BUSINESS PLAN

NAKALEI'S ELECTRICALS WHOLESALE

NAME: SAMWEL NAKALEI

INDEX NO: 5341010501

COURSE CODE: 2601

CENTER CODE: 534101

INSTITUTION : RIFT VALLEY TECHNICAL TRAINING INSTITUTE

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILMENT FOR THE AWARD OF DIPLOMA IN

ELECTRICAL AND ELECTRONICS ENGINEERING

POWER OPTION

SERIES : JULY 2023

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DECLARATION

I declare that this business plan is my original work and has not been presented for any award
of any diploma in any other institute.

Presenters Name:

Signature: ………………………………..

Date: ……………………………………

The business plan has been submitted to the Kenya national examination council for award of
diploma in Electrical and Electronics Engineering with approval of my supervisor.

Supervisor's Name:.

Signature: ………………………………

Date: ……………………………………

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 ACKNOWLEDGEMENT

I wish to extend my heart gratitude to the following for their help in the course of writing this
business plan. First I wish to thank all the personnel that research was conducted. Special
thanks to go to them for providing me with the information. To my parents for seeing me
through all financial support. Sincere thanks to my project supervisor for correcting and
advising on this project.

May God bless them all.

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 DEDICATION

I dedicate the business plan to my lovely parents, my family members and classmates who
assisted me and encouraged me in writing.

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Contents
DECLARATION........................................................................................................................i
ACKNOWLEDGEMENT.........................................................................................................ii
DEDICATION..........................................................................................................................iii
EXECUTIVE SUMMARY.......................................................................................................v
CHAPTER ONE........................................................................................................................1
1.0: BUSINESS DESCRIPTION..............................................................................................1
1.1 THE SPONSORS................................................................................................................1
1.2 NATURE OF THE BUSINESS..........................................................................................1
1.3 BUSINESS LOCATION AND ADDRESS........................................................................1
1.4 FORM OF OWNERSHIP....................................................................................................2
1.5 TYPE OF BUSINESS.........................................................................................................2
1.6 THE PRODUCTS/SERVICES............................................................................................3
1.7 JUSTIFICATION OF OPPORTUNITY.............................................................................3
1.8 THE INDUSTRY.................................................................................................................3
1.9 BUSINESS GOALS............................................................................................................3
ENTRY AND GROWTH STRATEGY....................................................................................4
CHAPTER TWO.......................................................................................................................5
2.0 MARKETING PLAN..........................................................................................................5
2.1 CUSTOMERS......................................................................................................................5
2.1.1 POTENTIAL CUSTOMERS.........................................................................................5
2.1.2 DOMESTIC CUSTOMERS.......................................................................................5
2.1.3 INSTITUTIONAL CUSTOMERS.............................................................................5
2.2 COMPETITORS..................................................................................................................6
2.3 MARKET SHARE...............................................................................................................7
2.4 ADVERTISING AND PROMOTION STRATEGY......................................................7
2.5 PRICING STRATEGY.....................................................................................................9
2.6 SALES TACTICS............................................................................................................9
2.7 DISTRIBUTION STRATEGY.........................................................................................9
CHAPTER THREE.................................................................................................................10
3.0 ORGANIZATION AND MANAGEMENT PLAN..........................................................10
.3 RECRUITMENT, TRAINING AND PROMOTION.........................................................12

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3.4 REMUNERATION AND INCENTIVES.....................................................................13
3.6 SUPPORT SERVICES..................................................................................................14
CHAPTER FOUR....................................................................................................................15
4.0 OPERATIONAL / PRODUCTION PLAN...................................................................15
4.2 PRODUCTION FACILITIES AND CAPACITIES......................................................15
CHAPTER FIVE.....................................................................................................................19
5.0 FINANCIAL PLAN........................................................................................................19
5.1 PRE - OPERATIONAL COST......................................................................................19
5.2 WORKING CAPITAL REQUIREMENTS...................................................................19
5.3 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 2022..............20
5.4 PRO FORMA INCOME STATEMENT.......................................................................21
PRO FORMA INCOME STATEMENT.................................................................................21
5.5 NAKALEI'S ELECTRICAL WHOLESALE PRODUCTS PRO FORMA BALANCE
HEET.......................................................................................................................................22
5.7 EXPECTED PROFITABILITY RATIOS.....................................................................25
5.8 PROPOSED CAPITALIZATION.................................................................................25

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 EXECUTIVE SUMMARY

CHAPTER ONE

In this chapter are the business name, location and address. The form of ownership and the
type of business is also contained herein. This chapter describes the products and justification
of opportunities.

CHAPTER TWO

Describes the industry in which the business belongs, the goals, and also explains the entry
and growth strategy.

CHAPTER THREE

In this chapter the marketing plan, the location of the business, types of customers to be
served are described.

It also highlights the number of competitors in the area their strengths and weaknesses.

Promotion and advertising methods are also included.

In this chapter is the business and personnel involved in the operation, their qualification,
duties specialization, recruitment, and remuneration and incentives strategies.

It also shows the organization structure and various support people and professionals who
will benefit the business.

CHAPTER FOUR

In this chapter is the production and operation of the business and how it will be conducted. It
includes the transactions and various policies and regulations to achieve the objectives and
goals.

CHAPTER FIVE

It describes the facilities and capacities needed in terms of finance.

Pre-operational costs

Working capital requirement

Projected cash flow statement.

Pro-forma income statement.

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‘Pro-forma balance sheet.

Break-even level.

Expected profitability level.

Desired financing.

Proposed capitalization.

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 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

This chapter covers the background information of the proposed business. The areas of
concern being business name, location, form of ownership, type of business, products,
justification of opportunities, industries, goals of the business and entry and growth strategy.

1.1 BUSINESS NAME

The business name will be NAKALEI'S ELECTRICALS WHOLESALE; the name shows
the business involvement in electronics and not just electronics but Master Technology as the
modern digital electronic world.

1.2 BUSINESS LOCATION AND ADDRESS

The business will be located in Lodwar Town within the popular market, opposite Co-
operative Bank building.

This location favors the business due to the presence of many customers within the market
and outside.

For easy identification and location of the business a big poster with smart calligraphy will be
placed at the door place reading Nakalei's ELECTRICALS WHOLESALE

P.O. BOX 139

LODWAR

TEL:0794085534

EMAIL: nakaleisamwel@gmail.com

The business will also be located in a place where factors collectively known as aids to trade
are easily accessible. For instance, transport and communication network is of good standard.
This enables easy involvement and transportation. There are also banks and insurance
companies in town, just a working distance away.

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The surrounding environment is also good security and standard hygiene being that there is a
police post near it.

The following is among the exact proposed location of Master general electronics.

1.3 FORM OF OWNERSHIP

The business will be a sole proprietorship kind of business at the beginning of its operations,
but there is prospect of its operations, but there is prospect of making it a partnership kind as
the business grows and flourishes.

The owner will be its manager. Labors force will be provided by an employed staff that will
be recruited according to their qualifications as required by their respective departments.

Being a sole proprietorship kind of business the owner will be his own boss, all decisions and
solution that might arise will be upon him.

The owner/manage will also be the sole source of all operations are satisfactory funded
growth of the business of the long run, he will enjoy all the profits as he shall incur all the
losses.

Some limitation to this kind of ownership include lack of finance might hinder the business
from expanding as expected. This is due to the fact that all the financial obligations are left on
the sole hands of the manager who might not be able to raise all the finance alone. In addition
is due to stiff competitions from others with the same kind of business.

1.4 TYPES OF BUSINESS

Nakalei's electrical wholesale shall operate as a selling business of electronics equipments as

well as providing technical services to its customers. The following is a description of some
of the products to be provided in the workshops of the business.

i. Speaker.

This shall include instruction of smart speaker cabinets and fixing the speakers in the

Cabinets plus giving the combination a perfect finish.

They will be charged according to sizes and materials used in construction.

ii. Wireless microphones.

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There are circuits specially designed to pick up voice phone and convert it into audio signal
voltages which when amplified reproduces the original sound from a speaker.

iii. Burglar alarms and sirens.

These will also be constructed in our workshop. They are special electronic appliances that
respond to certain changes in their environment e.g. change in light, temperature etc. to give
an audible output so as to alert. Ready made electronic appliances on sale shall also include;

 T.V. sets-These shall include the current analogue type and the new technology digital
types.
Nakalei's electrical wholesale systems-these are electronic systems that incorporate
radio, type recorder, DVD/VCD/CD/ MP3 PLAYERS. They are meant for music and
video receptions.
 Analogue digital converter-This is a near technology device that will be used to
convert the digital signals as radiated from the broadcasting stations to analogue as
received by analogue television once the technology of digital is implemented.

iv. Spare parts

These are electronic components and circuits that can be used to replace and destroy part in
the process of repair. They will include capacitors, resistors, and inductors. T.V. circuits,
transformers, deflection coil among others.

Technician services

The business will have a workshop with other technician and a chief technician. They shall
work together in handling any technical repair work including repair of T.V., radio system,
DVD, and Mp3 repairs etc. the group shall also help the society by ensuring the numerous
technical questions brought up customers concerning their observation or encounter with any
of their electronic problems.

We shall encourage the society to embrace the modern technology by exploiting to the
benefits of new technology over old technology e.g. the advantages of digital television over
an analogue television.

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1.6 JUSTIFICATION OF OPPORTUNITIES

Nakalei's electrical wholesale will eventually start operating as a business enterprise after
proper scanning has been done by the manager.

It is after scanning that the manager will finally decide on this location. Its proposed location
at the moment is found to be the perfect location considering some of the essential factors
including infrastructure, market and competition among others. The area accommodates only
one established electronic shop and one only nearly open electronics shops.

These will be perceived as the main competitors to Lojao electrical wholesale once it
commences its operation. But the management plan to put to its competitors. Those will be
ensured in the following ways.

i. Offering good quality electronic appliances.

ii. Applying the use of new technology in some of its operations.
iii. Improving on customers handling strategies where all customers will be handled
equally with respect.

The business is also seeing a sign of success due to the presence of high population in its
surrounding which will act as customers, inn copping up with the requirements of the
government. The business will be legally registered licensed by the local government
authority.

1.7 INDUSRTY

Nakalei's electrical wholesalefalls under communication industry. It shall involve production

service and sale of electronic appliances.

Communication and technology industry has under gone tremendous growth and as at the
moment boosting of being one of the largest industries both locally and internationally. It
deals on very sophisticated equipment like computers, mobile phones, T.V. broadcasting,
radio communications and many others. These have greatly changed the phase of
communication in the world.

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Due to changes in technology and many sophistication products from this industry are in
great demand by the society. Those has enabled those who venture into business that deal
with them to have an over whelming market.

1.8 GOALS OF THE BUSINESS

The business shall endeavor to meet the demands of its customers by providing good

quality goods and services.

It shall also strive to meet the following goals.

i. Expanding the business by opening more branches so as to reach a wider portion

of the society and to create more job opportunities to the society.

ii. Providing high quality products and services.

iii. Encouraging the society to phase out old technology.
iv. Equipment and embrace new technology.
v. Putting extra efforts at work so as to maximize profit and maintain the economics
status of the business.
vi. Boosting the living standard of its employees by giving a reasonable remuneration
and incentives.

1.9 ENTRY AND GROWTH STRATEGY

In its bid to get more customers and to penetrate a large portion of the market, the business
shall employ the following tactics.

i. Using various ways of advertising the business and its products and services so as
to create more awareness of the business in the community.
ii. Giving discounts and certain quality on price of accommodate or services.
iii. Employing the system of installment buying.
iv. Abiding to the law of the land by paying taxes in time and in a most transparent
manner.
v. Expanding branches and upgrading the existing ones.

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 CHAPTER TWO

2.0 MARKETIN PLAN

INTRODUCTION

This chapter introduces all the activities involved in the marketing of the products and
strategies that aims at attracting and retaining customers.

2.1 MARKET

In the economic point of view, a market is a place where buyers and sellers meet to exchange
goods or services with money being the medium of exchange. These two parties have the aim
of obtaining a product/service and making profit respectively. A market can also exist where
there is need for a commodity, ability to pay and willingness to buy.Nakalei's electrical
wholesale will tighten its bid to acquire a larger position of the market by improving on its
market acquiring tactics of planning managing, coordinating, organizing and controlling the
activities of buying and selling.

2.2 CUSTOMERS

Customers are the people who promote the business of a particular organization by buying
their products or services. Prospective customers of nakalei's electrical wholesale will
include,

a) Local people

It is from the local people that NAKALEI'S electrical wholesale will be able to get the largest
portion of its customers; these are people with diverse technical needs. All will be able to
solve most of their needs in the most pleasant manner that have satisfied and willing to come
back.

The technical need shall include repair work e.g. T.V. repair, technical questions concerning
some of their electronic equipment or visit to purchase an electronic appliance. .

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b) Other business

Our business being the only business that will probably stock electronic spare parts in its
locality will enable it to make customers among their electronics business that many need
these spare parts in their workshop for repair work.

They will prefer coming to us because we are close to them and our prices will be affordable.

c) Institutions

Lojao electrical wholesale will strive to work harder so as to make itself popular to be in a
position of acquiring tenders from institution for repair of broken down electronic
machineries.

2.3 MARKET SHARE

This position of the market that a business is able to serve form the analysis, the business
makes an average of about 8,000 customers from all available market

segments.

Each segment contributes some sectors.

Local residents

a) 48/100 x 10,000 = 4800 customers

b) Other business = 10/100 x 10000 = 1,000

c) Institution = 16/100 x 10,000=1,600

d) 6/100x 10000=600

The following data is a summary of the estimated market share that will be able to be
acquired by NAKALEI'S ELECTRICALS WHOLESALE from various market segments.

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NAKALEI'S ELECTRICALS WHOLESALE MARKET ANALYSIS

MARKET SEGMENT MARKET SHARE

LOCAL RESIDENTS 46%

OTHER BUSINESSES 22%

INSTITUTIONS 22%

OTHER 10%

Such a business venture dealing with electronic grafts is now seasonal kind of business, and
thus the business will be at place all the year round. This is because electronic appliances
have no specific time/season when they break down. They can brake down any time and they
will need to be repaired.

However, the business might find it rough once it gets into operation due to the proposed
switch to digital broad casting as the analogue type sets will be outdated as people go for the
more sophisticated digital ones that will need less repair work.

2.4 COMPETITION

This is the presence of two or more organizations in the same location and of the same line of
products or giving the same services.

Nakalei's electrical wholesale will fall competition from the already established business line.
Energy electronic and Stream electronics among others developing electronic business in the
area.

It will manage to outdo its competitors by:-

i. Strengthening its management and making sure that the management is working
really hard.
ii. Widening its operator by getting involved in production, service and sale of
electronic spare parts.
iii. Maintaining good customer relation by giving good services to the customers and
treating them politely.
iv. Offering affordable prices on its services and products.

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2.5 PROMOTION AND ADVERTISING

2.5.1 PROMOTION STRATEGY

Promotion is a strategy penetrating a market by creating awareness of a business products or

services to the people in the community, and them the people a chance to test or see the
effectiveness and suitability of Nakalei's electrical wholesale will be able to do this by:-

i. Offering after sale service-this will be offered to customers who buy in bulk or
purchase delicate appliances. These services transportation to the buyers premise.
ii. Offering warranty on the sold appliances.
iii. Giving free gifts and free samples, there will in create t-shirts and ball pens e.tc.

The free gift, free sample will have the name of the business, business logo and the business
slogan written on them.

2.5.2 METHOD OF ADVERTISING

The management will use some means to advertise its product and services to the public. This
will include:-

a) Use of signboards-these will be places to show the location, products and services offered
and the address Lojao electrical wholesale.

b) Posters-the business will print short messages containing products/services offered plus the
prices, business, locations and addresses and fix on strategic places where the largest
populations can be able to read them.

c) Radio and television-the management will also employ the use of media in advertising
especially radio system. This advertisement will be aired at least twice a day by the most
popular radio and Television services.

Brochures-these are booklets designed for advertising the banners as products and services, it
also shows the prices offered for every products/services and addresses of the design. These
booklets in the most appealing way and distribute them every visitor in the business premises.

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2.6 PRICING STRATEGY

It involves the strategy of prices for products/services.

Nakalei's electrical wholesale as any other business will have its own price strategy which
will recognize the government's requirement and regulating customer's ability to pay a given
price for a particular commodity/service and competitor's prices.

Otherwise the organization will make effort where possible to make its prices of some of our
products and services so as to attract more customers and retain the existing ones but this will
be done after proper calculation or estimation has been done so as not to run the business into
loss at the end of our financial periods.

We shall also fix our prices considering the cost for going in production which will include
cost of raw materials, transportation and tax imposed among other factors. Lastly the business
will consider changes in technology before fixing prices. Electronic field is radical
technologically; new technology commodity will last higher than old technology, in the case
of digital and analogue television.

2.7 SALES TACTICS

These are the methods to be employed by a management in relation of high sales volume and
maximization of profit.

a) Offer discounts-these will be both cash and trade discount and they will be offered for
those customers who buy commodity a service whose price exceed a given limit.

b) Installment buying-this is a situation where by a buyer buys a commodity and attains

the ownership of the commodity after payment of a down payment and paying the rest of the
money in equal monthly installment.

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c) After sale service-this includes transportation to the buyers premise. This is offered
for a free or at subsidized cost for customers who buy a commodity that is rather fragile or
bulky.

d) Offering quality products and services to the customer for their satisfaction.

2.8 DISTIBUTION STRATEGY

Distribution is the process of ensuring that products and services get to its customers. The
distribution strategy of Nakalei's electrical wholesale will be to a good standard, strengthened
by the presence of distribution locomotives under the ownership of the business. We shall
purchase lorry and a carriage van for the business to use in undertaking its distribution
activities.

The business shall use road transport as a means of transportation. This follows a number of
factors that goes with the use of road transport, cheap, flexible, safer and faster.

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 CHAPTER THREE

3.0 ORGANISATION AND MANAGEMENT PLAN

This is the structure of management from the manager to the junior employee. Nakalei's
electrical wholesale will be a sole proprietorship kind of business that runs under sole director
ship of manager who is also the owner. The manager will employ a number of employees in
the various departments.

Below diagram shows the flow authority from to bottom.

Manager

Assistant manager

Financial manager Marketing managers Chief technician

Sales representative Store keeper Security officer Technician

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3.1 QUALIFICATION AND EXPERIENCE OF EACH STAFF MEMBER

The manager

He/she will have the following qualifications:-

i. Be a degree holder in electronic engineering from a recognized institution.

ii. Have management and entrepreneurial skills.
iii. Be computer literate.
iv. Have at least 2 years working experience from a busy technologically based
institution.

Duties

i. Expected to perform the decisional role in the organization -should be able to

come up with plans on how the business should be made to grow.
ii. Will be expected to come up with objectives of the organization and set targets for
employees.
iii. Expected to take part in formulations of the organizations budget with the
assistance of the financial officers.
iv. He/she will be in charge also for all human resource matters-will be in charge of
hiring new employees, deciding, and remuneration for the employees. This is
aimed at creating a friendly environment among the employees for smooth
running of the business.
v. Will represent the business in trade meetings e.g. business seminars, show and
exhibition.

Assistant manager

Qualification

i. Will be a diploma holder in sales and marketing on business administration.

ii. Be computer literate.
iii. Be able to communicate well in English and Kiswahili.
iv. Be hardworking.
v. Should have at least 2 years experience from a busy institution as a sales
representative.

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Duties

i. To represent the manager in doing some duties in his/her absence.

ii. To take part in the formation of organization budget.
iii. To work closely with the manger in ensuring growth in the business.
iv. Should be able to work well with other employees and show good example as in
time management and commitment at work.

Financial officer

Qualification

i. Should at least have a C in K.C.S.E level.

ii. Be a holder of at least CPA II from KASNEB.
iii. Be computer literate.
iv. Be well acquitted with financial policies in the country and out of the country.
v. Be polite and fluent in English and Kiswahili.
vi. Be honest

Duties

i. Be accountable for all financial matters concerning the business.

ii. Be responsible for preparing the organization book of account and editing them.
iii. Be responsible in budget in the presence of the manager, assistant manager and
the chief technician.
iv. Be the One in charge of receiving cash on every transaction made.
v. Be responsible for paying salaries and wages to the rest of the employees.

Marketing manager

Qualifications

i. Be a holder of at least a higher diploma in sales and marketing or business

administration.
ii. Be computer literate
iii. Should have good qualification skills.
iv. Be hard working.
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 v. Should be innovative enough as to derive better means of coping up with
competition.
vi. Should have at least 2 years working experience.

Duties

i. To take part in formulation of the budget.

ii. Should keep up to date the record of stock available and know the rate at which
stock is-moving.
iii. To supervise the activities of the sales representatives storekeeper and the security
officer.
iv. Should come up with the right strategies of increasing sales volume.
v. Should work together with the manager and financial officer in making sure that
stock is maintained and all purchase is made transparently.

Sales representative

He/she will have the duty of conducting and promoting the sales service on daily basis.
Qualifications

i. Diploma or certificate holder in sales and marketing.

ii. Be fluent and able to communicate both in English and Kiswahili.
iii. Should have at least one year experience from a well known organization.
iv. Be hard working.
v. Be able to work under minimal supervision.

Duties and responsibilities

i. Attending to buyers
ii. Give certain description of working to certain electronic equipment to customers
who want to buy.
iii. Arranging displays in the premise.
iv. Strategizing means of coping with competitors.

3.2 RECRUITMENT TRAINING AND PROMOTION RECRUITMENT

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This is the task of hiring manpower to fill present vacancies in an organization. It involves
the process of identifying the positions vacant consideration of suitable candidates to fill up
the position and living the suitable candidates after an interview.

Lojao electrical wholesale will be able to hire its employees by advertising through
newspapers, radio and posters for available vacant position.

An interview will be conducted to an interested candidate after which if he/she passes the
interview he/she will be able to get the job. On the interview one shall be required to have the
appropriate academic qualifications and good code of conduct.

Training

A new employee will first be given short term training before he fully joins the other
employee in the day to day activities. This will be able to familiarize with new employee
from boosting his/her working experience.

Major training shall be given to employee after the business has flourished enough to meet
the financial recruitment of every trainee.

Promotion

Promotion will be done in accordance with an employee academic qualification and his/her
dedication at work. Hard working employees shall be given first hand preference.

3.3 RENUMERATION AND INCENTIVES

RENUMERATION

The manager shall put into consideration various factors before coming up with remuneration
packages of every employee.

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i. Academic qualification-those employees with higher academic qualification and job
experience will be able to earn more than those with lower academic qualifications.

ii. Productivity-productive employees will have good salary package.

iii. Position-an employee higher in position will earn higher than an employee lower in
position e.g. financial officer will earn more than security officer.

iv. The organization ability to pay-the financial position status of the business shall also
determine the amounts of money to be reserved for paying salaries.

Otherwise the management shall ensure that all employees are fairly enumerated. The table
below shows a summarized salary packages a storing salary packages that Lojao electrical
wholesale will be able to pay its various employees.

Nakalei's electrical wholesale salary structure

EMPLOYEES SALARY (P.M.) NO OF TOTAL SALARY

EMPLOYEES P.M.
Manager 30,500.00 1 30500.00
Assistant manager 19,000.00 1 19,000.00
Financial officer 16,300.00 1 16,300.00
Chief technician 16,000.00 1 16,000.00
Marketing 15,000.00 1 15,000.00
Sales representatives 10,000.00 2 20,000.00
Technicians 9666.00 3 29,000.00
Store keeper 6,500.00 1 6,500.00
Security officer 5,200.00 2 10,400.00
Total 128166 12 162,700.00

INCENTIVES

These are efforts made to motivate employees aiming at boosting morale of the workers.
Nakalei's electrical wholesale shall grant its employees the following incentives.
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i. Overtime pay-in a situation where the business shall need to close later than the
required time, the employees shall be entitled to a claim on an over time pay. The
amount to be paid as overtime shall be agreed by the manager and the employees.
ii. Sick-offs-whenever an employee becomes sick he/she shall be allowed to go home
for motivation till he/she recovers.
iii. Protective clothing-these will be given to all the employees in the workshop and sales
representatives.
iv. Washing soap/detergents
v. Medical allowances.

3.4 LICENSES, PERMITS AND BY-LAWS

a) Nakalei's electrical wholesale will acquire it operating license from kapenguria

Municipal council once everything has been put in order towards commencement of its
operations. This will cost the manager approximately Eight thousand shillings only.

b) Permit- the business will be in possession of a permit that will allow its day to day
activities. This shall be renewed after one year, after payment of municipal councils permit
fee of Kshs. 12,000.

c) By-laws-these are the local authority laws that have to be adhered to by every
business within the particular municipality.

By adhering to these by-laws, the public from being sold high quality commodities and
hygienic commodities among others benefits.

Nakalei's electrical wholesale shall try as much as possible to be loyal to these by-laws. These
by-laws include:-

i. Registration act
ii. Health regulation act
iii. Premise act

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3.5 SUPPORT SERVICES

No business can operate effectively without relying on support services to be provided by

other business.

Some of these services include:-

Nakalei's electrical wholesale shall operate a current account with Equity bank. This shall
provide the business with every essential banking service.

Insurance

The business asset shall be insured from the various policies from Amaco insurance trust.

Advocate

The business shall employ an advocate to take care of all the legal matters that may affect the
operations of the business.

The manager has chosen an advocate firm known as John Mark and Sons Advocates as its
prospect advocate firm.

Security

Being one of the major concerns, the business shall liars with Hatari Security Company to
take care of all its security concerns.

Power

Power shall be provided by electricity supply from Kenya power and lighting company. This
is one of the major support providers as power is one of the back bone in production in Hi-
tech electronics.

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The following table shows the cost of these support service per month.

NAKALEI'S ELECTRICALS WHOLESALE COST OF SUPPORT SERVICE

ORGANISATION COST(P.M.) IN KSHS

Equity bank 10,000.00

Insurance Amaco 11,000.00

Advocate (John Mark & sons) 12,000.00'

Security (Hatari) 13,000.00

Power (KPLC) 11,000.00

TOTAL COST 57,000.00

These shows the objectives of Lojao electrical wholesale will be achieved, in regard to;
processes involved, facilities available, production capacity and regulations affecting the
operations.

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 CHAPTER FOUR

4.1 OPERATION PLAN

These shows the objectives of Nakalei's electrical wholesale will be achieved, in regard to;
processes involved, facilities available, production capacity and regulations affecting the
operations

4.1 OPERATION FACILITIES AND CAPACITY

The management of Nakalei's electrical wholesale is in the process of a acquiring some of the
most essential facilities include:-

i. Offices-the business shall operate under your offices, the manager office from
which the organization shall be made, financial office from which financial
obligations and records shall be settled and kept assistant manager office and the
chief technician's office..
ii. Store-it is here that some of the most essential records shall be kept e.g. purchases
records and number of equipments e.t.c Its also in the store that all the stock for
sale and the centre business tools and equipment shall be kept.
iii. Workshop-this shall be the main operational room where all the repair work and
production shall take place and the supervision of the chief technician.
iv. Display area-this is where ready made electronic gadgets shall be put on displays
for sale. It shall have different compartments and shelves to accommodate all the
available appliances and spare parts.
v. Equipments-these consist of machines and tools to facilitate production and all
operation in the business premise.
a) Computer-this shall be used in record keeping and as source of
information to the business e.g. change in technology and any other
business information that can benefit the business all the four offices
shall be facilitated by a computer.

b) Telephone-this shall be used for communication within the business

premises and in communication with other business partners e.g.
suppliers and customers.

29
 c) Furniture-this includes chairs, cabinets, computer tables, shelves e.t.c.
d) Business van- this shall be used to facilitate transportation e.g. in supply
and distribution of the business products.
e) Lojao electrical wholesale being business that deals on electronic repair
work must therefore have enough tools for its operation to be in success.

All offices shall have a telephone clerk and also all the departments e.g. in the store,
showroom and in the workshop.

All the offices shall be under the same room in the business premise

Among the wide range of tools needed are

-Electronic meters (digital and analogue).

-Soldering iron -Signal generators.

-Cathode ray oscilloscope.e.t.c

The table below shows the summarized facilities and capacities and the cost of obtaining
them and the potential suppliers.

FACILITIES AND QUALITY UNIT PRICE SUPPLIER

EQUIPMENTS TOTAL COST

KSHS.

Offices 5 50,000

Store 2 10,000

Workshop 1 7,000

Display area 1 12,000

Computer 5 100,000 Energy electronics

Printer 4 35,000 Amazon electronics

Telephone 5 5,600 Edison electronics

30
Furniture 100,000 Fraz furniture

Business van 2 1,600,00 D.T. Dobie

Tools

Cathode ray oscilloscope 2 300,000 Fraz electronics

Signal generators 2 30,000 Amazon electronics

Electronic meters 3 10,000 Energy electronics

Power supplies- 3 30,000 Amazon electronics

Soldering iron 2 700 Stream electronics

TOTAL 2,323,700

4.2 PRODUCTION AND OPERATION CAPACITY

This is the monthly expected sales from the various departments in the business

Nakalei's electrical wholesale monthly expected sales volume

ITEMS
Ready made MASS 160,000.00
Appliances MASS 160,000.00
Spare parts MASS 200,000.00
Repair work MASS 80,000.00
Electronics products MASS
Total 600,000.00

4.3 LAYOUT PLAN

This is the general view of the business premise clearly indicating the arrangement position
and the criteria employed in designing the various departments and office in the premise.

4.4 OPERATION STRATEGY

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This entails on how the business places to undertake its daily business operations and the
measures put in place to ensure a success in the business operations. This strategy looks into
all areas of operation including personnel.

The business personnel should be of the right number to avoid too many expenses in paying a
large number. In the case of a large number of personnel and to ease work in the work plan
incase of a small number of personnel.

Qualifications of each employee must be considered before being moved at a particular post.
This ensures that the business is operating under less risks of making mistakes. The
employees must be given the right to pay package and the necessary incentives to boost their
interest in the role they are doing.

The employees must be committed to their role and sacrifice for the success of the business.

They should be honest to the business management and to the customers.

CUSTOMER HANDLING

Customers should be handled with care so as to attract more and retain the existing one. They
should be treated equally and be given quality products/services.

PRODUCTION/OPERATION AREA

The proposed premise for Nakalei's electrical wholesale is spacious enough to accommodate
all the offices and all the other areas of production/operation e.g. the workshop, store, display
room and parking space.

DOCUMENTATION AND RECORD KEEPING

For ease in operation and a subsequent success, business organization must undertake good
record keeping practice and must have the right for storing record files. Nakalei's electrical
wholesale shall make sure that it has acquiring the right filing cabinets and give the right
security to its documents.

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4.5 PRODUCTION/OPERATION PROCESS

This involves the procedure that shall be involved in the daily operation of Nakalei's
electrical wholesale and handling the customers.

Nakalei's electrical wholesale shall be both service and product oriented, but the main area of
operation will be providing technical electronic services to its customers.

Therefore, the operation processes given below entails service provide procedure. For
instance, the repair of an electronic appliance, the process involved shall be:-

i. Receiving the appliance from a custom.

ii. Interrogating the customer on the exact symptoms as evident from the appliance.
iii. Doing a random check and test on the appliance.
iv. Registering the appliance in the record book and giving the client a receipt after
making a down payment.
v. Carrying out diagnosis process on the appliance and subsequent faxing (repair
after the fault is success full located).
vi. Containing the customers to inform him/her of her success or failure on his/her
appliance.
vii. Leasing the appliance to the owner/customer and sharing the appliance from the
records.

4.6 PROCUREMENT PROCESS

It should be the duty of the manager in conjunction with the accountant/financial officer to
ensure that everything needed in the business premises production /operation purpose is
available.

Order shall be given to the various heads of the various departments on the materials required
and they shall be the ones concerned in making orders of the supplies of this material from
the supplies. They shall make sure that all these transactions are transparently carried and
records kept for the reference.

4.7 REGULATION AFFECTING OPERATION.

These are the legal amendments set by the government control the operation of business
ventures and to safe guard the unrest of the employer, employees and the customers.

33
They include,

a) Labor Laws

These will protect the employer and his / her employees as per the employment act of Kenya
Act Cap 226 which state.

• Employer should remit the employee's contribution to NSSF and NHIF.

• Remuneration to the employees should be made time and as agreed on by the two
parties.

• Women employees are puttied to three months maternity leave.

• All pregnant employees are entitled to an annual paid leave.

• Advance notification in case is entitled to an annual paid leave.

• Advance notification incase of dismissal of an employer.

b) Safety and health regulations Act Cap.

This regulation was amended so as to protect Kenyan employees and customers to any kind
of business from any kind or practice that may affect their health. In regard to this, Lojao
electrical wholesale shall strive to provide the following.

i) Building Laws.

This is a regard to location of the building drainage distance from the toilet and latrines,
parking areas and waiting rooms

. Cleanliness

ii) Every business most maintains high degree of cleanliness as per the regulations.

Hi- Tech electronics shall leave two employees whose duty shall be to make sure that the
whole business premise is clean.

iii) Lighting.

All working rooms shall be well kept from tilted electric bulbs to provide extra light and to
supplement the natural light.

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 iv) Fire.

The business shall have adequate fire extinguisher which can be used to cub a fire outbreak in
the business premise.

The building shall also be designed to provide a clear outlet and inlet which can be the work
place.

v) Protective clothing.

The employees shall be provided with dust coats and some other necessary protection to
enhance cleanliness and protect them from injury that might be caused if they had no
protective clothing.

c) Permits

This is given to ensure that a business is operating lawfully and that the business has fulfilled
all the regulations Act.

d)Waste Disposal

Every business venture should define a proper water disposal process. Electronics wastes are
very harmful in the environment and should not just be carelessly disposed, they should be
left in pits for the municipal officers to collect and dispose them properly as is done in Kenya.
But a proper electronic waste disposal procedure needs to be amended by the government to
take care of the harmful nature of electronics wastes.

e) Staff Welfare.

This includes enrolling the employees with institutions like NHIF, NSSF, Trade Unions and
providing them with an insurance cover.

f)Government Cover.

This involves registering a business with its respective industry e.g. ministry of trade and
industry. This enables the business to obtain a valid trade license and permit for smooth
running of the business.

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 CHAPTER FIVE

5.0 FINANCIAL PLAN

This chapter covers the financial concerns of Nakalei's electrical wholesale. It covers the
following areas :

i) Pre-operational cost statements

ii) Working capital
iii) Pro-forma income statement/ trading profit and loss account
iv) Break even profit
v) Profitability rations
vi) Desired financing
vii) Proposed capitalization

5 1 PRE-OPERATIONAL COST STATEMENT

This statement presents the initial cost of the business as shall be incurred by NAKALEI'S
electrical wholesale once it commences its operations.

NAKALEI'S ELECTRICALS WHOLESALE

PARTICULARS COST QUANTITY TOTAL

Rent 10,000 1 10,000
Car 400,000 1 400,000
Computer 25,000 100,000
License 5,000 1 5,000
Furniture 30,000 1 30,000
Electricity 10,000 1 10,000
Telephone 5,000 0 35,000
Tools and equipment 50,000 1 50,000
Insurance 5,000 1 15,000
Stock 50,000 1 50,000
Others 60,000 60,000
TOTAL 765,000

5.2 WORKING CAPITAL

36
 This is the money needed for the day to day running of business.

Working capital - current assets- current liabilities.

Current assets are the assets that are either cash or can be easily changed to cash. Current
liabilities are business obligation.

Current Assets Amount Kshs Current liabilities Amount KSHS

Cash at hand 20,000 Creditors 12,000
Cash at bank 30,000 Bank loans 120,000
Debtors 8,000 Bank draft 80,000
Stock 400,000
TOTAL 458,000 212,000

Working Capital = Current- Current liabilities

=458000-212,000

= Kshs. 246,000

5.3 PROFORMA INCOME STATEMENT/ PROFIT AND LOSS ACCOUNT

This state is prepared to show the net profit or net loss of a business.

Net profit = Gross profit - Expenses

Gross profit = Sales -purchases

The following is a statement for Nakalei's electrical wholesale estimated and projected for a
period of 2 financial years from the financial year ending 31st December 2022

5.3.1 NAKALEI'S ELECTRICALS WHOLESALE CASH FLOW

Months Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Amounts Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs
Cash in Flow A
Cash Balance 154900 18490 150900 17140 280400 251400 201400 218400 223900 1639

37
Cash Sales 0 0
Debtors 40000 40000 50000 50000 40000 50000 50000 40000 40000 500
Purchase 10000 7000 50000 50000 5000 5000 5000 5000 5000 50
Gains & Income 120000 10000 90000 80000 60000 6000 100000 100000 6000 60
Bank Loan 0
Total (A) 20000 10000 8000 10000 8000 8000 8000 8000 8000 80
Cash Outflow 7000 7000 7000 6000 5000 5000 5000 5000 5000 50
Salaries & Wages 331900 34890 310900 36740 398400 325400 369400 376400 287900 2379
Rent 0 0
Permits
License 60000 60000 60000 60000 60000 60000 60000 60000 60000 600
Water
5000 5000 5000 5000 5000 5000 5000 5000 5000 50
Transport
6000 6000 3000 3000 6000 6000 6000 6000 6000 30
Electricity
2000 2000 2000 2000 2000 2000 2000 4000 2000 20
Loan Interest
2000 2000 2500 2000 2000 2000 3000 3000 2000 20
Advertisement
Stationery
8000 9000 6000 6000 8000 6000 9000 9000 6000 50
insurance
3000 3000 3000 3000 3000 3000 3000 3000 3000 30
Total
5000 5000 4000 5000 5000 4000 3000 5000 4000 40
Net Sales
4000 4000 2000 3000 4000 4000 6000 6000 4000 30
Accumulative Cash
2000 2000 2000 2000 2000 2000 2000 1500 2000 15

50000 10000 50000 50000 50000 30000 50000 50000 30000 300
0
147000 19800 139500 87000 147000 124000 151000 152500 124000 1185
0
184900 15090 171400 28040 251400 201400 218400 223900 163900 1194
0 0
184900 35580 507200 78760 103900 124040 1458800 1682700 1846600 19660
0 0 0 0

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NAKALEI'S ELECTRICALS WHOLESALE PRO-FORMA INCOME STATEMENT
FOR THE YEAR ENDING 31ST DEC 2022 (1ST YEAR)

Items Amount(Kshs) Amount (Kshs)

Sales 1,800,000

Purchases 600,000

Gross profit 1,000,000

Expenses 320,000

Salaries 80,000

Rent 14,000

Electricity 5,00

Transport 8,000

Stationery 12,000

Telephone

Total expenses 428,000

Net profit before tax 576,000

Tax profit 10% of net tax

Tax 57,000 57,000

Net profit after tax 520,400

PRO-FRMA INCOME STATEMENT FOR TH E YEAR ENDED 2022

Items Amount(Kshs) Amount (Kshs)
Sales 3,900,000
Purchases 2,200,000
Gross profit 1,900,000
Expenses

39
 Salaries 300,000
Rent 86,000
Electricity 14,000
Transport 5,000
Stationery 5,000
Telephone 12,000
Total expenses 500,000
Net profit before tax 1,400,000
Tax provision 10% of net tax
Tax 130,200 130,200
Net profit after tax 1,269,800

5.4 BALANCE SHEET

This document is prepared to show the financial position of a business at particular times.
It presents resources and application of a business funds for prefer balancing assets should be
equal to liabilities (Assets = Liabilities).
NAKALEI'S ELECTRICALS WHOLESALE BALANCE SHEET AS AT 31st DEC
2022
ASSETS LIABILITIES
Cash in hand 400,000
Cash- at bank 1,650,000 Creditors
Debtors 150,350 Bank overdraft
Stock 800,000 Short term loans
Fixed assets Long term liabilities
Equipments 450,000 197,850
Motor vehicle 500,000 1,000,000
1,002,000
Total 4,250,350 4,250,350

iii) Gross profit ration- measures cost of purchases as compared to sales revenue.
40
 Gross profit x 100
Sales

Net profit ratio

Net profit x 100
Sales

=1,004,000 x 100
1670000
=60.1%
=578400 x 100
1670000
=31%

NAKALEI'S ELECTRICALS WHOLESALE BALANCE SHEET

AS AT 31ST DEC 2022
ASSETS LIABILITIES
Cash in hand 800,000

Cash at bank 3,300,000 Creditors 700,000

Debtors 1,600,000 Bank overdraft 800,000
Stock Short term loans 700,000

Fixed assets Long term liabilities

Equipments 900,000 3,325,700

Motor vehicle 1,600,000 10,700,000
Total 8,600,700 2.005.000

Total 8,600,700 Total 8,600,700

Gross profit ratio- measures cost of purchases as compared to sales revenue.

= Gross profit x 100
Sales
= 1700000 X 100
3900000
= 4.36%
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Net profit ration
= net profit x 100
Sales
= 518400 x 100
1670000
=32.6%

5.5 BREAK EVEN POINT

This is the point where the business is neither making profits nor loss.
At this point, a business spends equally as i t earns.

ITEM AMOUNT
Fixed transactions (Costs)
Salaries 300,600
Insurance 15,000
Rent 20,000
License 5,000
Total fixed cost 340,600
Variable costs
Purchase 666,000
Transport 5,330
Advertising 10,670
Water 10,000
Telephone 10,000
Electricity 16,000
Repair and maintenance 20,000
Miscellaneous expenses 50,000
Total variable costs 798,000
Break- even point =

Gross profit x 100

Sales
1 - Variable cost = FC
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 Sales 1 –VC

1-778000
1670000

340600
0.46

=740434.7826

5. 6 PROFITABILITY RATIO

Used to analyze the profitability of the business

Gross Profit percentage = Gross Profit x 100

Sales

=1.004.000 x 100
1,670,000

=60%

Return on Investment = Net Profit after Tax x 100

Total Investment

=540.750 x 100
550,000

= 98.32%

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 5.7 DESIRED
FINANCING
NAKALEI'S ELECTRICALS WHOLESALE
ITEMS AMOUNT (KSHS)
Working capital 705,000
Preoperational cost 1,000,000
Assets e.g.
-Furniture 150,000
-Land 800,000
-Motor vehicle 1000,000
-Equipment 1000000
-Cash in hand 500,000
-Cash at bank 2000,000
-Debtors 400,000
-Stock 2,100,000
TOTAL 9655000

5.8 PROPOSED CAPITALIZATION

NAKALEI'S ELECTRICALS WHOLESALE PROPOSED
CAPITALIZATION
ITEMS AMOUNT (KSHS)

Savings 500000

Friends 200000

Co-operations 100000

Loans 300,300

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Sale of Asset (Land) 700000

TOTAL 9,873,380

Appendix
67”

Toilets and latrines Assistant ant

manager’s
office

Chief technician’s Financial Sales Store

office officer’s office manager’s
20” office
20’

15” 15”

Workshop

Display area

Main entrance K7”

Main road
45