TITLE.

: BUSINESS PLAN

PRESENTED BY. : MUSAU R. KYALO

PRESENTED TO. : KENYA NATIONAL EXAMINATION COUNCIL

IN PARTIAL FULFILLMENT FOR THE AWARD OF DIPLOMA IN

ACCOUNTANCY.

CENTRE NAME. : RIFT VALLEY INSTITUTE OF SCIENCE

AND TECHNOLOGY

CENTRE CODE. : 552001

INDEX NUMBER : 552001/0491

COURSE NAME. : DIPLOMA IN ACCOUNTANCY

PAPER NUMBER. :2804/307B

SUPERVISOR : MRS JACINTA MWAI

EXAMINATION SERIES : NOVEMBER/DECEMBER 2021

i
Table of Contents
DECLARATION......................................................................................................................iv
DEDICATION...........................................................................................................................v
ACKNOWLEDGEMENT........................................................................................................vi
EXECUTIVE SUMMARY.....................................................................................................vii
CHAPTER ONE........................................................................................................................1
1.1 Business description.............................................................................................................1
1.2 Business name..................................................................................................................1
1.3 Business location and the address....................................................................................1
1.4 Form of ownership...........................................................................................................1
1.5 Types of business.............................................................................................................2
1.6Product and services..........................................................................................................2
1.7 Justification of opportunity...............................................................................................2
1.8 Types of industry the business belong..............................................................................3
1.9 Business goal /objectives..................................................................................................3
CHAPTER TWO.......................................................................................................................4
2.0 marketing plan..................................................................................................................4
2.1 potential customer............................................................................................................4
2.3 competition.......................................................................................................................4
2.3marketshare........................................................................................................................5
2.4 advertising and promotion................................................................................................5
2.5 pricing strategy.................................................................................................................5
2.6 Distribution strategies.......................................................................................................5
2.7 sale tactics.........................................................................................................................6
CHAPTER THREE....................................................................................................................7
3.0 Organizational and management......................................................................................7
3.1 organisation and staff.......................................................................................................7
3.2 organization structure.......................................................................................................8
3.3 recruitment ,training and promotion.................................................................................8
3.3.1 Recruitment................................................................................................................8
3.3.2 promotion...................................................................................................................8
3.3.3 Training......................................................................................................................9
3.4 Remuneration and incentives...........................................................................................9
3.4.2Incentives....................................................................................................................9

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 3.5 licenses and permit...........................................................................................................9
3.6 supportive business...........................................................................................................9
3.6.2Britam insurance.........................................................................................................9
CHAPTER FOUR....................................................................................................................10
4.0 operation plan.................................................................................................................10
4.1 product design and development....................................................................................10
4.2 Production facilities and capacity...................................................................................10
4.3 Production.......................................................................................................................10
4.3.1 monthly requirement................................................................................................11
4.4 government regulation....................................................................................................12
CHAPTER FIVE......................................................................................................................13
5.0 FINANCIAL PLAN.......................................................................................................13
5.1 PRE-OPERATIONAL COST........................................................................................13
5.2 WORKING CAPITAL...................................................................................................13
5.3 PROJECTED CASHFLOW...........................................................................................14
5.4 PRO-FORMA INCOME STATEMENT.......................................................................16
5.5 Proforma balance sheet...................................................................................................17
5.6 Break even point.............................................................................................................18
5.7 fixed assets......................................................................................................................18
APPENDIX I: MAP LOCATION...........................................................................................20
APPENDIX II: BUSINESS LAY OUT...................................................................................21

iii
 DECLARATION
I declare that this is my own work and it has never been written and submitted to the Kenya
National Examination Council ever before.

CANDIDATE NAME: MUSAU R. KYALO

SIGN: ............................................

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

SUPERVISOR NAME: MRS JACINTA MWAI

SIGN: ......................................

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

iv
 DEDICATION
I declare this project to my parents Mr and Mrs Karigi and my friends for the moral support
they gave me when writing this project.

v
 ACKNOWLEDGEMENT
First I thank God for giving me this golden opportunity to do this wonderful project.
Secondly, I would also like to thank my parents, my teacher Mrs Jacinta Mwai and friends
who help me a lot in finalizing this project within the limited time frame.

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EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION

The name of the business is Five star bar and restaurant Managed by Musau R. Kyalo. The
business will be located at Kenyatta avenue in Kiambu county. The business will deal with
the distribution of new curriculum books recommended by the Ministry of Education.

2.0MARKETING PLAN

The potential customers to Five star bar and restaurant will be classified into: commercial
customers, individual customers, institutional customers. To create a market niche, I will
advertise through billboards, Social media and even in Radios For it to be recognised Country
wide of it’s good services that it offers.

3.0ORGANISATIONAL AND MANAGEMENT PLAN

The proposed business will be managed by one managing director assisted by the following
Skilled personnels: one accountants who will maintain the books of records and receipts of
the business, two receptionists Who will attend to incoming customers in the business ,three
drivers whose obligations Is to transport books and stationeries to the preferred area to the
preferred area Requested and lastly four non management staff’s who will ensure books are
properly placed in shelves, arranging them according to their course of study and maintaining
a tidy work place.

4.0OPERATIONAL/PRODUCTION PLAN

The proposed business needs working materials which enables it to run efficiently and help
to improve Its performance and productivity. The business specifies well it’s opening and
closing hours and it has to follow the regulations set out by government policies.

5.0 FINANCIAL PLAN

The proposed business financial plan comprises of: pre operational costs, working capital,
projected cash flow, proforma income statement, proforma balance sheet and the businesses
cash -inflow and cash-outflow should be proportional in order to avoid inflation and
deflation.

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 CHAPTER ONE

1.1 Business description

The owner of the business is robin karigi .He is twenty years old resident of kiambu
county .Acquired primary education at shekinah school in the year 2009 and later joined
muindi mbingu school .Where the sat for Kenya certificate of secondary education in the
year 2018 and currentlya student in rift valley institute of science and technology
pursuing a diploma in accountancy

1.2 Business name

The name of the proposed business will be five star bar and restaurant .The name is
preferred because it is simple and easily remembered by customer
The logo of the business will be as follows below

1.3 Business location and the address

The location of the bar and restaurant will be near to t no l inniche international exhibition
center in kiambu .It has good environment which is easy quiet .it also has a view of Dian
late .it has convenient traffic system and it is next to the wealth area and there are many
famous entertainment places around there
The following will be the business address
Five star bar and restaurant
P.o box 437
Kiambu

1.4 Form of ownership

The business will be a sole proprietorship under my name karigi .the manager of the
business will be I .The reason why we prefer the sole proprietor is as below
i. It will be easy for decision making
ii. Its saves time when making decision
iii. It will be arranged or known by other people

Sources of fund for the business will be as follows

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 Sources Amount %
Owner contribution 360,000 50
Families friends contribution 340,800 30
Loan from bank 400200 20

Total 1,200,000 100

1.5 Types of business

The business will offer a variety product and services according to the customer
required .The customer will have to go through the menu and choose the type of services
of food to be offered .This will be a wide selection of firms that will fit with all different
customer be ;individual ,families or even institution

1.6Product and services

Five star bar and restaurant will be dealing with offering the specific drinks foods and
beverages of high quality services to customers
Examples of food and beverages are:
Snacks , porridge ,soup tea, and drinks are tusker cider ,black and white ,chrome
vodka ,pilsner ,kenyakane and wines

1.7 Justification of opportunity

The owner justify the needs for the proposed business due to following reason
a. Use of local reasons
Material that will be used in bar and restaurant in the production of food are
locally available at an affordable prices .The number of people who will be
working in the bar and restaurant are skilled and are also available
b. Creation of employment
c. The owner may enjoy herself and other in the business .This is very important
since the owner will not benefit alone but others as well
Improve living standard

Owner living standard will improve through making of profit as other workers

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1.8 Types of industry the business belong
The business falls under brewers industry within the business will be of medium because it is
located growing and amenities are available hence its expected to grow faster Business will
be dealing with selling of different kind of food and drink

The kind of technology will be modern where by the services are provided to customer in
higher standard to retain in the owner of the business will employee export and skilled people
in operating the work .The job categories are accountant required people who serving waiters
in operating clerks .The strategy of sales and profit will depend on the quality services
provided to the customer .The prosperity of the business is to provide good services and high
quantity food and drinks so as to attract more customer

1.9 Business goal /objectives

The goal to be achieved in the business are;

i. Provide product and services of high quality

ii. Make profit
iii. Expand the business
iv. Promote national development

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 CHAPTER TWO

2.0 marketing plan

Marketing plans is used in identifying or following up to the distribution of products and
services by all available by all means to the customers so as to enable the business owner
to find out the opportunities ,weakness ,strength and risk facing the business in order to
offer high demanding product and services to reach potential customers

2.1 potential customer

Potential customers will be people who have firm requiring the product these are:
i. commercial customers -These are profit making organization five star bar
and restaurant and Serena bar and restaurant
ii. Institutional customers -This is school likely in kiambu college ,Thika and
Jordan institution to buy product in bulk
iii. Domestic customers – This is an individual customers surrounded the area
the resident within the town trading The people coming or going to
kiambu travelers on the high way buy food to consume

2.3 competition
Five star bar and restaurant has three competition it faces stiff competition in its product and
serves .The strength and the weakness there are :

Name Strength Weakness

Serena bar and restaurant Use large equipment to offer Poor location
sales services Lack of qualified skills
personnel
Sacco bar and restaurant Qualified personnel Poor customer relation
Adequate equipment and
modern facilities

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2.3marketshare

Kiambu town has a population around 10,000 people I then target 50%of the
population .The business will acquire this by offering quality product and services
The data collected indicate that five star will have 50 % offer market share due to
i. it saves time when making decision
ii. It will be recognized
iii. It will be easy

2.4 advertising and promotion

The owner will be made aware of the existence of the business product and services through
three ways

a) Newspaper and magazines

On the newspaper and famous which people read regularlyto advertise the bar and restaurant
publicing the image of the company marketing idea and enterprises culture

b) Publicing internally

Publicing internally at the bar and restaurant to the customers through different types
of menu such as special for lovers ,children’s ,its important to make beautiful and
attractive menu to impress them

2.5 pricing strategy

The prices at which will be sold depend on factors such as :
i. Demand on the product The price will entirely depend on demand of the
product as well as product availability
ii. Cost of product s: the business is to offer product and services at a reduced
price than its competitors

2.6 Distribution strategies

The distribution starts from the producers is from kitchen or production from head chef to bar
and restaurant by the head waiter to the side board by assistant head water to the
customers .The main means of transport is carried food from kitchen using large tray

5
manually some items used road to transport others ,food and drinks to customers who orders
food and drink from the customers .The cost of transport normally costs sh200 per hour.

2.7 sale tactics

The business will make sales by producing menus which indicate the pricing of each
item ,hence the customers will have a choice on the menu on the variety of food and drink
willing to purchase .Another ways is to warn up my sales and emails .,this means before you I
contract a prospect I should fully understand who the idea customers

6
 CHAPTER THREE

3.0 Organizational and management

3.1 organisation and staff

The following tables shows the number of staff and their requirements of the business

Position No of personnel Qualification Duties

Manager 2 Should have a good Providing uniform
public relation skills Keep all electrical
At least 2 years wire proper and
experience in similar connection is
field saving maintaining
Should be aged 21-35 premises and
years equipment

Food and drink 1 Computer literate have Purchasing of all

manager a good public relation food and drinks
at least 22 years old Determining
position size in
relation to selling
prices
Bar and restaurant 4 Computer literate He set the standard
clerk At least 24-28 of age for service and is
responsible for any
staff training that
may have to be
carried out on off
the job

The head chief 1 A certificate in He serve the

catering customer on the

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 At least20 yrs. table
2 years of experience He bring food
from kitchen to the
bar and restaurant

3.2 organization structure

The chart below indicates the level of commands

MANAGING DIRECTOR

ACCOUNTANT

RECEPTIONIST DRIVERS STAFFS

3.3 recruitment ,training and promotion

3.3.1 Recruitment
Five star bar and restaurant will recruit its employee by the use of:
i. Questionnaire
A set of questions will be made for the person seeking the jobs as advertised

ii. Radio
Whether they need a person or if there’s a vacant post the advertising throught
radio deserving the person they want and the qualification it self

3.3.2 promotion
The business will offer promotion to the customers such as after sales and services also
granting business

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3.3.3 Training
Training programs will be conducted to allow new employees and other employees to meet
the challenges in the industry from time to the time to know work is being done this will be
as conducting seminars and export to train employees

3.4 Remuneration and incentives

The business will motivate the employees so as to increase sales of the product and also
maintain to increase sales of the product and also maintain good name of the business
maotivate the employee in order to make good working in the business and keep everything
in good conduct without failing All employees will be paid on monthly

Job title No of employees Basic salary Total amount

Manager 1 20000 480000
Food and drink 2 1500 720000
manager
Head chef 4 25000 1200000

3.4.2Incentives
This will be both monetary and non monetary incentives .The monetary incentives
issued will be yearly salaryincensement and allowances which are
iii. Rewards
iv. Medical allowances
v. Entertainment

3.5 licenses and permit

These are regulations produced by government so as to govern an organization on
how to conduct the business as per expected also help in smooth running of the
business

3.6 supportive business

The enterprise will have support services that will help the business run smoothly and
get advices on how to solve dispute when they arise

3.6.2Britam insurance
The business will be insured by Britam insurance p.o.box 8409

Kiambu

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 CHAPTER FOUR

4.0 operation plan

4.1 product design and development

The design of the development will be according to the customer desires .The
following are product designed development

 Offering quality and quantity products -the proposed business will attract and
retains customers by giving or producing quality and quantity products which
promote market of its product
 Pricing -the proposed business sell the product at fair prices .This price will
enable customer to buy in large quantity and good quality

4.2 Production facilities and capacity

The table below show the facilities required and cost during the start up of the business .The
proposed business will required the following machines and equipment in order to start
operation

Large equipment

The bar and restaurant will require 2 gas cooler and blender

Item No Cost Total

Utensil 20 400 8000
Unga 2 100 200
Large equipment 2 10000 20000
Mechanical 5! 2000 10000
Furniture and fitting 5 25000 125000

Other fixed assets – The proposed business require premises where is located Also a
pickup for transaction and distribution of product s

4.3 Production
The business will have specific hours that is opening business will have be at 8:00am
from every Monday and closing hour at 10:00 pm up to Friday and only weekend
where we operate on 24hours

Production strategy

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 The business has the following

Item Ksh Item Ksh

Tea leaves 330 Cocacola 80
Sugar 460 Pinneaple juice 230
Vinegar 210 Tusker 330
Pepper Chrome vodka 280
Salt 440 Black and white 700
Maize flour 6000 Balozi 400
Margarine 330 Kenya kane 400
Cooking fat 567 Gilbeys 489
Mustard 700 Tracey 130
Wheat flour 2500 Black label 440
Cocoa 450 Green label 200
Paring bags 4500 Quinnes 479
Powder 60 Dallas 200

4.3.1 monthly requirement

Types of labour No Labour test
Trained 1 8000
General manager 2 5000
Captain 1 5000
Headchef 2 4500
Cashier 6 7600
Cook 6 4500
Waiter 7 5600
Security 3 9800
Cleaner 3 4500
Total

4.4 government regulation

 Trade license regulation act -trade license are required for legal requirement
and used by the town

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  Environment regulation act -these regulation which enables the entire natural
environment are protected agaisntexploation or population

i. Health regulation

Being a hospitality industry the public health offices must aproveits adhereto

ii. Trading license

The proprietor will obtain trading from distinct trade office

iii. Local government act

The local government is whose jurisficationis to locate to give permit this would be town
council

iv. Trade mark

The business is to register under the laws of the trademark bureau of standard ACT
cap 506 of the law under the name and address

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 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COST

ITEM COST
RENT 34000
INSURANCE 55000
ELECTRICITY 12500
TOOLS &EQUIPMENT 90000

5.2 WORKING CAPITAL

ITEM YEAR 1 KSH YEAR 2 KSH YEAR 3 KSH
Stock 400,000 600,000 800,000
Cash in hand 500,000 700,000 900,000
Fixed assets
Furniture 30,000 90,000 120,000
Distribution van 1,000,000 800,000 750,000
Liabilities
Bank overdraft 90,000 60,000 300,000
Creditors 20,000 50,000 80,000
Total 2,040,000 3,110,000 2,950,000

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 5.3 PROJECTED CASHFLOW
.Ian Feb Mar Apr May June July Aug Sept Oct Nov Dec Total

Cash inflows Ksh. Ksh. Ksh. Ksh. Ksh. Ksh. Ksh. Ksh. Ksh. Ksh. Ksh. Ksh. Ksh.

Cash sales 400000 410000 41000 415000 420000 410000 415000 420000 480000 430000 425000 430000 2214200
0

Debtors 18000 20000 17500 16800 22000 15800 16750 19000 21000 16575 16575 200000

Cash at hand 0000 8000 7000 6500 6000 7200 7500 8000 9000 8000 12000 10000 97800

cash at bank 18000 25000 28500 18200 19800 14350 28600 27700 18300 29000 25000 27500 280000

Total cash inflow 426000 461600 46560 457200 462650 453550 456900 472450 476300 4800 478575 484075 5592900
0

Cash outflow

Cash purchases 70000 72000 75000 770 00 80000 83000 72000 74000 71000 70000 73000 70000 887000

Salaries and wages 100000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 720000

Interest on loan 2230 2230 2230 2230 2230 2230 2230 2230 2230 2230 2230 2230 26720

Loan repayment 14850 14850 14850 14850 14850 14850 14850 14850 14850 14850 14850 14850 178200

Water bill 300 300 200 250 300 200 200 200 250 300 300 250 3050

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Electricity bill 100 900 900 900 900 900 900 900 900 900 900 900 10800

Licenses 3500 3500

Repair & maintenance 5000 -3000 2000 I0000

Advertisement 4000 2000 6000

Stationery 0000 5000 2000 13000

Insurance 9000 9000

Telephone & postage 500 500 500 500 500 500 500 500 500 500 500 500 6000

Total cash outflow I70280 150780 15368 155730 158780 161680 153680 159080 149730 150780 153780 148730 1873310
0

Net cash 249720 310820 31182 301470 303870 291870 313220 312770 326570 337220 324795 335345 3719490
0

Accumulated cash 249720 560540 87236 1173830 1477700 1709570 2082790 2395560 272213 3059350 338414 3719490
0 0 5

15
16
5.4 PRO-FORMA INCOME STATEMENT
Items Kshs.

Sales 400,000

Opening stock 100,000

Purchases 220,000

320,000

Closing stock 150,000

170,000

Gross profit 230,000

Less expenses

Salaries 80,000

Rent 12,000

Water 3,000

Advertisement 6,000

Stationeries 7,000

Bank charges 10,000

Insurance 6,000

Legal fee 6,000

Total expenses 130,000

Net profit before tax 100,000

Less 5% tax 5,000

Net profit 95,000

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5.5 Proforma balance sheet
Items 2022 Ksh. 2023Ksh. 2024 Ksh.

Fixed assets

Premises 150,000 160,000 165,000

Fixtures 19,000 24,000 22,000

Motor vehicles 300,000 400,000 450,000

Total fixed assets 469,000 584,000 687,000

Current assets

Stock 120,000 150,000 170,000

Debtors 80,000 90,000 100,000

Bank 141,000 10,000 13,000

Less Current Liabilities

Creditors 90,000 130,000 130,000

Loans 21,000 40,000 30,000

103,000 80,000 123,000

Total current assets 572,000 664,000 760,000

Capital 550,000 600,000 680,000

Add net profit 95,000 120,000 160,000

Less drawings 73,000 56,000 80,000

572,000 664,000 760,000

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5.6 Break even point
Item Ksh. Ksh.

Sales 400,000

Less variable costs 3,000

Water bill 4,000

Salaries 6,000

Advertisement 11,000

Repair and maintenance 10,000

Insurance 10,000

Depreciation 80,000

Total contribution margin 320,000

5.7 fixed assets

Item Amount
Distribution van 7.37
Land 4.61
Furniture 0.18
12.16

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Break even point = Fixed Asset
Contribution margin
i. Distribution van
8,000,000
1,085,000
B.E.P = 7.37
ii. Land
5,000,000
1,085,000
B.E.P = 4.61
iii. Furniture
200,000
1,085,000
B.E.P = 0.18
5.8 Expected profitability ratio
Gross profit % = Gross profit x 100
Capital
= 7,010,000 x 100
13,000,000
= 53.92%

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APPENDIX I: MAP LOCATION

FIVE STAR BAR

AND RESTURANT

KIMJAY’S
COMPUTERS
MID WEST
TO BIASHARA PLAZA
SECTION

WANGARI MATHAI ROAD

NAIVAS SUPERMARKET

STATE HOUSE T
O

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APPENDIX II: BUSINESS LAY OUT

ENTRANCE
SECURITY EXIT

PARKING

MANAGER
SECRETARY’s OFFICE

WATER TANK

ENTERPRISE

STORE ROOM 1
AND 2

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