BUSINESS PLAN

PRESENTED BY: JOSEPH MARANGA KARANI

ADMISSION : 36532

INDEX NO : 2071012577

PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULFILMENT FOR AWARD IN DIPLOMA IN
BUILDING AND TECHNOLOGY

NAME OF INSTITUTION : THIKA TECHNICAL TRAINING INSTITUTE

EXAMINATION SERIES: JULY 2023

SUPERVISOR: MS MARYANNE NJERI

0723292882

i
 DECLARATION
I declare that this is my original work copy and has not been presented by any other
candidate.
JOSEPH MARANGA
SIGNATURE………………………………………
DATE……………………………………….

The research project has been submitted for examination with my approval of college
supervisor.
MADAM:
SIGNATURE:
DATE:

ii
 ACKNOWLEDGEMENT
I would like to give thanks to my parents for giving me their financial support throughout
the production of this work.

I will not forget to acknowledge my classmates and friends for their sincere support and
advice.

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 DEDICATION

I dedicate this business plan to my family, parents, my brothers and sisters for giving
their financial and moral support and encouragement.
I also wish to extend my dedication to my friends for their encouragement and
contribution in one way or another and also not forgetting my coursemates.

Contents
iv
DECLARATION....................................................................................................................................... II

ACKNOWLEDGEMENT........................................................................................................................... III

DEDICATION......................................................................................................................................... IV

EXECUTIVE SUMMARY............................................................................................................................ VII

CHAPTER ONE........................................................................................................................................ 1

BUSINESS DESCRIPTION......................................................................................................................... 1

1.1BUSINESS NAME..................................................................................................................................1
1.2 BUSINESS LOCATION AND ADDRESS...........................................................................................2
1.2.1 BUSINESS ADDRESS.............................................................................................................3
1.3 FORM OF OWNERSHIP................................................................................................................3
1.4 TYPE OF BUSINESS.......................................................................................................................4
1.5 PRODUCT AND SERVICES.............................................................................................................4
1.6 JUSTIFICATION OF OPPORTUNITY..............................................................................................4
1.7 INDUSTRY....................................................................................................................................5
1.8 BUSINESS GOALS..........................................................................................................................5
1.9 ENTRY AND GROWTH STRATEGY................................................................................................6

CHAPTER TWO....................................................................................................................................... 7

MARKETING PLAN................................................................................................................................. 7

2.1 CUSTOMERS.................................................................................................................................7
2.2 MARKET SHARE............................................................................................................................8
2.3 COMPETITION..............................................................................................................................9
2.5 PRICING STRATEGY..........................................................................................................................13
2.6 SALES STRATEGY........................................................................................................................14
2.7 DISTRIBUTION TECHNIQUES......................................................................................................14

CHAPTER THREE................................................................................................................................... 15

3.0 ORGANISATION/ MANAGEMENT PLAN............................................................................................15

3.1 KEY MANAGEMENT PERSONNEL......................................................................................................15
3.2 ORGANIZATIONAL STRUCTURE............................................................................................17
3.3 OTHER PERSONNEL...........................................................................................................................18
3.4 RECRUITMENT/ TRAINING AND PROMOTION.................................................................................18
3.5 REMUNERATION AND INCENTIVES...................................................................................................20
3.6 LICENSE / PERMITS AND BY- LAW.............................................................................................20

CHAPTER FOUR.................................................................................................................................... 22

OPERATIONAL/ PRODUCTION PLAN..................................................................................................... 22

4.1 PRODUCTION FACILITIES AND CAPACITY..................................................................................22

4.1.3 REPAIR AND MAINTENANCE....................................................................................................22
4.2 PRODUCTION STRATEGY........................................................................................................23
4.2.1 PRODUCTION, DESIGN AND DEVELOPMENT............................................................................24
4.2.2 MONTHLY MATERIAL REQUIREMENTS...................................................................................24

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 4.2.3 MONTHLY LABOUR REQUIREMENTS.....................................................................................25
4.2.4 MONTHLY PRODUCTION COST.........................................................................................25
4.3 PRODUCTION PROCESS..............................................................................................................25
4.4 REGULATIONS AFFECTING BUSINESS.........................................................................................26
CHAPTER FIVE.........................................................................................................................................27
FINANCIAL PLAN.....................................................................................................................................27
5.1 PRE-OPERATIONAL COST...........................................................................................................27
5.2 WORKING CAPITAL ESTIMATION................................................................................................27
5.3 CASH FLOW PROJECTION FOR YEAR 2028........................................................................................28
PROJECTED CASHFLOW STATEMENT FOR THE YEAR 2029.....................................................................29
CASH FLOW PROJECTON FOR YEAR 2030.................................................................................32
5.4 PROFORMA INCOME STATEMENT....................................................................................................36
5.6 BREAK EVEN POINT ANALYSIS..........................................................................................................38
5.7 PROFITABILITY RATIOS.....................................................................................................................39
5.8 DESIRED FINANCING.........................................................................................................................41
5.9 PROPOSED CAPITALIZATION.............................................................................................................42

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EXECUTIVE SUMMARY.
1.0 BUSINESS DESCRIPTION

The name of the business TRIPLE J ELETRIC PUMPS AND SERVICES

The business will majorly deal with selling Electric Pumps and services

The business will be ran on the sole proprietorship basis for easy management.

The business is located along Thika Town few meters from Thika sub county
head quarters Garrisa road along a building called West plaza.

2.0 MARKETING PLAN.

The customers to the business will include, Thika market residents, Mbiri
administration police, just but to mention a few.

The business expects to take 56% of the market share that is 8000 people out of
15,000 in the area.

In order for the business to overcome their competitors the price of the goods and
service will be slightly less than those charged by its competitors.

3.0 ORGANIZATIONAL/ MANAGEMENT PLAN.

The business will comprise of the following personnel; The manager who is the
sole proprietor, other assistants in the business will be marketing supervisor who
will have a diploma in marketing, Accounts clerk who should have a diploma in
accounts and in addition must have a certificate and above in C.P.A Secretary
having a certificate in secretarial and a security officer, a driver both having
certificate in their area of specialization.

4.0 PRODUCTION PLAN

The business will require ksh 30,000 major on major not minor. Kenya shillings
for the purchase of production facilities which will include phase testers, grinders,

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 multimeter, pliers. Furthermore the business will enhance key maintenance
approaches i.e. preventive and routine maintenances.

5.0 FINANCIAL PLAN

The business will expect to meet the pre-operational costs worth 22,850 Kenya
shilling working capital of Ksh 85,900, Kshs 729,300 and Kshs 735,000 for
working years one, two and three respectively.

The business will also be expected to meet the following ratings, contribution
margin 60.25% breakeven of sales of Kshs 873,029.05, gross profit margin of
82.88%, 23.03% and 76.84% for years 1,2 and 3 respectively. The return on
equity for the three consecutive years is expected to be 16.85%,14.85% and
12.6%.

viii
 CHAPTER ONE

BUSINESS DESCRIPTION
The business will majorly deal with the electrical accessories that is buying and
selling to customers at domestic and commercial levels. The business will be ran
on the basis of sole proprietorship headed by the owner himself as the manager.

1.1BUSINESS NAME.
The name of the business will be TRIPLE J ELETRIC PUMPS AND SERVICES. I came
up with the business name because I want my enterprise aims to top into the growing
demand for high quality Electric Pumps and services in both residential and commercial
sectors. The name has also simple pronunciation to the customers.

BUSINESS LOGO
I chose this logo because it clearly shows that the enterprise will be dealing with specific
(Electric Pumps and services) construction materials which can be detected on the logo.
The purpose of this business is to outline the key components and strategies for
establishing a successful Electric Pumps and services enterprise in Kenya.

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1.2 BUSINESS LOCATION AND ADDRESS.
TRIPPLE J ELECTRIC PUMPS AND SERVICES ENTERPRISE will be a
locally owned and operated business. It will be focusing on retails and distribution
of Electric Pumps and services. It will be located along Thika town few meters
from Thika Sub County Headquarters Garrisa Road. It will be along a building
called West plaza, opposite shell petrol station. Our target market will include
home owerners, contractors, architects and interior designers seeking a wide range
of tiles options and premium paints for their projects.

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1.2.1 BUSINESS ADDRESS
 One will identify the business through the following address

EMAIL ADDRESS :tripplej115@gmail.com

WEBSITE :www.triplejenterprise.co.ke
TEL NO :0798449854

1.3 FORM OF OWNERSHIP

The business will be owned by the proprietor because of the following
advantages.

 The proprietor will be the overall boss of the business thus he is the final
decision maker on any issues that arises basing on the business. This also
creates easy time for the proprietor to get the final solution unlike in
partnership form of business where every individual has to contribute in
finding a solution on any matters arising in the business.

 The proprietor enjoys the profit alone thus motivates him to work hard
towards the expansion of the business.

There is high secrecy in the business because the matters will be handled by the
proprietor and remains with him alone.

Besides the advantages above the sole proprietor will be disadvantage through the
following.

 The business owners suffer losses alone.

 It will be difficult to delegate duties.

 In case of any absentees from the owner who is the controller of the
business then the business might stop working.

 Low rate of expansion for the business only one person is supposed to
contribute towards the success of the business.
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 Basing on the disadvantages mentioned above the owner of the business will
employ the following techniques so that to overcome them.

The business will employ personnel basing on their qualifications as far as the business is
concerned.

The business will lias with the banks in order to acquire loans in case there is shortage of
money.

1.4 TYPE OF BUSINESS

The proposed business will majorly involve in the buying and selling of Electric
pumps accessories like different types of electric pump e.g standby generator ,
centrifugal pumps, submersive pumps gear pumps diaphragm pump etc.

The business will also lias with the residents in order to carry out installation for
them in their houses and even in institutions in the area. Training for installation
practice will also be done to those who will the interest.

1.5 PRODUCT AND SERVICES.

TRIPPLE J ELECTIC PUMPS AND SERVICES will specialize in the buying
and selling of electrical equipments. The goods will be sod to people nearby as far
as outside the country basing on their demand. High quality products and services
will only be offered in order to attract more customers.

Furthermore transport and installation service will be offered to customers. Those

customers who will buy goods in large quantities will be given discounts and free
transport to them.

Finally there will be training offered to those people who may have interest in
turning such like business and they will be demanded to pay for the training, for
example installation. Practice will be offered as a course to people on order to
enable them carry out installation of electricity in the peoples houses.

1.6 JUSTIFICATION OF OPPORTUNITY

After sale service will be considered first to customers as it will provide mutual
understanding between the customers and the business.
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 Training will be offered to the employees of the business in order to update them
with the new technological changes on the market. The business is also
strategically positioned in that it can serve a wider geographical area. High
security, good transport networks, good communication and high population
around the area are additional favors to the business.

High initial costs for starting the business will also add uniqueness to the business
because there is non in the area who have such like a business, many people travel
long distances in searching of the electric pumps equipments thus the business
will be a great relieve.

1.7 INDUSTRY.
The business is designed in a manner that it is both commercial and service
nature. This implies that it will serve the customers near Muranga town and
extend up to outside the country (export) basing on its demand and availability of
the products.

There are certain activities that the business will not venture in to. For example
processing of products but it will rather buy the already made product.

1.8 BUSINESS GOALS

The business will aim at both short term and long term goals.

Short term goals.

 To establish the business goals and win their competitors within the shortest time
possible, it should be within three months.

 To provide good quality products and services to customers.

 To acquire qualified skilled personnel.

 To discover more within the business fraternity by its employees and customers.

Long term goals.

5
  Expansion of the business by opening several branches within the country
and even outside the country in order to gain more profit.

 The business will also aim at maximizing the profit.

 Further training to employees will also be given in order for them to be

aware of the new technological changes.

1.9 ENTRY AND GROWTH STRATEGY.

The business will be made known through the following techniques:

Through media, the business will be advertised three times per week in order to alert the
customers be aware of the business.

Posters and signposts will be put in several areas along the road heading to different
places so that people can understand easily where the business is.

Displaying some of the products on the market.

Also, the owner intends to expand their business after flourishing. They intend
to expand their premise, increase the stock and employ more workers. Pricing
will be such that the products, services and appliances will be as affordable as
possible.

6
 CHAPTER TWO

MARKETING PLAN.
TRIPPLE J TILES AND PAINTINGS ENTERPRISE will employ several tactics in
selling the goods and services in order to overcome their activities i.e.

Promotion – will be done by free samples to customers, advertising through several

medias like Kangema fm, Inooro FM, Citizen TV among other media in order to alert
customers about the business.

Price – The price of the good will be as per the demand of the customers for example, the
high demanding goods will be charged higher and vice versa but in general the price of
TRIPPLE J TILES AND PAINTINGS ENTERPRISE will be slightly less as compared
to other competitors in order to attract customers, comparatively those customers who
will buy goods in bulk will be offered a discount otGher than those who will buy one
commodity.

Distribution – Those customers who will buy good in bulk will be offered free transport
up to their areas of residation while those who will buy few commodity will be left with
them to carry them all along.

2.1 CUSTOMERS.
Potential customers will include institutional customers, commercial customers and
domestic customers.

Institutional customers.

This will include Muwasco water company, mumbi Girl secondary school,
Magunas supermarket, mukuyu muranga resident Muranga district hospital among
others. They are expected to buy goods in bulk for example generator equipments,
generators almost each year because of the new constructional structures.

7
Commercial customers.

A number of customers will develop some interest in buying of goods from the firm
because of good quality and quantity produced from the business in order to go and
sale them to other people on retail prices. Such like customers will be given
discounts on goods bought from the business. Those customers will therefore be
promoting their business as well as sending goods close to their customers.

(iii) Domestic customers.

These are regular customers which goods can be offered to them on cash or on
credit. These are the customers whose residents are within Muranga market. Since
they are regular customers the business is sure of them coming back for more
products. These customers will have on account book where records of credit
products are made. They will indicate the date, when the products were offered, the
quantity, name, cash and when to pay, finally the signature of the buyer and the
seller. Some of these domestic customers will include, teachers, doctors, business
men and Muranga prison.

2.2 MARKET SHARE.

The residents of the location of the business have a very positive view and
expectations of the goods and services offered by the business thus the business
looks forward for a very good turn-up of customers hence high rate of expansion.
Below is a table that shows how the market will be shared among its competitors.

NUMBER NAME OF THE PERCENTAGE TOTAL

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 BUSINESS SHARE NUMBER OF
CUSTOMERS

1 TRIPPLE J ELECTRIC 50% 7,500

PUMPS AND
SERVICES

2 DANMAX ELECTRIC 25% 3,750

PUMPS DEALERS

3 NYUTU DEALERS 15% 2,250

4 OTHER SMALL-SCALE 10% 1,500

BUSINESSES

TOTAL 100% 18,000

2.3 COMPETITION.
Danmax Electrical pumps dealers and Nyutu Dealers are the only key
competitors to the business though they are disadvantaged and advantaged as
analyzed below. These two businesses do compile with PATMAX
ELECTRICAL PUMPS DEALERS directly by offering similar goods and
services.

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 STRENGTH AND WEAKNESS ANALYSIS TABLE.

BUSINESS STRENGTH WEAKNESSES

NAME

TRIPPLE J Produce good quality products. Lacks modern facilities in running

ELECTRIC the business.
Have good communication to
PUMP AND
the workers and customers. Low motivation of staff (workers)
SERVICES
thus killing their moral.
Have qualified and skilled
personnel.

Enough security.

Better payment to the workers.

DANMAX Centrally situated at a ready Harassment of workers every time

ELECTRIC market place. thus demoralizing them.
PUMP
Have qualified personnel. Poor quality of goods and services
DEALERS
offered.

Poor communication to the

workers and customers.

NYUTU Have modern machine. Have poor communication to both

DEALERS
Have better ways of motivating
staff i.e. better pay.
Have goods in large quantity.
customers and workers.
The business have unqualified
skilled personnel

OTHER Direct contact with the Lack of adequate capital o goods

SMALL customers hence low rate of expansion.
SCALE
Good communication. Poor quality of goods offered.
BUSINESSES

10
 Poor transport facilities.

Poor advertisement of their

products.

Low skilled personnel.

COMPETITION ANALYSIS TABLE

BUSINES PRODUC PROMOTIO PERSONNE LOCATIO SIZ TOTA

S NAME T N AND L N E L
SERVICE PRICING

TRIPPLE 5 4 6 5 4 24
J
ELECTRI
C PUMPS
AND
SERVICE
S

DANMA 3 5 4 4 3 19
X
TEXTILE
S

Nyutu 4 4 3 2 1 14
Dealers

Other 2 3 1 2 1 9
11
 Small
Businesses

Total 6 6 6 6 6 36

OVERALL COMPETITION ADVERNTAGE.

From competition analysis research that was carried out TRIPPLE J ELECTRIC PUMPS
AND SERVICE emerges the winner with the following results.

 It has enough capital that enable it to run the business effectively.

 It is strategically situated in that customers can reach the place very easily and
quickly.

 It has qualified, trained and skilled personnel who will perform their duties well
thus better quality goods and services offered.

 It has good communication framework both to customers and employees hence

provide mutual understanding.

METHODS OF PROMOTION AND ADVERTISEMENT.

Advertising.

TRIPPLE J ELECTRIC PUMPS AND SERVICES willing adopt the following methods
in advertising their goods and services.

Use of agents – The agents will be moving around and talk to people on good products
and services offered from business.

Sign posts – This will be placed at strategic places to show the directors of Mawasa
electrical dealers.
12
Media – The

re will be monthly advertisement on radiobroadcasts stations like Kangema FM, Inooro

FM, Radio citizen Nairobi among others in order to make customers an other people be
aware of the business.

Promotion

For business promotion the following tactics will be used. The business will give
discount to goods and services offered. The business will also take part in exhibition
sand shows this will increase people’s morale. After sale service and giving of
tangible goods to customers will also promote the business.

2.5 PRICING STRATEGY.

The prices of goods and services will depend on the following factors.

Demand – The higher the demand of the produces, the higher the price charge
and the lower the price charge.

Competition – When there is stiff competition on goods and services offered

the business will charge slightly less than their competitors but under less or
no competition then the prices of the commodity will be high.

The quality and quantity of the products – High quality products will be
charged high and vice versa.

Labour – When high labour is used it will lead to high expenditure from the
business thus high prices charged on the goods and services offered.

13
2.6 SALES STRATEGY.
The business will employ selling agents who will not only sale goods to
customers but also to offer service to them.

There will be low prices of goods and services from the business in order to
attract customers and overtake competitors.

Faithfulness after-sale service is also among the tactics that will be offered to
customers in order to encourage and motivate them.

2.7 DISTRIBUTION TECHNIQUES.

The farm will buy one lorry that will be used to distribute goods for long
distances but those domestic customers around the area will be distributed by
agents using bicycles.

14
 CHAPTER THREE.
3.0 ORGANISATION/ MANAGEMENT PLAN.
 TRIPPLE J ELECTRIC PUMP AND SERVICES intends to begin with
maintaining a few full time employees which include: owner manager who is
the sole proprietor himself, marketing supervisor, electricians, shop attendants
who will be the key management personnel and others like business agents
among others.

3.1 KEY MANAGEMENT PERSONNEL

Owner manager (1 post)

Qualifications

 Must have a diploma in Building and constrction engineering

 Must be over 25 years of age.

 Must be computer literate.

 Should be of sound communication in both English and Kiswahili.

 Must have a working experience of not less than five years in the field.

Duties and Responsibilities.

 Recruitment of staff in the business.

 Carry out short-term and long-term planning of the enterprise activities.

 Supervisor all the employees.

 Supervise the business transaction/ develop capital budget

Marketing supervisor (1 post)

Qualifications

 Must be a diploma holder in marketing from a reputable institution.

15
  Must have a working experience of not less than two years. Prefarably in
consruction field.

 Have the ability to handle confidential and sensitive information.

 Excellent interpersonal and communication skills including ability to work in a

multi-cultural team environment.

 Should be decent and have attractive language to customers.

Duties and responsibilities.

 To carry out research and establishing sound marketing strategies in the business.

 Analyzing and regulating the running stock of the business.

 Reporting to the owner manager about the preferences of the customers.

 Establish good relationship between the customers and the business by improving
communication networks.

Electricians (2 posts)

Qualifications

 Should have business skills and traits.

 Should have a working experience of at least two years in installation.

 Must be able to work in any environment without supervision.

 Must have a certificate in installation from a recognized institution.

 Should be trustworthy.

Duties and responsibilities.

 Selling of goods and services to customers.

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  Provision of technical services to customers such as domestic wiring, after sales service like
demonstration of the working performance of electrical goods and appliances.

Shop attendants

Qualifications.

 Should be a hardworking person.

 level education standard and above.

 Must be trustful.

 Should have good relationship with other people.

Duties and responsibilities.

 To ensure the workshop is clean and tidy.

 Assisting in the transportation of goods if there need be.

 Report to the electricians if there is any down faults in the business.

3.2 ORGANIZATIONAL STRUCTURE

MANAGER

MARKETING OTHER
ELECTRICIANS
SUPERVISOR PERSONEL

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3.3 OTHER PERSONNEL
BUSINESS AGENT (1 POST)

Qualifications.

 Should have at least a certificate in marketing from a recognized institution.

 Active and ambitious.

 Good communication skills.

 Self motivated.

 Hard working

Duties and responsibilities.

 Give weekly report to the marketing supervisor on the availability of business

opportunities in the field.

 Assisting the marketing supervisor to implement laid down marketing tactics such
as promotion.

 Reporting to the manager on the results of the implemented marketing techniques

every month.

3.4 RECRUITMENT/ TRAINING AND PROMOTION

Recruitment.

The business staff will be recruited as per the procedures under:-

Advertisement will be conducted through posters, friends, agents and the media.

Successful candidate will be invited for an interview.

There will be open announcement of members who would have qualified.

Training

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 The business will enhance support in training its staff members for efficient
service reproduction and up date them with the new technological changes. This
will be provided as follows:-

Orientation.

New employees will be oriented to familiarize themselves with the operation

and requirements of performance in the business.

On the job training.

In order to be able to catch up with the new technological changes and

competition employees (like electrician) will always be trained on the operation,
handling and maintenance of newly invited electrical appliances on the market,
among other employees.

Apprenticeship.

Untrained yet potential individuals will after recruitment be trained and allowed
to deliver for the business.

Promotion

Promotion in the business will solely depend on the good job performance.

Discipline.

Loyalty of individuals

Good public relations

Field experience

Level of education.

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3.5 REMUNERATION AND INCENTIVES.
JOB NUMBER SALARY HOUSE MEDCAL TOTAL
TITLE PERSONNEL ALLOWANCE ALLOWANC
E

Owner 1 10,000 2,000 p.a 1,000 13,000

manager
1 8,000 1,500 800 10,300
Marketing
2 6,000 1,000@ 500@ 15,000
Supervisor
1 4,000 500 200 4,700
Electricians
1 4,000 1,000 700 5,700
Shop
attendant

Business
agent

Total 6 38,000 7,000 3,700 48,700

3.6 LICENSE / PERMITS AND BY- LAW.

(a) License.

These will include:

Trade license from the trade and industry ministry, municipal council worthy 5,400 p.a
and 1,000 Kenya shillings respectively.

Health certificate from Muranga district level six hospital worthy Kshs. 800 per annum.

Certificate of ownership worth 500 from the Kenya registrar of societies.

(b) By law.

20
 The employees will belong to the national social security fund (N.S.S.F) and
10% of their salary will be catering for this.

The employees will pay a 7% valued added tax (V.A.T) to the government per
annum.

At least every employee will be insured with the Insurance Company Limited
(C.F.C) Kahuro.

SUPPORT SERVICES.

The business will incorporate with the following support associates.

Kabwe and company Advocates of maguna branch

Kabwe “Transparency” Auditing body in

Nduini post office.

The co-operative bank services at 500 shillings p.a Kaharo branch.

The Kenya Power and Lighting Company for electricity provision.

The Muwaso water supplies for water provision.

21
 CHAPTER FOUR

OPERATIONAL/ PRODUCTION PLAN.

4.1 PRODUCTION FACILITIES AND CAPACITY.
TOOLS AND QUANTITY COST OF EACH IN TOTAL COST IN
EQUIPMENT KSHS KSHS

Electrical meters 1 1,500 1,500

Sprit level 1 250 250

Blower 1 2,600 2,600

Phase testers 5 100 500

Fluorescent tubes 10 100 1,000

Grinder 1 1,200 1,200

Rewinding machine 2 700 1,400

Pliers 5 100 500

Total 6,550 8,950

4.1.3 REPAIR AND MAINTENANCE

The following types of repairs and maintenance will be used in the business.

(a) Preventive maintenance.

This will be done regularly on the electrical equipment such as the generator and blowers.

This will include dismantling and cleaning the internal structure of the equipment in
question using a multon cloth wet with petrol or diesel.

Any loose and faulty parts will be tightened and replaced respectively.

22
This maintenance type will be meant to avoid disruptions and minimize, production cost.

(b) Corrective maintenance.

This maintenance type will be instantaneous.

It will be carried out on already faulty and/ but functional to avoid possible
failure.

The maintenance will be aimed at avoiding disruption of services and saving the
available resources.

(c) Break Down maintenance

This maintenance will be carried out on equipments which have already failed.

It will be aimed at reducing losses, due to failure of production.

(d) Regular/ routine maintenance.

Such maintenance will always be scheduled to be carried out at regular equiduration

intervals.

This will promote efficiency of performance.

4.2 PRODUCTION STRATEGY

The following strategies will be observed in the business to ensure maximum
production of goods and services.

Wider stock

Where the owner will strive to keep many of the customers requested goods on
display.

23
 Remuneration.

The business intends to offer better salaries and wages to its employees to
promote and motivate them towards wonderful production of goods and services
to customers. On the job training will also be observed.

Courtesy and faithfulness

Customers to this business will be handled kindly and the business will practice
trustworthiness towards its customers.

After sales services will always be encouraged both within the business premises
and up to the customer’s residences to maximize on the business reliability. The
business will have an agent who will do field promotion.

4.2.1 PRODUCTION, DESIGN AND DEVELOPMENT

Products within the shop will be well arranged and key procedures of service
offers will be adhered to.

4.2.2 MONTHLY MATERIAL REQUIREMENTS

MATERIAL AMOUNT (KSHS)

Soldiering wires 500

Cell tapes 200

Petrol/ diesel 42,000

Detergent 3,500

Total 46,200

24
4.2.3 MONTHLY LABOUR REQUIREMENTS.
PERSONNEL AMOUNT (KSHS)

Owner manager 13,000

Marketing manager 10,300

Electricians 15,000

Shop attendant 4,700

Business agent 5,700

Total 48,700

4.2.4 MONTHLY PRODUCTION COST

PARTICULARS AMOUNT (KSHS)

Material requirement 453,330

Labour requirement 48,700

Trade license 1,800

Health certificate 800

Total 504,630

4.3 PRODUCTION PROCESS

Any customer entering this business will always be:-

Welcomed cordially by the shop attendant.

25
In case of any processing issue the customer will always be allowed to meet either the
marketing manager or the owner manager.

Customers will be allowed to express their needs to the shop attendants and electricians
who will offer goods and services.

At least customers will be thanked for buying and paying for a service or any other
concern and will be allowed to leave at pleasure.

4.4 REGULATIONS AFFECTING BUSINESS

The environment within the location of this business will be kept clean and this will
ensure proper hygiene and maximum work performance.

Customers entering the shop will also be guarded by the shop attendant and security
officers cautioned against any dangerous equipment.

The workers will be allowed to register with the Kenya National Hospital Insurance Fund
(NHIF) to assure them of their health safety.

At least every employee will be insured with the C.F.C Insurance Company.

Workers will be allowed to join workers union in order for them to be aware of their
rights and protection against any problems facing them.

The business will also be insured against thefty and fire in order to have maximum
assurance of sales to customers at any time of demand

The business will also register with the international standard of measurements in order
for it to provide better quality and quantity.

26
CHAPTER FIVE
FINANCIAL PLAN.
5.1 PRE-OPERATIONAL COST.
NUMBER DESCRIPTION COSTS (KSHS)

1 License 500

2 Health certificate 800

3 Certificate of ownership 500

4 Tools, machines and 4,000

equipment

Banking charges
5 500
Electricity installation
6 1,000
Legal fees
7 2,000
Rent
8 1,000
Furniture fittings.
9 1,000

TOTAL 11,300

5.2 WORKING CAPITAL ESTIMATION

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Raw material 14,400 660,000 665,000

Stock of finished goods 15,000 69,500 21,000

Debtors 56,500 49,000

TOTAL 85,900 729,500 735,000

27
5.3 CASH FLOW PROJECTION FOR YEAR 2028

Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Cash sales 62,000 72,150 60,650 71,00 77,000 58,150 63,000 41,650 56,000 60,000 67,000 56,150 744,500
0

Debtors 7,000 10,000 10,000 15,000 7,000 7,500 56,500

Discounts 8,000 9,500 7,000 9,000 9,500 8,500 8,000 10,000 10,500 9,000 9,000 8,000 106,000
received

Total 77,000 81,650 77,650 80,00 86,500 76,650 71,000 66,650 66,650 76,000 76,000 71,650 907,250
0

Cash outflow

Purchase 25,000 30,000 25,000 30,00 35,000 25,000 20,000 15,000 15,000 25,000 25,000 2,000 290,000
0

Electricity 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Wages/ salary 48,700 48,700 48,700 48,70 48,700 48,700 48,700 48,700 48,700 48,700 48,700 48,700 584,400

28
 0

License 450 450 450 450 450 450 450 450 450 450 450 450 5,400

Total 74,650 79,650 74,650 79,65 84,650 74,650 63,650 64,650 74,650 74,650 74,650 69,650 885,800
0

Surplus/ deficit 2,350 2,000 3,000 350 1,850 2,000 1,350 2,000 1,850 1,350 1,350 2,000 21,450

Accumulated 2,350 4,350 7,350 7,700 9,550 11,550 12,900 14900 16,750 18,100 19,450 21,450

PROJECTED CASHFLOW STATEMENT FOR THE YEAR 2029

Loan repayment and interest on loan ends on march this third year

particul JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTA
ars L
Opening 146810 142310 12319 125490 11729 113690 136890 16187 20599 24549 27439 306070 208950
balance 0 0 00 00 00 0 0 00 00 00 00 0 00
Cash 80000 76000 90000 30000 10000 200000 400000 45000 40000 15000 10000 4000O 564000
sales 0 0 0

29
Debtors 20000 30000 20000 40000 40000 20000 30000 40000 40000 20000 20000 50000 568000

Total 176810 154910 15569 149400 14190 158690 196390 19689 24189 27599 31649 347170 271078
cash 0 0 00 0 00 0 0 00 00 00 00 0 00
flow
Cash
out
Pre 150000 150000 15000 150000 15000 150000 150000 15000 15000 15000 15000 150000 180000
operatio 0 0 0 0 0 0 0
nal cost
Purchas 60000 50000 45000 30000 45000 60000 56000 80000 70000 89000 45000 34700 657900
es 0 0
Paymen 20000 3000O 20000 30000 20000 30000 20000 10000 30000 20000 23000 20000 460000
t to
creditor
s
Salaries 47000 47000 47000 47000 47000 47000 47000 47000 47000 47000 47000 47000 30000
and
wages
Rent 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 300000
Electrici 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 4000 65000

30
ty
Transpo 3000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 3000 70000
rt
Insuran 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 60000
ce
Loan 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 60000
payment
Interest 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 15000
on loan
Total 345000 317200 30200 322000 35500 318000 350000 39500 30500 42100 41100 421720 421720
cash 0 0 0 0 0 0 0 0
flow out
Net cash 142310 123119 12549 117290 12689 161890 205990 24549 27439 30607 32837 228906 228906
flow of 00 00 00 0 00 00 00 00 00 00 00 00 00
the
month

31
 CASH FLOW PROJECTON FOR YEAR 2030

particu JAN FEB MAR APRIL MAY JUNE JULY AUGU SEPT OCT NOV DEC TOTA
lars ST L

Openin 2289060 2234060 2107060 2042260 1977360 191366 18540 179636 1738460 16813600 1606160 16813600 211231
g 0 0 0 0 0 00 600 00 0 0 600
balanc
e

Owner 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 60000
s
equity

Cash 45000 60000 100000 1115000 100000 105000 11000 112000 100000 122000 261000 270000 615000
sales 0 0

Debtor 10000 10000 20000 30000 40000 2000 40000 40000 30000 30000 79000 79000 214391
s 600

Total 2299560 2299560 2193260 2197000 2053400 202660 19436 188696 1830860 17742600 1720360 164600 441400
cash in 0 0 0 0 0 0 600 00 0 0 0
flow

32
Cash
out
flow

Pre- 300300 100000 350000 360000 365000 350000 35600 360000 360000 36000 356000 340000 239900
operati 0 0
onal
cost

Purcha 100000 120000 180000 186000 186000 187000 18700 187000 189000 187000 186000 19000 239900
ses 0 0

Payme 150000 1600000 190000 192000 187000 160000 17600 189000 160000 180000 170000 16900 250800
nt to 0 0 0
credito
r

Salarie 47000 47000 47000 47000 47000 47000 47000 47000 47000 47000 47000 47000 456400
s and 0
wages

Rent 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 250000 25000 300000

Electri 2000 2000 2000 2000 200 2000 2000 2000 2000 2000 20000 2000 24000

33
city

Water 2000 2000 3000 1000 1000 24000 3000 1000 2300 2000 2000 20000 19000

Teleph 3000 20000 3000 2000 4000 30000 2000 1000 23000 4500 2000 5000 30000
one

Transp 5000 5000 5000 4000 5000 5000 6000 4000 4000 4000 5000 4000 48000
ort

Advert 10000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
isemen
t

Insura 3000 3000 3000 3000 3000 3000 300 3000 3000 3000 3000 3000 48000
nce

Taxes 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000

Toal 655000 747000 853000 868000 880000 890000 89600 906000 924000 929000 1142000 1253000 104670
cash 0 0
out

Net 2234060 2172360 2042260 1977360 1913660 185406 17963 179636 1738460 16061600 1520760 17693000 203924
cash

34
for the 0 0 0 0 0 00 600 00 0 0 600
month

35
5.4 PROFORMA INCOME STATEMENT.
DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Cash sales 744,750 745,750 807,500

Discount received 106,000 107,000 108,000

Debtors 56,500 57,500 -

Total 907,250 910,250 915,500

Cost of sales 290,000 291,000 295,000

Gross profit 617,250 619,250 620,500

Expenses

Electricity 6,000 6,000 7,000

Wages/ salary 884,400 585,400 585,400

License 5,400 5,400 5,400

Net profit before tax 21,450 22,450 22,700

Provision for tax 25% 5,362.50 5,612.50 5,675

Net profit after tax 16,087.50 16,836.50 17,025

36
 5.5 PROFORMA BALANCE SHEET

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Fixed assets

Furniture 10,000 15,000 20,000

Production facilities 15,550 16,000 18,000

Total 25,550 31,000 38,000

Depreciation

10% on furniture 1,000 1,500 2,000

5% on production facilities 777.50 800 900

Total 1,777.50 2,300 2,900

Total fixed assets 23,772.50 28,700 35,100

Current assets

Cash at bank 20,000 25,000 30,000

Stock 15,000 69,500 21,000

Debtors 56,500 - 49,000

Total current assets 91,500 94,500 100,000

Total assets 115,272.50 123,200 135,100

Current liabilities

Creditors 10,000 10,000 -

Total current liabilities 10,000 10,000 -

Long term liabilities

Bank loan - - -

37
 Owner’s equity 95,272.50 113,200 135,100

Total long term liabilities 95,272.50 113,200 135,100

Total liabilities 115,272.50 123,200 135,100

5.6 BREAK EVEN POINT ANALYSIS

DESCRIPTION AMOUNT (KSHS) AMOUNT (KSHS)

Sales 744,750

Purchases 290,000

Electricity 6,000

Total variable costs 296,000

Contribution 448,750

Contribution margin = Contribution x 100%

Sales

= 448,750 x 100

774,750

= 60.26%

38
FIXED COSTS

Fixed costs Amount KSHS

Wages/ salaries 584,400

License 5,400

Total fixed costs 579,000

Break even of sales = Fixed costs x 100%

Contribution margin

= 579,000 x 100%

60.26%

= Kshs. 960,836.38

5.7 PROFITABILITY RATIOS.

(a) Gross profit margin

= Gross profit x 100%

Sales

Year 1 = 617,250 x 100

39
 744,750 = 82.88%

Year 2 = 619,250 x 100

745,750 = 83.04%

Year 3 = 620,500 x 100

807,500 = 76.84%

(b) Return on equity

= Net profit after tax x 100%

Equity contribution

Year 1 = 16,087.50 x 100%

115,272.50 = 13.96%

Year 2 = 16,836 x 100%

123,200 = 13.67%

Year 3 = 17,025 x 100%

135,100 = 12.60%

40
 (c) Return on investment

= Net profit after tax + Interest on loan x 100%

Total investment

= Net profit after tax x 100%

Owner’s equity

Year 1 = 16,087.50 x 100

115,272.50 = 13.96%

Year 2 =16,836.50 x 100

123,200 = 134.67%

Year 3 =17,025 x 100

135,100 = 12.60%

5.8 DESIRED FINANCING

DESCRIPTION AMOUNT (KSHS)

Pre-operational costs 9,372.50

Working capital (year 1) 85,900

Total desired financing 95,272.50

5.9 PROPOSED CAPITALIZATION

DESCRIPTION AMOUNT KSHS

41
Owner’s Equity 115,272.50

Total capitalization 115,272.50

APPENDIX

42
PIG SITE MAP

43