BUSINESS PLAN

NAME: MAUREEN SCOVIA AKINYI

INDEX NUMBER: 5780011240

COURSE CODE: 2908

CENTRE NAME: THE ELDORET NATIONAL POLYTECHNIC

CENTRE CODE:

PRESENTED TO: THE KENYA NATIONAL EXAMINATION COUNCIL

IN PERTIAL FUILFILMENT FOR AWARD OF
DIPLOMA IN PROJECT MANAGEMENT.

SUPERVISOR: MRS. TERER.

EXAM SERIES: JUNE/JULY 2019

TABLE OF CONTENTS
DEDICATION......................................................................................................................................i
DECLARATION.................................................................................................................................ii
ACKNOWLEDGEMENT..................................................................................................................iii
CHAPTER ONE.................................................................................................................................iv
EXECUTIVE SUMMARY.................................................................................................................iv
CHAPTER TWO.................................................................................................................................1
2.0 BUSINESS DESCRIPTION............................................................................................................1
2.1 OWNERS OR SPONSORS BACKGROUND................................................................................1
2.2 BUSINESS NAME..........................................................................................................................1
2.3 BUSINESS LOCATION.................................................................................................................2
2.4 CHOICE OF BUSINESS LOCATION...........................................................................................2
2.5 THE FORM OF OWNERSHIP.......................................................................................................3
2.6 FORM OF OWNERSHIP................................................................................................................4
2.7 TYPE OF THE BUSINESS.............................................................................................................4
2.8 PRODUCTS AND SERVICES.......................................................................................................4
2.9 JUSTIFICATION AND OPPORTUNITY......................................................................................6
2.10 INDUSTRY...............................................................................................................................6
2.11 BUSINESS GOALS..................................................................................................................7
2.12 GROWTH AND ENTRY STRATEGY........................................................................................8
CHAPTER THREE...........................................................................................................................10
3.0 MARKETING PLAN....................................................................................................................10
3.1 CUSTOMERS...............................................................................................................................10
3.3 COMPETITORS...........................................................................................................................11
3.4 MARKET SHARE........................................................................................................................13
3.5 ADVERTISING AND PROMOTION STRATEGY.....................................................................14
3.6 PRICING STRATEGY.................................................................................................................15
3.7 SALES TACTICS.........................................................................................................................15
3.8 DISTRIBUTION STRATEGY......................................................................................................15
CHAPTER FOUR.............................................................................................................................16
4.0 THE ORGANISATION AND MANAGEMENT PLAN..............................................................16
4.1 INTRODUCTION.........................................................................................................................16
4.2 BUSINESS MANAGER AND QUALIFICATIONS....................................................................17
4.3 PERSONNEL NUMBER AND DUTIES......................................................................................17
4.4 RECRUITMENT AND TRAINING AND PROMOTION...........................................................19
4.5 REMUNARATIONS AND INCETIVES......................................................................................19
4.6 LICENSES, PERMITS AND BY LAWS......................................................................................20
4.7 SUPPORT SERVICES..................................................................................................................21
CHAPTER FIVE...............................................................................................................................22
5.0 OPERATIONAL/ PRODUCTION PLAN.....................................................................................22
5.1 PRODUCTION FACILITY AND CAPACITY............................................................................22
5.1.1 REPAIR AND MAINTENANCE OF MACHINES AND EQUIPMENT..................................22
5.2 OTHER FIXED ASSETS..............................................................................................................22
4.3 OVERHEAD COSTS PER MONTH............................................................................................23
5.4 MOTHLY LABOUR REQUIREMENTS.....................................................................................24
5.5 MONTHLY MATERIAL REQUIREMENT.................................................................................25
5.6 OPERATION AND PRODUCTION PROCESS...........................................................................25
5.7 GOVERNMENT REGULATION AFFECTING OPERATIONS.................................................26
CHAPTER SIX..................................................................................................................................28
6.0 FINANCIAL PLAN......................................................................................................................28
6.1 PREOPERATIONAL COST.........................................................................................................29
6.2 ESTIMATED WORKING CAPITAL...........................................................................................30
6.3 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 2014...........................31
6.4 PRO-FORMA BALANCE SHEET...............................................................................................33
6.5 BREAK EVEN LEVEL................................................................................................................34
6.6 EXPECTED PROFITABILITY RATIO.......................................................................................36
6.7 DESIRED FINANCING...............................................................................................................36
6.8 PROPOSED CAPITALIZATION.................................................................................................37
Appendix............................................................................................................................................38

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DEDICATION

My dedication goes to the almighty God giving me power, effort, and care he has taken unto

me during the time I was writing this business plan. Secondly I declare this script to my

beloved brother and Dad

May God bless them all.

i
DECLARATION

I MAUREEN SCOVIA AKINYI do hereby declare that the business plan that I am

submitting to KNEC through my supervisor MRS. TERER is my original arithmetic work.

Candidates Name: MAUREEN SCOVIA AKINYI

Sign ………………………………………

Supervisor’s Name : MRS. TERER

Sign: ………………………………………

ii
ACKNOWLEDGEMENT

I sincerely wish to thank my lecturer MRS. TERER for her tireless effort in advising and

provision of the materials for the successful completion of the script. I also extend my thanks

to my guardian and parents for their moral support and financial support towards the success

of the script. At the same time, special thanks go to my closest friends who in one way or

another helped me very much and also thanks to my course mates.

May God bless them all.

iii
CHAPTER ONE

EXECUTIVE SUMMARY

1.1 BUSINESS DESCRIPTION

The business is an industry located in Siaya town which will be dealing with large scale

production of Mango juice industry to distribution to the whole country specifically to the

areas which are due to climate. It's a sole proprietor kind ‘of business owned by or sponsored

by Miss Maureen Akinyi who is a diploma holder in project management.

The business is food processing industry. The outlet is planned to be opened after the

advancement of the of the business and also filling of vacant posts and buying a vehicle in aid

of distribution products to the market. The entry is achieved by employing competitive

pricing method.

2.0 MARKETING PLAN

The customers of Miti Mango juice compose of commercial and individual customers. Its

competitors are the potential institutional commercial customers. The pricing strategy is

competitive pricing method.

The sale tactics is through promotional activities such as high quality and hygiene packing

system smart and courteous salesmen. Distribution of products undergoes three chemical:

these are producers - distributer - retailers - consumers.

3.0 ORGANISATONAL PLAN

The key management is the manager and assistant manager. The other personnel are operator,

cleaners, distributors and watchman.

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Recruitment of employee is done on merit while training is done o job basis and off job basis.

Promotion of employees is strictly done on productivity and performance of a person in

auditors is hired at the end of every year to monitor the basics of accounts.

4.0 OPERATION / PRODUCTION PLAN

The cost of machines and equipment is Kshs 316,000 and maintenance cost is Kshs 200,000

per year monthly cost of raw material is Kshs 4,750,000. Productivity overhead is Kshs

630,000 whereby production and estimated working capital in a year is Kshs 2,780,000.

5.0 FINANCIAL PLAN.

It has the following topics.

1. Pre-operational costs.

2. Estimation of working capital.

3. Pre-operational of pro-forma balance sheet.

4. Estimation of working capital.

5. Pre-operational of pro-forma balance sheet.

6. Operation of breakeven point.

7. Desired financing.

8. Calculation on profitability ratio.

v
CHAPTER TWO

2.0 BUSINESS DESCRIPTION

2.1 OWNERS OR SPONSORS BACKGROUND

The owner of proposed business will be Miss MAUREEN SCOVIA AKINYI. She is 20

years. The proprietor of the business is currently a student in The Eldoret National

Polytechnic pursuing a Diploma in Project Management. She joined the college after

finishing her secondary education from Mbaga Girls Secondary school in 2017 and she

attained relevant skills and knowledge on how to run a business successfully from assisting

her relatives operating the industry and after learning on entrepreneur as a subject in her

course which she performed well throughout the compensate her lack of experience by

employing experienced and skilled people so as they can help achieve his objective

efficiently.

2.2 BUSINESS NAME

The business will be called M1T1 MANGO JUICE INDUSTRY the name comes from my

sister Miriam.

The address and contact will be

MITI MANGO INDUSTRY

P.O BOX 171

SIAYA

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TEL NO: - 0703773763

2.3 BUSINESS LOCATION

The business is located in Siaya town District Nyanza Province adjacent to Uhuru Round

About at Siaya town provincial hospitals plot no 0001 opposite Kenol petrol station. The firm

is well fixed fenced on a sign post next to the main road.

2.4 CHOICE OF BUSINESS LOCATION

This area was chosen for the proposed business after consideration of various factors such as:

Availability of raw material: - this option was very suitable because the manager which is the

raw material in this case is produced in all session in this place as compared to other places in

the country.

a) Good infrastructure: - the roads and railways in this area are in good condition thus

making the transportation of raw materials to the industry and also the finished

products to the industry and other places more efficiently.

b) Accessibility to customers-- this place has a high population of people thus making it

easy to reach many customers also there are big hotels like the mash park Hotel and

also that are willing to buy the products.

c) Security assurance: - availability of other factors high population and even

d) Availability of water and electricity: - both water and electricity are available thus

making the area more suitable and efficient for the intended purpose.

e) The business is intended to be started in eight months’ time this is to give the sponsors

on adequate time to meet all the necessary standards required and make proper

2
2.5 THE FORM OF OWNERSHIP

Capital Structure

The proposed business will be formed by the owner alone hence sole proprietor type of

business. It will start at amount of Kshs 10,000,000. To which my father and mother will

assist me with same amount

Owner saving 300,000

Bank loan 400,000.

Friends and relatives 300,000

Total 1,000,000

SPONSOR AMOUNT KSHS PERCENTAGE

Owner contributions 300,000 25%

Bank loan 400,000 50%

Friends and relatives 300,000% 25%

TOTAL AMOUNT 1,000,000 100%

3
2.6 FORM OF OWNERSHIP

The proposed business is a sole proprietorship form of business owned by Maureen Akinyi

the managing director. This makes it easier for the to operate and thus being more responsible

and carefully in distributing the funds.

2.7 TYPE OF THE BUSINESS

The business will give or offer both wholesale and retail services to its customers. This is

because apart from distributing its products to the large markets big hotels and even to

institutions who buy/purchase the products in bulk it will also be among at attracting and

giving those customers from the surrounding areas a chance to purchase from the industry

directly even for smaller quantities.

It is a start up of business this is because it is intended to be started from scratch meaning that

is has never been into existence.

2.8 PRODUCTS AND SERVICES.

The industry is aiming to provide quality services and also quality mango juice which is not

expensive as any other in the market This will attract more customers and thus leading to

high profit gain since the industry will be producing more people has in many occasions been

complaining about the poor quality and even packaging of some fruit juice and must

especially mango juice and so this is what this industry will be working hard to collect. It

intends to acquire enough well equipped vans and tracks for the purpose of efficient and

effective and distribution of both personal and commercial orders.

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Other services include: -

a) Quality

In order to maintain good and quality products and services in the industry staffs are to be

employed will be supposed to be highly qualified and conversely with the modern

technology. They will be offered good salaries and fridges benefits so as to keep them

motivated. They will also have the capacity to offer job description. This will enhance better

services to the customer.

b) Unique selling points

Since the location of the business is near the source of raw materials the cost of transport will

be reduced as said eelier while at the same time providing mango juice within the locality and

the institutions around. The juice produced will be packed in an attractive manner and in

recycled containers. These will also be collection of the same containers from the institutions

of sale an at different estates and villages at a lower price in order to recycle them. The

containers will bear the industry's name on the tops.

c) Sales Promotions

In addition to offering of services like transport and also for samples the industry will offer a

20% discount for any bulk buying made.

d) By products/services

As pertaining to the products the industry will be using by treating the outer cover of the

mango fruit to prepare them to manure where they will be mixed with other leaves like the

dry coconut leaves that have fallen to the ground and also grasses.

5
2.9 JUSTIFICATION AND OPPORTUNITY

a) Qualification of staff

The staff of this business will be highly qualified and those who are well conversant with the

current modern technology and also the abilities in other different areas meaning that they are

all rounded people. For example the human resource manager will be expected to have a

degree in Human resource management and also food nutrition and dietetics just to mention

other have degree in public relations health rural industrialization, information among others

courtesy courses will be mandatory for all manager to go though immediately they are

employed.

This is to enable them to be more efficient and effective on offering services to the

customers.

b) Economics Factors.

There is a high demand for juice in this area. This because the climate in this place is

extremely hot and people living here keeps on buying fluids these are also so many classic

hotels where tourists resides.

2.10 INDUSTRY

The industry falls under the ministry of trade and industry and aid is a business which cannot

lose market that easily because mango juice is usually taken in every place although the dry

and hot areas consumes a lot of it due to the nature of the environment.

It will also have some marketing strategy cheap that are convenient to all customers and this

will enable them to complete well other similar industries all intends to acquire modern

6
equipments and machines so as to produce high quality products to even such the required

international standards and therefore be able to complete more favorable both locally and

internationally.

2.11 BUSINESS GOALS

a) Short Term Goals

 To meet the needs and the demands of the customers.

 To provide our customers with high quality products at an available and fair prices.

b) Medium Term Goals

 To ensure that the business recognized all over as a modern and quality industry.

 To be customers friendly and caring and also giving quality services to attract

customers.

c) Long Term Goals

 to decentralize development and offering job opportunity especially to the

surrounding people.

 To make a profit margin of at least 40% within one year and then expand the industry

by buying more trucks for delivering the products to the customer and also building

hotels to serve customers.

 To attract at least five institutions hotels and supermarket from the entire country per

month to become our customers through offering better quality products and services.

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2.12 GROWTH AND ENTRY STRATEGY

The sponsor having gained adequate knowledge and experience hat is entrepreneur skills,

managerial skills and tactics skills through training in born abilities and experience helps him

to operate the business successfully and obtain maximum profit

Through these skills he will be able to communicate with the customers about the availability

of goods and services in order to satisfy potential target market needs this will be done

through.

i. Advertising through media.

ii. Bill boards.

iii. Posters.

2.13 GROWTH STRATEGIES

The sponsor is determined about the perpetual growth of the business I future. This is because

he will use the acquired knowledge and skills from learning to exploit the available resources

so as to merge successful.

He will also ensure that capital interact in the business is properly allocated for and used to

have high returns and maximum expenditures considerably.

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CONTRIBUTORS

Particulars Amount Percentage

Owners savings 400,000 40%

Family contribution 200,000 20%

Friends contributions 100,000 10%

Bank loans 300,000 30%

TOTALS 1,000,000 100%

9
CHAPTER THREE

3.0 MARKETING PLAN

3.1 CUSTOMERS

The business plan to market its products to the following customers.

i. Potential customer.

These are customer who lives around or near the area where the business is to be located and

also those from out skirts who will be willing to buy the products 1 wholesaler in the area in

retail from the industry.

ii. Institutional customers.

These will be the schools either primary, secondary, colleagues, university who will purchase

the products in large quantities for their students' consumptions or for otherwise they

include:-

 Siaya Technical training institute.

 Siaya District Hospital.

 Kenya Medical Training Collage.

iii. Commercial customers

These will be those customers who will buy the products, Commodity in large quantities for

resale purchase and for use in their business for example.

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  Mash Park Hotel.

 Mwalimu Hotel.

 Best nine Supermarkets.

These will be no age limit for any customers or even any restaurant as to income gender or

occupation and due to the business principle and dedication towards servicing it will be

determined to offer good performance comfort ability and even safety towards serving the

customers.

3.3 COMPETITORS

The potential competitors of MITI MANGO JUICE INDUSTRY are: -

a) Nyateko Juice Factory

The factory is located five kilometers from Siaya town Boys High school on your way to

Mwalimu Sacco. It’s of medium size as compared to or in relation to other competitors in the

region and it offer a wide variety of juice.

Strength

i. It is located at an open area where it is easily accessible by customers including.

ii. It was started two year ago and produces a wide variety o fruit juices.

Weakness

i. The have poor customers’ relations.

ii. Their packaging materials are methods are poor.

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 iii. The sell their products at high prices.

b) Capital Juice Industry

The industry is located a few meters away from Siaya town stadium it is large in size as

compared to others and mostly it deals with exports.

Strengths

i. It offers high quality services to their customers and have a well experienced staffs

ii. They also offer a variety of fruits juices

iii. It is located at a strategic place with a frequent flow or visitors

Weakness

i. They are charge high prices for their product

ii. They only deal with customers who buy in large quantities

iii. They are export oriented

Miti mango juice industry will be examining the various departments of the competition that

have some weakness and then capitalized on them by improving or collecting all this

weakness to make them more attractive to customers and seeking ways to make the produce

of high quality than all others .it is also aimed at doing campaigns vigorously to create

awareness of its existence and it quality juice product

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3.4 MARKET SHARE

Due to the quality services and products this industry is expected to have attained a 60% of

the market share within two years of its operations and to gain at least two third of the

estimated population of 30,000 people

The total number of local customers expected is 6000

The following is an illustration of market share

BUSINESS NO. OF CUSTOMERS MARKET SHARES

Miti Mango Juice Industry 3600 60%

Nyatero Juice Factory 1500 25%

Capital Juice Factory 900 15%

Miti Mango Juice Industry

3600/6000 x 100 =60%

Nyatero Juice Industry

1500/6000 x 100 = 25%

Capital Juice Factory

900/6000 x 100 = 15% 11

13
 Market Share

Miti
Nyatero
Capital

3.5 ADVERTISING AND PROMOTION STRATEGY

The industry has about half a million shillings to be spent for these events. This is to make

the industry and its product to be known to the public.

The type of advertising methods to be used will be media (for example through televisions

radius)

Electronics bill boards posters also through eye catching and attractive video clips that will be

runner for few seconds on TVs or radius in between programmers.

Also through preparation of brochures containing details of the industry and the product

which will be spread all over the country.

Other means that will be used is through awareness campaigns where people will be

travelling to various places explaining to customers and get to have a one on one sales

promotion through sampling and free gifts

14
The business will also provide calendars bearing the name of the product being offered

3.6 PRICING STRATEGY

The industry will be using the market penetration oriented pricing method where it shall find

out the prices of mango juices in other industry and then establish its own price that will then

more gradually to the "skimming the cream" pricing strategy through this will vary from the

location of various customers

3.7 SALES TACTICS

The industry will offer 20% discount for those who will buy our product in bulk it will also

introduce credit policy of a discount incase of clearance the customers who will be willing to

buy from us on credit

3.8 DISTRIBUTION STRATEGY

The business will distribute the product directly to the customers the individual customers

will have a chance to purchase directly for institutional customers who will buy in large

quantities transport will be provided at reasonable charges and also for commercial customers

like the supermarket and hotels this transport services that will be offered is through tracks

and vans which the business intends to purchase a numbers of them

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 CHAPTER FOUR

4.0 THE ORGANISATION AND MANAGEMENT PLAN

4.1 INTRODUCTION

Organization is the systematic combination of independent entities or personnel to form a

unified team / group upon which co-ordination working and control to employ in an effort to

achieve given goals. Management on the other side is the systematic utilization of recourses

available within or without an organization to help meet the desired objectives/ goals; it

involves planning directing and controlling all the resources in the organization. Effective

management is mandatory for an organization to succeed.

The diagram below represents organization chart.

CHIEF EXECUTIVE/ MANAGING DIRECTOR

ASSISTANT EXECUTIVE MANAGER

FINANCER MANAGER SALES MANAGER SECRETARY CLINICAL OFFICER

STORE KEEPER DRIVER WATCHMAN GROUNDS MEN

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 4.2 BUSINESS MANAGER AND QUALIFICATIONS

According to the companies of industry act, all staff must be of high and of unquestionable

level of education standards. This means that they will be expected to do the job they are

offered and people who are accountable and responsible since they will be handling a delicate

and sensitive business issues on daily basis.

For example, the chief executive of arranging directors will have a master degree and in

Human Resource management from a recognized University and at least a degree in food and

Beverage.

4.3 PERSONNEL NUMBER AND DUTIES.

The table below shows the number of personnel their age and qualifications that they are

expected to have.

JOB TITLE NUMBE AGE DUTIES QUALIFICATION

R
Managing 1 Above 30 *Oversee the smooth running of the *degree in human
director years business. Resource
*Recruit new staffs Management or
*Set rules and regulation Degree in Food and
*Ensuring that salaried and bills are beverage.
paid well in advance. *Fluent in English
and Kiswahili.
Deputy 1 Over 30 *Keeping Financial records of the *masters in
Managing years business. Economics or a
Director *Perform data analysis. Bachelor in Finance
*Act as a legal advisor to the top or Accounting
management. * 3 Year Working
*Keep a breast for the latest computer experience.
technology in order to increase

17
 efficiency of the industry Financial
operations.
Secretary 1 25-35 *Receiving calls and transmitting *diploma in
years them to the right personnel. Secretarial or
*Booking appointments for customers Diploma in Public
and staffs. relations.
*receiving visitors. * Be computer
literate.
Sales manager 1 25-30 investigation about the conditions of *Degree in Sales and
years the market marketing
meeting the sales schedules. *ensuring *diploma in public
that there are enough goods to be taken relations.
to the market to meet the customers’
needs. .
Clinical 1 25-45 *Ensuring that all products are best for *Degree in medicine
Officer years Human Consumption. or a higher diploma in
*ensuring that skilled services are community health
provided y or under his supervision *3 years working
following a medically approved plan of experience
care.
Store keeper 2 25-30 - *Making sure that the raw materials are *higher Diploma in
years kept well and in good conditions. supplies and
*Keep records of what is out and management
coming in for example what have been *be computer literate
produced and sold.
Driver 2 25-50 *make delivery to various institutions, Valid driving license
years customers. fluent in English
Kiswahili
Grounds Men 2 25-30 *to keep the compound clean by *experience though
years cutting grass, collecting and burning working in firms./
litter. industry hotels e.tc
*general maintenance of cleanliness

18
Watch Men 2 30-5-years *maintain security around the area. *High school leaver.
*Report any form of theft to the *Fluent in Kiswahili,
management and English

4.4 RECRUITMENT AND TRAINING AND PROMOTION

The industry will do its recruitment through advisory short listing interviews selections

replacements orientation and training. These will be on the job training which will be done

through holding seminars and workshops capacity building and exposure more knowledge.

For services and also be able to perform their duties more efficiently and efficiency.

These will also get an opportunity to interact know each other’s and also build their trust in

one another.

On the other hand, promotion will be based on merits and the performance of the industry the

best staff on terms of performance will be rewarded and promoted. Titles will be pasted on

the staffs’ doors and those will also be leaves and retreats for the workers.

4.5 REMUNARATIONS AND INCETIVES

Employees in this industry will be remunerated according to the views of business expansion

and the prevailing economic conditions in the industry.

The table below shoes the remunerations and incentives.

TITLE NUMBER BASIC SALARY ALLOWANCES TOTAL

AND
INCENTIVES
Chief Executive. 1 Kshs 35,000 Kshs 15,000 Kshs 50,000

managing
directors
Assistant director 1 Kshs 30,000 Kshs 10,000 Kshs 40,000

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Finance manager 1 Kshs 25,000 Kshs 10,000 Kshs 35,000
Sales manager 1 Kshs 25,000 Kshs 10,000 Kshs 35,000
Secretary 1 Kshs 15,000 Kshs 5,000 Kshs 20,000
Clinical Officer 1 Kshs 15,000 Kshs 5,000 Kshs 20,000
Store Keeper 2 Kshs 11,000 Kshs 4,000 Kshs 30,000
Grounds men 2 Kshs 7,000 Kshs 3,000 Kshs 20,000
Watchman 2 Kshs 7,000 Kshs 3,000 Kshs 20,000
Drivers 3 Kshs 15,000 Kshs 5,000 Kshs 60,000
TOTAL 15 Kshs 33,000
Incentives

These are kind of rewards given to the employees to induce them to work harder. The

industry will be looking forward to do this through.

a) Giving them bonuses.

b) Giving them pensions and sharing opportunities.

c) Treating the employees with respect and fairness

4.6 LICENSES, PERMITS AND BY LAWS

The industry will have training as well as a health license from the Siaya town town council.

It will also register with the attorney generals chamber to certify that it is a legal one and

complies with terms and conditions of the trade.

The facilities of the industry and properties will be insured against fire and theft. The staffs

will also be expected to hire medical covers from a recognized insurance company.

20
4.7 SUPPORT SERVICES

The industry will hire support services on demand such as auditors for example from JIMWA

auditing firm in Siaya town. Medical insurance company, an advocates to represent as 1 legal

matters as well as advising in some of its financial understandings.

21
 CHAPTER FIVE

5.0 OPERATIONAL/ PRODUCTION PLAN

The industry will deal with production of quality mango juice fruits which are the raw

material in this case it is aimed at adopting a flow line method of production since it will be

producing a large quantities of a single standardized product

5.1 PRODUCTION FACILITY AND CAPACITY

This refers to the basic resources that the business will require in order to commence its

activities they will include

Serial no. Facilities capacity numbers source Amount

1 premises 2storey building 1 purchase Kshs.1000000
2 Machinery and 10 10 purchase Kshs.700000

equipment
3 generators 500 tones 2 purchase Kshs.300000
4 vehicles 1.7 tones 3 purchase Kshs.250000
5 refrigerators 20 purchase Kshs.2 50000
total Kshs.4750000

5.1.1 REPAIR AND MAINTENANCE OF MACHINES AND EQUIPMENT

Repair and maintenance of these facilities will be carried cut by the excel partisans limited

while specialized repairs will be undertaken supplying companies

5.2 OTHER FIXED ASSETS

This includes other tools and equipments which will be required to aid in carrying out the job

efficiency this will include office furniture and other items

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ITEMS QUALITY UNIT COST TOTAL COST

Computers 6 Kshs15000 Kshs 90000

Computer desks 6 Kshs 2000 Kshs12000

Tables 10 Kshs 2000 Kshs 20000

Chairs 20 Kshs 3000 Kshs 60000

Office equipment Kshs Kshs100000

Photocopier machine Kshs10000 Kshs10000

Printers 3 Kshs 4000 Kshs12000

Telephone heads 4 Kshs 3000 Kshs12000

TOTAL Kshs316000

4.3 OVERHEAD COSTS PER MONTH

ITEMS AMOUNT IN KSHS

Water Kshs 50000

Advertisement Kshs100000

Maintenance Kshs 200000

Telephone services Kshs 20000

Electricity Kshs 40000

License and permits Kshs 50000

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Transport Kshs 20000

Insurance Kshs100000

TOTAL Kshs 630000

5.4 MOTHLY LABOUR REQUIREMENTS

Job description Number of personnel Total salary

Managing director 1 50000

Assistant manager 1 40000

Finance manager 1 .. 35000

Sales manager 1 35000

Secretary 1 20000

Clinical officer 1 20000

Store keeper 2 30000

Drivers 3 60000

Ground men 2 20000

Watch men 2 20000

TOTAL 15 Kshs330000

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5.5 MONTHLY MATERIAL REQUIREMENT

Raw materials Kshs 1500,000

Flavors Kshs 100,000

Total kshs600,000

Cost of production = total materials +Total monthly labour +Total overhead cost Cost of

production = 1600,000 + 550,000 + 630,000

= Kshs 2,780,000

5.6 OPERATION AND PRODUCTION PROCESS

The production will be made from raw materials in this case is mango fruits. The industry

will purchase mangoes from farmers within the region and collect them to our stores

The raw materials will then be stored for about two to three days under conservation before

undergoing processing after which ripe mangoes will be selected for processing where it will

be crushed to produce the juice this will be then some water, flavor and preservation. It will

be then tested to ensure that it is fit for human consumptions.

After this the finished products will be packed into appealing packaging containers and

weighed into quality control units. For example, it will be packed into 500 milliliters waiting

for distributions to the customers.

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The business will adopt flow line methods of production since it is aimed at producing large

quantities of single standardized products which in this case is mango juice

5.7 GOVERNMENT REGULATION AFFECTING OPERATIONS.

These are officially laid down orders which will guide and control the behavior, action and

the performance of the employees and the business as a whole so as to achieve the desired

objectives or the set goals.

They will include: -

i. Licensing and Permits (cap 26a)

The business will ensure that it acquires all the license required for example the public health,

government license and a license from the municipal and local council.

ii. Health regulations act 294

The business will also ensure that there is good ventilation of the building for proper

concentration of air in the entire building and also make sure that the entire area is clean to

make the environment more conducive and even attractive.

iii. Trade regulations act (cap 449)

It will also comply with the business regulation act in which is set to ensure that all business

is registered so as to prohibit illegal business from conducting their activities.

iv. Safety regulations act.

The business will provide the workers with protective garments and other safety equipment

Also fire extinguishers will be evenly distributed throughout the building.

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These are also grounds men who will be employed to ensure that the entire compound is

clean and tidy and thus making the environment to be appealing and attractive.

v. Trade mark (cap 506)

The industry has designed a sign or trade mark of total quality mango juice. This trademark is

printed on very products being sold in the industry and there helps advertising.

vi. Employment act (cap 266)

It states that nobody should work for three months without him or her being recommended as

an employee. It also requires free and fair methods of employment. It also states that

employment exercise should be free from bias. It is an act stating general rules of

employment under which different categories of personnel are employed.

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CHAPTER SIX

6.0 FINANCIAL PLAN

This is a summary chapter of the business which interprets the other chapters in monetary

terms. The financial matters include*, requirements, expenditure and income statement, pre-

operational cost incurred etc.

Financial plan assists in motivating performance of the business and in evaluation of the

amount available with the aim of making profits.

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6.1 PREOPERATIONAL COST

This is the cost incurred before the business commences.

Item Cost

Rent 2,000

Electricity 2,000

Water 1,000

Transport 3,600

Telephone 1,500

Maintenance 5,000

Insurance 1,000

Expenses & License 10,000

Postage 4,000

Promotion 3,000

Furniture 6.000

Purchase of machinery 250,000

Goodwill of the business 5,000

Total 294,100

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6.2 ESTIMATED WORKING CAPITAL.

This is the capital requirement needed for the business to start operating. The estimate of the

working capital prepared is for three years.

Item Year 1 (Kshs) Year 2 (Kshs) Years 3 (Kshs)

Stock of materials 200000 100000 ) 250000

Debtors 50000 60000 40000

Cash at hand 150000 220000 150000

Cash at bank 50000 90000 110000

Stock of finished 10,000 20000 30000

goods

Work in progress 10000 10000 10000

470000 500000 580000

Assumptions.

a) Working capital will be increasing every year.

b) The number of competitors unit remains constant hence the business profit will also be

increasing and thus the business financial position increases yearly.

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6.3 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 2014

Item fan Feb Mar Apr May fun Jul Aug Sep Oct Nov Dec Total
Cash Inflow 130,000 125000 12000 12500 11000 13000 120(10 13000 12750 127500 127500 127500 1500000
0 0 0 0 0 0 0
Debtors 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Owners’ equity 300000 300000
Bank loan 400000 400000
Parents 200000 200000
Total 900000 900000
Total cash 103500 130000 12500 13000 11500 13300 12500 13500 13250 132500 132500 132500 2460000
inflow 0 0 0 0 0 0 0 0
Cash outflow
Pre-operational 33800 338500
cost
Salaries/ wages 38000 38000 38000 38000 38000 38000 38000 38000 38000 3800(1 38000 38000 456000
Rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
Telephone 3000 2000 2000 1000 1000 1000 1000 1000 2000 1000 1500 1500 18000
Electricity 4000 20110 2000 2000 2000 2000 2000 1000 1000 1000 2000 2000 24000
Water 2000 1000 1000 1000 1000 1000 1000 1000 1000 500 500 1000 12000
Insurance 3000 3000 6000
Maintenance 2500 2500 2500 2500 2000 3000 2500 2500 2500 2500 2500 2500 30000
I license/
2000 2000
Permits
Loan Interest 300 250 200200 200 250 300 300 250 300 150 3000
Loan payment 60000 25000 40000 35000 30000 25000 30000 3000 2000 100011 25000 25000 400000
i
Tax 4174 4166 4166 4166 4166 4166 4166 4166 4166 4166 4166 4166 50000
Total cash 439466 76916 91866 86916 80366 79416 80966 75800 80466 80466 75816 76416 1321500

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outflow
Net Cash 575534 530584 33134 43084 34634 55584 22034 59200 51534 51534 56184 55584 1138500
Cumulative 575534 628618 66175 70483 73947 79508 83908 89828 94982 100035 105734 1138500
cash 2 6 0 4 8 8 2 6 0

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6.4 PRO-FORMA BALANCE SHEET

Item As at opening year 1st As at end of year 31st As at the end of the

Jan 2010 Dec 2010 year 31st Dec 2011

Fixed assets 60000

Machinery 5000 60000 60000

/Equipment

Accumulated 30000 5000 10000

depreciation

Transport 95000 28000 32000

Total 93000 102000

Current assets

Stock 150000 100000 155000

Cash at bank 50000 60000 20000

Cash at hand 150000 220000 150000

Debtors 50000 60000 40000

Total current assets 400000 440000 415000

Total assets 495000 553000 517000

Liabilities

Owners’ equity 95000 95000 107000

Bank loan 400000 440000 425000

Total liability 495000 533000 517000

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6.5 BREAK EVEN LEVEL.

The breakeven level of the business should be estimated after the business has been

established as indicated below.

The total contribution margin =Sales" -Variable cost.

Sales =1,500,000

Variable cost

Item Cost (Kshs)

Creditors 140,000

Electricity 24,000

Telephone . 18,000

Advertisement 6,000

Transport 30000

Water 12,000

Insurance 10,000

License 2,000

Total 242,000

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Contribution margin = 1500000-2420001

= 1,258,000
Contribution Margin percentage = Contribution margin x 100
Sales
= 1,258,000x100
1,500,000
=83.9%

Fixed cost
Items Cost (Kshs)
Purchase of machines 250000
Furniture 6000
Goodwill 50000
Rent 24000
Total 330000

Total fixed cost = Kshs 330000

Breakeven level = Total fixed cost
Contribution margin
=330.000
83.9

=3933.25

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6.6 EXPECTED PROFITABILITY RATIO.

Calculating the profitability ratio of the business.

i) Gross profit =Gross profit x 100
Sales.

Year 1 Year 2 Year 3

1,100,000 x 100 1,200,000 x 100 1,300,000 x 100

1,500,000 1,550,000 1,800,000

=73.33% =77.42% =72.22%

6.7 DESIRED FINANCING.

Item Amount (Kshs)

Pre-operational cost 338,000

Working capital 450,000

Total fixed assets 45,000

Total 883,500

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6.8 PROPOSED CAPITALIZATION.

Item Amount (Kshs)

Personal 300,000

Loan (KIE) 400,000

Friends and relatives 300000

Total 1,000,000

37
APPENDIX

To Kisumu
To Busia

Siaya Town

Nyanturago center

Miti Mango juice

Nyamasibi

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