OLTARARA DAIRIES.

TITLE: BUSINESS PLAN

PRESENTED BY: LORNA SELEINA KOYIE

INDEX NO: 5821010382

CENTER NAME: MAASAI MARA TECHNICAL AND

VOCATIONAL COLLEGE
COURSE CODE: 2819

PRESENTED TO: KENYA NATIONAL EXAMINATION

COUNCIL FOR THE AWARD OF A CERTIFICATE IN DIPLOMA
IN CATERING AND ACCOMODATION OPERATIONS.

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DECLARATION.
I Lorna Seleina declare that this is my original work obtained through research and
technical knowledge from entrepreneur skills and submitted to Kenya National
Examination Council as award of Certificate in Catering and Accommodation.
NAME: …………………………………………..
SIGNATURE: …………………………………. DATE: ……………………………

SUPERVISOR: M.S. OLE SAKAU

SIGNATURE ………………………………………...

DATE: …………………………..………….………

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DEDICATION.
I dedicate this business plan to my parents Mr and Mrs Koyie for their financial support,
encouragement and moral support throughout the study period.
I cannot forget Mr. Sakau for his support towards typesetting of my business plan.
Thankyou.

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ACKNOWLEDGEMENT.
I would like to take this opportunity and honour to acknowledge the contribution of my
entrepreneur lecturer who guided me through this business plan successfully.
With my utmost sincerity, love and respect I wish from the bottom of my heart to
acknowledge the efforts of my fellow colleagues who constantly supported and
encouraged me in compiling this plan.
I am especially grateful to my parent’s efforts who were able to provide with good
atmosphere through moral and material support for the entire period of my studies in
college.
To all, God Bless you all.

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Contents
DECLARATION........................................................................................................................................ii
DEDICATION..........................................................................................................................................iii
ACKNOWLEDGEMENT...........................................................................................................................iv
EXECUTIVE SUMMARY...........................................................................................................................1
1.0 CHAPTER ONE..............................................................................................................................1
2.0 CHAPTER TWO.............................................................................................................................1
3.0 CHAPTER THREE...........................................................................................................................1
4.0 CHAPTER FOUR............................................................................................................................1
5.0 CHAPTER FIVE..............................................................................................................................1
CHAPTER ONE........................................................................................................................................2
1.0 BUSINESS DESCRIPTION...............................................................................................................2
1.1 BUSINESS NAME AND ADDRESS..................................................................................................2
1.2 FORM THE BUSINESS...................................................................................................................3
1.3 TYPE OF OWNERSHIP...................................................................................................................4
1.4 THE PRODUCT AND SERVICES......................................................................................................4
1.5 JUSTIFICATION OF THE OPPORTUNITY........................................................................................4
1.6 GOALS OF OLTARARA DAIRIES.....................................................................................................4
1.7 ENTRY AND GROWTH STRATEGY.................................................................................................5
CHAPTER TWO.......................................................................................................................................6
2.0 THE MARKET PLAN.......................................................................................................................6
2.1 CUSTOMERS.................................................................................................................................6
2.1.1 DOMESTIC CUSTOMERS........................................................................................................6
2.1.2 COMMERCIAL CUSTOMERS..................................................................................................6
2.1.3 INSTITUTION CUSTOMERS....................................................................................................6
2.2. MARKET SHARE...........................................................................................................................6
2.3 METHOD OF PROMOTION AND ADVERTISEMENT.......................................................................7
2.4 PRICING STRATEGY......................................................................................................................8
2.5 SALE TACTICS...............................................................................................................................9
2.6 DISTRIBUTION STRATEGY.............................................................................................................9
CHAPTER THREE..................................................................................................................................11
3.0 ORGANIZATION PLAN AND MANAGEMENT PLAN.....................................................................11
3.1 DUTIES, RESPONSIBILITIES AND QUALIFICATION OF PERSONNEL.............................................11
1. MANAGING DIRECTOR.............................................................................................................11
2. SECRETARY...............................................................................................................................11

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 3. ACCOUNTANT..........................................................................................................................11
4. CLEANERS................................................................................................................................12
5. SALES SUPERVISOR..................................................................................................................12
6. DRIVER.....................................................................................................................................12
7. SECURITY GUARD.....................................................................................................................12
3.2 RECRUITMENT TRAINING AND PROMOTION AND INCENTIVES.................................................13
3.2.1 RECRUITMENT....................................................................................................................13
3.2.2 TRAINING............................................................................................................................13
3.2.3 PROMOTION.......................................................................................................................13
3.2.4 ROAD SHOW.......................................................................................................................13
3.2.5 PERSONAL ADVERTISING....................................................................................................13
3.2.6 RADIO ADVERTISEMENT.....................................................................................................13
3.2.7 INCENTIVES.........................................................................................................................13
3.3 SALARY STRUCTURE...................................................................................................................14
3.4 TARGET POPULATION................................................................................................................14
3.5 SAMPLE SIZE AND SAMPLING PROGRAMS/ TECHNIQUE...........................................................14
CHAPTER FOUR....................................................................................................................................16
4.1 OPERATION AND PRODUCTION PLAN........................................................................................16
4.2 PRODUCT DESIGN AND DEVELOPMENT.....................................................................................16
4.2.1 LABOUR...............................................................................................................................16
4.3 PRODUCTION STRATEGY............................................................................................................16
4.3.1 FINANCES............................................................................................................................16
4.4 EQUIPMENT FOR PRODUCTION.................................................................................................16
4.4.1 OPERATION AREA...............................................................................................................17
4.4.2 MONTHLY PRODUCTION EXPENSES....................................................................................17
4.5 OPERATION PRODUCTION PROCESS..........................................................................................17
4.6 ENVIRONMENT REGULATIONS..................................................................................................18
4.7 HEALTH REGULATIONS..............................................................................................................18
4.8 SAFETY IN THE WORKPLACE......................................................................................................18
4.9 INTERNAL REGULATIONS (RULES IN THE BUSINESS)..................................................................19
CHAPTER FIVE......................................................................................................................................20
5.0 FINANCIAL PLAN........................................................................................................................20
5.1 INTRODUCTION.........................................................................................................................20
5.2 PRE – OPERATIONAL COST.........................................................................................................20
5.3 WORKING CAPITAL REQUIREMENTS..........................................................................................20
5.4 PROJECTED CASHFLOW STATEMENT.........................................................................................23

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5.5 PROFORMA INCOME STATEMENT.............................................................................................26
5.5.1 THE TRADING ACCOUNT.....................................................................................................26
5.6 PRO FORMA BALANCE SHEET....................................................................................................26
5.6.1 ASSETS................................................................................................................................26
5.6.2 EQUITY (OWNER’S EQUITY)................................................................................................27
5.6.3 LIABILITIES...........................................................................................................................27
5.7 BREAK EVEN LEVEL....................................................................................................................27
5.8 EXPECTED PROFITABILITY RATIOS..............................................................................................28
5.9 DESIRED FINANCING..................................................................................................................28

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EXECUTIVE SUMMARY
1.0 CHAPTER ONE
Business description- This chapter includes business name, its location and address.
It also includes the form of ownership and type of business. It gives a detailed description
of the products or services offered justification of the opportunity the industry in which it
is found together with the goals of the business. Description here is the entry and growth
of the business.
2.0 CHAPTER TWO
It describes clearly the customers, the market plan, market share and competition, method
of production and advertising, pricing strategies, sales tactics and description strategy
being used.
3.0 CHAPTER THREE.
This is more about Manager’s qualifications, the number of personnel including their
duties recruitment, training and promotion, employees, renumeration and incentives. It is
clearly explaining the license, permit and by laws. Support services is also explained.
4.0 CHAPTER FOUR.
It takes the following sections, production capacity and facilities, product design and
development. Production strategy, production process and government regulations
affecting production.
5.0 CHAPTER FIVE
5.0.1. Pre- operational cost
5.0.2 working capital
5.0.3. cash flow
5.0.4. Pro- forma income statement
5.0.5. Pro- forma balance sheet
5.0.6. Break-even level
5.0.7. Profitability ratio
5.0.8. Desired financing
5.0.9. Proposed capitalization

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CHAPTER ONE
1.0 BUSINESS DESCRIPTION
I will be the owner of the OLTARARA DAIRIES, Koyie a resident from Rift valley in
Narok county. I am aged 21 years old started school in the year 2006 at Siana primary
school until the year 2015, where I attained a score of 300 marks in my KCPE
examination and later joined Maasai Girls Secondary school for secondary education.
Later, I joined Maasai Mara technical and vocational college where am pursuing a
Diploma in catering and accommodation.
1.1 BUSINESS NAME AND ADDRESS
Business name will be (Oltarara Dairies) which simply means that it is the only best place
any one can get satisfactory goods and services. Oltarara Dairies is quite simple to
understand and easy to be pronounced by both literate and illiterate people in the
community.
The name also explains the type of services and goods that is offered in the business. The
business identification will be:
OLTARARA DAIRIES,
P.O BOX 577-20500 NAROK
PHONE NUMBER: 0721336049
OLTARARA DAIRIES MAP

FROM NAIROBI
BUSINESS LOCATION DEMACOS CLUB

COMPLEX BUILDING

HH
KOBIL PETROL

STATION
TUSKEYS MALL BUILDING J

KIRUBI LODGE
TO NAKURU COUNTY

TO NAROK

NAROK
EQUITY MARRAM ROAD TO

MAIN STAGE TO NAROK

OLTARARA DAIRIES

MMM ~2~
KEY
J- COUNTY SUPERMARKET
HH- COMPLEX BUILDING
MMM- OLTARARA DAIRIES
- DIRECTION

- POLICE STATION

Reasons for locating business in Narok town.

The town is densely populated due to most of the people migrating searching for jobs in
the town. This will enable the business to be common to most of the people who will be
there, they will be aware of the goods and services offered by the business. There is good
network of milk supply, so raw food material will be always available in Oltarara Dairies.
Narok is strategically located and position of attracting many potential customers who
frequently visit the center.
The area has adequate security because it is near the police stations and major
administration offices.
Oltarara Dairies will be good and easy to transport goods due to availability of a good
infrastructure and also good communication network because of availability of telephones
and mobile phones.
The address of Oltarara Dairies will be:
SAFI MLK BAR,
P.0.BOX 577-20500 NAROK,
PHONE NUMBER; 0721-336-049.
1.2 FORM THE BUSINESS
The business will be a sole proprietorship. The owner being participating in daily
activities of the business. The initial capital to start any business will be generated and
obtained as follows:
CONTRIBUTION AMOUNT PERCENTAGE
Personal contribution 200,000 20%
Parents 500,000 50%
Family bank 200,000 20%
Uncle 100,000 10%
TOTAL 1,000,000 100%

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The sponsor of the Safi milk bar will be Lorna Koyie aged 21 years old where I had
gathered more knowledge and experience to run my business.
1.3 TYPE OF OWNERSHIP
Oltarara Dairies will be a sole proprietorship kind of small business. Operation on daily
product that can support the growth of small business to a greater height. The target is to
have domestic customers who will be buying milk and other daily products for
consumption purposes. Oltarara Dairies, is expected to serve its potential customers that
is complex college in nearby shopping centres. Institution customers are schools,
churches and hospitals.
1.4 THE PRODUCT AND SERVICES
The goods and services that the entrepreneur plans to offer including products such as;
i. Yoghurts
ii. Fresh milk
iii. Powdered milk
iv. Curded milk
v. Butter
vi. Cheese

The price of goods will charge supply and on the other hand employees will be paid dairy
for motivational purposes. The main feature of the product produced to be of the highest
quality goods which will intend to attract and retained customers thus the business
expand.
1.5 JUSTIFICATION OF THE OPPORTUNITY
There will be high success of the business since the climatic condition of this are
favourable for livestock keeping, for daily supply of milk.
1. To improve standard of living in that many would be healthy for the start and
community at large.
2. Good infrastructure in terms of road networks joining the farm and the market
place promoting the daily delivery of milk.
3. To create employment for others in our area.
4. Bring high quality and standard services for the people who seem to have been
waiting for such services for so long.
5. Utilizes both the managerial and entrepreneurships skills in business
administration and such I will be able to support goods with fewer risks.

1.6 GOALS OF OLTARARA DAIRIES

1) Provision of employment hence raise the economic growth of the market and
town at large.

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 2) Motivating of employees by increasing their salary and wages and also by
promoting them.
3) Maximize the business aims at offering the incoming best services.
4) To impact of introducing new technology in Oltarara Dairies to provide faster
and quality goods and services.
5) Targeting that all new milk products in the industry are brought to the market.
6) Oltarara Dairies will have computerized all its operations right from point of
sales to stock control system.

1.7 ENTRY AND GROWTH STRATEGY

Several measures will be put so that the business will overcome its competitors and also
gain acceptance in the business area.
Oltarara Dairies will be laying pricing strategies in order to attract more customers.
Most competitors sell their goods at high prices to make more profits.
The business will be setting a slightly lower price so as to attract more customers.
The business will penetrate fast through advertisements within town and outside the town
in order to make it known to people.
Advertisement will be made through magazines newspapers vernacular radio stations;
posters will also be mounted at strategic points such as entrances road process and at
entrance to banks and shops.
High standards of management will also be fully utilized and monitored with employees
being provided with uniforms for identification and hygiene purposes.
This will serve as an additional advantage to other competitors. The Oltarara Dairies will
choose the means of transport that is cheaper and quicker Oltarara Dairies will treat the
customers in the most hospitable way in order to enhance both of the business.
Regular uttering of the business will be exercised all day long for the purpose of
constituency of the customers.

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CHAPTER TWO
2.0 THE MARKET PLAN
2.1 CUSTOMERS
According to research carried out the potential customers of Oltarara Dairies:
2.1.1 DOMESTIC CUSTOMERS
There are customers who would buy products and get services for their own consumption.
Oltarara Dairies targets them since the needs to come back again and again because it is
strategically located. It will attract customers who buy for direct consumption for
example carpentry, masonry teachers and also students. The target age of the potential
customers is from 13 to 60 years since they will be a wide range of products which are
qualitative to them.
2.1.2 COMMERCIAL CUSTOMERS
These are customers who will be buying goods and products in large quantities at a profit.
They include big hardware from the area. These customers will buy from Oltarara Dairies
because it is cheaper and provides quality daily products. The main mode of payment will
be through cash sales and invoices for wholesalers. After sale services will include
transportation of goods to the premises will be offered.
2.1.3 INSTITUTION CUSTOMERS
Most of the customers will fall under this category will be within surrounding institutions
such as; Narok teachers’ college, Maasai girls’ secondary school, Preparatory academy
school and others. I expect to get monthly tender supply which will be paid inform of
cheques or buy on credit and get paid at the end of the month.
2.2. MARKET SHARE
The business will be located in an area with a population of about 150,000 residences. It
is expected to cover 59% of the population because 21% has been occupied by the
existing business dealing with trade. The expected total sales per month are 2.5 million.

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 MARKET SHARE
45
59

50

SAFI MILK BAR CHELSILION MILK BAR BROOKSIDE MILK BAR

COMPETITION
NAME STRENGTH WEAKNESS
OLTARARA DAIRIES  Good transport and  Intensified
communication experience
system.  It is poorly
 Have qualified and established
skilled manpower.  It is new in the
 Business situated in market
busy area where
customers access.
 Offer discounts to
their customers.
BROOKSIDE MILK BAR  Well established  Appetite at high
over the last three production network
years  Sell their goods at a
 Offer transport to higher price
customers  Help poor supply of
 They are financially workers
stable
 Offer quality
products
CHELSILION MILK  Well established 5  Lack of good
BAR years ago transport networks.
 Skilled employees  Poor package of
and well their products.
experienced.  Have poor
 Have well sound supervision of
client base. workers.
.

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Plan to capitalize on competitors.
The business will provide quality and standardized products and services to their
customers than what the competitors do. Safi milk bar will charge relatively low price to
its customers than the competitors.
2.3 METHOD OF PROMOTION AND ADVERTISEMENT
Indore for the business to attract and maintain its customers the following ways of
advertisement has to be used;
a) Radio: Oltarara Dairies will advertise its product through different radio FM
station such as Mayian FM, Osotua Catholic Radio, and Radio Citizen which will
be understood well by the target customers. The advertise will be highlighted
mostly during weekends, during prime time’s such as before and after news to
ensure that they reach the required target. This will attract a monthly fee of three
thousand two hundred shillings only (ksh.3,200 /=) per month.
b) Internet: Oltarara Dairies will have an email address oltarara@gmail.com and a
c) website: www.oltarara.com where it will place photos and give details of the
stationery as well as contacts of the business to the potential customers. All the
orders and comments received through the internet will be attended to
immediately since the website and email shall be browsed regularly during the
day. This will be done at a cost of four thousand Kenya shillings only
ksh.4,000/month.
d) After sale services: Oltarara Dairies will be offering after sale services like
transporting of bulky goods to the customer premises which should charge when
the customers are purchasing milk and its products.

2.4 PRICING STRATEGY

While pricing its products Oltarara Dairies will consider the salary of its employee, water,
electricity and transport expenses not forgetting that it will need to make profits. it will
depend on the demand and supply of the product and the market which will lead to a high
price, while the local demand and high supply will depend on the price. Oltarara Dairies
will make sure that it selects a penetrating pricing strategy that will enable it get and
retain the customers as well as ensure returns on investments. Oltarara Dairies will also
put into consideration the fact that it will pay taxes and also have some expenses on
license. Oltarara Dairies will use discount pricing as one of the pricing strategies this
refers to selling at a straight deduction in prices on purchases during a stated period of
time. Cash discount will be given to customers who will buy in cash and those customers
who buy goods in large quantities will be offered quality discount. This discount will
provide incentives to the customers who buy from Oltarara Dairies. Pricing and
measurement will be set according to the various classes of population. There is the low
income, middle- and high-income earners. The prices should be buyer oriented and
should be slightly lower than of my competitors. This is illustrated by the table below:

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 NUMBER ITEM QUANTITY PRICE(KSH)
1 Fresh raw milk 1 litre 50.00
½ litre 25.00
¼ litre 13.00

2 Processed fresh 1 litre 55.00

milk ½ litre 30.00
¼ Litre 15.00

3 Vanilla 500 grams 100.00

straw berry 250 grams 50.00
yoghurt 500 grams 100.00
250 grams 50.00

4 Maasai oil 500 grams 250.00

(traditional butter) 250 grams 170.00
150 grams 120.00

2.5 SALE TACTICS

Oltarara Dairies will employ the following sale tactics;
Personal selling: This is where the employees will interact briefly with customers.
customers may seek clarification on the prices and type of new products they want to
purchase.
Indirect selling: this is a sale tactic whereby sales would be made through proxies. In
this case suppliers will not have to be known.
Direct selling: Oltarara Dairies will offer over the counter sales where a customer
will make an order and get on the spot services. This will be prompt with very
minimal delays. In order to make this sales tactic effective Oltarara Dairies intends to
motivate its sales men and employees by offering them good salaries, attractive
allowance lunches and transport to their home.
2.6 DISTRIBUTION STRATEGY
Distribution is the process of spreading out or determining goals or services from the
manufacturer to the consumer. Oltarara Dairies will use intermediaries or middle men to
make the stationery available when and where the consumers or users want. In addition,
this will help the business to meet the needs of the target market. The following
distribution channel will be used in Oltarara Dairies.
One level channel
This channel consists of one intermediary or middle man. This channel help in reduces
the cost of the stationery as the bigger the channel the more the cost.in addition the
retailor will get a high profit margin since he is getting the stationery direct from the
Oltarara Dairies, unlike the situation where he would be going through a wholesaler.

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 FARMER RETAILER
CONSUMER
PROMBLEMS FACING DISTRIBIUTION OF MILK PRODUCTS
i. Bad roads during rainy season may read to delay of goods.
ii. Customers complaining on the prices or bargaining too much.
iii. Electricity cut off of disconnection.
iv. The rising cost of animal feeds and fuel prices are bound to affect the business to a
great deal because milk prices are bound to be raised and this will reduce profit
margin and raise prices of the product.
v. Spoilage of milk products.

SOLUTIONS TO PROMBLEMS FACING TO DISTRIBUTION OF MILK

PRODUCTS
1. Improvement of infrastructure.
2. Proper handling and storage of milk products
3. Proper packaging and careful transportation
4. Insuring of the products
5. Lowering price to the maximum to enable the customer buy milk product from
Oltarara Dairies.

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CHAPTER THREE
3.0 ORGANIZATION PLAN AND MANAGEMENT PLAN.
OLTARARA DAIRIES will run as a sole proprietorship and entrepreneurship will be
managed by the owner as the manager. The business will have nine workers who will be
posted to work according to the knowledge and skills.
3.1 DUTIES, RESPONSIBILITIES AND QUALIFICATION OF
PERSONNEL.
1. MANAGING DIRECTOR.
QUALIFICATION
I. A diploma in sales marketing or certificate with 5 years’ experience.
II. Aged 30 years and above.
III. Possesses knowledge in daily products
IV. Should be self-motivated
V. Be innovative
DUTIES AND RESPONSIBILITIES OF MANAGING DIRECTOR.
I. Will be the overall managers of the Oltarara Dairies i.e direct all business
activities
II. Report all staff of the business.
III. Organise for employees to attend seminars.
IV. Will be holder of signature.
2. SECRETARY.
Safi milk bar will have one secretary preferably a lady to record all day’s operations of
the business.
QUALIFICATION.
I. Should be good in English and Kiswahili and also the local language.
II. Must be a computer literate.
III. Must be 20 years and above.
IV. Must have completed and attained a credit in secretarial studies.
DUTIES AND RESPONSIBILITIES.
I. Keeping business records for future reference.
II. Recording the customers urgent message and passing information to the manager.
III. Recording, receipt, invoice and any other document in Oltarara Dairies.
3. ACCOUNTANT.
QUALIFICATION.
I. He/she must have a Diploma in Accountancy and Pass in KATC LEVEL 2.
II. Must be honest and trustworthy.
III. Must be a computer literate.

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 IV. A person with 2 to 3 years’ experience.
DUTIES AND RESPONSIBILITIES.
I. Keeping books of account.
II. Prepare the annual financial records.
III. Provide the payroll.
4. CLEANERS
QUALIFICATION.
I. He/she should be a holder of K.C.P.E certificate.

DUTIES AND RESPONSIBILITIES.

I. Ensure all the compound is clean.
II. Ensure everything is in good condition.
5. SALES SUPERVISOR.
QUALIFICATION.
I. Must be a certificate holder in Sales and Marketing.
II. Be aged between 20 to 25 years.
III. Be a good public speaker.
DUTIES AND RESPONSIBILITIES.
I. Keeping daily sales records.
II. Distributing safi milk bar and related products to customers.
6. DRIVER.
QUALIFICATION.
I. Should be 35 years and above.
II. Should have a valid Driving License and a Certificate of Good Conduct
III. Must be a good communicator and have good human relations.
IV. Should be a person of integrity.
DUTIES AND RESPONSIBILITIES.
I. Transporting daily products to various destination.
II. Ensure the vehicle is clean, good mechanical condition.
III. Ensure has all the insurance covers and other documentations required.
7. SECURITY GUARD.
QUALIFICATION.
I. Must be having a KCSE certificate.
II. Should be well trained.
DUTIES AND RESPONSIBILITIES.

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 I. Ensuring everything is going as intended by the firm.
II. Maintain peace and order in the firm.
III. Provide security in the firm.

3.2 RECRUITMENT TRAINING AND PROMOTION AND INCENTIVES.

3.2.1 RECRUITMENT.
The process of recruitment is as advertising the job opportunities to the members of the
public through posters, local media newspaper and other methods of advertisement. For
one to qualify for the post he/she has to fulfil all the qualification or training is done.
Those who have applied for the job will be shortlisted and a fixed date place and time of
interview. After the interview those who will have succeeded will be given the
opportunity later whereas unsuccessful participants will be given a regret letter.
3.2.2 TRAINING.
Successful applicants will be trained through orientation and taking them to seminars
during the period of work. This will improve the skills and experience of workers and
exchange programme when work is not fixed.
3.2.3 PROMOTION.
Promotion of employees will be done considering those qualification performance. It is
done where one is perfect in the area of work hence the salary rises in connection to that
training one has undergone, he/she is promoted to another invite.
To evaluation of the performance of employees is against the set standards. Evaluation of
data will be obtained from the state of business and the key management personnel, keen
observation of employee.
3.2.4 ROAD SHOW.
This will be done by employees and the satisfied who will create awareness and
popularity of the Oltarara Dairies. This method is cheap and effective as the cost to be
used is transport cost.
It will cost 1000 shillings per month.
3.2.5 PERSONAL ADVERTISING.
Oltarara Dairies will ensure that brochures and handouts are distributed to local flower
forms, learning institutions, market place, shops and supermarkets in order that casuals
and potential customers get to know the existence of Oltarara Dairies and also come and
enjoy our excellent services.
3.2.6 RADIO ADVERTISEMENT.
By use of media either in the local dialect- MAA or Radio Citizen. This can be effectively
done by incorporating captions of athletes return from the Olympic games spiced by a
little song and dance to capture the attention of the listeners.

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3.2.7 INCENTIVES.
Breaks – the employee of Oltarara Dairies will be given a break of 10:30 am and 430 am
and 4:00pm.
Off duties – the employee will be given 2 to 3 days long weekend for many months.
Trips – taking them for trips once in a year.
Allowance – the firm will have set a certain amount to boost each and every employee in
the firm.
Loans – such as to pay school fees, emergencies, hospital bills and allowing them to form
trade union and to be members of the firm and other SACCOS.
3.3 SALARY STRUCTURE.
N DESIGNATION NUMBER OF STAFF MONTHLY
O SALARY
1. Accountant 1 15000
2. Secretary 1 12000
3. Sales supervisor/ 1 10000
Promotion personnel
4. Security Guard 1 5000
5. Driver 1 6000
6. Cleaners 2 5000
Total 7 53000

3.4 TARGET POPULATION

TARGET POPULATION NUMBERS
EXECUTIVE HOUSEKEEPERS 40
HOUSEKEEPING STAFFS 50
SUPERVISION OF HOUSEKEEPING 50
DEPARTMENT
LINEN ATTANDANTS AND HOUSEKEEPING STORE 60
CONTROLLERS
TOTAL 200
3.5 SAMPLE SIZE AND SAMPLING PROGRAMS/ TECHNIQUE
Given the target population of the study is retrenched and survivors of retrenchment of
the most appropriate is simple random sampling.
Sampling gives an idea when selecting several elements in a study population in order
that similar conclusion can be made concerning the complete population.
In this simple random sampling small proportion of the population was selected. Previous
researcher such as (orodha 2001), Muganda (2000) have recommended that the minimum
sample size from the population should be 30% of the entire population. So, in
housekeeping department the following respondents were selected; executive
housekeeper, housekeeping staff or employees. A simple of 60 members of staff out of a
total population 200 employees was studied.

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Table 3.4 sample distribution.
A B C
Target population population Sample
Housekeeping staffs 60 30
Executive housekeeper 30 15
Supervisor’s in 30 15
Housekeeping department
Human resources 20 15
personnels
Total 120 60

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CHAPTER FOUR.
4.1 OPERATION AND PRODUCTION PLAN.
This chapter gives an outline of the entire production plant facilities to be used,
equipment and other capacity operation area, source of finance for the business, labour
expenses, production process and rules regulations as pertains the business in terms of
health, environment and internal rules governing the business.
4.2 PRODUCT DESIGN AND DEVELOPMENT.
OLTARARA DAIRIES will supply its product to customers which include learning
institutions, supermarkets, flower farms, shops, and kiosks. The range of product will be
produced by the proprietor at her depots and Olekarau centre. The same shall be
transported to Ntulele centre, Tasaru, and Er- ekule centres where it will be stored in the
proprietor’s business warehouse at Tumaini Building where all the transactions will take
place. The salesmen will be around to deliver the products as per the customer’s order.
Packing will be in such a way that it will accommodate every customer example, it will
be in a quarter, half, one, two, five litres and a cup and available both while fresh and
processed
Products will be displayed on a glass counter so that it is available to the customers.
4.2.1 LABOUR
Oltarara Dairies will employ both skilled and semi – skilled will be Marketing Managers,
Accountant, Sales Personnel and Semi – skilled will be the security guard, driver and
caretaker.
4.3 PRODUCTION STRATEGY.
Oltarara Dairies will aim to satisfy its customers at all levels. Products should always be
fresh. Milk being a very perishable product should be handled with high hygiene and
proper storage equipment used to prolong its very limited shelf – life. The product will be
sold on first products first sold basis.
4.3.1 FINANCES.
The finances of the business include any money used to purchase required facilities and
the initial sources of capital that will be required. The sources are thus stipulated below.
PERSONAL SAVINGS 400000
FAMILY BANK LOAN 300000
TAIFA SACCO LOAN 500000

In the course of the business, the proprietor will realize some cash in terms of profit
through sales of the products.
4.4 EQUIPMENT FOR PRODUCTION.
Facilities are resources needed to ensure the smooth flow of work. The enterprise will
purchase two milk coolers, 2 freezers, a computer and its accessories for records keeping

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and cash book registers to records sales everyday coolers and fridge will be monthly
serviced maintained to avoid breakdown by locally available technicians and the manager
will look for specialized machines to service them.
4.4.1 OPERATION AREA.
OLTARARA DAIRIES will operate at Tumaini Building on the ground floor. It is
opposite Uchozi Supermarket and Tuskeys Supermarket. This is a strategic position with
modern infrastructure. The monthly rent will be ksh. 10000 combined with other services
from the town council and electricity and water bills.
The facilities which will be required are:
NO. EQUIPMENT NO. SOURCE UNIT(KSH TOTAL(KSH)
)
1 Cooling system 1 Japan 6000 60000
2 Yoghurt/ mala 2 China 15000 30000
processor
3 Deep freezer 1 Kenya 40000 40000
4 Package machine 1 South Africa 15000 15000
5 Total 7 151100
Table 4.1 shows Equipment required and their cost.
4.4.2 MONTHLY PRODUCTION EXPENSES.
S/NO ITEM TOTAL COST
1 Equipment and other 30000
facilities
2 Regular supplies 100000
3 Transport 10000
4 Packaging papers 10000
5 Licences 30000
6 Electricity and water bills 10000
7 Stationery 5000
TOTAL 195000
Table 4.2 shows monthly production expenses.
Monthly production overhead expenses are only salaries which amount to 50000.
4.5 OPERATION PRODUCTION PROCESS.
1. The milk is received very early in the morning and stored in the cooling plant.
2. When all supplies are delivered, boiling is done and cooled.
3. Boiled cooled milk is separated from the fat and kept in different quantities I.e fresh
milk, milk for mala and milk for making yoghurt.
4. The boiled fresh milk is packaged in different quantities. Mala is processed and also
yoghurt and all packaged and arranged ready for sale.

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 Milk is received from farmers

Boiling is done and cooled.

Separation of milk and fat

Boiled fresh milk packaged in different quantities.

Yoghurt and mala are processed and packaged.

Fat is boiled, filtered and packed.

4.6 ENVIRONMENT REGULATIONS.

NEMA Act will be complied with to avoid environmental degradation. The sewage
system will be properly built and man – hole designed to standard. Modern technology
will be embraced as far as environmental conservation is concerned. Dustbins will be
emptied daily and washed and dried. The county Government will collect waste with
monthly payment of ksh. 100 daily amounting to 600 shillings per month. Recycle
packaging will be used to reduce waste.
4.7 HEALTH REGULATIONS.
Workers will be examined after every three months by a Health Practitioner and given a
Certificate under the Public Health Act. This will be done at a Government Hospital and
paid for at a normal rate of ksh. 500.
4.8 SAFETY IN THE WORKPLACE.
All workers will wear white Aprons, white gumboots and use gloves always as they go
about their duties. All workers will be sensitized on safety while in workplace and all
efforts made to involve all employees in development and implementation of health and
safety will be followed to the latter. Fire extinguishers will be placed at strategic points
and all will understand its operation procedures and use. This is important because
employee’s safety and the public are paramount.

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4.9 INTERNAL REGULATIONS (RULES IN THE BUSINESS).
All workers will be at business by 7:30 am except for caretaker who will arrive half an
hour earlier. All will leave at 6:00 pm except for the salesman and accountant who will
make balances of the daily sales/transactions. Business will officially close at 8:00 pm
except on busy days when customers are many especially on weekends and public
holidays.

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CHAPTER FIVE.
5.0 FINANCIAL PLAN.
5.1 INTRODUCTION.
Oltarara Dairies’s financial plan will consist of pre – operational costs, working capital
requirements, projected cash flow statement, pro – forma income statement, pro – forma
balance sheet, break – even level, expected profitability ratios, desired financing and
proposed capitalization.
5.2 PRE – OPERATIONAL COST.
ITEM AMOUNT
Purchase of fixed assets 250000
Machine and Equipment (Refrigerators,
computer,
sealing machine, furniture etc)
Installation of electricity and water etc 35000
Advance, rent payment for 3 months 10500
Business permit/ trade license 14550
Legal fees 5000
Insurance policy payment 35000
Marketing and Advertisement 2000
Total 319550

5.3 WORKING CAPITAL REQUIREMENTS.

Oltarara Dairies’s capital requirements for the first year of operation will be as follows:
ITEM YEAR 1 AMOUNT
Stock of raw materials(raw milk, packaging 130000
papers)
Cash in hand 500,000
Cash at bank 370,000
Total 1000000

ASSUMPTIONS.
Assuming that Oltarara Dairies Sales will be 80% and 20% credit while the purchases
will be at 90% and 10% credit.

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 i. Sales schedule in ksh (Between 210000 – 38000 for twelve months)
MONTHS AMOUNT(KSH)
January 220000
February 230000
March 240000
April 250000
May 260000
June 270000
July 290000
August 320000
September 340000
October 350000
November 360000
December 370000

ii. Purchase schedule in ksh (Between 120,000 to 190,000)

MONTHS (JAN-DEC,2020 AMOUNT(KSH)

Jan 120000
Feb 135000
March 145000
April 150000
May 165000
June 175000
July 185000
August 190000
September 190000
October 190000
November 190000
December 190000
E.G January sales
X= cash sales which is 80%
If total sales for the month of January is ksh 220 000 which is 100% then, cash for
January = 80* 220000 /100 = 176000(cash sales)
Credit sales for January = 20*220000/100 = 44000(credit sales)
Break- even Analysis for the year 2020.
FIXED COST AMOUNT VARIABLE COST AMOUNT
Salaries 378500 Purchases 1500000
Insurance 36000 Transport 108000
Licences 7000 Electricity 42,200
Rent 108000 Loan interest 120000
Water 14400
Total 529500 Total 1784600

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Contribution margin % = total sales – variable costs
Contribution margin= 2708000- 1784600= ksh 923400
Contribution margin= (923400*100)
(2708000) = 34
Break even= (529500)/34= 1227353

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 5.4 PROJECTED CASHFLOW STATEMENT.
YEAR 2019
DETAILS JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
CASH INFLOW KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH
18400 23200 32000 36500
CASHSALES 176000 0 192000 200000 208000 216000 0 256000 0 345000 0 375000 3069000
COLLECTION
FROMDEBTORS 44000 46000 48000 50000 52000 54000 58000 64000 68000 70000 72000 626000
TOTAL CASH 22800 28600 38400 43500
INFLOWS 176000 0 238000 248000 258000 268000 0 314000 0 413000 0 447000 3695000
CASH OUTFLOWS 0
CASH 10868 12768 13504
PURCHASES 90000 92000 94600 99200 98040 101840 0 119320 0 132240 0 139840 1338480
PAYMENT TO
CREDITORS 22950 23760 24840 25920 28080 30240 31320 34560 37260 39440 40500 338870
RENT 21000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 98000
SALARY&WAGES 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 720000
TELEPHONE 1500 2000 1000 2500 1000 1500 2000 1000 1000 1000 1500 1500 17500
ELECTRICITY &
WATER 3000 2500 1500 2000 2500 1500 3000 1500 2000 2500 3000 2000 27000
ADVERTISEMENT 25000 1500 2000 2500 3000 2000 1500 3000 1500 3000 1500 2000 48500
STATIONERY 3000 1000 2000 1500 1000 1500 500 2000 2500 1000 2500 1500 20000
TOTAL CASH
OUTFLOWS 0
10752
NET CASH -5000 39050 46140 48460 59540 64580 73080 89860 99760 103500 0 113660 840150
CUMULATIVE 32585 51547 72649
CASH -5000 34050 80190 128650 188190 252770 0 415710 0 618970 0 840150

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~ 24 ~
 YEAR 2020
DETAILS JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
CASH INFLOW KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH
18400 23200 32000 36500
CASHSALES 176000 0 192000 200000 208000 216000 0 256000 0 345000 0 375000 3069000
COLLECTION
FROMDEBTORS 44000 46000 48000 50000 52000 54000 58000 64000 68000 70000 72000 626000
TOTAL CASH 22800 28600 38400 43500
INFLOWS 176000 0 238000 248000 258000 268000 0 314000 0 413000 0 447000 3695000
CASH OUTFLOWS 0
CASH 10868 12768 13504
PURCHASES 90000 92000 94600 99200 98040 101840 0 119320 0 132240 0 139840 1338480
PAYMENT TO
CREDITORS 22950 23760 24840 25920 28080 30240 31320 34560 37260 39440 40500 338870
RENT 21000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 98000
SALARY&WAGES 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 720000
TELEPHONE 1500 2000 1000 2500 1000 1500 2000 1000 1000 1000 1500 1500 17500
ELECTRICITY &
WATER 3000 2500 1500 2000 2500 1500 3000 1500 2000 2500 3000 2000 27000
ADVERTISEMENT 25000 1500 2000 2500 3000 2000 1500 3000 1500 3000 1500 2000 48500
STATIONERY 3000 1000 2000 1500 1000 1500 500 2000 2500 1000 2500 1500 20000
TOTAL CASH
OUTFLOWS 0
10752
NET CASH -5000 39050 46140 48460 59540 64580 73080 89860 99760 103500 0 113660 840150
CUMULATIVE 32585 51547 72649
CASH -5000 34050 80190 128650 188190 252770 0 415710 0 618970 0 840150

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 YEAR 2021
DETAILS JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
CASH INFLOW KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH
18400 23200 32000 36500
CASHSALES 176000 0 192000 200000 208000 216000 0 256000 0 345000 0 375000 3069000
COLLECTION
FROMDEBTORS 44000 46000 48000 50000 52000 54000 58000 64000 68000 70000 72000 626000
TOTAL CASH 22800 28600 38400 43500
INFLOWS 176000 0 238000 248000 258000 268000 0 314000 0 413000 0 447000 3695000
CASH OUTFLOWS 0
CASH 10868 12768 13504
PURCHASES 90000 92000 94600 99200 98040 101840 0 119320 0 132240 0 139840 1338480
PAYMENT TO
CREDITORS 22950 23760 24840 25920 28080 30240 31320 34560 37260 39440 40500 338870
RENT 21000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 98000
SALARY&WAGES 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 720000
TELEPHONE 1500 2000 1000 2500 1000 1500 2000 1000 1000 1000 1500 1500 17500
ELECTRICITY &
WATER 3000 2500 1500 2000 2500 1500 3000 1500 2000 2500 3000 2000 27000
ADVERTISEMENT 25000 1500 2000 2500 3000 2000 1500 3000 1500 3000 1500 2000 48500
STATIONERY 3000 1000 2000 1500 1000 1500 500 2000 2500 1000 2500 1500 20000
TOTAL CASH
OUTFLOWS 0
10752
NET CASH -5000 39050 46140 48460 59540 64580 73080 89860 99760 103500 0 113660 840150
CUMULATIVE 32585 51547 72649
CASH -5000 34050 80190 128650 188190 252770 0 415710 0 618970 0 840150

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5.5 PROFORMA INCOME STATEMENT.
The purpose of the income statement is to show whether Oltarara Dairies profit or loss in
the first financial year. It will describe how the profit or loss arises.
Oltarara Dairies income statement will start with trading account and then will take into
account all the other expenses associated with the business.
5.5.1 THE TRADING ACCOUNT.
The trading account for the business will show the income from sales and the direct costs
of making those sales. It may include the balance of stocks at the start and the end of
year.
OLTARARA DAIRIES INCOME STATEMENT FOR THE YEAR ENDING 31, 2020.
SALES 3500000
LESS PURCHASES (2026500)
GROSS PROFIT 1473500
LESS EXPENSES
SALARIES AND WAGES 720000
RENT 42000
WATER 18000
TELEPHONE 24000
ADVERTISING 35200
POSTAGE 5000
TRANSPORT 10000
STATIONERY 5000
DEPRECIATION OF FIXED 10000
ASSETS
REPAIRS AND MAINTEINANCE 20000
TOTAL EXPENSES (884200)
NET PROFIT BEFORE TAX 589300
LESS TAX VAT(16%) (94288)
NET PROFIT AFTER TAX 495012

5.6 PRO FORMA BALANCE SHEET.

The balance sheet will reflect the structure of Kule assets and financing sources which
will be used to finance these assets, i.e equity and liabilities.
5.6.1 ASSETS.
They will be physical items which will have a monetary value and will be owned by the
business. They will be divided into two:
1. CURRENT ASSETS.
These will be expected to be realized cash or sold within one year or less in the normal
operations of the business.

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 2. LONG TERM ASSETS.
These will be permanent assets or relatively fixed in nature and will be used by the
business in its operations for the period longer than one year.
5.6.2 EQUITY (OWNER’S EQUITY)
These will represent the owner’s contribution to the business and will be obtained when
liabilities will be deducted from the total assets.
5.6.3 LIABILITIES.
These will be debts owed to the third parties, that is, creditors which will have a certain
maturity date and will have to be paid. Liabilities will be divided into two groups:
1. CURRENT LIABILITIES.
They will be payable within a period of one year or less. (They will be paid back from
current assets)
2. LONG TERM LIABILITIES.
These will be amounts owed and will be payable within the period longer than one
year.
OLTARARA DAIRIES BALANCE SHEET FOR THE YEAR ENDING 31st
DECEMBER, 2020.
CURRENT ASSETS KSHS CURRENT KSHS
LIABILITIES
250000 Creditors 19000
STOCK
Debtors 77812 Accounts payable 69250
Cash at bank 500000 Bank overdraft 40000
Cash in hand 50450
Fixed asset Long term liabilities
Furniture, fittings 600000 Bank 390000
Coolants, computers and printers,
Sealing machine

Less depreciation of fixed assets 60000 Capital

at 10%
Owners’ equity 48175000
Net earnings 495012

TOTAL 1495012 1495012

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5.7 BREAK EVEN LEVEL.
Valid costs are purchases which may include cost of goods sold, sales commission and
delivery charges. For OLTARARA DAIRIES, variable costs will consist of both cash
purchases and payment to creditors.
i. Total contribution margin= 350000-2026500
= kshs 1473500
ii. Contribution margin percentage=contribution margin*100
Sales=1473500*100/1500000
= 42%
The total fixed costs are the operating expenses for the whole year. For Oltarara
Dairies will include rent, salaries and wages, telephone, electricity and water as per
the projected cash flow statement.
TOTAL FIXED COSTS AMOUNT (KSHS)
Rent 42000
Salaries and wages 720000
Telephone 25395
Electricity and water 38165
TOTAL 825000

Breakeven level of sales in shillings.

Breakeven level (in shillings) = total fixed costs/ contribution margin %
825560*100/42
= kshs. 1965619.
5.8 EXPECTED PROFITABILITY RATIOS.
I. Gross profit percentage= gross profit*100/3500000
= 42%
II. Return on equity= Net profit after tax*100/owner’s equity
=405012*100/145000
=341%
III. Return on investment= Net profit after tax*100/1000000
5.9 DESIRED FINANCING.
This will be the total amount of money required to start off the business. This amount will
be derived from the following items:
ITEM AMOUNT(KSHS)
PRE OPERATIONAL COSTS 319550
WORKING CAPITAL 680450
TOTAL DESIRED FINANCING 1000000

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