Table of Contents

DECLARATION..............................................................................................................................................v
DEDICATION................................................................................................................................................vi
ACKNOWLEDGEMENT................................................................................................................................vii
EXECUTIVE SUMMARY..............................................................................................................................viii
CHAPTER ONE..............................................................................................................................................1
EXECUTIVE SUMMARY.................................................................................................................................1
BUSINESS DESCRIPTION...............................................................................................................................1
MARKETING PLAN.......................................................................................................................................1
ORGANIZATION / MANAGEMENT PLAN......................................................................................................2
OPERATION/PRODUCTION PLAN.................................................................................................................2
FINANCIAL PLAN..........................................................................................................................................2
1.6 BUSNESS DESCRIPTION..........................................................................................................................3
1.7 BUSNESS NAME.....................................................................................................................................3
1.8 BUSINESS LOCATION AND ADDRESS......................................................................................................3
1.9 FORMS OF OWNERSHIP.........................................................................................................................5
DECISION MAKING.......................................................................................................................................5
UNLIMITED LIABILITY...................................................................................................................................6
LACK OF FINANCIAL CONTROL.....................................................................................................................6
DIFFICULT IN RAISSING CAPITAL..................................................................................................................6
1.1.0 BUSINESS TYPE...................................................................................................................................8
1.1.1 PRODUCT AND SERVICES....................................................................................................................8
1.1.2 JUSTIFICATION OF THE BUSINESS OPPORTUNITY...............................................................................9
ACCESSIBILITY..............................................................................................................................................9
COMPETITION..............................................................................................................................................9
INFRASTRUCTURE........................................................................................................................................9
MARKETING.................................................................................................................................................9
1.1.3 INDUSTRY...........................................................................................................................................9
GOALS........................................................................................................................................................10
1.1.4 ENTRY AND GROWTH STRAGETY......................................................................................................10

i
ENTRY........................................................................................................................................................10
GROWTH STRAGETY..................................................................................................................................11
CHAPTER TWO...........................................................................................................................................12
2.0 MARKETING PLAN................................................................................................................................12
2.1 POTENTIAL CUSTOMERS......................................................................................................................12
PURCHASING PATTERN TABLE...................................................................................................................12
2.2 MARKET SHARE....................................................................................................................................13
MARKET SHARE GRAPH.............................................................................................................................15
2.3 COMPETITION......................................................................................................................................16
2.4 POTENTIAL COMPETITOR....................................................................................................................16
2.5 COMPARISON BETWEEN PRODUCTS AND SERVICES...........................................................................16
2.6 STRENGTH AND WEAKNESS OF THE COMPETITORS............................................................................17
2.7 ADVETISEMENT AND FORMATION STRATEGY.....................................................................................17
2.8 ADVERTISEMENT.................................................................................................................................17
2.9 PROMOTION STRAGETY.......................................................................................................................18
2.2.0 PRICING STRAGETY...........................................................................................................................18
DIRECT METHOD.......................................................................................................................................18
INDIRECT METHOD....................................................................................................................................19
DIRECT COST..............................................................................................................................................19
INDIRECT COST..........................................................................................................................................19
2.2.1 SALES TACTICS..................................................................................................................................20
2.2.2 DISTRIBUTION STRATEGIES...............................................................................................................20
CHAPTER THREE........................................................................................................................................21
3.0 ORGANIZATION/MANAGEMENT PLAN................................................................................................21
3.1 ORGANIZATION STRUCTURE................................................................................................................21
BUSINESS MANAGEMENT..........................................................................................................................21
QUALIFICATION.........................................................................................................................................21
DUTIES OF THE MANGER...........................................................................................................................22
3.2.OTHER PERSONNEL.............................................................................................................................22
3.2.1ASSISTANT MANAGER.......................................................................................................................22
Roles of assistant manager........................................................................................................................22
CASHIER.....................................................................................................................................................22

ii
Roles of the cashier...................................................................................................................................23
CLEANERS..................................................................................................................................................23
Roles of the cleaners.................................................................................................................................23
SUPERVISOR..............................................................................................................................................24
Qualifications.............................................................................................................................................24
Roles of the supervisor..............................................................................................................................24
SECURITY...................................................................................................................................................24
Roles of security........................................................................................................................................24
WORKERS..................................................................................................................................................25
Roles of the workers..................................................................................................................................25
RECRUITEMENT TRAINING AND PROMOTION...........................................................................................25
RECRUITEMENT METHOD..........................................................................................................................25
TRAINING...................................................................................................................................................26
PROMOTION..............................................................................................................................................26
REMUNERATION AND INCENTIVES...........................................................................................................27
REMUNERATION........................................................................................................................................27
3.4.2 INCENTIVES.......................................................................................................................................27
3.5LICENSE PERMIT AND BY-LAWS............................................................................................................28
3.5.1 LICENSE.............................................................................................................................................28
3.5.2 PERMIT.............................................................................................................................................28
3.5.3 BY-LAWS...........................................................................................................................................28
3.5 SUPPORT SERVICES..............................................................................................................................29
CHAPTER FOUR..........................................................................................................................................30
4.0 OPERATION/PRODUCTION PLAN.........................................................................................................30
4.1 OPERATION / PRODUCTION FACILITIES AND CAPACITY.......................................................................30
4.2 OPERATING/PRODUCTION STRATEGY.................................................................................................31
4.2.1 MONTHLY MATERIAL REQUIRED......................................................................................................31
4.2.2 OVERHEAD EXPENSES.......................................................................................................................32
4.2.3 LABOUR COST...................................................................................................................................33
4.3 PRODUCTION / OPERATION PROCESS.................................................................................................33
FLOW CHART.............................................................................................................................................33
4.4 EXTERNAL FACTORS LIKELY TO AFFECT OPERATION PROCESS............................................................34

iii
GOVERNMENT REGULATIONS...................................................................................................................34
CHAPTER FIVE............................................................................................................................................35
5.0 FINANCIAL PLAN..................................................................................................................................35
5.1 PRE-OPERATIONAL COSTS...................................................................................................................35
5.2 WORKING CAPITAL..............................................................................................................................35
5.4 KIBOI ELECTRICAL AND ELECTRONIC SHOP PROFORMA INCOME STATEMENT FOR TH E YEAR ENDING
DECEMBER 2023........................................................................................................................................37
5.4.1 KIBOI ELECTRICAL AND ELECTRONIC SHOP PROFORMA INCOME STATEMENT FOR TH E YEAR
ENDING DECEMBER 2024..........................................................................................................................38
5.4.2 KIBOI ELECTRICAL AND ELECTRONIC SHOP PROFORMA INCOME STATEMENT FOR TH E YEAR
ENDING DECEMBER 2025..........................................................................................................................39
5.5 KIBOI ELECTRICAL AND ELECTRONICS SHOP BALANCE SHEET FOR THE YEAR ENDING DECEMBER 2023
.................................................................................................................................................................. 40
5.5.1KIBOI ELECTRICAL AND ELECTRONICS SHOP BALANCE SHEET FOR THE YEAR ENDING DECEMBER
2024...........................................................................................................................................................42
5.5.2 KIBOI ELECTRICAL AND ELECTRONICS SHOP BALANCE SHEET FOR THE YEAR ENDING DECEMBER
2025...........................................................................................................................................................43
5.6 CALCULATION OF BREAK EVEN POINT OF THE 1 ST YEAR 2023.............................................................44
5.6.1 CALCULATION OF BREAK EVEN POINT OF THE 2 ND YEAR 2024..........................................................45
5.6.2 CALCULATION OF BREAK EVEN POINT OF THE 3 RD YEAR 2025..........................................................46
5.7 CALCULATION OF PROFITABILITY RATIOS FOR FIRST YEARS 2023.......................................................48
5.7 .1CALCULATION OF PROFITABILITY RATIOS FOR 2 ND YEAR 2024..........................................................49
5.7.2 CALCULATION OF PROFITABILITY RATIOS FOR 3 RD YEAR 2025..........................................................49
5.8 DESIRED FINANCING............................................................................................................................50
5.9 PROPOSED CAPITALIZATION................................................................................................................51

iv
DECLARATION
I Kiboi Kwemoi Isaiah a student of DEE2018S at The Sigalagala National Polytechnic do

solemnly declare that this Business plan is my own work at my best of my knowledge and it

has never been presented to any college or university for any award.

Student Name

Sign..................…...…..….......…...... Date................................

Supervisor.

Sign.................................................. Date................................

v
DEDICATION
I hereby dedicate this business plan to my brother and my father for their financial

support my trainee Mr Inyangala and my fellow student that have made these program to

be more effective and successful throughout the period.

vi
ACKNOWLEDGEMENT
I take this time thank the almighty God for the far he has brought me and the gift of he has

granted onto me also I take this time to sincerely appreciate and give thanks to my

supervisor Mr Inyangala for guiding me through the entire period of time

I also like to acknowledge my family for financial support and positive morale towards the

importance of education that has facilitated the smoothness and effectiveness

Lastly I would like this opportunity to acknowledge the entire Sigalagala fraternity for

being able to give a conducive and peaceful environment to carry out activity.

vii
 EXECUTIVE SUMMARY
Business Description

This business will be operate under the name KIBOI ELECTRICAL AND

ELECTRONICSHOP. It Will be located in Tranzoia county Kwanza sub county Bidii

location Bidii sub location opposite alsaint academy. The business will operate as a sole

proprietor by Kiboi k Isaiah as the proprietor . The proposed business will require a

capital of Ksh 800000

The business major activities will be to sell electrical equipment

Opportunity and Entry strategy

The owner indent to start the business in the year 2023 as soon he is through with his

training and collected all the required capital. The business is scheduled to enter into the

market through advertisement of the product offer through citizen ana mtume FM

viii
CHAPTER ONE

EXECUTIVE SUMMARY

BUSINESS DESCRIPTION
The business name will be KIBOI ELECTRICAL AND ELECTRONIC SHOP. The business

will be located Tranzoia county, kwanza sub county, Bidii Sub location market opposite the

Alsaint academy

The business will be operated under sole proprietorship the business will be dealing with selling

of electrical and electronic appliances.

MARKETING PLAN
For any business to develop there should be a presentable market to give to the customers

enabling them to buy the goods and services KIBOI ELECTRICAL AND ELECTRONICS

SHOP will consider customers needs thus enabling the market to get profit. This will be done by

advertising the business .Promotion strategy will involve all activities done to improve the

efficiencies of the business in the market

1
ORGANIZATION / MANAGEMENT PLAN
This includes the people who will manage the business in form of effective running of the

business. The sponsored business will run under the following management:

i. Manager

ii. Asistant manager

iii. Supervisor

iv. Cashier

v. Security

vi. Cleaners

vii. Workers

viii. Driver

The employees will be taken for recruitment to learn more of the business. The business will

require license from the government so as to be legalized in the county

OPERATION/PRODUCTION PLAN
The business will be operated under sole proprietorship. Production refers to creation of goods

and services for satisfaction of human wants .The process of repair and maintenance of the

facilities will be done after every three weeks. There are strategies that will be required such as

monthly materials, over head expenses, labour cost,

FINANCIAL PLAN
A Financial plan shows weather the business will have the profit or loss in its operation. Under

the financial plan, the pre-operational cost falls under the rent, license, water, electricity, permits,

and insurance cover

2
Working capital will also determine to enable the sponsor know how profit earned by the

business are used under current assets and liabilities. The proforma income statement shows all

the profit and loses occurring in a business at a particular period.

1.6 BUSNESS DESCRIPTION

1.7 BUSNESS NAME

The name of the business shall be KIBOI ELECTRICAL AND ELECTRONICS SHOP. The

name is derived from the owner of the business Kiboi due to his famous in the area which will

help him win more customers. The business will be dealing with buying of electrical and

electronic appliances from the producer at affordable prices and sell them at a profit. The

business will be sponsored by Kiboi k Isaiah who is a Kenyan citizen by birth. He comes from

Tranzoia county, Kwanza sub-county, Bidii location, Bidii sub-location, Skynest village. The

sponsor is currently a student of The Sigalagala National polytechnic pursuing a Diploma in

Electrical and electronics engineering. He enrolled in the college after attaining a minimum

grade of C- in KCSE at st patrick Mixed Secondary school in the year 2017. He joined secondary

after attaining 280 marks in KCPE at Chemoge Primary School in the year 2013

1.8 BUSINESS LOCATION AND ADDRESS.

The business will be located in Tranzoia county, Kwanza Sub-county Kwanza constituency,

Bidii location, Bidii sub-location, at Kibomet market opposite the police station. The reasons

why the location will be favorable to the business is that:

 ACCESSIBILITY

The business will be easily accessible by everyone

 COMPETITION.

3
 For the business to run smoothly there should be stiff competition where it is located.

 SECURITY.

The place is more secured from risks like robbery thus will facilitate smooth operation of

business activities

 INFRASTRUCTURE.

The place is well developed with good roads for transportation; good communication channel

and electricity which will help the business operate smoothly

 READY MARKET.

Due to different organization such as Institutions schools, hotels and other small business

around the area will provide readily market.

The address of the business will be

KIBOI ELECTRICAL AND ELECTRONIC SHOP

P.O BOX 2905,

KITALE.

TEL NO: 0708709743

EMAIL: kiboiisaiah@gmail.com

The business will commence in January 2023when the sponsor finishes his course

4
 Automobile
Alsaint Bridgestone electrical shop
academy hotel

Kitale-kapenguria road

Kibomet Digital
Kiboi
police electrical
electrical
station shopss
and

1.9 FORMS OF OWNERSHIP

The car business will operate under sole proprietorship .This will be because of the following

reasons:

The business requires little money to start the business.

DECISION MAKING
The choice of the business will be at your hands hence you can decide when to start and end the

business

There will be job security at the business location because of the police station found in the area.

The owner will be required to start and end the business at his or her free time.

The owner of the business enjoys the profit made alone.

Despite this advantages the business might be encountered by the following

5
UNLIMITED LIABILITY
Your small business in the form of a sole proprietorship is personally liable for all debts and

actions. And like a co-operation your business doesn’t exist as a separate legal entity.

LACK OF FINANCIAL CONTROL

The looser structure of a proprietorship won’t require financial statements and maintaining

company as co- operation .the lack of accounting controls can result in the owner being tax about

financial matters perhaps not getting paid on time

DIFFICULT IN RAISSING CAPITAL

The unlimited investor has less peace of mind concerning the use and security of his or her

investment and the investment is more difficult to formalize.

Starting capital of the business will be 800,000/= .The sources of the business capital will be as

follows:

Members of the family -160,000/=

Friends- 100,000/=

Bank loans-190,000/=

Savings – 180,000/=

Youth development fund – 170,000/=

Members of the family = 160,000 *3600

800,000

=720

6
Friends = 100,000* 3600

800,000

=450

Bank loans= 190,000*3600

800,000

=85.50

Savings =180,000*3600

800,000

=810

Youth development fund = 170,000*3600

800,000

=76.50

7
 contribution

21% 20% member of family

friends
Bank loan
savings
13% youth development fund

23%

24%

1.1.0 BUSINESS TYPE

The business will be dealing with selling of Electrical and Electronic appliances e.g. bulbs,

florescent tubes, batteries, switches, cells, solar panel e.t.c.

The business will also be dealing with offering of m-pesa services

1.1.1 PRODUCT AND SERVICES

The business will be selling quality product to customers. The business product include conduits,

solar panels, batteries, cables, patreces, sockets, switches e.tc

The customers will be served on time to avoid conduction in the shop .The business will also

operate hand in hand with customers by ensuring that there is good communication that is a

polite language to create a good relationship between the buyer and the seller.

1.1.2 JUSTIFICATION OF THE BUSINESS OPPORTUNITY.

SECURITY

8
Due to police station found around there would be routine police patrol daily; during the night

hours. The area will be fenced with electric fence to prevent intruders

ACCESSIBILITY
The appliances will be easily accessible by all the clients

COMPETITION
Due to other business competitors such as Mwangi Electrical shop and Jeri’s Automobile shope,

their will be stiff competition when selling the appliances

INFRASTRUCTURE
There will be a good infrastructure network which enhances a steady supply of electrical and

electronic appliances.

MARKETING
There will be ready market for electrical and electronic appliances due to increased demand on

electricity as the main source of fuel.

1.1.3 INDUSTRY
The business will fall under industry of energy. The industry is widely spread all over the

country. This is because it deals with the generation, production and distribution of energy. The

size of the industry will be medium because of the unavailability of land. The technology being

used in the industry will be modern technology. This technology enhances quick production

services at the manufacturing industry. There will be use of modern machines like computers,

9
GOALS
The business will have both short and long term goals

 Short term goals

Customer satisfaction – the owner will make sure that all customers are fully satisfied with the

appliances offered on them.

Profit – the owner will start enjoying profit within short period of time

Insurance and license- the owner will make sure that the business has the license that is proved

by the government and all the products will have insurance

Quality – all the customers will be offered good quality and services within a short period of

time

 Long term goals

Expansion of the business- the owner will purchase more goods from the producers so as to

attract more customers hence expanding the business.

Employment – more workers will be employed in the shop so as to serve all the customers on

time.

1.1.4 ENTRY AND GROWTH STRAGETY

ENTRY
 Offering good quality

The owner will be offering good quality products to all the clients who will be purchasing

them

 Advertisement

10
 The business will be advertised through radio, newspapers and television so as to market it.

This will make most of the customers to identify where the business is located, goods being

sold and the price.

GROWTH STRAGETY.
 Trained personnel

 The owner will make sure that all employees are trained and they have original documents

 Profit maximization

The profit will be maximized well i.e. expansion of the business and offering services to the

needy

 Customer relationship

The owner will use simple language to be understood by all the customers. He will also make

sure that he has etiquette to all the customers so as to avoid quarrels with them.

11
CHAPTER TWO

2.0 MARKETING PLAN

2.1 POTENTIAL CUSTOMERS

KIBOI ELECTRICAL AND ELECTRONIC SHOP when opened will target the following

customers

 Building and construction companies

This will need the electrical materials such as bulbs, florescent tubes, switches, sockets,

cables, and conduits for installation of light?

 Schools e.g. colleges and institutions

Will need electrical material such as high voltage cable for transmission of current. The

current will be used in various functions like running of heavy machine e.g welding machine

 Hospital and health centers

For the supply of energy in hospitals will need power from generators for the use of lighting

and other appliances such as pumping of water from a well.

The amount of payment for the customers will be through cash because it is easy to access

and cheap thus time saving

PURCHASING PATTERN TABLE.

SERVICE PRODUCTS QUANTITY UNIT PRICE

CABLES 6 ROLLS 1500

CONDUITEES 300 100

MIN-TRUNKS 500 80

FLORESENT TUBES 500 1500

12
BULBS 50 50

HOLDERS 50 50

PATTRESSES 200 160

SWITCHES 250 100

SOCKETS 350 100

2.2 MARKET SHARE

According to the research on the business it was realized that there are a number of electrical

shop within the location which could not serve customers efficiently. However they offer credit

to customers according to tribes

 DIGITAL ELECTRONIC SHOP

Deals with selling of electronic appliances such as radios, television, generators and other

appliances such as solar panel and chloride batteries. The business will be located at kitale

kapenguria road near bridgestone hotel

 AUTOMOBILE ELECTRICAL SHOP.

Deals with selling of electrical materials only e.g. switch bulbs, sockets, florescent tubes,

cables, conduit pipe e.t.c. It is locate In kitale kapenguria road near stage choma

KIBOI ELECTRICAL AND ELECTRONICS SHOP.

Will be dealing with selling of both electrical and electronics material such as

bulbs ,generators ,television , florescent tubes, radio , switch bulb sockets e.tc .The business

will be located in kitale kapenguria road opposite Alsaint academy

From the research the area has 800,000 people but out of this entire people only 230,000 will be

potential customers for Electrical gadgets.

13
The table below shows the market share among the existing business.

BUSINESS NAME NUMBER OF CUSTOMERS

DIGITAL ELECTRONIC SHOP 80,000

AUTOMOBILE ELECTRICAL SHOP. 60,000

KIBOI ELECTRICAL AND ELECTRONICS 90,000

SHOP.

The percentage of existing business is as shown below;

Digital Electronic Shop = 80,000*100

230,000

=34.9%

Automobile Electrical shop =60,000*100

230,000

=26%

Kiboi Electrical and Electronic shop =90,000*100

230,000

=39.1%

14
MARKET SHARE GRAPH

NUMBER OF CUSTOMERS

45

40

35

30

25

20

15

10

0
digital electrical shop SeriesAutomobile
1 electrical
Column1 shop
Column2 Kiboi electrical and electronic
shop

Basing on the current percentage which is 39.1%,the business will serve more customers ,as the

business will expand the market will increase from 39.1 to 50 % .The table below shows

estimated sales;

ITEM/SERVICES UNIT COST QUANTITY NUMBNER OF EXPECTED

SOLD CUSTOMERS SALES

FLORESCENT 1500 5 3 4500

TUBE

BULB HOLDER 50 10 2 100

SOCKET 150 7 1 150

CONDUITE 100 5 1 100

15
2.3 COMPETITION

2.4 POTENTIAL COMPETITOR

The potential competitors are digital electronic shop which will be located along kapenguria

kitale road 5 km from kitale town and 1.5 km from Kiboi electrical and electronic shop and

1km from Automobile electrical shop

It will be followed by Kiboi Electrical and Electronic shop which will be locate around 10 metre

from KITALE _KAPENGURIA road 3.5 km from kitale town.

Automobile electrical shop located 4 km kitale along kitale kapenguria road near bridgestone

2.5 COMPARISON BETWEEN PRODUCTS AND SERVICES

BUSINESS QUALITY WORKERS PRICE TECHNOLOGY

NAME

DIGITAL High Non-skilled Low Modern

ELECTRONIC

SHOP

KIBOI Low Skilled personnel High Appropriate

ELECTRICAL

AND

ELECTRONIC

SHOP

AUTOMOBILE High Non-skilled Low Modern

ELECTRICAL

SHOP

16
2.6 STRENGTH AND WEAKNESS OF THE COMPETITORS
The strategies that will be used to stay ahead of the competition by KIBOI ELECTRICAL AND

ELECTRONIC SHOP are:

Ensure that all workers are trained i.e. they should have experience in the field that they have

been employed. The sponsor will ensure that the business offers products of high quality

compared to other business. All workers will be professional and have skills that they have

gained in their life experience. All the product of the business will have warrant. The business

will use modern technology such as computers. Credit will be offered to all the customers who

purchase most of the products

2.7 ADVETISEMENT AND FORMATION STRATEGY.

2.8 ADVERTISEMENT.
The business will use the following methods for advertisement.

 The advertisement will be through radio.

Mtume Fm is the one which will be commonly used by the business for the

advertisement. The advertisement will be on Saturday evening as from 6pm.It will cost

50,000/= per year. This kind of means will make the information be delivered to the

target group. They will be making of customers aware on the changes of the products in

terms of prices and sales

 Through business television.

Every Monday of the week at 7:50pm after the news, this station will be preferred

because most of the customers used it in watching of the news. This will cost the shop

100,000 per year.

17
2.9 PROMOTION STRAGETY
This will involve all activities done to improve the efficiency of the business in the market thus

will be conducted through the following;

i. The shop will be offering discount on products being bought in large quantities hence

motivating more customer.

ii. The credit will be offered to all the customers who always buy the products continuously.

iii. The promoters will use t-shirts and free sample to those attended to.

iv. The language used to customers will be easily understood by everyone hence creating

good relationship with customers

v. The price will be fair thus motivating the customers

2.2.0 PRICING STRAGETY.

The factors to be considered in setting of prices of the products are as follows;

Quality products: The owner of the business will ensure that he sells products of high quality in

order to attract the customers from the nearby places

Government policy: Paying of taxes and revenue on time and even getting insurance and permit

of the business on time to avoid distraction of government policies

Transport expenses: The sponsor of the business will ensure that, there are tracks and other

vehicles to make transportation of goods and services efficiently.

Labour: All the workers will be paid on time to avoid coalition with anyone.

Methods of direct and indirect will be used in calculating the selling prices in targeting a profit

margin not less than 39.1%

DIRECT METHOD
1. Transport

18
2. Labour

3. Raw material

INDIRECT METHOD
1. License

2. Rent

3. Electricity

Selling price of a conduit= 160/=

DIRECT COST
1. Transport-15

2. Labour -10

3. Raw material-25

TOTAL-50

INDIRECT COST
1. License -20

2. Rent-25

3. Electricity-15

TOTAL-60

Total cost =direct cost + indirect cost

=50+60

=110

19
 Profit margin = 110*39.1

100

=43.01

Selling price = total cost + profit margin

=110+43.01

=153.01

2.2.1 SALES TACTICS.

Kiboi workers will use a simple language which every customer understands while in a

convesation. All customers will have to be explained on how each equipment works and their

advantages. Kiboi shop will also use modern technology to sell and deliver the goods and

products to customers because it is easy and convenient to any person and it is cheaper to access

if needed.

2.2.2 DISTRIBUTION STRATEGIES.

The business will be using the retailers who will be distributing products to the customers.

KIBOI ELECTRICAL AND

ELECTRONIC SHOP RETAILER CUSTOMERS

20
 CHAPTER THREE

3.0 ORGANIZATION/MANAGEMENT PLAN

3.1 ORGANIZATION STRUCTURE

kiboi electrical and electronic shop

Will operate under the following;

Manager, Assistant manager, cashier, cleaners, supervisor, security workers.

BUSINESS MANAGEMENT
The business will employ a manager by a sponsor of the business

QUALIFICATION
I. Aged between 20-30years

II. Have an experience in management field

III. Must be a Kenyan citizen

IV. Must have diploma in Electrical engineering

V. Must be computer literate

21
 DUTIES OF THE MANGER
i. Organizing payment of workers

ii. Supervise workers

iii. Recruiting employees

iv. Decision making.

3.2.OTHER PERSONNEL.

3.2.1ASSISTANT MANAGER
The assistant manager will have the following qualification.

I. Computer literate

II. Certificate in electrical and electronics engineering

III. Ability to speak fluent English and Kiswahili

IV. Must be God fearing

Roles of assistant manager

I. Assistant manager overseer employees and make sure they follow the companies rules and

policies

II. He or she schedule employees and make sure they get paid for hours they worked

III. He or she must be ready to fill in at any given moment to keep things run smoothly.

CASHIER.
The cashier of the proposed business will have the following qualifications

i. Diploma in accounts.

22
 ii. Two experience in the relevant field

iii. Ability to speak fluent English and Kiswahili

Roles of the cashier

i. In charge of purchased product and equipments.

ii. Prepares the budget of the business.

CLEANERS
The cleaner should have the following qualifications

i. Certificate in social and community work

ii. Must be aged between 20 and 30 years

iii. A Kenya citizen by birth

iv. Must have certificate of good conduct

Roles of the cleaners

i. Ensures that the flows are cleaned by moping

ii. Mix water and detergents or acids in containers to prepare cleaning solutions

iii. Dust walls and electrical equipment

iv. Spray insecticides and fumigants to prevent insect and rodents infestations.

23
 SUPERVISOR

Qualifications
i. Diploma in business management

ii. 2 years experience

iii. Computer literate

iv. Speaks more than one language

Roles of the supervisor

i. To manage the business

ii. To ensure that the material are available

iii. To make sure that other employees perform their duties

SECURITY
He or she will have the following qualifications

i. Certificate of good conduct

ii. Form four certificate with a minimum grade of D+

iii. Computer literate

iv. One year experience in working with public security

Roles of security
i. Inspect people coming out of the proposed business

ii. To direct the visitors on where they should go.

24
iii. In charge of security of proposed business

iv. Guard property in case of any violence

WORKERS
They must have the following qualifications

i. Diploma in electrical and electronic engineering

ii. A form four certificate with a minimum grade of D+

iii. Computer literate

iv. Able to speak fluent English and Kiswahili

v. Certificate of good conduct

vi. A Kenyan citizen by birth

Roles of the workers

i. Serve the customers on time

ii. Report the finished goods to the supervisor

iii. Cleaning of the shop and compound where the business is operating from

RECRUITEMENT TRAINING AND PROMOTION

RECRUITEMENT METHOD
The vacant post will be advertised through the use of news papers. The application of the jod will

be conducted by the interested people. The short listed names will be given the interview after

attaining the following qualifications

i. Kenyan citizen by birth

25
 ii. Diploma in business management

iii. Computer literate

iv. Certificate in electrical and electronics engineering

v. Able to communicate more than one language

vi. Aged between 20 and 25 years

vii. Two years experience

Then the best applicant will be selected for the job

TRAINING
The business associates with use the following techniques in training employees

i. Employees will be taken to several seminars in order to acquire skills for the business

ii. Employees will be taken for field works in order to acquire more knowledge about the

business e.g. installation of electric fence

iii. Employees will be trained by other skilled and experienced employers as the business carries

on

PROMOTION
Hard working employees will receive promotion through

i. Mode of payment will be slightly different because of the education level, those with

diploma will earn a high salary than those of lower levels

ii. Employees who have worked in a given post for a long time will be promoted from one post

to another

iii. The skilled employees will be promoted and awarded

26
REMUNERATION AND INCENTIVES

REMUNERATION
Employs will earn their salaries according to their qualifications. Low ranked employees will

be the first to get their salaries in order to earn a living. Mode of payment will be through bank

account because it is easy and convenient method of payment .Allowances will be given to

employees e.g house allowance ,medical allowance and transport allowance .All the

employees who prolong their working time will be given an overtime payment .The payment

will be given on time to all the workers.

The chart of payment is shown below.

TITTLE NUMBER OF BASIC ALLOWANCES GROSS

EMPLOYEES SALARY SALARY

MANAGER 1 40,000 5,000 45,000

ASS 1 33,000 5,000 38,000

MANAGER

CASHIER 1 25,000 2500 27,500

SUPERVISOR 2 17,000 2,000 19,000

SECURITY 3 7,000 1,000 8,000

WORKERS 7 10,000 800 10800

TOTAL 15 107,000 16,300 245,500

3.4.2 INCENTIVES
The business ownership will reinforce the following values to motivate the workers to perform

their duties successfully

27
 i. A day will be set aside for thanks giving to the employees motivate them and feel

appreciated

ii. Workers salaries will be increased annually depending on the business growth and

strategies which will boost the business

iii. Employees will be given insurance by the government so as to perform their duties

interestingly.

iv. Some workers who come from far areas will be given accommodation to avoid lame

excuses

v. A day will set aside monthly for annual parties to motivate all the employees hence

putting more effort on their work

3.5LICENSE PERMIT AND BY-LAWS

3.5.1 LICENSE
The business will require a license from the government so as to be legalized in the county. The

cost of the license will be 600/= and will be renewed yearly

3.5.2 PERMIT
The business will require a permit from the local government for its assurance whenever a

problem shall arise. The cost of the license will be 500 /= and will be renewed yearly

3.5.3 BY-LAWS
The proposed business will have the following rules and regulation for effective and smooth

running of the enterprise

i. All the workers will be disciplined all the time

28
 ii. No taking of drugs and alcohol in the shop for working hours elapse

iii. All the employees should be punctual hence no late coming should be observed.

iv. All the employees should put on the right attire at the right time e.g. should wear gloves ,

overalls and boots while cleaning

3.5 SUPPORT SERVICES

The business will work in hand with Kenya commercial bank to keep its money and loans to

enable it to run smoothly and effectively .Medical allowances will be provided to the

employees. The business will be insured with insurance for effective and smooth running of the

business.

The business will be protected by the security guard from the company called Bed Rock. This

will protect most of the items against theft.

29
 CHAPTER FOUR

4.0 OPERATION/PRODUCTION PLAN

The proposed business will be offering services like fluorescent tube, switches, bulbs, cables,

conduits, sockets and other appliances to the customers to the customers Tools and equipment of

electrical and electronic material will be required for performing certain jobs or task in the shop

e.g weighing balance for measuring the quantity of wood clips ,wood screws and nails

4.1 OPERATION / PRODUCTION FACILITIES AND CAPACITY

For the business to operate effectively it needs the following facilities e.g weighing balance for

measuring the quantity of goods being sold, Transportation device for transporting goods and

services in and out of the shop, wheelbarrow for transportation of goods in and out of the store

The table below shows the equipments to be purchased

Item Unit cost Quantity Total cost

Wheelbarrow 3,000 2 6,000

Pickup 500,000 1 500,000

Weighing balance 5,000 2 10,000

Total 508,000 5 516,000

The named facilities will have a person who will take care of and maintained after every three

weeks.

The business will buy spare parts from nearest shop to save on transport cost. Oiling and

greasing of the movable parts will prevent wear and tear

30
 Store Shop

Manager
Parking

Toilet

Security Reception

4.2 OPERATING/PRODUCTION STRATEGY

Since the items sold are regularly needed KIBOI ELECTRICAL AND ELECTRONIC SHOP to

be operated the whole week which will be decided by the management. The supply of raw

materials should be done regularly .The compound will be of electrical fence for good security

and prevent intruders As Kiboi Electrical shop will need qualified workers who are well trained

and have skills

4.2.1 MONTHLY MATERIAL REQUIRED

ITEM UNIT COST QUANTITY TOTAL COST

Florescent tubes 1500 30 45000

31
Cables 800 20 16000

Conduits 120 50 6000

Wood screws 70 200 14000

Bulbs 150 1000 150000

Holders 50 700 35000

Patresses 50 500 25000

Wood clips 50 1000 50000

Meter box 300 10 3000

Total 3090 3510 344000

4.2.2 OVERHEAD EXPENSES

This is expenses other than business expense that the business will incur. Some of the expenses

include electricity, transport, repair, water bills, rent, labour, insurance, tax

EXPENSES AMOUNT

Electricity 2000

Transport cost 2500

Water bills 1500

Rent 3000

Insurance 100000

Tax 1200

Maintenance 3200

Labour 70000

Total 183400

32
 4.2.3 LABOUR COST
The business will have seven workers in number and their payments will be indicated as shown

below;

PERSONNEL BASIC SALARY ALLOWANCES GROSS SALARY

Manager 20000 5000 25000

Ass manager 18000 3000 21000

Supervisor 15000 2850 17850

Security 3500 1000 3600

Cashier 10000 2000 12000

Cleaners 5000 1500 65000

Accountant 17000 1700 18700

Total 88500 17050 104650

4.3 PRODUCTION / OPERATION PROCESS.

KIBOI ELECTRICAL SHOP will apply the following for the business to produce quality

products. On the arrival of the customers to the business they will find a gate man and register in

the gate book.next they will be requested to go to the customer care where they will be directed

to various section

FLOW CHART

ENTRANCE SECURITY CUSTOMER STORE ACCOUNTS

CARE OFFICE

33 EXIT
4.4 EXTERNAL FACTORS LIKELY TO AFFECT OPERATION PROCESS.
Some factors such as excessive rain will affect the business in a manner that customers won’t

access to goods .Emergency of diseases to business product will also be a major problem since it

will make the products to be of low price. Thus will call for employing skilled personnel who

will help to work out of the problem.

GOVERNMENT REGULATIONS.
The business will get license from town council of Mumias at 2500/= which will be renewed

yearly at 1000/=

34
CHAPTER FIVE

5.0 FINANCIAL PLAN.

Financial plan shows weather the business will have profit or loss in its operation. The owner

will require 800,000 to start the business.

5.1 PRE-OPERATIONAL COSTS

This is what shall be done before the business starts. It will be in terms of transport cost, rent,

getting insurance cover and acquiring materials, permit, electricity, license, water

EXPENSE AMOUNT

Transport cost 2500

Rent 3000

License 1000

Permit 2000

Electricity 2000

Water 1500

Insurance 100000

Total 112000

5.2 WORKING CAPITAL.

Is the amount of money that will be required by the business owner during its operation for it to

operate effectively. To get working capital, one takes current –current liabilities

Working capital = current assets – current liabilities

35
The following table shows working capital for KIBOI ELECTRICAL AND ELECTRONIC

SHOP.

CURRENT ASSETS AMOUNT

Cash in hand 50000

Cash at bank 40000

Debtors 100000

Stoke 150000

Cash sales 60000

Total 400000

CURRENT LIABILITIES AMOUNT

Bank loan 190000

Tax 1200

Creditors 110000

Labour 70000

Total 391200

Working capital = current assets – current liabilities

=400000 – 391200

= 8800

5.3 CASH FLOW STATEMENT

ITEM YEAR 1 YEAR 2 YEAR 3

CASH SALE 60000 90000 1500000

DEBTOR 100000 100000 100000

36
RENT 36000 36000 36000

SALARY 70000 70000 70000

ELECTRICITY 2000 2000 2000

ADVERTISEMENT 5000 50000 50000

TAX 1200 1200 1200

PAYMENT OF 110000 110000 110000

CREDITOR

LOAN PAYMENT 19000 190000 190000

TELEPHONE 6000 6000 6000

TOTAL
PARTICULARS AMOUNT
571200 622800 2032800
Capital 300000

Add purchases 65000

Goods available for 325000

sale
5.4 KIBOI ELECTRICAL AND ELECTRONIC
SHOP PROFORMA INCOME STATEMENT
Less closing stock 180000 FOR TH E YEAR ENDING DECEMBER 2023
Proforma income statement is a statement which shows
Cost of goods sold 145000
all the profit / loss in a certain business
EXPENSES

Salaries 70000

Electricity 2000

Transport 2500

License and permit 3000

Advertisement 50000

Tax 1200
37
Total 128700

(16300)
 PARTICULAR AMOUNT

Sales 685000

Less cost of 145000

goods sold

Gross profit 145000

Less expenceses 128700

Net profit 16300

Tax 16% 2608

Net profit after 13692

PARTICULARS AMOUNT
tax
Capital 300000

Add purchases 67000 5.4.1 KIBOI ELECTRICAL AND

ELECTRONIC SHOP PROFORMA INCOME
Goods available for 380000
STATEMENT FOR TH E YEAR ENDING
sale DECEMBER 2024
Proforma income statement is a statement which shows
Less closing stock 200000
all the profit /
Cost of goods sold 180000 PARTICULARS AMOUNT
loss in a certain
EXPENSES Sales 835000
business
Salaries 90000 Less cost of 180000

Electricity 2000 goods sold

Transport 2600 Gross profit 180000

License and permit 3000 Less expenceses 148800

Advertisement 50000 Net profit 31200

Tax 1200 Tax 16% 4992

38
Total 148800 Net profit after 26208

(31200) tax
5.4.2 KIBOI ELECTRICAL AND ELECTRONIC SHOP PROFORMA INCOME
PARTICULARS AMOUNT
STATEMENT FOR TH E YEAR ENDING
DECEMBER 2025
Capital 300000 Proforma income statement is a statement which shows

Add purchases 65000 all the profit / loss in a certain business

Goods available for 390000

sale
PARTICULAR AMOUNT
Less closing stock 210000
S
Cost of goods sold 180000
Sales 798000
EXPENSES
Less cost of 180000
Salaries 90000
goods sold
Electricity 2500
Gross profit 180000
Transport 25000
Less expenceses 171700
License and permit 3000
Net profit 8300
Advertisement 50000
Tax 16% 1328
Tax 1200
Net profit
39 after 6972
Total 171700
tax
(8300)
5.5 KIBOI ELECTRICAL AND ELECTRONICS SHOP BALANCE SHEET FOR
THE YEAR ENDING DECEMBER 2023
PARTICULARS AMOUNT

Fixed assets
PARTICULARS AMOUNT
Electricity 24000
Capita; 300000
Rent 36000
Add ; net profit 16300
Tools and 155000
Total 316300
equipments
Long term liabilities
Vehicle 21350
Bank loan 190000
Total fixed asset 236350
Creditors 730000
Current assets
Short term liabilities
Capital 300000
Tax 13200
Cash in hand 689000
Labour 682000
Cash in bank 476000
Total liabilities 1931500
Debtors 575000

Cash sales 685000

Total current asset

Total assets

Balance c/d Balance c/d 793500

Grand total 2725000 Grand total 2725000

40
5.5.1KIBOI ELECTRICAL AND ELECTRONICS SHOP BALANCE SHEET FOR
THE YEAR ENDING DECEMBER 2024
PARTICULARS AMOUNT

Fixed assets
PARTICULARS AMOUNT
Electricity 24000
Capita; 300000
Rent 36000
Add ; net profit 31200
Tools and 3000
Total 331200
equipments
Long term liabilities
Vehicle 100000
Bank loan 190000
Total fixed asset 163000
Creditors 578000
Current assets
Short term liabilities
Capital 300000
Tax 14400
Cash in hand 650000
Labour 1035000
Cash in bank 768000
Total liabilities 1817400
Debtors 655000

Cash sales 835000

Total current asset 3208000

Total assets 3371000

Balance c/d Balance41c/d 1222400

Grand total 3371000 Grand total 3371000

5.5.2 KIBOI ELECTRICAL AND ELECTRONICS SHOP BALANCE SHEET FOR
THE YEAR ENDING DECEMBER 2025
PARTICULARS AMOUNT

Fixed assets
PARTICULARS AMOUNT
Electricity 24000
Capita; 300000
Rent 36000
Add ; net profit 8300
Tools and 3000
Total 308300
equipments
Long term liabilities
Vehicle 100000
Bank loan 190000
Total fixed asset 163000
Creditors 680000
Current assets
Short term liabilities
Capital 300000
Tax 14400
Cash in hand 789000
Labour 1020000
Cash in bank 770000
Total liabilities 1904400
Debtors 982500
Total 2212700
Cash sales 798000

Total current asset 3639500

Total assets 3802500

Balance c/d 42c/d

Balance 1589800

Grand total 3802500 Grand total 3802500

5.6 CALCULATION OF BREAK EVEN POINT OF THE 1ST YEAR 2023
Is a point when the business is either making a profit or loss.

B.E.P = fixed cost *100

Total

Contribution table

Particulars Amount

Fixed cost

Electricity 24000

Tax 13200

Insurance 100000

License 3000

Total 140200

Variable cost s

Tools and equipments 155000

Raw materials 152000

Advertisement 275000

Water bills 16740

Total 598740

43
Total cost = 140200 + 598740

=738940

Total contribution = sale – variable costs

=685000 – 598740

= 862

Total contribution margin = total cost *100

Sales

=86260 *100

685000

=12.6%

B.E.P = 140200*100

738940

=20%

5.6.1 CALCULATION OF BREAK EVEN POINT OF THE 2ND YEAR 2024

Is a point when the business is either making a profit or loss.

B.E.P = fixed cost *100

Total

Contribution table

Particulars Amount

Fixed cost

Electricity 24000

Tax 13200

44
Insurance 100000

License 53000

Total 140200

Variable cost s

Tools and equipments 265000

Raw materials 196000

Advertisement 335000

Water bills 12050

Total 808050

Total contribution = sale – variable costs

=835000 – 808050

= 26950

Total cost = 140200 + 808050

= 948250

Total contribution margin = total cost *100

Sales

26950*100

83500

=3.2%%

B.E.P = 140200*100

948250

45
 =14.8%%

5.6.2 CALCULATION OF BREAK EVEN POINT OF THE 3RD YEAR 2025

Is a point when the business is either making a profit or loss.

B.E.P = fixed cost *100

Total

Contribution table

Particulars Amount

Fixed cost

Electricity 24000

Tax 13200

Insurance 100000

License 3000

Total 140200

Variable cost s

Tools and equipments 263500

Raw materials 17500

Advertisement 355000

Water bills 22800

Total 658800

Total contribution = sale – variable costs

=798000– 658800

46
 = 139200

Total contribution margin = total cost *100

Sales

= 139200*100

798000

=17.4%

B.E.P = 140200*100

139200

=1%

5.7 CALCULATION OF PROFITABILITY RATIOS FOR FIRST YEARS 2023

1. Gross profit ratio = gross profit *100%

Total sales

=145000*100%

685000

=21.2%

2. Net profit ratio = net profit *100%

Total sales

=16800 * 100%

685000

=24.5%

3. Return on investment = net profit *100%

Total investment

=16800*100%

47
 316800

=5.3%

Total investment = capital + net profit

= 300000 + 16800

=316800

5.7 .1CALCULATION OF PROFITABILITY RATIOS FOR 2ND YEAR 2024

1. Gross profit ratio = gross profit *100%

Total sales

=180000*100%

835000

=21.6%

2. Net profit ratio = net profit *100%

Total sales

=31200 * 100%

835000

=3.7%

3. Return on investment = net profit *100%

Total investment

=31200*100%

331200

=9.4%

Total investment = capital + net profit

48
 = 300000 + 31200

=331200

5.7.2 CALCULATION OF PROFITABILITY RATIOS FOR 3RD YEAR 2025

1. Gross profit ratio = gross profit *100%

Total sales

=180000*100%

798000

=22.6%

2. Net profit ratio = net profit *100%

Total sales

=8300* 100%

798000

=1%

3. Return on investment = net profit *100%

Total investment

=8300*100%

308300 =2.7%

Total investment = capital + net profit

= 300000 + 8300

=308300

49
5.8 DESIRED FINANCING
DESCRIPTION AMOUNT

Pre operational cost 112000

Working capital 8800

Fixed assets

Rent 3600

Electricity 24000

Tax 13200

Insurance 100000

License 3000

Total 297000

5.9 PROPOSED CAPITALIZATION

SOURCE OF INCOME AMOUNT

Members of the family 160000

Friends 100000

Bank loans 190000

Savings 180000

Youth development funds 170000

50