TITTLE : BUSINESS PLAN

NAME OF BUSINESS : COSMATE WATER TUBES STORE.

CENTRE NAME : GATANGA TECHNICAL AND VOCATIONAL

COLLEGE

CENTRE CODE : 2341010

COURSE : CRAFT CERTIFICATE IN PLUMBING

PAPER CODE : 316

PRESENTER : COSMUS MUKITI

INDEX NUMBER : 2341010017

PHONE NUMBER : 0745571798

EMAIL ADRESS : Cosmusmukiti@gmail.com.

SUPERVISOR : MADAM IRENE

EXAM SERIES : MARCH 2023

DATE OF PRESENTATION :
 DECLARATION
I declare that this work is my original work and it has not been presented by anybody or submitted
to any examination body for any certificate award.

Candidate declaration

Name:

Date: ……………………………..

Signature…………………………….

Supervisor’s declaration

This work has been submitted to Kenya National Examination Council with approval of my
Supervisor

Name: ………………………………….

Date: ……………………………..

Signature…………………………….

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 DEDICATION
I would like to dedicate this project to my parents for financial assistance in helping me to come
up with my business plan and also, I am not forgetting my supervisor and friends for advice they
gave me during the business plan writing.
 ACKNOWLEDGEMENT

I would like to acknowledge my lecturer and my friends who worked tirelessly to ensure that my
work was okay and more so I would like to thank my loving parents for their financial support to
produce a presentable project.

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 TABLE OF CONTENTS
DECLARATION..........................................................................................................................................
I

DEDICATION................................................................................................................................................2
ACKNOWLEDGEMENT.................................................................................................................................3
EXECUTIVE SUMMARY................................................................................................................................6
CHAPTER ONE.............................................................................................................................................7
1.0 Business description..............................................................................................................................7
1.1 Start-up Summary.................................................................................................................................7
1.2 Company Ownership.......................................................................................................................7
1.3 Objectives........................................................................................................................................7
1.4 Mission............................................................................................................................................8
1.5 Keys to Success................................................................................................................................8
1.6. Services................................................................................................................................................8
CHARPTER TWO..........................................................................................................................................9
2.0 Market Analysis.....................................................................................................................................9
2.1 Market Segmentation...........................................................................................................................9
2.2 Target Market Segment Strategy........................................................................................................10
2.3 Service Business Analysis....................................................................................................................10
2.3.1 Competition and Buying Patterns.....................................................................................................11
2.4 Competitive Edge................................................................................................................................11
2.5 Marketing Strategy..............................................................................................................................12
2.6 Sales Strategy......................................................................................................................................12
2.6.1 Sales Forecast...................................................................................................................................12
CHARPTER THREE......................................................................................................................................13
3.0 Management plan...............................................................................................................................13
3.1 Personnel Plan.....................................................................................................................................13
3.2 Organization structure........................................................................................................................13
3.3 Key management personnel................................................................................................................14
3.4 Recruitment, Training and promotion of personnel............................................................................16
3.4.1 Recruitment.....................................................................................................................................16

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3.4.2 Training............................................................................................................................................16
3.4.3 Promotion........................................................................................................................................16
3.5 Incentives............................................................................................................................................17
3.6 Legal requirements.............................................................................................................................17
3.7 Other supportive services...................................................................................................................18
4.0 Operational/Production Plan..............................................................................................................19
4.1 Introduction........................................................................................................................................19
4.2 Production facilities and capacity........................................................................................................19
4.3 Premise layout.....................................................................................................................................20
4.4 production strategy.............................................................................................................................21
4.4 Production process..............................................................................................................................23
4.5 Regulation affecting regulation operations.........................................................................................23
CHAPTER FIVE............................................................................................................................................25
5.0 Financial Plan......................................................................................................................................25
5.1 Important Assumptions.......................................................................................................................25
5.2 Break-even Analysis............................................................................................................................25
5.3 Pro Forma Profit and Loss...................................................................................................................26
5.4 Projected cash flow.............................................................................................................................26
5.5 Pro Forma Balance Sheet....................................................................................................................27

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 EXECUTIVE SUMMARY
Water Tubes Plumbing is a MWINGI-based plumbing company that has chosen residential new
homes as their niche. Water Tubes will be able to handle any service request for plumbing of
volume home builds or custom new homes. By concentrating on a specific segment of the
market, Water Tubes will be able to rapidly gain market share demonstrating their proficiency
and professionalism in serving a specific market niche.

Water Tubes will leverage their competitive edges of professionalism and trim quality by
properly training all their employees and impress customers who are used to the lackadaisical
attitude of most plumbers. Water Tubes will have a total of four employees and will reach
profitability by month eight.

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 CHAPTER ONE

1.0 Business description

Water Tubes Plumbing, soon to be located in MWINGI, OR, will offer plumbing services for
residential new houses as well as custom new houses. The business will be based out of Cosmus
Mukiti’s house. Water Tubes will have four employees by the end of the year.

1.1 Start-up Summary

Water Tubes will require the following equipment and materials:

• Two trucks (used) fitted with a pipe rack on top.

• Assorted pipes (different diameters and materials).

• Assorted fittings.

• A 30 gallon bucket to store fittings.

• Pipe wrenches.

• Reciprocating saw.

• Circular saw.

• Whole hog (high torque right angle drill).

• Cordless screw gun.

• Propane torch.

1.2 Company Ownership

Water Tubes Plumbing is a sole proprietorship owned by COSMUS MUKITI

1.3 Objectives
The objectives for the first three years of operation include:

1. To develop a company whose primary goal is to exceed customer's expectations

2. To increase sales so in four to five years Cosmus can hire another master plumber.

3. To create a sustainable business, surviving off its own cash flow.

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1.4 Mission
Water Tubes Plumbing's mission is to provide the finest new house plumbing installation. We
exist to attract and maintain customers. When we adhere to this maxim, everything else will fall
into place. Our services will exceed the expectations of our customers.

1.5 Keys to Success

The keys to success are to provide the customer with a fair price and outstanding service.

1.6. Services
Water Tubes offers the finest in residential home plumbing construction as well as custom new
home construction. Residential construction is chosen because it is straight forward and clean.
Estimates are far more accurate, and the company is dealing with a few contractors instead of
many home owners. Additionally, there is no need to be on call 24 hours a day, a major
downside of being a traditional plumber.

New construction will be typically bid at $1 per foot plus a multiple of $400 per fixture. Fixtures
include sinks, toilets, tubs, etc.

The two other elements of Water Tubes services are professionalism and trim quality.
Professionalism of Water Tubes is clearly a service offering that will be highlighted as well as
trim quality which is the part of plumbing that is visible to the customer.

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 CHARPTER TWO

2.0 Market Analysis

Water Tubes will be focusing on a specific niche in the plumbing market, new homes. The
company will target both volume builders of new homes as well as customer builders.

Through a combination of networking activities and advertisements, Water Tubes will increase
their visibility among home builders allowing them to gain market share.

2.1 Market Segmentation

Water Tubes will target two distinct segments in the plumbing market:

1. Volume residential home builders. These builders are creating many different homes,
often at the same time, often on the same plot of land. These builders need a professional, well
priced, reliable plumber for all of their residential new builds. This is an attractive market niche
because the plumbing jobs are clean, numerous, and reasonably easy to do. Once a builder has
found a plumbing company that they are happy with, a long-term relationship is often
established, ensuring a constant flow of future jobs.

2. Custom home builders. These builders need a plumbing company for their custom
projects. This segment is attractive because the margins are better than typical build jobs and the
projects can be fun to do because it requires creativity and thoughtfulness to accomplish the task
within the established designed constraints. This target market makes up a smaller percentage of
Water Tubes forecasted sales.

Sales

CHB V.H.B

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2.2 Target Market Segment Strategy
The plumbing market (excluding direct to the consumer jobs) is a highly networked industry
where everyone knows everyone, and jobs are won or loss by who you know. Cosums will work
hard to establish himself as an experienced, professional plumber who is concentrating on the
residential new builds market. This will be Cosums in part through networking with all home
builders. The networking will be an important method to increase visibility of Water Tubes
because most home builders are always looking for professional, high-quality plumbers. It is
advantageous for Water Tubes to position themselves as solely working with the residential new
build market because it is attractive to builders to form a relationship with a plumber that is
specializing on the new build market and not trying to do a little of everything. Water Tubes will
be marketing themselves with an advertising campaign in the local home builder’s journal.

2.3 Service Business Analysis

The plumbing industry is state regulated. The state regulates the industry through a licensing
process based upon the Universal Building Code. The code is state specific and is a
comprehensive code for all building issues. There are three skill levels of plumbers. The first is
the apprentice who is basically a skilled laborer. In MWINGI, apprentices earn from $8-$12 an
hour depending on experience level. The next level is a journeyman. To achieve the journeymen
license you must past the state journeymen test. Journeymen in MWINGI typically earn from
approximately $18 an hour. The last step in the plumbing hierarchy is a master plumber. A
master plumber is a journeymen with more than 10 years’ experience and their earning potential
is from $35-$50 per hour.

To do work in the state, it is required that a deposit is made into the workers compensation fund
of $4,000 during the first year. This is only for new companies that have no record of revenue,
and no record of worker compensation history. After one year of no claims, $1,000 is refunded
per year and after five years the entire amount is refunded. In essence, this is acting as a bond for
newly formed companies.

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2.3.1 Competition and Buying Patterns
The plumbing market is quite competitive, and consequently in order to reap decent profits, large
quantity of work must be Cosmus Competitors can be broken down into three groups:

1. Chains: these plumbing companies are a franchise or a division of a larger chain. The
chains typically do repair work instead of new building construction, but sometimes they do
work with new builds.

2. Private companies: these companies are typically local. In order to generate sufficient
revenue, they will offer a wide range of services.

3. Large commercial & residential companies: these are the local Starbucks of the plumbing
world and will bid on any type of plumbing project, whether commercial or residential, repair or
new builds. Most jobs that this competitor will work on is the larger commercial projects, but a
getting a contract with a volume home builder would be attractive.

2.4 Competitive Edge

Water Tubes has two competitive advantages that they will leverage to gain market share:

• Professionalism. Fortunately for Water Tubes, professionalism seems to be absent among

many plumbers skill sets. Water Tubes will exhibit their professionalism in all aspects of
customer interaction as well as job performance. It is very common for plumbers to bid out for
more items that they can handle at once. This is Cosmus because the assumption is that they will
not get all the jobs they bid for so it is likely that their job load will be balanced out in the long
run. Some times this works, other times it fails. This is a common source of unprofessionalism
that will not happen at Cosmate Water Tubes. Additionally, all employees will be indoctrinated
into this customer centric culture, ensuring that all interactions with anyone from Water Tubes
will be a positive experience.

• Trim Quality. This is the part of the job that is visible to the customer as opposed to the
bulk of the work that is hidden behind cabinets and walls. There are not a lot of plumbing
companies that have consistently good trim quality.

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2.5 Marketing Strategy
As mentioned earlier in the Target Market Segment Strategy, Water Tubes marketing campaign
will be based on both networking as well as advertising.

• Networking. This will consist of meeting with builders that Cosmus had worked with in
the past, as well as others in the industry. Cosmus will chat with them and let them know about
his current venture and request a trial build to prove himself. Because the industry is so closely
networked, whenever he runs into someone, he will mention his new company. This will spread
the word rather fast as contractors tend to bump into each other all over town, both socially as
well as professionally.

• Advertising. Cosmus will be running advertisements in the local home builders journal.
This publication is a printed resource that home builders will typically consult when they are in
need of a contractor for a specific service in the construction of their house. Because the
readership is targeted and so closely interconnected, advertisements will be quite effective.
Cosmus will also put an advertisement in the Yellow Pages, however Cosmus believes that the
advertisements in the trade journal will be more effective due to the closer demographics and
behavior factors of the readership group.

2.6 Sales Strategy

Water Tubes sales strategy will be to get at least one job with the new builder to provide them
with an example of Water Tubes work. Based on the current competition, a display of Water
Tubes competitive edges of professionalism and trim quality will likely be more than sufficient
to turn a prospective customer into a long-term relationship.

2.6.1 Sales Forecast

The first month will be used to set up the business. The second month will be used to train an
employee as well as to undertake several jobs. The third month will be used to train two more
employees as well as do a few other jobs. By the fourth month it is forecasted that Water Tubes
will have a volume relationship with one builder. Month four will also see a custom home built.
Month six will mark the development of another volume builder. From month six on there
should be a steady increase in sales activity.

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 CHARPTER THREE

3.0 Management plan

Cosmus Mukiti received his certificate in plumbing from Gatanga technical and vocational
college. After college, Cosmus decided to teach more about plumbing, one of the odd jobs that
he did in college. After six months of inconsistent work Cosmus landed a job with a larger
plumbing company that did both residential and commercial work. Cosmus started as an
apprentice, but within four months had passed his journeymen exam. Cosmus continued to work
for this company for ten years, receiving his master plumbing designation right at the ten year
mark. At this point Cosmus decided that he wanted to try operating his own company, leveraging
skills learned in college as well as providing him the flexibility of being his own boss. It was at
this point that he started writing the business plan for Water Tubes and eventually quit his job.

3.1 Personnel Plan

Cosmus will be the only employee for the first month. Cosmus will bring on board a second
employee during month two, and two more employees on the third month. It is forecasted that
Water Tubes will stay at four employees for the foreseeable future.

3.2 Organization structure

This section shows the arrangement or diagrammatical form of business organization chart.

Manager

Asst Manager

Accountant/ Maintenance Shop Watch man

clerk personnel assistant

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3.3 Key management personnel.
The business will be managed by the owner who will be the general manager and will recruit
qualified and skilled works in the field.

Duties responsibilities

The manager will be the top most executive in the business and will lead in decision making in
the business the responsibilities will include organizing, planning, coordinating all activities of
the business, evaluating market strategy and performance and will be looking after safety health
and welfare of the employees.

Qualification of a manager.

- Be a diploma holder in business administration.

- Must have experience exceeding five years in the same field.

- Must be able to communicate and write.

- Must be computer literate.

- Must not have engaged in any corrupt issue.

Assistant manager

The assistant manager will work on behalf of manager when the manager is not there to ensure
smooth and efficient of the business.

Duties and responsibilities

- To ensure the staff members are motivated.

- To solve any complaints from the consumers.

- To ensure higher discipline are maintained by the staff.

- Responsible for employee’s salaries.

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Qualification of assistant manager

- Be a certificate holder in business administration.

- 1 year experience in the same field.

- A good communicator and a computer literate.

Accountant clerk

All payment will be done by accountant clerk.

Duties and responsibilities

- To record all business sales.

- To prepare a financial statement for the business.

- To prepare pay slips for the workers.

Qualification

- Must be a certificate holder in public accounts (CPA).

- Should have a minimum of 25 years.

- Must be a diploma holder in business administration.

Maintenance personnel.

Duties and responsibilities

- To ensure premise is in order.

- To clean the premise.

- To arrange the stocks.

Qualifications

- Must have experience in the relevant work.

- Must be a certificate holder in environment.

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Watchman Duties and responsibilities

- He will be in charge of the security of the premise.

- Assist in parking products for customers.

Qualification

- Should have experience in that field of the security for at least 3 years.

- Should have not been involved in any criminal crises.

3.4 Recruitment, Training and promotion of personnel.

This section deals with personnel acquisition and development.

3.4.1 Recruitment
The manager will conduct all recruitment practices their qualifications will be strictly scrutinized
to ensure justification employment of the good worker quality performance. All the vacant post
shall be advertised in the area using posters. Applicants shall submit their written application,
attaching their curriculum vitae and shall reach the firm officers within a period of two weeks.
On the expiring date of the period to short listing shall be done to choose the qualified personnel.

3.4.2 Training
COSMATE WATER TUBES shall train its employees so as to improve their skills and enable
them to cope up with changes due to how technologies. Seminars shall be provided by the
institution around the business e. Mount Kenya University. The institution normally organizes
field days for all the enterprises dealing in that field.

3.4.3 Promotion.
COSMATE WATER TUBES shall promote their employees according to their performances;
they will be rewarded by increasing their salaries, motivating them and also organizing for them
a free tribe while also separating employees who are not doing well on their job by reducing their
salaries or post or also sacking them.

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Table 3.1 Remuneration guideline
Position Salary House Transport Medical Net pay
allowance allowance allowance

Manager 29000 500 100 600 30200

Accountant 19000 500 100 600 20200

clerk

Shop assistant 9000 500 100 600 10200

Maintenance 4000 500 100 600 5200

personnel

Watchman 2000 500 100 600 3200

Total 63000 2500 500 3000 69000

3.5 Incentives
The workers shall be given incentives on the problem they shall be encountering in the due
course of the business. They will be given goods on credit and this will be recovered from their
salaries, also during holyday they would not be attending jobs instead they should celebrate
while those who will be also going for future education they should be given time to continue
learning and also they shall get a commission if they attain a certain target in sales.

3.6 Legal requirements

This section deals with both central government and local authorities’ business. Licenses by-laws
requirements and permits include the following: license of trade, this will be obtained from the
nearby offices of commerce and industries on local authorities offices. This obtained upon
incurring some expenses for it has to be renewed annually. This form is filled showing business
name, address and period of existence. Council license will be another requirement; this will be
obtained from council officers and will be renewed automatically after every year. Permit will be
another requirement which will be incurred inside the premise this gives the authority to
establish a building in the chosen location.

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3.7 Other supportive services.
For the business to run well there will be other essential services acquired to the stable
especially during the initial stages.

Banking services

Since the business will be in Mwingi where many banking service available the business shall
choose KCB bank because it has good reputation in offering good services.

KCB bank P.O.BOX

90-400,
Mwingi.

Insurance

The business shall insure its properties and services with the ENTERPISE of East Africa Limited
which covers damages.

APA Insurance ENTERPISE

P.O.BOX 6704, Mwingi

Transport services

The business shall choose road transport since the business is located near the road side and it is
flexible for vehicle. The business will choose kintwa Transport Services

kintwa Transport ENTERPISE

P.O.BOX 90-400

Mwingi.

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 CHAPTER FOUR

4.0 Operational/Production Plan

4.1 Introduction
This chapter describes the products and services and how they will be manufactured. It shows a
breakdown of tools, equipment, materials and other necessary equipment during production
process.

4.2 Production facilities and capacity.

ANIAM Construction ENTERPISE will be required different equipment to be used in offering
goods and quality services.

The following table showing the equipment and facilities purchased.

Table 4.1Table showing the equipment and facilities purchased.

Item Number required Cost Installation cost Total

Computer 1 20000 300 20,300

Tables 2 1000 - 2000

Chairs 2 600 - 1200

Cables 1 5000 - 5000

Total 26600 28600

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Table 4.2 Maintenance and repair cost
Item Supplier Repair cost

Computer Eldmatt 3,000

Wheel barrow Ktl hardware 1,000

Total 4,000

4.3 Premise layout

At the start

Account office Store Toilet

Production department
Park jard

Security

After 2-3 years

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 Account office Store Toilet

Park yard Production department Secretarial

office

Reception

Security

4.4 production strategy

Table 4.3 Monthly material requirements.
Material required Quantity Cost of transport Source

Machines 5 rolls 1000 Nairobi

Mouse 1 2000 Kitale

Total 3000

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Table 4.4 Monthly labor cost
Position Salary H. Allowances Medical Transport Net pay
allowance allowance

Manager 29,000 500 600 100 30200

Accountant 19000 500 600 100 20200

Clerk 500 600 100

Shop 4000 500 600 100 10200

assistance
Maintenance 4000 500 600 100 5200

Personnel 500 600 100

Watchman 2000 500 600 100 3200

Total 3600 2500 3000 500 69000

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Table 4.5 Monthly production overheads
Item Cost

Repair 4000

Transport 3000

Advertisement 10000

Permit 5000

Rent 8000

Registration fees 2000

Total 32,000

4.4 Production process

Production is a process of converting raw materials into more useful goods. The products that
will be sold directly include; cables, computers and phones etc. The phone will be ensured that
has all available internet items in order to be able to access the various information needed by the
customers. The computers will be first tasted by experiences to ensure they have large storage
volume for information needed by the customers. The computers will be first tasted by expertise
to ensure they have large storage volume for information and are of small size which can be
easily portable without difficulties.

4.5 Regulation affecting regulation operations

Public health regulations

This is concern with waste material used from packaging of the products e.g. environment should
be kept clean and all plastic bags should be deposited. The metal products which are of no use
should be taken back to the manufacturer for recycling.

Trade licenses
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This will be obtained from the county council by trade licensing of cap 497 for kshs. 4500 per
year and the labor law will include maximum working

Health and safety

The ANIAM Construction ENTERPISE will ensure there is a good disposal of waste products
and the room will have a good ventilation and recommended materials e.g. gloves.

CHAPTER FIVE

5.0 Financial Plan

The following sections will outline important financial information.

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5.1 Important Assumptions
The following table details important financial assumptions.

General Assumptions
Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

5.2 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the
breakeven point.

5.3 Pro Forma Profit and Loss

Sales %$133,858 $190,752 $215,330

Direct Cost of Sales $13,386 $19,075 $21,533

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Other Production Expenses $0 $0 $0

Total Cost of Sales $13,386 $19,075 $21,533

Gross Margin $120,472 $171,677 $193,797

Gross Margin 90.00% 90.00% 90.00%

5.4 Projected cash flow

Month 1 Month 3 Month 5 Month 7 Month 9 Month 11

Month 2 Month 4 Month 6 Month 8 Month 10

Month 12

5.5 Pro Forma Balance Sheet

Assets

Current Assets

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Cash $22,969 $48,976 $83,158

Other Current Assets $0 $0 $0

Total Current Assets $22,969 $48,976 $83,158

Long-term Assets $24,000 $24,000 $24,000

Accumulated Depreciation $3,456 $6,912 $10,368

Total Long-term Assets $20,544 $17,088 $13,632

Total Assets $43,513 $66,064 $96,790

Liabilities and Capital Year 1 Year 2 Years 3

Current Liabilities

Accounts Payable $3,807 $4,297 $4,826

Current Borrowing $0 $0 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $3,807 $4,297 $4,826

Long-term Liabilities $0 $0 $0

Total Liabilities $3,807 $4,297 $4,826

Paid-in Capital $44,000 $44,000 $44,000

Retained Earnings ($350) ($4,294) $17,768

Earnings ($3,944) $22,062 $30,196

Total Capital $39,706 $61,768 $91,964

Total Liabilities and Capital $43,513 $66,064 $96,790

Net Worth $39,706 $61,768 $91,964

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