BUSINESS PLAN

SIR BLIEN ELECTRICAL

AND ELECTRONICS
WORKSHOP

P.O. BOX 6069 GILGIL TOWN

CELL PHONE: 0707477122

PRESENTED BY :EVANS KIPTOO RONO

INDEX NUMBER : 4011030330

INSTITUTE : RAILWAY TRAINING INSTITUTE

PRESENTED TO : THE KENYA NATIONAL

EXAMINATIONS COUNCIL IN
PARTIAL FULFILLMENT FOR THE
AWARD OF CERTIFICATE IN
ELECTRICAL AND ELECTRONICS
ENGINEERING (POWER OPTION)

SUPERVISED BY : MR. MUTAHI

EXAM SERIES : NOVEMBER, 2023

i
 TABLE OF
CONTENTS PAGES
DECLARATION.......................................................................................................i
DEDICATION...........................................................................................................ii
ACKNOWLEDGEMENT.........................................................................................iii
EXECUTIVE SUMMARY.......................................................................................iv

CHAPTER ONE
1.0 BUSINESS DESCRIPTION................................................................................1
1.1 BUSINESS NAME..............................................................................................1
1.2 BUSINESS LOCATION AND ADDRESS........................................................2
1.3 FORM OF BUSINESS OWNERSHIP................................................................4
1.4 TYPE OF BUSINESS..........................................................................................4
1.5PRODUCTS AND SERVICES............................................................................5
1.6 JUSTIFICATION OF BUSINESS OPPORTUNITY..........................................5
1.7 INDUSTRY.........................................................................................................5
1.8 OBJECTIVES OF THE BUSINESS...................................................................7
1.9 ENTRY AND GROWTH STRATEGY..............................................................8

CHAPTER TWO
2.0 MARKETING PLAN.........................................................................................9
2.1 POTENTIAL CUSTOMERS...............................................................................9
2.2 COMPETITION..................................................................................................12
2.3 MARKET SHARE...............................................................................................17
2.4 PRICING STRATEGY........................................................................................18
2.5 SALES TACTICS................................................................................................19
2.6 METHODS OF PROMOTION AND ADVERTISING......................................21
2.7 DISTRIBUTION STRATEGY............................................................................22

ii
CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT PLAN............................................24
3.1 ORGANIZATION CHART.................................................................................24
3.2 MANAGER.........................................................................................................25
3.3 OTHER PERSONNEL........................................................................................26
3.4 RECRUITMENT, TRAINING AND PROMOTION.........................................29
3.5 RENUMERATION AND INCENTIVES...........................................................31
3.6 LICENSING AND REGISTRATION.................................................................34
3.7 SUPPORTING SERVICES AND ADVISORY..................................................34

CHAPTER FOUR
4.0 OPERATION / PRODUCTION PLAN...............................................................35
4.1 INTRODUCTION...............................................................................................35
4.2 PRODUCTION FACILITIES AND CAPACITY...............................................35
4.3 PRODUCTION STRATEGY..............................................................................38
4.4 PRODUCTION DEVELOPMENT AND DESIGN............................................41
4.5 PRODUCTION PROCESS.................................................................................42
4.6 REGULATIONS AFFECTING OPERATIONS.................................................42

CHAPTER FIVE
5.0 FINANCIAL PLAN.............................................................................................43
5.1 PRE-OPERATIONAL COSTS...........................................................................43
5.2 ESTIMATED WORKING CAPITAL.................................................................44
5.3 CASH FLOW PROJECTION..............................................................................45
5.4 PROFIT INCOME STATEMENT......................................................................47
5.5 PROFORMA BALANCE SHEET......................................................................48
5.6 CALCULATION OF BREAK EVEN PROFIT ANALYSIS.............................49
5.7 PROFITABILITY RATIOS................................................................................50
5.8 DESIRED FINANCING......................................................................................51
5.9 PROPOSED CAPITALIZATION.......................................................................52

APPENDICES
APPENDIX I: MAP SHOWING THE LOCATION OF THE BUSINESS...........53
APPENDIX II: GROUND PLAN LAYOUT..........................................................54

iii
DECLARATION

I declare that this business plan is my own original work and it has not been presented by

any other candidate in any institution of higher learning.

NAME : EVANS KIPTOO RONO

SIGNATURE:

DATE :

DECLARATION BY THE SUPERVISOR

I hereby certify that this business plan is submitted to the Kenya national examinations

council with my approval as the supervisor

NAME : MR. MUTAHI

SIGNATURE:

DATE :

i
DEDICATION

I dedicate this business plan to my lovely parents for financial and moral support during

my entire course. Be blessed abundantly

i
ACKNOWLEDGEMENT

I appreciate the support offered by my Supervisor Mr. Mutahi for his competence and

guidance in giving me the direction in producing this business plan successfully and not

forgetting my dear parents for their financial and moral assistance . Be blessed all

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 EXECUTIVE SUMMARY
BUSINESS DESCRIPTION

The proposed business will be SIR BLIEN ELECTRICAL AND ELECTRONICS

WORKSHOP. The business will deal with various electrical and electronic services around

Gilgil town. The business will be located along the Old Highway Opposite the Five Kenya

army Riffles Barracks which is 700metres from Gilgil Town. The business will be a sole

proprietorship form of business run and owned by Evans Kiptoo. It will be under the

engineering Industry and will be guided by long and short term goals. A capital of

1,500,000/= will be used as working capital for the business

MARKETING PLAN

After a thorough market research, the entrepreneur found out that he will be dealing with three

competitors in sharing of the market share. The competitors will be Mwaura Services and

Products, Kims Electrical and Electronics and Gilgil Tech Electrical Services with a market

share of 35%, 5% and 155 respectively. A price list of products and services will be clearly

shown with a 50% profit margin. Sales tactics will be applied to outwin my competitors.

ORGANIZATION AND MANAGEMENT PLAN

Sir Blien Electrical and electronics store will be run and managed by the owner Mr. Evans

Kiptoo and helped run the business by other seven employees who will include head of

finance, technician supervisors, secretary, technician, driver, cleaner and a security guard.

Their duties and responsibilities are clearly indicated and a salary of 103,800 for all

employees will be paid on monthly basis

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OPERATIONAL / PRODUCTION PLAN

For the business to run smoothly without hitches in its operation the following will have to be

emphasized. Production facilities and capacity, production strategy, regulations affecting

operations, production design and development and production process. Machines and

equipments will be services on monthly and yearly for smooth operations. A well laid ground

plan for employees is clearly shown with each employee having his/her own office . a

flowchart showing the service process for business premises is as shown below

The producer The Supplier Procurement Payment of

the products

Customers feedback To the customers

FINANCIAL PLAN

The business will require a capital of kshs 1,500,000/= to start. The amount will be sued in

buying all equipments and machines for business operations. A working capital of kshs

632,540/= will be applied for year one. A Contribution margin of 99.9% will be achieved with

a breakeven point of Kshs 1,835,5050.05 units, a Gross profit percentage of 97.7%, return on

equity of 0.08% and a return on investment of 187.5%. This will shows that the business will

be making profit and not a loss

v
 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The business name will be SIR BLIEN ELECTRICAL AND ELECTRONICS

WORKSHOP. It will be owned by EVANS KIPTOO RONO aged 23 years of age. The

business name will be a clear identification of what the business entails and what it will be

dealing with various electrical and electronic services around the areas it operates in.

Table 1.1 Educational Background

YEAR INSTITUTION QUALIFICATIONS

2019-2021 Railway Training Institute Certificate in Electrical and Electronics

Engineering (Power option)

2014-2018 Koelel High School Kenya Certificate of Secondary Education

2005-2013 Sitotwet Primary School Kenya Certificate of Primary Education

The proprietor has no relevant experience in the business that has is going to start but the

qualifications he got from the railway training institute on electrical and electronics

engineering which will help him in the running of the proposed business

The proprietor intends to hire someone to teach him on the types of motors to be used on

electrical due to the lack of experience

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 Table 1.1.2 Sponsors contributions towards the proposed business

Source Amount (Kshs) Percentage (%)

Personal 650,000 43.3

5 Kenya Riffles 400,000 26.7

family and friends 200,000 13.3

Loans 250,000 16.7

TOTAL 1,500,000 100

Present Occupation/ Experience

The proprietor is currently perusing a Craft Certificate Course in Electrical and Electronics

Engineering (Power Option) at Railway Training Institute. The course is intended to end

on November 2021.

1.2 BUSINESS LOCATION, AND ADDRESS

The business will be located along the old highway opposite the Five Kenya army

Barracks which is 700metres from Gilgil Town. This place is less densely populated with

people doing small businesses especially in electrical services and there is the main Kenya

Power and Lightning office.

The business located will just be beside the tarmac rod and a railway line is beside it. The

area is well supplied with electricity therefore the store will be in a good position. The

business location will act as a good and central point for a ready market as the materials

which will be needed by the people nearby the 5 Kenya Riffles and the Kenya Power

company will be available in the store. The neighouring schools will also act a s a ready

market.

2
Map showing the location of Sir Blien Electrical and Electronic Store

Kenyatta Naivasha
Avenue GDH
GTI

EB DEB BH

SE

GSS
SIR BLIEN
ELECTRICAL KPLC
AND
ELECTRONICS
STORE GTS

GSS

CB

5KR KHS

Key To Nakuru
GDS
K.H.S Koelel High School
5KR Kenya Army
Riffles
G.G.S Gilgil Garrison School
G.D.S Gilgil Day
School Railway
Line
D.E.B District Education Board Primary
G.D.H Gilgil District Hospital
G.T.I Green Tough Estate
B.H Buffalo Horne Hotel
E.B Equity Bank
C.B Co-operative Bank
S.E Sierra Estate
KPLC Kenya Power and Lighting
Company GTS Gilgil Township School
GSS Good Shepherd School

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1.3 FORM OF BUSINESS OWNERSHIP

The owner proposes a sole proprietorship of business. He will be the overall manager

being aided two other department manager and finally the technician. The sole

proprietorship provides the following advantages;

a) The business is not capital intensive

b) There is easy planning and management

c) Business decision are made quickly

d) All profit are enjoyed by the owner

The sole proprietorship also has disadvantages

a) The business successes will be depending on the owners hard work

1.4 TYPE OF BUSINESS

The business will focus on electrical and electronics services, deal on the following areas;

a) Selling of electrical materials like electrical tools such as phase tester, electrical tool

box, screw drivers, electrical motors, cables of different sizes depending on the

customers interest or choice, switches, lightning systems

b) Repairing of faulty electrical gadgets in different capacitors

c) Motor winding, rewinding, dismantling, repair and sell the rewinded motors

d) The business specializes in repair and selling of home electronics especially home

entertainment electronics. leasing of services like lighting systems, music stereotypes,

music systems used in occasions like weddings, political functions, funeral services

and schools functions and national functions and gatherings

4
1.5 PRODUCTS AND SERVICES

Sir Blien Electrical and Electronics Workshop will majorly offer on electrical. The

business willbe involved in electrical services to different customers in Gilgill Town. The

business will take tenders from different institutions within and outside the town.

To ensure a good and healthy competition, the owner will constantly check the new and

upcoming trends in electronics and electronic products from like online advertisements

and getting new emerging electrical tools in the market. This will give the owner a

privilege and a step ahead of others.

1.6 JUSTIFICATION OF BUSINESS OPPORTUNITY

The art of providing electrical services in Gilgil area will greatly be profitable. The people

who are living in the area, the estates the schools, the army barracks to make the place

suitable for the proposed business store.

Customers who will be in need of electrical services will be highly welcomed so s to boost

the awareness of the business existence in the area and its offering of electrical services to

satisfy potential customers needs

The location of competition in the location is less compared to the town centre which is

about 700metres from the proposed business site. As per intensive research done by the

owner, the sole business operating as for now has no enough skills in the electrical

business so there is no great challenge imposed by the emerging business. It is a great and

rewarding opportunity for the owner

1.7 INDUSTRY

The business will be acting as a commercial and a service store as it will be based on

purchasing materials tools and equipments to sell them to customers as well as the services

to institutions like repairing and motor rewinding

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 The size of the business will be a medium sized business that will have no more than 10

workers and have two departments that will make its operations efficient

The two departments are as follows. The owners and the finance department and the

electrical services and customer services department

The technology to be used in the business will be both labour and capital intensive because

of hand in hand for smooth running of the business. It will recruit both the skilled and

unskilled labours. The most skilled will handle the intensive and the most complex task in

the business which will be financed and offering electrical services in the store.

The capital requirement for the business to start as calculated will be ksh 1,500,000/=

This will ensure that all the requirements that will aid in the starting up of the business are

readily available in time to ease the set of the proposed business to try to meet the high

standard set by other competitors in the in the electrical and electronics industry.

The industry faces a lot of seasonal factors that tends to change the way industry works.

Some of the factors are

- Climate change

- Government policy

- Security

1.7.1 The trends and Prospects of the Industry

The global electrical services growth has been in arise 2013 and the growth has been high

compared to the gross domestic products (GPD). The following are the trends seen at

electrical services industry.

- Better safety equipments

- Well connection of motors and electrical machines

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 The prospects seen at the electrical industry are as follows

- Creation of jobs

- Infrastructure projects will be the bigger driver to the market growth

The business operating under electrical industry do face and still will face competition

among themselves. What distinguishes them is the trends they tend to enforce.

1.8 OBJECTIVES OF THE

BUSINESS Objectives

The primary goals of this business will be;

- Provide quality, excellent services that will meet and exceed customers expectations

costs efficiency within agreed time frames

- Build relationships with communities where we do business as part of our stakeholders

industry

- Build a portfolio of sustainable business project

- Review and measure our growth and impact periodically aligning business strategies

with government initiatives and polices

Short term objectives

- Approval of the business done from our customers will be an important part of the

business objective

- Strive to produce excellent results in every business transaction that we do in terms of

quality and durability

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 Long term goals

- Employees relation and productivity

- Profitability

- Specific improvements in the organizations competitive positions

1.9 ENTRY AND GROWTH STRATEGY

The owner intends to create awareness to the people around Gilgil. This will be done by

putting advertising posters and boards banners along Gigil junction and along the Nakuru

Naivasha Highway. The posters and banners will give out the location and services that

will be offered and even the prices of the common services which will be slightly lower

than those offered and even the price of the common services which will be slightly lower

than those offered by the other electrical stores and businesses

The area where the business is situated is growing at a faster rate especially houses are

being built and those are general expansion. There will be great success in the first 2years

of operation in the areas. When the business will start to grow and also the increase of

buyers, there will be an addition of workers to cab for the extra work and increase

efficiency at work, purchasing of product in bulk and expanding.

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 CHAPTER TWO

2.0 MARKETING PLAN

The purpose of this chapter is to cover the costs incurred before initiating the business. The

business will use small billboards, posters, banners and magazines to advertise its

business.

2.1 POTENTIAL CUSTOMERS

Potential customers will be those customers who will be in need of our services frequently.

The customers will enjoy good discounts on services and goods they receive. The

customers will come from all races, ages and tribes. The customers will range from

individual, institutions and commercial customers

2.1.1 Domestic customers

These are customers who will be from the same areas where the business will be located.

The domestic customers will mainly include people like teachers, policemen, bankers,

farmers, residents of the estates and electricians

Age

The business will serve adults or people who will be able to do a business transaction with

ease and comfort without any difficult and the law will be able to act upon the individuals

without leaning to one side if one has not honoured the team and conditions of the business

transactions like paying for the services with the agreed time frame.

Income

The business will serve all the people regardless of their income as long as one is able to

pay for services rendered. The services we will offer will be affordable but if one is not

able to pay at the moment, he or she can have the services he or she wants on credit if he

or she agrees on the terms and conditions of payment

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 Gender

The business will serve all gender without any discrimination. Gender has become a hot

topic where you find some businesses being biased or treating the opposite gender unfairly

hence creating chaos leading to collapse of business. So to promote equality we will treat

all gender with equality no matter the situation.

Education

Education level will not determine how the business will offer services to an individual.

The business will not be selective when offering services on the basis of education

Occupation

The business is located in an areas occupied by middle class people so most people who

will need our services will be the working class who will be our main customers

Religion

The business will serve people from different religions. The area has a lot of Christians

and Muslims hence making the customers to business

Ethnicity

The business site is surrounded by different ethnic group starting from boranas, Somalis,

Kikuyus, Kalenjins, Kisii, Merus and Luos. The business service all these groups equally.

This type of location with many ethnic groups needs harmony and cohesion for smooth

business flow. The area has never gone through any tribal clashes at any point this will

help the business plan of the future with ease.

2.1.2 Institution customers

This areas has institutions and they are schools, hospitals and banks, army barrack. The

institutions will purchase the business products and services by giving out tenders to the

business. The business will offer electrical services to the institutions

1
Koelel High school

This is a public secondary school located 700metres from the business location. The

school has a population of 1800 students of which each form has about seven streams

making the school to have more than 28classrooms. The schools has a lot of dormitories

in order to cater for the number of students. For the teachers, the school has different

departments and the main teaches office on the administration block. The school has two

halls that need enough lighting and sound systems. On the parade ground of the school,

there are speakers when conveying information due to the crowded students. The business

tends to capitalize on that by offering electrical services to the school at an affordable rate

hence making the school the most potential customers.

5 Kenya Army Barracks

This is a government block where the Kenya Army Soldiers do stay and train. It has

different sections whereby there is the work areas and the married quarters. The working

areas covers around 10hectares and the married quarters covers almost 10hectares whereby

there are a lot of buildings making it a source of business. The barracks will be needing a

lot of motors so as to use them as they do travel a lot guiding the country. It will be a

potential customers

District education board primary school

This is a primary school located along the Gilgil Town Road.

It boosts the student population of 600. It has a vast development and also they have a plan

of building enough classes to accommodate the growing number of pupils. In that case

they will need electrical services. The business will market its products and services to the

management and secure a tender to supply electrical services at a cheaper amount.

1
 Gilgil District Hospital

The hospital is situated along Gilgil town way and 1.2 km from the business location. It is

publicly owned hospital and has a bed capacity of 500. It has a regular patient visit of 300

to 700 who came to seek service of the hospital. The hospital intends to bulks another out-

patient unit to make it easier for the hospital to provide services to the patients. The

business will be at hand to help the hospital attain its goal by supplying the hospital with

electrical services when the construction of the new unit commences. The business intends

to offer electrical services of a good price rate because they will have it in bulk .

2.2 COMPETITION

Every business activity has to have competition that promotes new business ideas; new

business trends emerge and the end even create employment. Every business wants to

acquire new customers as it also maintains their previous customers. The business will

face competition from those dealing with the same business activity as Sir Blien Electrical

and Electronics Store and also deal with different business activities. According to the

business owner of Sir Blien Electrical and Electronics Store he will face the following

competitors;

i) Mwaura Services and Products

ii) Kims electrical and Electronics

iii) Gilgil Tech Electrical Services

Mwaura Services and Products

Mwaura services and products is a medium sized business located in Gilgil town along

Kenyatta Avenue next to Cooperative bank. The business specializes in the field of

electrical products and services. The business is runned by an individual who has

employed 5 individuals

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Advantages of the location

Mwaura Services and Products location favors it because it is situated along Kenyatta

avenue hence making it possible for a customer to access the competitor business premises

helps in brand visibility influences a business ability to market itself, the competition it

faces from business

Disadvantage of the Location

i) It has less operating space

ii) Increased burglary cases

iii) Poor drainage system

His strength

i) Possess good information about its market and knows a good deal about the

common attributes of the most periodic customers.

ii) Has free and well designed training programmes for electrical around Gilgil town

iii) He has a strong relationship with home builders. This is due to his quality services

iv) He has extensive industry knowledge and expertise. This is attributed to the field

that he started the business seven years

His weakness

i) Since the business is runned by one individual, he has the difficulty balancing his

limited time between doing jobs which is the source of short term revenue and

business development which affects long term sustainability

ii) The business has a limited marketing budget to develop brand awareness and

visibility within the home community in Gilgil town

iii) The business has poor customer care service and professionalism which are the two

key functions for a business to succeed

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Kims Electrical and Electronics

Kims electrical and electronics is one of the oldest business in Gilgil town. The business is

2 km from the proposed Sir Blien Electronicals and Electrics store site.

The business specializes on electrical services

Advantages of the location

i) Well trafficked road

ii) Improved search engine ranking

iii) Easy marketing

iv) Increased brand visibility

v) Easy access by customers

His strength

The business has been operating for 5 years therefore it has loyal customers. They have

great marketing strategy compared to other business around Gilgil town. They have great

ample parking space for customers

His Weakness

i) Poor after sale services

ii) Employees have low strategy

iii) Poor implementation of strategy

iv) They are to expensive to hire

Gilgil Tech Electrical Services

Gilgil tech electrical services are a large sized business Kenyan Company that has

branches all over Kenya with one branch situated in Nakuru. The business is 3 km away

from where Sir Blien Electricals and Electronics store will be situated at. It provides these

agriculture technologies and services and they are as following;

1
 i) Rain hose irrigation system and installation

ii) Electrical water pumps

iii) Borehole motor drillers

Their strength

i) Has well trained personnel

ii) Well established because of different branches all over the country

iii) Large market share

iv) Satisfying customer services

v) Affordable prices on their goods

Their weaknesses

i) Limited product availability

ii) Inadequate in depth definition of the services given by the business

iii) Limited flexibility in pricing of the company services

iv) Billing issues

v) Low profit margins

Parameter Sir Blien Mwaura Kims Gilgil Tech

Electrical And Services And Electrical And Electrical
Electronics Products Electronics Services
Store
Assets 4 5 3 9

Sales Volume 4 5 3 7

Number Of 10 5 3 10

Employees

Number Of Braches 5 2 1 7

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 How Sir Blien Electrical and Electronics will capitalize from competitor’s weaknesses

- More time will be taken to access the enterprise ability to satisfy its customers by

creating good customer relations. This will help the business make good profit unlike

Mwaura Services and Products

- Training of the working staff will be taken into consideration to ensure all skills and

knowledge that are acquired by the staff are used for the goodness of the business. this

will help the business be a step ahead of its competitors like Gilgil Tech electrical

Services

- Define in depth what we deal with so as to set our customers informed on what they

want without any complications unlike Mwaurah services and products

- Customer care services is paramount. If none cannot have a good customer care

services, he/ she cannot know his/her weaknesses in the field he or she is on

- The business will have a great customer care services so as to keep satisfied coming

back again unlike Mwaurah Services and products who have poor customer services

- Sir Blien Electrical and electronics store will have a good billing systems for efficiency

and for reference unlike Mwaurah services and products.

The business will have a good marketing budget to have a strong brand awareness

compared to Gilgil Tech Electrical Services.

Employees are the heart of the business, if you pay low wages the quality of services that

they will provide will be poor so Sir Blien Electrical and electronics Store will pay its

employees good and favourable wages so as to motivate them to produce quality work

1
 Parameter Sir Blien Mwaura Kims Gilgil Tech
Electrical Services And Electrical Electrical
And Products And Services
Electronics Electronics
Store
Benefits To 5 3 3 5

Customers

Technology 4 3 3 4

Location 1 3 1 1

Management 1 1 1

Distribution 4 1 2 3

Channels

2.3 MARKET SHARE

This is the number of customers who will be distributed among the competitors according

to what they offer. The business will be competing for customers like civil servants,

business men, learning institutions, army barracks and even the government. From a study

carried out Sir Blien Electricals and Electronics store controls 45% of the total population

of customers while Mwaura Services and Products controls 35% of total number of

customers who amounts to 760 customers. Kims Electricals and Electronics control 5% of

the total customer’s population of the 760. Gilgil tech electrical services controls 15% of

the total customer population this showing the three competitors controlling 55% of the

total customers population making for Sir Blien having the most number of customers.

This is a great number for and the number will increase gradually as time goes by if the

business keeps on satisfying its customers.

1
 A pie chart showing market share

15%
Sir Blien Electrical and Electronics

5%
Mwaura Servcies and Products
45%

Kims Electricals and Electronics

35% Gilgil Tech Electrical Servcies

2.4 PRICING STRATEGY

Pricing calculation is important since it will enable Sir Blien Electrical and Electronics

Workshop come up with prices and the pricing of services will be based on the following

factors;

i) Costs – first and foremost, the business will be financially informed. Before settling

the pricing working out the cost involved in running the business. These include fixed

costs (the expenses that will come in every month regardless of sales) and the direct

costs (the expenses you incur by providing and delivering your services)

ii) Customers – knowing what the customers will want from the business services will

they be driven by the cheapest value they receive

1
 Pricing Table

PRODUCT BUYING PROFIT SELLING

UNIT COST MARGIN PRICE

MCB’S 1,200 20% 1,440

Refrigerators 45,000 35% 60,750

Automatic Generators 220,000 50% 330,000

Generators 35,000 25% 43,750

Switches 200 5% 210

Electrical Power Switches 3,000 20% 3,600

Relays 7,000 25% 8,750

Fan Regulators 6,000 20% 7,200

Electrical Tester (Power) 15,000 30% 19,500

2.5 SALES TACTICS

Sir Blien Electrical and Electronics Store will be persistent and will to the development of

the frequent visits of customers. This will help the business have many customers, phone

calls and sending brochures will keep the customers thinking of coming back when they

want to do another purchase. The business will be solving customer’s problems for the

success of the business. Giving solutions to meet customers’ needs will be a great deal for

the business to be able to success and prosper. The business will display before and after

pictures of the previous beneficiaries of business services. The new customers will be

motivated by social proof when customers will be able to view the visible proof they will

be more likely to invest in services.

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 Sales target table

PARTICULARS JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS
Beginning cash 635,000 - - - - - - - - - - - 635,000
Cash sales 250,400 576,200 608,658 620,565 470,325 599,345 600,654 599,985 600,985 595,925 580,750 589,769 6,693,561
Debtors 15,983 36,779 38,722 37,679 38,914 39,611 30,657 38,256 38,340 - - 37,645 352,586
TOTAL CASH INFLOW 902,033 612,979 647,380 658,244 509,239 638,956 631,311 638,241 639,325 595,925 580,750 627,414 7,681,797
EXPENSES
Purchases 350,650 340,645 430,650 402,650 322,870 345,860 304,654 328,780 498,740 452,760 340,870 504,819 4,623,948
Salary 55,000 340,645 430,650 402,870 322,870 345,800 304,654 328,780 290,740 452,740 340,370 504,871 4,119,990
Electricity bills 5,500 2,000 200 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 23,700
Water bills 2,000 2,000 200 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 22,200
Insurance 15,000 - - - - - - - - - - - 15,000
Loan repayment 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 50,600
Maintenance and repair 13,500 - 13,500 - 13,500 - 13,500 - - - 13,500 - 67,500
Telephone and postage 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 13,200
Stationery and printing 2,700 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 33,500
Transportation 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
Drawings 3,000 - 3,000 - 3,000 - 3,000 - 3,000 - 3,000 - 12,000
Miscellaneous 4,000 - - - - - - - - - - - 4,000
TOTAL EXPENSES 467,150 703,890 896,800 828,120 684,840 714,260 648,408 680,160 765,080 927,800 720,840 1,032,290
NET CASH (A-B) 434,883 20,911 249,420 169,876 175,601 75,304 17,097 41,919 125,755 331,875 140,090 404,876

20
2.6 METHODS OF PROMOTION AND ADVERTISING

2.6.1 Advertisement Strategy

Sir Blien intends to use various means to advertise the business. The following methods

will be used.

i) Hosting an event

Hosting an event will be a great way to get people to physically know and to get into

the business which will make them more likely to become customers

The event needs to be fancy and super organized. The business will have a sidewalk

sale outdoor open house to draw even large crowds

ii) Upgrade

The business will offer an upgrade for potential customers to try out the new services.

Offering a new service will have a complimentary upgrade

iii) Posters

Posters will have the business information as follows. The name of the business what

the business will deal with and the business physical location. The posters will be

posted on all major roads in Gilgil and the Nakuru to Naivasha highway. The poster

will be posted for at least for at least 4-8 weeks at a cost of Ksh 10,000/=

iv) Newspapers

The business will be advertised on the daily nation and the standard newspapers. The

advert will talk up half a page, in the advertising section so as to catch ones attention.

The newspapers will advertise the business not only in Gilgil but also across the

country. This will cost the proprietor around Ksh 60,000 per day and the advert will be

published every Monday and Friday for 2 weeks.

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2.6.2 Promotion Strategy

The business will use trade in services each discounts free samples and after sales services

to promote the business.

i) Trade in

In trade in promotion a customers can get a new service by trading a token credit. Any

customers who will purchase services for around Ksh 10,000/= will get a discount of

20% for any services on any other purchase done.

ii) Free business samples

The business will offer free sample that have the business name and logo. The samples

will be calendars, caps, stickers, t-shirts, hoods. The free samples will be given to all

customers who will spend not less than 2000/= on any services provided by the

business.

iii) After sale services

Customers who will purchase or get out products for as low 30,000 will enjoy ater

sales services. After sale services that will be offered include the following, free

transport for goods purchased and free installations.

2.7 DISTRIBUTION STRATEGY

The business intends to operate as a retail business in which the business will deal with

services that come directly from the manufacturer and directly sold to the customers. It

will also offer services directly to the consumer using the business employees. The goods

will be delivered to the business via roads and this will cost the business around ranging

from Ksh 20,000 to Ksh 40,000 a month. It will cost the business roughly Ksh 30,000 –

50,000 to provide Electrical services to clients

2
Challenges anticipated

i) Some customers will fail to pay goods distributed to them as per agreed terms and

conditions

ii) Some customers might change their taste of the need after seeing the services they

ordered, hence making the business face unwanted expenses like the cost of

transportation or wastage of time for the employees who come to provide a plumbing

service for a client

iii) Poor handling of consumer products hence leading to breakage

iv) Poor planning on delivery of a service.

To solve such problems the business will do the following;

i) The business will inform consumer the consequences of not following being and

conditions of payment of goods taken on credit

ii) The consumers will be advised to take view time when they are ordering for a service

so as to minimize wastage of time and money

iii) Proper handling of customers products by the employees of the business when

distributing this will minimize wastage of the business resources and promote

efficiency

2
 CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

Sir Blien Electrical and Electronics Store will be run by a single manager who will be

owner. The owner will be the focal point in the business ensuring the business goals are

met and the business goals are met and the business runs smoothly without hitches. The

manager will coordinate the entire department within the business to enhance efficiency

and to see all the business goals are achieved.

3.1 ORGANIZATION CHART

Organization Chart for Sir Blien Electrical and Electronics Store

GENERAL MANAGER

TECHNICIAN SUPERVISOR
SECRETARY HEAD OF FINANCE

TECHNICIAN DRIVER CLEANERS SECURITY GUARD

2
3.2 MANAGER

The manager of the business will be Mr. Evans Kiptoo. The manager will be the business

owner. He intends to put all his knowledge and experience to the business in order to

achieve the goals set. The manager is 23 years old. The manager is currently pursuing a

craft certificate in electrical and electronics engineering at Railway Training Institute.

Duties and Responsibilities

- Staffing and Management

The manager will be responsible for putting a top notch team in place to operate the

business. This includes recruiting and hiring new staff. It also means training and

developing existing staff. He will write job descriptions, provide feedback and

performance reviews and reward employees with pay benefits and recognition

- Finances

The manager will be responsible for the physical health of the business. It’s up for the

manager to establish a viable business model for how the business will earn money.

The owner will establish budget and sales forecast and make sure the company meets

them.

- Planning and strategy

Establishing the vision and mission for the business. The manager will also

communicate the vision and mission so that employee’s customers are the works

undertaking. As part of planning and strategy, the manager will keep tabs on market

place, trends, competitors and changing customers tastes and needs.

- Recruiting

Recruiting exercise will be done by the manager with the aid of a supervisor. The

manager will ensure qualified and experienced staff are recruited without favoritisms.

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3.3 OTHER PERSONNEL

3.3.1 Technician Supervisor

Sir Blien store will have one supervisor. The supervisor will be a holder of certificate in

electrical and electronics with not less than 3 years of experience. This will help the

business in handling its plumbing services with great quality. The supervisor must portray

good leadership quality and also be a good communicator either verbally or in a written

way.

Duties and responsibilities

- Managing workflow

One of the supervisor’s most important responsibilities will be managing a team. The

supervisors will create and exercise the technician’s workflow or the task required to

complete a job. He will define goals, communicate objective and monitor team

performance.

- Training new hires

When a new employee joins the business, the supervisor should help them understand

their role and support them during their transitions. This include providing workplace

orientation and explaining the business policies or job duties

The supervisor may manage all on boarding activities or they may work with the

human resources departments to make the new hired receive the guidance and any

information they need.

- Creating and managing team schedule

The business will set hours for the entire workforce and the supervisor will not need to

adjust them. However when team member work in shifts, the supervisor will be

responsible for creating schedules

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 - Reporting to senior management

The supervisor will be responsible for reporting team and individual’s performance to

the senior management. He will need to evaluate each member of the business and

record employee punctuality. Performance on goals, professionalism disciplinary

issued adherence to the business policies

- Evaluating performance and providing feedback

He will be tasked with developing or exceeding employee feedback and recognistition

programs might include setting employee and team goals and choosing appropriate

rewards for achievements

3.3.2 Head of Finance

The head of finance of the business will be the individual in charge of the financial matters

of the financial health of the business. He will be a diploma holder in accounting and must

have learnt electrical and electronics with a 2 year experience. The need of finance will

also perform a lot of data analysis and use the result to help advice the manager on how to

increase profitability

Duties and responsibilities

i) Managing the financial reporting for the organization. This includes 5 years

financial plans and all statutory financial reporting

ii) Providing sound financial support and insight to enable the manager to make

critical business decisions

iii) Presentations of financial results and insights to the management

iv) Playing a key role in formulations of the business strategy

v) Managing and overseeing the taxation affairs of the organization and liaising with

the external tax firm for specialists advice

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3.3.3 Secretary

The business secretary will be a holder of a certificate public secretary with not less than a

year experience

Duties and responsibilities

i) Keep records - the secretary office will act as the main store for an information in

the business. All proceedings from other departments will be stored at the

secretary’s office. For any reference the secretary will be able to provide

ii) Processing and printing works – any form of writing that may be needed within the

business will be done by the secretary. The purchase order books the receipts

writing stationeries will be at the secretary’s office

iii) Ensuring meetings are effectively organized

3.3.4 Office Messenger

The office messenger will be a holder of a certificate in sales and marketing and with a 1

year experience

Duties and responsibilities

i) Packaging of material received for dispatch labeling inserting materials in envelopes

and marketing outgoing mail

ii) Photocopying and duplicating services

iii) Assists in the loading, unloading and moving of furniture equipments and cargo office

supplies

iv) Performs of unskilled tasks as helper and messenger

2
3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1 Recruitment

Sir Blien will recruit employees on merit or their education, marital status. Character and

experience. The recruitment process will be advertised through posters and newspapers.

Application from interested persons will be sent directly ot the mangers office. The

manager with the help of the supervisor will decide the number of employees required by

the business and they will be shortlisted. Letters will be sent to those who will be

shortlisted for an interview. The interview will be both in writing and practical. Those who

will qualify will be informed via email and calls

3.4.2 Training

Staff training is the process of training the current staff of the organization for enhancing

the performance of the staff as well as the productivity of the organization. This is also

very important as to can help in ht e professional development or career advancement of

the employees. One important aspect of the business is training the staff as they are of the

valuable assets. It will be mandatory to train the staff with the skills and knowledge

required to meet the business objectives. With the assistance of training, the best will get

from the staff an they are made even more productive by this way job satisfaction will be

achieved and the staff will also retain back hence avoid recruitment. The staff training plan

will be an important aspect of business and will be implemented at regular intervals

Importance of Staff Training

One orientation takes place there will be a need for training of employees in any

workplace in order to improve the capabilities, skills and knowledge of the staff to do a

specific job, staff training will be important. Within the help of such training the quality

performance is gained as output from employees and alsi the thinking of the staff will be

molded.

2
 Staff training will be important for the following reasons;

i) Enhancement in performance. When weakness and shortcomings are identified then

employee will be required to be trained. Hence employee training is important as it

amplified and helps the staff to gain new skills. It has become important for companies

to focus on training needs for individuals

ii) Enhanced productivity. With the state of the are situations, productivity mainly

depends on the technology being used rather than the staff training and development

focusing on how well the employees are making use of technologies. The employees

will be trained on existing technologies where they abandon the out of date ones. By

this way of training work will run in an efficient manner and hence productivity

increase

iii) Tackle shortcoming. These are shortcomings feed by every staff and hence training for

employees will be as Important as it helps them face any shortcoming. Training can be

given appropriately to a specific group in order to turn out skilled

iv) Employee satisfaction. Training is important in an organization as organizations that

arrange for training are said to have satisfied their employees. Training must be ones

that are relevant for employees and they have something to educate themselves

v) They are up to date. Whether it is work training methods or registration there are many

things that keep changing in the workplace with the aid of continuous training the staff

as well as a business do not leg behind and they work at the best everyday and also in

the future.

3.4.3 Promotion

Sir Blien will promote its workers to motivate them and also improve their contributions

towards the business. This will make them feel part and parcel of the business enterprises

and strive to depict good character which make them quality for promotion.

3
 The following will be taken into consideration for one to be promoted

- Goal work ethic – a good work ethic worker is characterized by good priotization skills

punctuality consistency and commitment to continuous improvement. Workers who depict

reliability dedication, productivity, cooperation, character integrity and sense of

responsibility, emphasis on quality discipline, team work professionalism and

respectfulness will get promotion

- Oriented towards solution to problems within the business. It is often stated that there are

two types of people, those who create and those who solve problems. Any employee who

will work to solving problems regardless of their provision should be given an opportunity

to exercise his to her problem solving abilities. This leads to the promotion of the

employee.

3.5 REMUNERATION AND INCENTIVES

3.5.1 Renumeration

Remuneration will be paid to employees of Sir Blien for their labour. Remuneration

intends to provide basic attraction to the business employees to perform their job

efficiently and effectively. Remuneration will lead to employee motivation. Salaries

constitute an important source of income for employee and determine their standard of

living. Salaries affect the employees productivity and work performance. Thus the amount

and methods of remunerations will be very important for both management and

employees. Methods of employee remuneration;

i) Time rate method

ii) Price rate method

- Time Rate Method

under the time rate system, remuneration will be directly linked with their new spent or

demoted by employed of business will be paid a fixed pre-decided amount hourly, daily,

3
 weekly or monthly irrespective of their output. It is a simple method or remuneration. It

will lead to minimum wastage of resources and lesser chances of accidents. This time rate

method will lead to quality output and this method will be a very beneficial to new

employees as they can team their work without any reductions in their salaries. This

method intends to encourage unity as employees of Tenzi Plumbing services. There will be

some disadvantages of time rate method such as it will lead to tight supervision, indefinite

employee cost and lesser efficiency or employee as there will be no distinction made

between efficient and inefficient employees and losses morale of employees

- Piece Rate Method

It is the method of compensation in which remuneration will be paid on the basis of

writing produced by an employee. In this emphasis will be more on quantity output rather

than quality output. Under this system the determination of employee costs per unit will

not be difficult because salaries differ with output. There will be less supervision required

under this method and hence the per unit cost of production will be low. This method will

improve the morale of the employees as the salaries will be directly related with their work

efforts. There is greater work efficiency in this method.

There are some demerits of this method htat the business will face some demerits are; it

will not easily computable and will lead to deterioration in work quality, there will be

waste of resources lesser unit of employees, higher piece rate system will be more suitable

where the nature of work the business deals with will be repetitive and quantity will be

emphasized more than quality. Salary and wages will be offered according to the following

factors;

- Level of education

- Experience

- Job evaluation and performance appraisal

- Job type

3
 - Labour law

Personnel Number Salary Per Head Total Salary Total Annual

Per Month Salary
Manager 1 30,400 30,400 364,800
Supervisor 1 25,500 25,500 306,000
Head Of Finance 1 15,000 15,000 180,000
Technician 3 13,200 39,600 475,200
Secretary 1 9,200 9,200 110,200
Office Messenger 3 6,000 18,000 216,000
Security Guard 2 4,500 9,000 108,000

3.5.2 Incentives

The business will give out incentives to motivate and encourage the employees as they

carry out their duties. Examples of incentives that the business will give are as follows;

a) Bonus ; it will be given above typical compensation after an employee achieves a goal

or target

b) Overtime payment – the business will give out payment at all increased rate for

workers more than the usual number of hours

c) Career development and training. There will be need for the business to emphasize on

employee training intended to help the business to meet its objectives. By coaching and

developing the employee to develop skills for the position he or she wants

d) Annual levels - employee will have annual leave so that they can reduce the tiresome

energy lost during work and increase happiness for them to get back feeling refreshed.

This will lead to increased in productivity and reduced staff turnover and reduced

abseentism including sick leave

e) Recognized and no cash incentives. Employees likes to be recognized in front of their

peers and this makes them thrive

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3.6 LICENCES, PERMITS AND B-LAWS

The business will obtain licenses so as to operate the business. The business will be

registered under the laws of industrialization, trade and cooperatives. By submitting the

documents as stated under trade licenses at 497 the business will be able to get the license

from Nakuru County Council Trade License Department

The business will be renewing its licenses annually. This will costs the business around

Ksh 15,000/= the owner will register the business and obtain a legal permit from Nakuru

electrical and electronics licensing authority and Kenya revenue authority. The permit will

display the name of the business and what the business deals with the location and forms

of ownership and will cost the business 5,500/=

3.7 SUPPORTING AND ADVISORY SERVICES

Coki Technologies

The company will offer the following services to Sir Blien

i) Advertising – on billboards, street banners, Flyers and brochures, street furnitures,

web banners, media placement magazines, newspapers posters and bus stop

banners

ii) Printing – digital printing, screen printing, offset printing, embroidery, heat press

and large forma printing

iii) Branding – colour selection graphics and theme

iv) Graphic designs – image design type based designs, image and type symbols logos

and logo types

v) Digital marketing – marketing the business through all the tools that access the

internet to reach the consumer

3
 CHAPTER FOUR
4.0 OPERATION / PRODUCTION PLAN

4.1 INTRODUCTION

For the business to return smoothly without hitches in its operations the following will

have to be emphasized;

i) Production facility and capacity

ii) Production strategy

iii) Regulation affecting operation

iv) Production design and development

v) Production process/service delivery process

4.2 PRODUCTION FACILITIES AND CAPACITIES

Facilities in a business are very essential for smooth running of its operations. The

business will need enough production facility that will enable the business to stay its

operations

Item Quantity Cost/unit Total cost Supplier

Computer 3 10,500 31,500 Coki Technology

Printer 2 12,450 24,900 Coki Technology

Backup generator 1 32,700 32,700 Atlas Company

Electrical tools and equipments 5 5,650 28,250 Power General Store

Office furniture 6 6,750 40,500 Brinto Time Office

Furniture

Air conditioner 1 20,000 20,000 Refnet Air Conditioner

Total 88,050 177,850

3
Machines and Equipments

Machines and Lease/hire Month/year of Cost

equipments hire/lease

Automatic generator Hire 3 months 120,000

Motors Hire 3 months 90,000

Generators Hire 3 months 90,000

All the machines and equipments will be purchased must have a warranty of not less than

2 years. This helps the business lower its costs of repairing and maintaining the production

machines and equipments

The spare parts of major items will be available locally and the suppliers will be any well

known genuine supplier with vast experience in supplying spare parts that the business

will need

The business space will be owned by the owner to lower the costs of operating the

business and also for every designing of the ground according to the owners preferences.

3
Ground plan layout

SIR BLIEN STORES

CHANGING ROOM MANAGERS OFFICE

TESTING STORE

OTHER OFFICES

DISPLAY AREA

SECURITY GUARD OFFICE DESK

PARKING AREA

ENTRANCE

The space is enough for future expansion when the business will grow after some years of

operation

3
4.3 PRODUCTION STRATEGY

4.3.1 Monthly Raw Materials

The raw materials that the business will intend to use for production are as follows;

binding wires, communication cables, d-ions, supply cables, meters, climbers, 3-phase

testers, wheelbarrows and spade

Materials Frequency Source Quantity Costs/unit Total costs

Binding wires Regularly Metal 50kg/roll 1,000 20,000

Communication Regularly Wire/metal 35kg/roll 1,500 52,500

cables

D-ions Regularly Metal 16 500 8,000

Supply cables Regularly Wire/metal 100kg/roll 4,500 450,000

Meters Regularly Metal 5 1,500 7,500

Climbers Regularly Metal 4 1,000 4,000

3-phase tester Regularly Metal 10 4,000 40,000

Wheelbarrow Regularly Metal 4 4,200 16,800

Spade Regularly Metal 4 450 1,800

TOTAL 228 18,650 630,600

The materials will be readily available through the years for the smoothly and easy

running of the business. The owner will purchase the materials from a produce or

manufacture who provides transport for buyers. This will help the buskins not incur any

extra costs apart from buying.

3
4.3.2 Monthly Labour Requirements

The business will need the following number of direct and indirect workers

Direct – 8

Indirect – 3

Indirect workers Function

1 Accounting
1 Marketing
1 Customer relations
Direct workers Function
1 Driver
2 Cleaning
5 Electricians

All indirect workers will have no more than a year of experience in their fields but they

have to be knowledgeable on which they will be handling and also be able to work

under immense pressure. Direct workers need much experience and must be time

conscious for they will be working under pressure and must be creative. For the

cleaners, they must be able to do the motor cleanings at a faster rate for they might be

needed any moment.

Direct workers 8 x 700 x 22 hours = 123,/=

Indirect workers 3 x 500 x 22 hours = 33,000/=

Total cost of production labour per month is Ksh 156,200/=

3
 The following expenses will be incurred before this commencement of the business

electricity, water, stationary, transport and land rate

4.3.3 Monthly Operation Expenses

Number Product Expenses Cost (kshs)

1 Water and electricity 2,400

2 Installation machines and equipments 4,500

3 Marketing 4,000

4 Tax 6,000

5 Business permit 2,000

TOTAL 18,900

4.3.4 Monthly Overhead Expenses

Number Product Expenses

Salaries and wages 4,000
Electricity 5,000
Water 2,000
Transportation 4,000
Stationary and printing 2,500
Loan repayment 4,600
TOTAL 22,100

The business will be servicing 3 hours in a day, 18 hours in a week, 72 in a smooth moth

and 648 hours in a quarterly

The production cost per units will be as

follows; Direct/ indirect labour = Ksh 24,000/=

Transport = Ksh 14,000/=

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 24,000 + 14,600 = Ksh 38,600/= (Production on costs per unit)

38,600 x 3 = Ksh 115,800/= costs of units

Cost per unit x week/monthly quarterly

Ksh 115,800 x 18 hr = 2,084,400/=

(weekly) 115,800 x 640 = 74,112,000

(quarterly) Total cost of production =

74,112,000

4.4 PRODUCTION DEVELOPMENT AND DESIGN

The owner of the business will have a unique service design will need the customers and

environmental knowledge in which the business owner seeks advice from other enterprises

so as to come up with a unique service design that will satisfy the customers.

Services will be provided at a cheaper cost compared to other neighboring business. This

will attract potential customers and such ideas will be put to test once the business

commences

The business will pay expenses services that will come up with the design according to the

customers and environmental knowledge

The business will use mechanical and computer technology to offer its services. The

business will start with a best level of technology available for the business. This level of

technologies is suitable for small enterprises. Small level technology is the appropriate due

to its simplicity in utilizing the costs of operating in relatively less compared to their level

of technology. Flexible in adoption and does not need frequent maintenance. The business

will be at bar with the latest technology because it impacts the business a lot

Workers will be taught on how to come up with the last or latest technology to promote

efficiency and productivity.

4
4.5 PRODUCTION/SERVICE DELIVERY PROCESS

The flow chart below gives a glimpse on how the service process will be;

The producer The Supplier Procurement Payment of

the products

Customers feedback To the customers

The external factors that are likely to affect to affect service process are economic

situations, law technological factors customer demand and competition. For the business to

minimize the impact of these external factors is to maintain adequate level capital to

handle the economic situation technological factors and meet customers’ demands and the

business will operate under laws that govern the country and also those in place to govern

business operation.

4.6 REGULATIONS AFFECTING OPERATIONS

The following are government regulations compile and approved that will affect the

business

1. Taxation

Tax is paid by every business regulation

2. Business registration

The business will register its owner, the name of the business and the type of business it

will transact

The business will be required to pay the following local taxes

i) Land rate tax Ksh 2,000 (monthly)

ii) Licensing fee 15,000/=

iii) Environmental regulations advertising regulated and employment will also affect

the business.

4
 CHAPTER FIVE

5.0 FINANCIAL PLAN

In this chapter I will be dealing with the financial aspect

5.1 PRE-OPERATIONAL COSTS

This is the cost of the business will incur before the start of the business

ITEMS AMOUNT (KSHS)

Market Research 7,000

License 15,000

Stationery 7,000

installation 25,000

Consultation 13,000

Assets (plant property) 166,550

equipments 35,000

TOTAL 208,550

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5.2 WORKING CAPITAL

Working capital is the amount of money required by the business for its operation in

giving out its services to the market. The table shows the working capital for the business

in their years

Working capital = Current Assets – Current Liabilities

ITEMS YEAR 1 YEAR II YEAR II

Current assets KSHS KSHS KSHS

Stock Of Raw Materials 120,000 160,070 230,300

Closing Stock 115,780 155,060 190,060

Debtors 100,520 105,600 125,100

Cash In Hand 360,340 757,680 660,100

Cash At Bank 450,000 - 1,236,660

TOTAL 1,146,640 1,178,410 2,442,220

CURRENT LIABILITIES

Creditors 243,500 260,550 350,500

Drawing 270,600 345,790 320,040

TOTAL LIABILITIES 514,100 606,340 670,540

WORKING CAPITAL 632,540 572,070 1,771,680

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 5.3 CASH FLOW PROJECTION FOR THE YEAR ONE

JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS
Beginning cash 635,000 - - - - - - - - - - - 635,000
Cash sales 250,400 576,200 608,658 620,565 470,325 599,345 600,654 599,985 600,985 595,925 580,750 589,769 6,693,561
Debtors 15,983 36,779 38,722 37,679 38,914 39,611 30,657 38,256 38,340 - - 37,645 352,586
TOTAL CASH INFLOW 902,033 612,979 647,380 658,244 509,239 638,956 631,311 638,241 639,325 595,925 580,750 627,414 7,681,797
EXPENSES
Purchases 350,650 340,645 430,650 402,650 322,870 345,860 304,654 328,780 498,740 452,760 340,870 504,819 4,623,948
Salary 55,000 340,645 430,650 402,870 322,870 345,800 304,654 328,780 290,740 452,740 340,370 504,871 4,119,990
Electricity bills 5,500 2,000 200 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 23,700
Water bills 2,000 2,000 200 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 22,200
Insurance 15,000 - - - - - - - - - - - 15,000
Loan repayment 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 50,600
Maintenance and repair 13,500 - 13,500 - 13,500 - 13,500 - - - 13,500 - 67,500
Telephone and postage 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 13,200
Stationery and printing 2,700 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 33,500
Transportation 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
Drawings 3,000 - 3,000 - 3,000 - 3,000 - 3,000 - 3,000 - 12,000
Miscellaneous 4,000 - - - - - - - - - - - 4,000
TOTAL EXPENSES 467,150 703,890 896,800 828,120 684,840 714,260 648,408 680,160 765,080 927,800 720,840 1,032,290
NET CASH (A-B) 434,883 20,911 249,420 169,876 175,601 75,304 17,097 41,919 125,755 331,875 140,090 404,876

45
5.3.1 Cash Flow Projection For The First Three Years
ITEM YEAR I YEAR II YEAR III
KSHS KSHS KSHS

Beginning cash 800,000 1,600,000 2,400,000

Cash ales 786,590 1,240,400 1,890,780

Debtors 230,560 212,900 250,890

TOTAL CASH INFLOW A 1,817,150 3,053,300 4,541,670

EXPENSES

Purchases 40,500 10,400 1,200

Salaries 4,000 4,000 4,000

Electricity bills 1,000 800 850

Insurance 1,000 1,0000 1,000

Loan repayment 1,200 2,000 900

Transportation 2,000 2,000 2,000

Stationery/ printing 400 400 400

Drawing 1,000 1,500 1,200

Miscellaneous 1,300 1,200 1,300

TOTAL EXPENSES B 52,400 23,300 12,850

NET CASH (A-B) 1,764,750 3,030,000 4,528,820

4
5.4 PROFORMA INCOME STATEMENT FOR THREE YEARS
ITEM YEAR I YEAR II YEAR III
KSHS KSHS KSHS
Sales 1,817,150 40,000 160,000

Less purchases 1,776,590 29,600 14,800

GROSS PROFIT 3,593,740 69,600 174,800

EXPENSES

Salaries 4,000 4,000 4,000

Electricity bills 4,000 8,000 850

Water bills 200 200 200

Insurance 1,000 1,000 1,000

Loan repayment 12,000 1,000 900

Transportation 2,000 2,000 2,000

Stationery and printing 400 400 400

Drawing 1,000 1,500 1,200

Miscellaneous 1,300 1,200 1,300

TOTAL EXPENSES 25,900 19,300 11,850

NET PROFIT BEFORE TAX 3,567,840 50,300 162,950

(A-B)

TAX PROVISION 356,784 5,030 16,295

NET PROFIT AFTER TAX 3,211,056 45,270 146,655

4
5.5 PROFORMA BALANCE SHEET FOR THREE YEARS

FIXED ASSETS YEAR I YEAR II YEAR III

KSHS KSHS KSHS

Computer 35,500 33,000 31,500

Printer 24,900 23,157 21,400

Backup generator 32,700 30,411 28,122

Accumulated depreciation 7% - 86,568 81,036

CURRENT ASSETS

Debtors 20,450 20,000 15,550

Cash At Bank 50,600 56,600 62,600

Cash At Hand 40,500 50,600 70,800

Closing Stock 43,434 34,900 40,000

CURRENT LIABILITIES

Creditors 65,900 50,900 60,700

NET ASSETS 220,884 213,000 249,650

FINANCED BY

Capital 180,900 45,000 52,890

Net Profit 39,984 115,150 96,550

Less Drawings - 52,850 149,440

TOTAL 220,884 213,000 249,650

4
5.6 CALCULATION OF BREAK EVEN PROFIT ANALYSIS

FIXED COSTS AMOUNT (KSHS)

Sales 1,817,150
Insurance 1,000
TOTAL 1,818,150

VARIABLE COSTS AMOUNT (KSHS)

Water 200
Electricity 1,000
TOTAL VARIABLE COST 1,200

Contribution margin percentage

Contribution margin % = Total Sales – Total Variable Costs x 100
Total Sales
= 1,817,150 – 1,200 x 100
1,817,150
= 99.9%
Break even Point (Level
Break even Point = Fixed cost
Contribution margin Percentage
= 1,818,500
99.9%
= Kshs 1835505.05%

4
5.7 PROFITABILITY RATIO ANALYSIS
Gross profit percentage
Gross profit percentage = Gross profit x 100
Total sales
= 1,776,590 x 100
1,818,150
= 97.7%

Return on equity
Return on equity = Net profit after tax x 100
Owners equity
= 1,499,816 x 100
180,900
= 0.08%

Return on Investment
Return on Investment = Net Profit after tax x 100
Total investment
= 1,499,816 x 100
800,000
= 187.4%

5
5.8 DESIRED FINANCING
ITEMS AMOUNT
(KSHS)
Pre-Operational Costs 268,550

Initial Working Capital 282,540

TOTAL 551,090

5
5.8 PROPOSED CAPITALIZATION

SOURCE AMOUNT

(KSHS)

Personal 650,000

5 Kenya Riffles 400,000

family and friends 200,000

Loans 250,000

TOTAL 1,500,000

5
 APPENDICES

APPENDIX 1: MAP SHOWING THE LOCATION OF THE BUSINESS

Kenyatta Naivasha
Avenue GDH
GTI

EB DEB BH

SE

GSS
SIR BLIEN
ELECTRICAL KPLC
AND
ELECTRONICS
GTS
STORE GSS

CB

5KR To Nakuru
Key KHS
K.H.S Koele High School
5KR Kenya Army
Riffles GDS
G.G.S Gilgil Garrison School
G.D.S Gilgil Day School
Railway Line
D.E.B District Education Board Primary
G.D.H Gilgil District Hospital
G.T.I Green Tough Estate
B.H Buffalo Horne Hotel
E.B Equity Bank
C.B Co-operative Bank
S.E Sierra Estate
KPLC Kenya Power and Lighting
Company GTS Gilgil Township School
GSS Good Shepherd School

5
APPENDIX II: GROUND PLAN LAYOUT

SIR BLIEN STORES

CHANGING ROOM MANAGERS OFFICE

TESTING STORE

OTHER OFFICES

DISPLAY AREA

SECURITY GUARD OFFICE DESK

PARKING AREA

ENTRANCE