P.

O BOX 1024-20200 KEROCHO

TEL NO:0716302000

EMAIL;dynamicelectrical@gmail.com

TITLE : BUSINESS PLAN

PRESENTER : EDWIN KIBET TOO

INDEX NUMBER :

CENTRE NAME : RIFT VALLEY INSTITUTE OF SCIENCE AND

TECHNOLOGY.

COURSE : DIPLOMA IN ELECTRICAL AND ELECTRONIC

ENGINEERING (TELECOMMUNICATION).

CENTRE CODE : 511102

PAPER NO. :

PRESENTED TO : THE KENYA NATIONAL EXAMINATION COUNCIL.

FOR PARTIAL FULFILMENT FOR THE AWARD OF

DIPLOMA IN ELECTRICAL AND ELECTRONIC
(TELECOMMUNICATION)

SUPERVISOR : MR. NGUNJIRI

SERIES : JULY/AUGAST 2023

1
TABLE OF CONTENTS

DECLARATION..............................................................................................................................................4
ACKNOWLEGDEMENT.................................................................................................................................5
EXECUTIVE SUMMARY.................................................................................................................................6
CHAPTER ONE..............................................................................................................................................7
1.0 BUSINESS DESCRIPTION.....................................................................................................................7
1.2 FORM OF OWNERSHIP.......................................................................................................................9
1.3 TYPE OF BUSINESS.............................................................................................................................9
1.4 THE GOOD AND SERVICES................................................................................................................10
1.5 JUSTIFICATION OF OPPORTUNITY....................................................................................................11
1.6 THE INDUSTRY.................................................................................................................................12
1.7 BUSINESS GOAL...............................................................................................................................12
1.8 ENTRY GROWTH..............................................................................................................................13
CHAPTER TWO...........................................................................................................................................15
2.0 MARKETING PLAN............................................................................................................................15
2.1 CUSTOMERS.....................................................................................................................................15
2.2 COMPETITORS.................................................................................................................................17
2.4 ADVERTISING AND PROMOTION STRATEGY....................................................................................23
2.5 PRICING STRATEGY..........................................................................................................................24
2.6 SALES TACTICS.................................................................................................................................25
2.7 DISTRIBUTION STATEGY...................................................................................................................25
CHAPTER THREE........................................................................................................................................26
3.0 ORGANISATION AND MANAGEMENT..............................................................................................26
3.1 KEY MANAGEMENT AND PERSONAL DUTIES...................................................................................27
3.2 RECRUITMENT,TRAINING AND PROMOTIONS.................................................................................31
3.3 REMUNARATION AND INCENTIVES..................................................................................................32
3.4 LICENCE, PERMIT AND BY- LAWS.....................................................................................................33
CHAPTER FOUR..........................................................................................................................................35
4.0 OPERATIONAL PLAN........................................................................................................................35
4.1 PRODUCT DESIGN AND DEVELOPMENT..........................................................................................35
4.2 PRODUCT FACILITY AND CAPACITY..................................................................................................35

2
 4.3 PRODUCT STRATEGY........................................................................................................................35
4.4 OPERATIONAL PROCESS..................................................................................................................37
4.5 GOVERMENT REGULATION AFFECTING OPERATIONS.....................................................................37
CHAPTER FIVE............................................................................................................................................38
5.0 FINANCIAL PLAN.............................................................................................................................38
5.1 PRE-OPERATIONAL COST.................................................................................................................38
5.2 WORKING CAPITAL REQUIREMENT.................................................................................................39
5.3 PROFOMA BALANCE SHEET............................................................................................................40
5.4 PROJECT CASH FLOW STATEMENT FOR 2016. CLAUDIA’S ELECTICAL INVESTMENT.......................41
5.5 PROFORMA INCOME STATEMENT...................................................................................................42
5.6 BREAK-EVEN INCOME......................................................................................................................43
5.7 DESIRED FINANCING........................................................................................................................45
APPENDIX SHOP LAYOUT.................................................................................................46

DECLARATION

3
I declare that this business plan is my personal work submitted to the Kenya National
Examination Council in partial fulfillment for the award of Diploma in Electrical and Electronic
Engineering (TELECOMMUNICATION)

STUDENT NAME: EDWIN KIBET TOO

SIGNATURE: .................................................

DATE: ..................................................

SUPERVISOR NAME: MR NGUNJIRI

SIGNATURE:..........................................

DATE:..........................................

i
4
 ACKNOWLEGDEMENT
I would like to acknowledge my most gratitude to my parents for their financial support until
the completion of my course.

Finally ,Its my pleasure appreciation to my Lecturer MR NGUNJIRI for his assistance and
guidance towards successful planning of the business.

May blessings reign in their lives in wherever they are and what they do.

Thankyou.

ii
5
 EXECUTIVE SUMMARY
The proposed business will be known as DYNAMIC ELECTRICAL AND ELECTRONIC
DEALERSand will be operating basically on sole proprietorship.

The business will be located at KERICHO Centre.

MARKETING PLAN

Business will be dealing with Electronics and Electrical appliance and equipment.

The major or target customers will be institutions and individual clients who make up personnel
structures.

The owner expects the business share of about 46 percent at the initial state of the business and
growth rate of 17 percent per annum.
Healthy competition is expected , hence the proprietor intends to have a highly qualified staff,
extensive working hours at reasonable prices and sales services shall be offered to attract more
customers.
ORGANIZATION AND MANAGEMENT PLAN
Since business is to be based on sole proprietorship, decision making is done by the owner.
Recruiting of new employees shall be done based on academic qualification and at most
experience.
OPERATION PLAN
It involves the equipment and services, the numbers, capacity, cost and government regulations.
FINANCIAL PLAN
This reflects the financial way forward of the proposed business to gauge further potentiality of
the business. This will show how much will be done required finance, the source and how it will
be spent.
There will be estimation of working capital and projected cash flow statement.
Proforma balance sheet, calculation of gross profit, net profit and break-even points and
profitable ratio will be shown.
Also methods of financing includes, owners equity, loan and donation from relatives are also
included.
Financially the proposed DYNAMIC ELECTRICAL AND ELECTRONIC DEARERS will
predict and show how the business will expand in near future. Also geared up in meeting the
country wide standards and maybe international.

iii6
 CHAPTER ONE.
1.0 BUSINESS DESCRIPTION
The name of the business will be DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS,
which will be a sole proprietorship owned by one DYNAMIC.

It is intended to deal with selling of electrical appliance, accessories and equipments as well as
offering services such as electrical installation in homes and other premises such as industries,
schools churches etc.

The business will employ people with electrical knowledge and skills to perform this services.
This will start by recruiting workers from the community or from without.

This will create awareness to the community as it will be a way of job creation and thus be the
first indirect advert for the business.

I. BACKROUND OF THE OWNER

The business manager who is also the proprietor will be DYNAMIC, born in 1996 at KERICHO
town. He currentry lives in KERICHO and works at KERICHO.

He sat for her KCSE exam in 2016 at Chepkosilen High school in kericho and joined Rift
Valley Institute Of Science And Technology in 2018. Having grown up in a town prepares her in
business as she has experience on how business operate, since he has been helping her father
(who is a businessman) .

II. NATURE OF THE BUSINESS.

DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS is a service business which also

will venture in selling of electrical equipments to interested parties.

It will operate as a company under management of one DYNAMIC who will be in charge of the
activities pertaining the business .

7
Workers in both the service department will be qualified to ensure quality while the goods
department will benefit from her expertize.

The goods include electrical cables, accessories, appliances, spare parts etc. The non-perihability
of the goods involved ensures minimal risk and the growing need of electrical power promises
the growth of the business service department.

The business is scheduled to start by the end of 2023 and therefore taking the advantage of the
ongoing government initiative of rural electrification.

Principal customers domestic plants, schools, churches, growing industries and general
environment bearing in mind the huge population around.

The business will be based in KERICHO town imarisha plaza next to Kenya power. Being at the
heart of the town gives it proximity for accessibility from any side of KERICHO It being on the
ground floor gives it a good site to the passersby.

The building is served by good roads and hence easy to access and to transport gods either to the
business or to the customers. The business will operate under the following addresses; .

DYNAMIC ELECTRICAL AND ELECTRONIC DEALERSPO

BOX 1021, KERICHO
Email:dynamicelectrical@gmail.com
Mobile No : 0716302000

1.2 FORM OF OWNERSHIP.

The business will be solely owned and the proprietor who will double up as the manager will be
responsible for the decision making.

The business will be operated a 1.23 million intended to be raised as follows;

Personal savings 840,000

Family and friends 110,000

Loans (EQUITY BANK) 280,000

8
The owner will contribute 68.29% of the cost while family, friends and the bank will contribute
the rest.

1.3 TYPE OF BUSINESS

DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS is a service and wholesale/retail
type of business that is at its start- up stage. It intends to create a pool of employment
opportunities thereby solving not only the electrical aspect of the community but the
unemployment issues facing the youth.

The products will include electrical appliances and accessories as well as electronics. Electrical
installation services also included , the potential customers being the local population as well as
the wider community. Advertisement will be done using posters, radio and billboards. Service
price will be negotiable.

1.4 THE GOOD AND SERVICES

DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS deals in general products such as;

 Electrical cable

 Electrical accessories

 Electronics

 Electronic spare parts

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 PRODUCTS AND SERVICES

Product
Radio
Tv sets
Amplifiers
Mixers
Computers
Phone accesories
Video decks

Services

Trouble shooting of electronic device

Servicing of electronic devices
Maintenance of electronic devices.

The services will include electrical installation, electrical repair house hold electrical
expansion/renovation.

1.5 JUSTIFICATION OF OPPORTUNITY.

DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS desire is to provide quality
electrical services as well as equipment to the users to ensure quality not forgetting their
safety .This is in line with the desire to embrace technology for growth. Unemployment is
another field that the business is concerned in including environmental awareness i.e safe
disposal of electrical and electronic waste.

The proposed business will fall under electrical industry .the commodities are sold in daily basis
and the size of the electrical industry is large, evident to the vicinity of the firm and the area
covered.

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Due to job scarcity, electrical industries have much expanded leading to many people turning to
self employment to earn a living. DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS
require eight employees the technology being capital intensive. A lot of work will be operated
manually. Products will be sold with no seasons

1.6 THE INDUSTRY.

The business falls into both service and sales industry. The service part of the business will be

more reliable since it proves to be more profitable- (not based on seasons) The service industry

Quite a number of young people since it requires minimal capital to start.

Quality of the service determines the growth of the business .Competition will be catered or by
customer relations and quality of services.

1.7 BUSINESS GOAL.

Main objectives are;

 Making profit
 Creating employment
 By the end of the second year the business wishes to introduce cell phones in their
range of products.
 By the end of the first year, the first year the business intends to start looking for
government tenders,eg rural electrification.
 Manufacturing of electric posts using plastic

1.8 ENTRY GROWTH

Advertisement and promotion is going to be the entry strategy while growth will be ensured by
expansion and in the above discussed goals

The owner will carry out market survey and analysis. The environment has few such firms which
exploits their customers by selling their services at high prices. The business aim is that by the
third of the second financial year; it will have increase its market and employ more workers. this
will only be achieved if only there shall be economic and political stability.

11
To ensure the growth, the following strategies must be laid down by the owner.

Indentify its strengths and weakness

-To maintain good relationship with both customers and employees.
-To maintain potential customers by selling their services at affordable prices to those
who buy in large quantities
-To offer all the services at all time in order to maintain customers.

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 CHAPTER TWO

2.0 MARKETING PLAN

As the population grows, KERICHO town requires safety measures in all aspects. DYNAMIC
ELECTRICAL AND ELECTRONIC DEALERS .It will major in electrical safety to ensure
growth in other sector s such as medicine, education and technology. Having a few electrical
service providers has led to low quality or unsafe installation leading to hazards. There are more
demand for quality and safe electrical practice which leads to the great desire to start the
business.

2.1 CUSTOMERS
All the population across KERICHO and beyond is the business’s potential customers both in the
sales and service department. The business having no seasons ensures consistence income
distribution throughout the operating period. The potential customers of DYNAMIC
ELECTRICAL AND ELECTRONIC DEALERS vary in many ways namely:

Income

The customer’s income for the business ranges from low to high earnings hence making the
management of the business to offer different standards of products and services which will
meets the needs of all the customers

Age

The customers of the proposed business will be those who are viable to follow instruction of
attached to the product by the manufacturer of the equipments. This means that these customers
are of all ages.

Education

The customers should be the ones who can at least able to read as to know the usage of the
equipments and to operate it under the prescribed conditions without having any effect.

Customers need on the product /services

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Quality products

The objective of purchasing the product/services will be determined by the quality of the
product/service so that the quality should be considered first.

Safety of products/services

The equipments sold enough to be operated without having any harm to the user.

Economic convenience

Different quantities obtained by the business and supplies to the business and to the customers
are at slightly less prices will meet uniform satisfaction of all customers hence leads to high sales
to the customers.

Security

The security to be provided by the business to the customers and the business itself.

2.2 COMPETITORS
The owner of DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS done a research and
found that there are other three institutions which offers stiff competition to the proposed
enterprise- the following are the experienced firms.

Industrial supply electronics enterprise

Pendo electronics

Other electricals shop

Industrial supply electronics

Located at the outskirts of trading centre mostly specialize in electronic gadgets

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Strengths

Has good management

Operate in large quantities

Prices are customer friendly

Weakness

He has no posters and sign board

Employee unskilled personnel

Doesn’t transport services to its customers

Pendo electronics

It is located 3 kilometers away from the proposed business and is specialized in electronics
accessories.

Strengths

Conveniently located

Has qualified employees

Low prices

Weakness

Lack of timely supply of goods

Poor advertisement for goods and services

Poor management

15
Others electronics

It is located far from the intended business it deals with electrical accessories

Strengths

Quick in supply

Prices are fair

Weakness

Poor working conditions

Doesn’t provide leave to employees

It is still new in business

Poor public relation.

The following strategies are ensured to be availed to the esteemed customers to provide
positively meet their needs.

Provide good public relation

Qualified personnel are employed

Provision of quality products and services

Timely supply of ordered goods and services to customers

Constant prices with discount depending on purchases.

Now ,High quality goods and services will reduce competition since the existing ones are few
and un experienced.

16
Having our offices in distinct location also ensures easy accessibility unlike the competitors.
Dealing with both sales and services ensures ‘one business advertising to other’ offering an
upper hand.

Having many employees (salesmen) ensures constant availability of services unlike in the case of
my competitors, ie. They work as individuals, hence ca only serve only one customer at a time.

2.3 MARKET SHARE

With a population of approximately 950000 people, KERICHO is a promising place to start a

business. Taking the 720000 adult population,(as confirmed by last cencus) the market share
of DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS is expected to be more than
50%.

Two other electrical shops-‘Industrial supply electricity’ and ‘Pendo Electrical Shop’, will
scramble over the remaining percentage in the sales department.

In the service department , there is not a recognized firm that offers installation and therefore
the market will be shared by DYNAMIC ELECTRICAL AND ELECTRONIC DEALERS
and other individual service providers.

17
This is described by the pie charts below;

Sales
12% 8%

16%
64%

DYNAMIC ELECTRICAL - 64%

INDUSTRIAL SUPPLY- 16%

PENDO- 12%

OTHERS- 8%

Sales
Others
8%

ARWASA
91
92%

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2.4 ADVERTISING AND PROMOTION STRATEGY
The advertising will be aimed at promoting the business’s image as a safety oriented and Good
quality conscious business whose main objective will be to serve customers.

Advertising is estimated to cost the business Ksh 120000.Other promotion strategies will include
discounts on installation, free home delivery, free introductory installation and discounts on
purchased goods.The following are some of the means of advertising

Hand out s produced by the organization giving services offered.

Posters mounted on the highly concentrated area of the public.

Publications of the organization calendar Securing information about the prosed business

Provision of signboards that shows the location address and distance of the business.

The frequency of advertisement will merely depend on the number of sales and response to
customers daily recorded by the manager

The effectiveness of the advertisement will be measured by comparing the number of customer
turnout before and after.

2.5 PRICING STRATEGY

Pricing will depend on the after sale services required. If the after sale services (installation) is
required, the price of the electrical appliance/accessory will be lower and vice versa taking into
account the prices of the competitors.

In short, the business’s service part is a strategy to absorb high selling price which is the main
secret to deal with the competitors.

Also the pricing strategy will depend on the cost of buying the items by the owner. Changes are
made due to the cost of buying the items by the owner.

19
Changes are made due to the cost of various factors the business intends to lay in that way price
is to cover the initial cost plus gross profit which is to pay all, the expenses and remain with
appropriate margin.

2.6 SALES TACTICS

Direct sale to customers from the electrical shop will be the main sales method that will be
applied. However, home delivery to requests by customers will be applied for a pocket friendly
charge based on distance and the amount of goods delivered.

The taskforce will be reqruited through an interview which will include demonstrations on ones
skills in the field of interest. Perfomance of the employees will determine their rank and the pay.

The situation of customers should be known by the salesman and understand so as to guide them
on who are to be given credit terms during emergencies- suggestions, views and complaints shall
be considered and acted upon by the department addressed to through the provision of
suggestion Box.

2.7 DISTRIBUTION STATEGY

The business will take advantage of the four available vehicles owned by the propriator
distribution. However, the business intends to purchase four motor bikes for the service industry
to cater for outside jobs.

Loss of marchandise during transit is the key problem during distribution but the business has
designed boxes to be mounted on motorbikes to prevent loss.

20
 CHAPTER THREE

3.0 ORGANISATION AND MANAGEMENT

MANAGER

ASSSTANTANT MANAGER

ACCOUTANT

TECHNICIAN

MESSANGER DRIVER MECHANICS CUSTOMER CARE

21
3.1 KEY MANAGEMENT AND PERSONAL DUTIES
 Manager

The business proprietor (owner) will also double up as the organization manager. she will be
in charge of each and every operation of the business as well as handling the human resource,
including hiring and firing of staff. Being the owner, her renumeration will not be fixed.

 Assistant manager.

The business will hire the assistant manager based on the following qualifications.

 Be a holder of at least a CRAFT in management related course

 Must have an experience of at least one year
 Must be honest and trustworthy
 Must agree to the terms of work.

His /her duty will include;

 Being in charge when the manger is not around,

 Handling contracts and outside jobs, manage human resource,
 Control the conduct of employees.

 Accountant

The business will hire an accountant based on the following qualifications;

 Must have a certified public accountancy certificate

 Must be computer literate
 Must have at least two year experience in the same field.

His/her duties will include;

 Preparing the annual budget

22
  Preparing the pay roll of all employees
 Keeping financial records
 Preparing the annual financial report

 Technicians

The business will hire at least ten technicians to cater for the outside jobs based on the
following qualifications;

 Must have at least a CRAFT in electrical engineering

 Must have worked for more than two years in the same field
 Be ready to comply with the terms if work.

Each technician will earn ksh 20000 per month starting salary. The other allowances will be
discussed on recruitment.

 Driver

The business will employ 5 drivers to start with and since the business is looking forward on
growth, it will employ others as it grows. The qualification of the driver will be;

 He/she must be a Kenyan and be between 25-40 years

 He/she must have a driver’s license from a recognized institution
 Must have 2 or more years of experience.

He/she will earn Ksh 15000 per month.

 Mechanics

Qualifications will include;

Experience of more than two years in the same field

 Be trustworthy and honest

 Be aged between 25-50

23
His role will be to repair and maintain the businesses vehicles and machinery. He will earn
15000 per month.

 Customer care

Qualifications will include

 Be fluent in English and Swahili

 Be kind.

His/her roles will include relating to customers who will call the business, giving directions
to new customers. He/she will earn 15000 per month.

 Messenger

His qualifications will include;

 Be a faithful person
 Be time conscious
 Be ready to work in time bars

His /her role will include enhancing communication between the business members and the
customers. he/she will earn 1500 per month.

 Other personnel
 Sweepers

The business will employ two sweepers to keep the environment tidy. they will also be
washing the other workers overalls. they will earn 10000 per month allowances.

 Security

The business will employ two security officers from G4s to earn 15000 per month

24
3.2 RECRUITMENT,TRAINING AND PROMOTIONS.
Recruitment will be done after the positions are advertised through newspaper, radio, Tv and
posters. after application, short listing will take place followed by an interview those who will
qualify will be informed. the business will provide training sessions to new workers in ways like
arrangement of seminars, tours on business fields etc. promotion of employee will be done with
consideration of effectiveness of the work.

Academic papers will also be considered during promotions. Other considerations will include
hard work, experience and creativity or innovation. The recruitment of staff will be carried out
by advertising interested and qualified will received and suitable candidate will be short listed to
come for interview.

The shortlist will be carried out for interview.

The interview will be carried out to attain the best and qualified candidate who will suit fee post.

The candidate after they have been employed will be trained the job until they become . perfect.
Training employees will be geared to improve the efficiency of the worker. It also upgrade the .
skills and techniques needed in the business and the standard staff.

The employee will be taken for short term courses to increase in the skills necessary to the
business and the standard staff.

The employee will be taken for short courses to increase in the skills necessary to the business.

Promotion will be doe to the worker where he will be boosted or upgraded to a few post of the
business will have new posts.

Recruitment will be done every financial year where the recruitments will board, poster and the
people who will respond will be interviewed and given job most of the vacant will be as result of
the business or recruitment of workers the vacancy will be accountant salesman.

25
3.3 REMUNARATION AND INCENTIVES
Remuneration will be fixed according to the initial agreement. other incentives such as lunch
allowance ,risk allowance and insurance will be discussed during recruitment. the business in
tends to give every worker an insurance cover.

Every individual employer will be a member to NHIF and NSSF where each will be charged Ksh
200 from business and Ksh 200 from each member’s salary.

The individual will be paid according to qualifications of the employer’s competence, working
condition and experience of the staff.

The incentives will be as follows for the employees that the staff will be promoted as follows

i ) Financial support in case of illness or misfortune

ii) Salaries increment after every 3 years

iii) Giving leaves and sick off
iv) Offering lunch and breakfast
v) Every year employees will be taken to recreation place and tour.

3.4 LICENCE, PERMIT AND BY- LAWS

The business will acquire its legal permits from the county authority. The business will also
abide by the trading and business laws set by the government and as drafted in the constitution of
Kenya. taxation will be based on values as set by the government.

i. SUPPORT SERVICES
 Bank

The Cooperative Bank Of Kenya

Po Box1021,

KERICHO

26
  Insurance

Amaco insurance Limited

KERICHO

 Postal address

POSTA

Po Box 1024 _20200

KERICHO

 Legal representation

MUKUBI Advocates

Po box 1243-20200 KERICHO

Payable (chargable) fees will be according to the agreement upon both the business and the
support staff.

27
 CHAPTER FOUR

4.0 OPERATIONAL PLAN

4.1 PRODUCT DESIGN AND DEVELOPMENT.

The business will not venture on production. It will be a service oriented one. Sustaining the
customer in the business is key in service industry. Therefore the business intends to keep
good relation between it and its customers as well as to abide by the rule of law.

4.2 PRODUCT FACILITY AND CAPACITY.

The type of machines to be used will include;

 Vehicles
 Installation tools eg pliers hammers, strip knives etc
 Computers
 Price tag machine

For stores layout of the business, refer to appendix 1.

4.3 PRODUCT STRATEGY

Monthly material requirement

ITEM CASH(KSH)
Stock 50000
Receipt book 1500
TOTAL 51500

28
Monthly labour requirement

POSITION AMOUNT(KSHS)
Manager NOT fixed
Assistant Manager 45000
Accountant 30000
Technician 20000
Messager 15000
Drivers 15000
Mechanics 15000
Customer care 15000
TOTAL 155000

Monthly production cost

Transport(fuel) 50000
Electricity 2000
Stationery 5000
Communication 20000
TOTAL 77000
Cost of production

51500+155000+77000=747000

Others: sweepers- 20000, Security-30000

Total- Kshs 797000

29
4.4 OPERATIONAL PROCESS

Workers are expected at work by 8 a.m . Instructions from the customer care desk are taken for
the days tasks. The assistant manager will then distribute the tasks to the workers. As for the
shop, the opening hours are 8 a.m and closing hours 9 p.m. Workers on outside jobs receive
briefings on new jobs to be accomplished from the assistant manager through customer care
desk.

4.5 GOVERMENT REGULATION AFFECTING OPERATIONS

 Health

Regulation concerning health matters has to be adhered to in order to reduce the risk of using the
products. Such under goings are costly and time consuming.

 Environmental regulations

This will include measures to ensure safe working conditions such as proper dumping of waste,
less noise e.t.c.

 Employee work act

This include their right to;

 Be paid
 Be respected
 Freedom
 Go on strike e.t.c

Such under takings are costly and time consuming.

30
 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COST.

ITEM AMOUNT

Fixed assets 27000

Advance rent payment 22000

Trade license 6000

Legal fees 5000

Insurance policy 12000

Consultancy fees 7500

Renovation 17500

TOTAL 340000

5.2 WORKING CAPITAL REQUIREMENT

ITEM 2017 2018 2019

Stock of raw materials 17500 22000 235000

Stock of finished goods. 20000 18500 175000

Debtors 7000 5000 2000

Cash in hand 5000 6000 15000

Cash at bank 12000 135000 6000

Work in progress 10000 16000 12000

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TOTAL 71500 81000 62500

Assumptions

 Water and electricity will vary according to use.

 Rent will remain constant throughout the year.

 Other payment such as insurance policy will remain constant.

5.3 PROFOMA BALANCE SHEET.

FIXED ASSET As at Jan 2020 As at Dec 2021

Land and building 1800000 1800000
Plant and machinery 800000 70000
Motor vehicles 560000 500000
Furniture and fittings 270000 200000
TOTAL FIXED ASSET 3430000 3200000

CURRENT ASSET
Stock of raw materials 6000 5000
Stock of finished goods 130000 98000
Stock of work in progress 250000 300000
Debtors 7000 7000
Cash at bank 40000 500000
Cash at hand 170000 230000
TOTAL CURRENT 603000 690000
ASSETS

TOTAL ASSETS 4033000 3890000

CURRENT LIABILITIES 76800 40000
Creditors 115000 64000
Bank overdraft 191800 104000

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TOTAL 48000 70000
Long term liabilities
Loan from bank 160000 100000
TOTAL LIABILITIES 831800 274000
Assumptions

 Bank rate will remain constant

 The business will run at a profit.

33
 5.4 PROJECT CASH FLOW STATEMENT FOR 2023. DYNAMIC ELECTRICAL AND
ELECTRONIC DEALERS
ITEMS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Cash inflows

Cash sales 550000 600000 540000 560000 450000 700000 670000 530000 600000 580000 670000 570000 7020000

Collection from 160000 22000 14000 15500 27000 1800 19400 17200 12300 20500 17200 8000 207100
debtors

Discount records 7000 2500 7500 8300 5500 6700 4200 1350 2000 1450 6500 2700 55700

Total cash 573000 624500 561500 583800 482500 724700 693600 548550 614300 601950 693700 880700 7252800
inflows

Cash outflow

Cash purchases 20000 230000 360000 270000 210000 30000 260000 300000 220000 150000 180000 205000 2650400

Payment 7000 6500 5000 67700 8000 65500 500 7500 4200 7200 6700 6500 76800
to
creditors

Rent 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500 54000

Salaries and 163000 163000 163000 163000 163000 163000 163000 163000 163000 163000 163000 163000 1956000
wedges

Telephone 1000 700 900 1200 1400 650 2000 1400 1100 900 750 800 12800

Electricity and 3000 2700 1300 4100 1750 3200 2800 2300 3200 2700 1900 4000 32950
water

Total cash 178500 177900 174700 179500 178650 177850 177300 178700 176000 178300 176850 178800 4782950
outflow

Cash of the 194000 2166000 49100 93000 93850 246850 256300 69450 218300 275650 336850 196900
month

Cash bal b/f 19000 210000 49000 91000 92850 240000 256000 69000 215000 273000 330000 195000

34
Accumulated 19000 210000 49000 91000 92850 240000 256000 69000 215000 273000 330000 195000
cash

5.5 PROFORMA INCOME STATEMENT.

SALES 31st Dec 2021 31st Dec 2022 31st Dec 2023

Cost of sales 7020000 7120000 8100000

Opening stock 60000 6500000 7000000

Purchases 20000 40000 60000

Closing stock 57000 60100 70100

Gross profit 6277000 13720100 15230100

EXPENCES

Salaries and wedges 1956000 1956000 1956000

Rent 44000 44000 440000

Water and electricity 32900 32950 32950

Teleohone 12800 12800 13000

Advertising 16500 20000 20000

Stationery 12000 12000 12000

Postage 3600 3600 3600

Transport 32400 40000 41000

Depreciation on fixed assets 10000 10100 12000

Intrests 7000 8160 9000

Repairs and maintenance 12200 12800 14000

TOTAL EXPENCES 2139450 2152310 2145850

Net profit before taxation 4137550 11567790 13084250

Less 16% taxation 413755 1156779 1308425

Net profit after taxation. 372379 10411671 1177825

35
5.6 BREAK-EVEN INCOME

VARRIABLE COST AMOUNT

=Ksh 81150
Stationery 18500

i. Contri
Telephone 17500
bution

Electricity and water 32950

Repair and maintenance 12200

TOTAL 81150

margin.

= Sales-Total variable cost

7020000-81150=6938850

Contribution margin percentage

Contribution margin x 100%

Sales

= 6938850 x 100

7020000

=94.84%

ii. Total fixed cost (operating expense).

36
 Rent 19560000

Salary 54000

Insurance 6700

TOTAL 2016700

Break even level (ksh)

2016700 = 20402.84

98.84

=ksh 20402.84

i. Expected profitability ratios

iii. Gross profit percentage

=6277000 x 100

7020000

=Ksh 89.42

iv. Return on equity

3723795 x 100

540000

=Ksh 48000.

v. Return on investment

37
 3723795 x 100

700000

=Ksh 531.97

5.7 DESIRED FINANCING.

ITEM AMOUNT

Pre-operational cost 340000

Working capital 1500000

Fixed cost 300000

TOTAL 2140000

5.8 . PROPOSED CAPITALIZATION

Total investment 700000

My own contribution 540000

Borrowed funds 160000

APPENDIX I SHOP LAYOUT

38
ACCOUNT OFFICE STORE

SHOP

39
APPENDIX II

UHURU GARDEN
COUNTY
ASSEMPLY

KERICHO-NAKURU

DYNAMIC
GREEN SQUARE
ELECTRICAL
MALL
ELECTRONIC

DEALER

40