BUSINESS PLAN

ROSE BETTRY ELIMINATOR SUPPLY

P.O BOX 34-30100 ELDORET

NAME: ROSA NASAMBU KUTENDE

INDEX NO: 5341010743

COURSE CODE : 1904

CENTER CODE : 534101

CENTER: RIFT VALLEY TECHNICAL TRAINING INSTITUTE

SUPERVISOR: MRS MOGO

SUBMITTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILLMENT FOR THE AWARD OF

 DECLARATION

DECLARATION BY STUDENT
I declare that this is my own original work and has never in any case submitted it anywhere
for the purpose of academic qualification.

NAME: ROSA NASAMBU KUTENDE

SIGNATURE:……………………………………
DATE:…………………………………..………..

DECLARATION BY SUPERVISOR
The plan is presented for examinations with my approval as the
SUPERVISOR. NAME:
SIGNATURE:……………………………………….
DATE:…………………………………………….…

i
 DEDICATION
I dedicate this business plan to my parents, brothers and sisters for their prayers and success
and well wishes for me and also my classmates for their assistance to make me succeed for
their encouragement.

ii
 ACKNOWLEDGEMENT
First and foremost I would like to acknowledge the almighty God for his care and gift of life
during the production of this work .I would also like to acknowledge all those who gave me
support and courage during the production of this work .
Thank you all.

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 Table of Contents

DECLARATION...................................................................................................................................i

DEDICATION.....................................................................................................................................ii

ACKNOWLEDGEMENT...................................................................................................................iii

EXECUTIVE SUMMARY..................................................................................................................1

CHAPTER ONE...................................................................................................................................2

1.0 BUSINESS DISCRIPTION............................................................................................................2

1.1 BUSINESS NAME........................................................................................................................2

1.2 BUSINESS ADDRESS..................................................................................................................2

1.3 BUSINESS LOCATION................................................................................................................2

1.4 TYPE OF THE BUSINESS............................................................................................................3

1.5 MARKET.......................................................................................................................................4

1.6 OPERATIONAL RESOURCES....................................................................................................5

1.7 ENTRY AND GROWTH STRATEGY.........................................................................................5

1.7.1 ENTRY STRATEGY..................................................................................................................5

1.7.2 GROWTH STRATEGY..............................................................................................................6

1.8 SWOT ANALYSIS TABLE..........................................................................................................7

CHAPTER TWO..................................................................................................................................8

2.0 MARKET PLAN............................................................................................................................8

2.1 MARKETING ANALYSIS............................................................................................................8

2.2 TARGET MARKET.......................................................................................................................8

2.3 SALES POTENTIAL.....................................................................................................................9

2.4 PROMOTIONAL METHODS.....................................................................................................10

2.5 MARKET SEGMENTATION.....................................................................................................11

2.6 PRODUCTS AND SERVICES..............................................................................................12

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2.7 MARKET RESEARCH................................................................................................................12

2.8 DEMAND ANALYSIS................................................................................................................13

2.9 MARKET STRATEGY................................................................................................................13

2.10 PRICING POLICY.....................................................................................................................14

CHAPTER THREE............................................................................................................................15

3.0 ORGANIZATION AND MANAGEMENT PLAN......................................................................15

3.1 THE ORGANIZATION STRUCTURE.......................................................................................15

3.2 RECRUITMENT, TRAINING AND PROMOTION...................................................................15

3.2.1 RECRUITMENT.......................................................................................................................15

3.2.2 TRAINING................................................................................................................................17

3.2.3 PROMOTION...........................................................................................................................18

3.3 REMUNERATION AND INCENTIVES.....................................................................................19

3.3.1 REMUNERATION...................................................................................................................19

3.3.2 INCENTIVES............................................................................................................................19

3.4 LICENCE.....................................................................................................................................20

3.5 PERMITS.....................................................................................................................................20

3.6 BY- LAWS...................................................................................................................................20

3.7 SUPPORT SERVICES.................................................................................................................20

CHAPTER FOUR..............................................................................................................................22

4.0 OPERATIONAL AND PRODUCTION PLAN...........................................................................22

4.1 PRODUCTION FACILITIES AND CAPACITIES.....................................................................22

4.2 PRODUCTION STRATEGY.......................................................................................................22

4.3 PRELIMINARY COST / RAW MATERIALS............................................................................23

4.4 MONTHLY OPERATIONAL OVERHEADS.............................................................................23

4.5 PRODUCTION OPERATION.....................................................................................................24

4.6 PRODUCTION PROCESS..........................................................................................................24

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 4.7 FACTORS AFFECTING THE PRODUCTION PROCESS........................................................24

4.8 REGULATION AFFECTING THE PRODUCTION...................................................................26

CHAPTER FIVE................................................................................................................................27

5.0 FINANCIAL PLAN.....................................................................................................................27

5.1 PRE-OPERATIONAL COSTS....................................................................................................27

5.2 WORKING CAPITAL.................................................................................................................27

5.3 PROFORMA INCOME STATEMENT.......................................................................................27

5.6 PROJECTED ASH FLOW FOR YEAR 2....................................................................................31

5.7 PROFORMA BALANCE SHEET...............................................................................................32

5.8BREAK EVEN POINT FOR 2016 YEAR 1.................................................................................33

5.9 PROFITABILITY RATIO...........................................................................................................37

5.10 DESIRED FINANCING.......................................................................................................................37

5.11 PROPOSED CAPITALIZATION..............................................................................................37

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EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION.
This involves the name of the business that will be -:
ROSE BATTERY ELIMINATOR SUPPLIES
P. O BOX 34-30100ELDORET
.
2.0 BUSINESS LOCATION.
The business will be located in ELDORET. The business will be a sole proprietorship form of
business. The business will offer battery as well as telephones.
3.0 MARKETING PLAN
This will involve the identification of customers of different status, teachers, students and
tourists.
4.0 ORGANIZATION AND MANAGEMENT PLAN.
It involves the organizational structure of the business and different personnel and will be in
the business from top management to bottom. It also indicates how the different personnel will
be recruited, trained and the qualification required of each.
5.0 OPERATIONAL AND PRODUCTION PLAN.
This will involve the production plan on how the business intends to run and the support
factors how it plans on operating and running its operations. It will deal with quality products
to meet to customer’s tastes and preferences
6.0 FINANCIAL PLANS
It will involve the amount of money that will be used for the operation of the business. The
pre-operational costs and working capital for each year, involved in preparing cash flow
statement for every year for the proforma balance sheet. The proposed capitalization will be:-
Bank loan is 1760,000
Personal saving 6150,000
Family and friends 50,000

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 CHAPTER ONE

1.0 BUSINESS DISCRIPTION.

1.1 BUSINESS NAME.

The business name will be Rose Battery Eliminator Supplies which means that it will always
be leading than other businesses carried out within the area.

1.2 BUSINESS ADDRESS.

The business will be using the following addresses to reach the customers.
ROSE BATTERY ELIMINATOR SUPPLIES
P. O BOX 34-30100
ELDORET.
Also the telephone lines for the customers to use when making communication to the Centre
will be as follows.

The telephone line will be opened from morning to evening week days.

1.3 BUSINESS LOCATION.

The business will be located in Eldoret along Nairobi-Uganda highway near to Kalyet plaza,
the business is a sole proprietorship owned by Rose Nasambu Kutende and its objective is to
make profit and to create employment.

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 A MAP SHOWING THE PLACE OF ENTERPRISE

RUBIS PETROL
SATSTATION
ELDORET CENTRAL
POLICE

Rose
POST-ROAD Battery
Eliminator
TOTAL Supplies
KALYET BUILDING
NAIROBI-UGANDA ROAD

PETROL STATION

1.4 TYPE OF THE BUSINESS

The business will be a sole proprietorship based on electronics.
The reasons why the business will operate under sole proprietor is due to the following:
i) Easy to manage.
The business will be easily managed by a single owner since he can make prompt decision in
carrying out policies, changing the system of running the business and also delegating tasks to
employees

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ii) Secrecy.
A single owner of the business being general organizer maintains a high standard of secrecy of
profits and the system of running his business successfully
iii) No sharing of profits.
There is no sharing of profits hence the sole owner may decide to purchase more equipment for
expanding his business using such profits or may also use it to open other branches of the
business in other various places.
iv) Easy formation.
If will not be difficult to form since the idea comes from a single person who on availability of
capital can start his business without consulting anybody.
v) Sole authority.
The business will be under sole proprietor who takes decision of planning organizing, co-
coordinating, staffing, directing and controlling the business unit.

1.5 MARKET
The business is set to target a number of customers within and outside the market. The
customers expected will include.
i) Solar Panel Users
ii) Business Opting for Battery Use
iii) Battery Charging Shops
The business will seek to maintain its customers by the following ways:
i) Providing high quality services.
The business will be offering high quality services to its customers in order to attract and
retain them.
ii) Offering services at affordable prices.
The business will offer services at affordable prices so as to suit all kinds of people within and
outside the locality, both rich and the poor.
iii) Accepting to offer services on credit to customer.
The business will be willing to offer services to customers especially those who are always
coming to have their services in the enterprise.
iv) Attending the customers immediately.

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The business will to serve their customers as soon as they arrive in the enterprise so as to make
them come again since there are no delays
Keeping promises.
The business will always keep promises to their customers, for example if a customer had been
promised to be given discount, the business will adhere that promise hence attracting more
customers.

1.6 OPERATIONAL RESOURCES.

a) Financial resources.
The business is expected to start up at an estimate cost of 500,000 Kenya shillings. The funds
will expect to be raised by different sources.
The sources include the following.
Own contribution 150,000
Financial institution 100,000
Family and friends 50,000
Total 300,000
b) Human resources.
The business will employ competent employees who will be working in the enterprise. Also
some unskilled manpower will be required for the premises cleaning.
c) Raw materials.
The business will obtain its materials from large scale distributors who are willing to supply on
time and who specifically deal with selling of quality electronic devices.
d) Infrastructure.
The business is found fit to operate in the stated area in that it has the required infrastructure.
There is a good accessible road to the business premise; supply of Kalyet Building is also
identified to be safe premise with adequately rooms.

1.7 ENTRY AND GROWTH STRATEGY.

1.7.1 ENTRY STRATEGY.

The business will be expected to be introduced in the region gradually. The business intends to
make the business popular through the following ways:

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i) Branding of the name.
The business will brand the business so as to enable many people to accept the services offered
by the business.
ii) Advertising.
The business will advertise through posters leaflets, road shows and brochures and in an
advanced level there will be advertising through the radio
iii) After sales services.
The business will always give fair prices to its customers for example sale of goods for
example stationery to customers.
iv) Pricing.
The business will always give prices to its customers especially those who purchase in the
enterprise always.
v) Sale promotion.
Sale promotion will be used immediately after opening the business so as to attract as many
customers as possible and maintain them.

1.7.2 GROWTH STRATEGY.

The business will be required to have the following in order for it to grow.
i) Plenty of equipment and machinery
This will help the business not to run shortage of computers in case many students enroll
themselves for ICT training.
ii) Capital for expansion.
The business will look for a reliable sources or ways of getting more capital for expansion.

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iii) Management of finance.
The business should look for a reliable accountant who will always be sincere so as to avoid
loss of money in the enterprise or the business account.

iv) Management of human resources.

The business will manage his human resources so as to make them active.

v) Giving advice customers.

The business attendants will be readily willing to give advice to its customers so as to attract
those hence giving high profits to the enterprise.

1.8 SWOT ANALYSIS TABLE.

AREA STRENGTH WEAKNESS OPPORTUNITY THREATS

Finance Adequate Improper Banks can give Individual can

management Individual donors be influenced
by others not
to give

Management Presence of Poor Newly trained Improper

qualified management employees maintenance
personnel Trustworthines available of employees
s

Technology Advanced Communicatio Qualified Costly

n problem personnel

Location Accessible Lack of Feeder roads are Competition

strategic being put problem by
located premise emerging.

Raw Available Scarcity Presence of Poor

materials Easy to use expensive suppliers transportation

7
 of materials

Security Presence of Increasing level Development of Corruption of

police station of theft Kapseret police police may
station place insecure

CHAPTER TWO

2.0 MARKET PLAN

The key marketing objective in the intended business will be to identify customers through
application of customers’ friendly policies as a means of measuring the business goals.

2.1 MARKETING ANALYSIS

The business will analyze its customers in relation to the following:
a) Individual customer.
These will include buyers within the area or surrounding villages who buy the goods or
services to fulfill a need or desire. These include pupil, form four leavers and other customers
within the locality.
b) Commercial customers.
These are customers who will come to the intended enterprise to buy products or services in
bulk. They usually buy such goods and services for production of other goods. They include
hospitals, business men etc.
c) Institutional customers.
These customers will comprise of primary schools, secondary school, college who purchase
goods in bulk to be used in the offices of such institutions. They are usually given after sales
service since they take goods in bulk.

2.2 TARGET MARKET.

The main customers of the business will be mainly institutions and individual customers. They
include the following:
1) Schools
2) Businesses
3) Individual Customers

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Their taste and preference are as follows:
i) To get the quality goods and services.
The customers will be assured of getting quality products and services hence maintain them to
always get their goods and services in the enterprise.
ii) Advertise the products.
When the products will be advertised it will attract as many customers as possible since the
business product and service s will be well known all over the region hence everybody will
make sure that he or she gets such products or services
iii) Giving after sales services.
Maintain the customer also involves giving them after sale services for examples, transporting
the customer goods of their premises and also repair and maintenance of the customers
machines is a way of attracting more and more customers to the business.
iv) Giving free samples.
Giving free samples to customers who buy in bulky or who frequently buy in the enterprise
will attract more customers and maintain the present once since they enjoy the free samples.
My sales will increase gradually as the business is being advertised and people enjoy the
services my business is offering the business will grow rapidly which gives me more room in
terms of capital to open up other branches in various places.

2.3 SALES POTENTIAL.

The business will grow rapidly and the sales of the business will increase through the following
ways.
i) Giving discount to customers
The business intends to give its customers discount on goods or services purchased on cash
basis especially for those who frequently purchase in the enterprise hence making them to
purchase most of the time in the enterprise.
ii) Offering quality products and services.
Always customers want well or services which have no doubts. My business will make sure
that it gives customers quality services which maintain its customers and attract more hence
increasing sales.
iii) Advertising.

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By advertising the products and service offered by the business, the business will be well
known hence many people will like to purchase or given the services hence increasing the sale
iv) Price stabilization.

By stabilizing the prices of products and services the business will be in a position not to loose
its customers in fear of fluctuating but ensures that customers are not encountering such
fluctuations will maintain the customers hence increasing sales

v) Sales promotion.

High sale also comes in through promotion of the business which will attract many people
hence increasing the sales.

2.4 PROMOTIONAL METHODS.

The business intends to use the following promotional methods in order to get more customers.

i) Advertisement.

Advertising the business through posters, magazines radio makes people to know and to be
eager of wanting to purchase such products and services being advertised hence attracting more
customers.

ii) Employing sales men.

Sales men will be employed in order to travel to other areas to sell goods being sold in the
enterprise as well as to inform the people about the services being offered also in the business
for example training in ICT.

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Offering free samples

By giving out free samples to the customers the business will gain more customers since the
present customers will inform their fellows about the goodness of purchasing in the enterprise.

iii) Use of business cards.

Business cards will be distributed to some of the people whereby they will get informed of the
products and services being offered hence making them to come to purchase in the enterprise.

2.5 MARKET SEGMENTATION.

This refers to division of market into smaller market which the organization can successfully
satisfy.

The following is the total market segmentation

i) Individual customers 1000

ii) Commercial customers 1400
iii) Institutional customers 800
Total 3200

The market segmentation percentage is as follows.

i) Individual customer = 1000 x 100
3200
= 31.25%
ii) Commercial customer = 1400 x 100
3200
= 43.75%

iii) Institutional customer = 800 x 100

3200

= 25%

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2.6 PRODUCTS AND SERVICES.
Typing of reports, online services, printing, website creation, binding, photocopying,
lamination etc.
It will also offer internship to students whereby it will be quality and attractive.

2.7 MARKET RESEARCH.

Market research refers to a systematic and organized plan of analyzed customer needs located
at a specific location.
The problem will be defined by doing the research and giving out the products and services
needed by the customers living in Eldoret.
The business will provide door to Door Supply services as well as training in Supply chain
management since there are the most wanted services demanded by the people.
The research will be conducted in the following order.
Individual customer 7.00AM -10.30 AM
Commercial customers 10.30 AM – 3.30 PM
Institutional customers 4.00 P.M – 7.00 PM

REPORT WRITING
According to the research that will be done in the market the products offered and services will
be of high quality and will fully satisfy the needs of the customers. The business will find a
way of improving the business in order to gain high profits. The products or services in the
business which will act as samples will be battery Eliminator machine supplies.
The methods that the business intends to use to collect data are as follows.
a) Observations.
The business intends to observe the most services that the customers usually seek for so as to
analyze if there is need to put more effort in installing such a service or product.
b) Use of questionnaires.
The business will design questionnaires and distribute the people to get the feedback about
their needs so as to make the business prepare for such needs.
c) Interviews.
The business will plan to interview some of its customers in to find out their needs tastes and
preferences in order to meet such needs. The business will then analyze the findings from

12
customers so as to find out low much it should have to give in order to meet such customer’s
needs.
After analyzing all the needs the business will finally write report about all the needs needed by
their customers in order to plan for them.

2.8 DEMAND ANALYSIS.

The business will be able to analyze its demand of products and services purchased by the
customer services such as eliminators

2.9 MARKET STRATEGY.

The chain controlling of the flow of products from point of manufacture to the point of use to
meet the customer requirement. This is the channel of distribution according to apex
communication centre.

Manufacturer Wholesaler Retailer Consumer

The business intend to get the following benefits for being wholesaler and retailers
i) Communication with customers
Retailer will be in a position to communicate with its customers on matters pertaining their
prices in the market for example if the retailer expects a rise in price of certain goods or
services; he will have to inform his customers earlier.
ii) High profits.
A retailer gets high profits since splitting of goods to lower quantities gives room for better
high prices than buying in bulk.
iii) More sales.
A retailer is able to sell more since his business deals mostly with individual who buy in
smaller quantities than whole sellers or manufactures who have to sale their goods in bulk.
iv) Tastes and preference of customers.
Selling goods to customers by retailer helps a consumer not to purchase goods in bulk rather
buy already split ones from the retailer.

2.10 PRICING POLICY.

The business intends to price its product and services in the follow

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a) Cost of production.
The business intends to price its products and services according to the cost of production. in
case of Page communication, the cost of production is determined by the cost of the assets
used for the operation of the business for example the cost of battery elimnators. If the cost of
production is high it means the cost of selling such production or services will also be high.
b) Competitors.
The business will price its products different from its competitors for example slightly reduce
the prices of goods in order to attract most customers
c) Government policy.
The products of the products and services should not vary much from such which have been
estimated by the government budget. So the business even though it is reducing the prices than
of its competitors should bear in mind not to go against the government law.

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 CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

The business will form on organization of employees to make the business successful by
employing personnel to work in the business.

3.1 THE ORGANIZATION STRUCTURE

The following is the organizational structure of the organization.

3.2 RECRUITMENT, TRAINING AND PROMOTION.

3.2.1 RECRUITMENT.
In order for the business to gain more profits and prosper in its activities there should be
quality employees who have been fully trained the areas they have been employed for. The
business will take the following procedures to recruit staff to the business.
a) Job analysis.
This includes details and the description of job vacancies available for application. The
business will recruit secretary, manager, and salesman, watchman, teaching staff, accountant
and cleaners in to the business.
b) Job description.
This includes description of what an employee is to do on a specific post or job. The duties of
each employee will be shown in the job description for example duties and responsibilities of
the accountant, secretary, manager, teaching staff so as to make the application know the work
that he is required to do in case he qualities the interview..
The cleaners will be looking at the general cleanliness of the premises. They make sure that
stationery for sale is arranged in a good manner. Also ensures that furniture in the business
premises are arranged in an order manner. They also make tea for the other staff members.
The watchman duty is to keep the gate. He is responsible for letting customers in the business
and letting them out of the business. He also looks after the premise during the night to avoid
thieves breaking into the premise.

15
c) Person’s specifications.
The business will mostly focus on competent employees at least most of them especially the
key personnel should have attained full training and should have all their document during
time of the interview so as to prove if he has really been trained.
d) Job advertisement
The business intends to advertise the applicants about the job vacancy in advance so as to make
them be prepared as early as possible. The business will advertise the job vacancy through the
following Medias so as to reach as many applicants as possible.
i) Radio
ii) Posters.
iii) Daily nation.
e) Application forms.
The applicants will get the application forms from the business premises or download from the
website so as to fill and sent them to the business if they become interested of applying for the
vacant position.
f) Short listing of candidates
After the business has received the application forms they shortlist those who have attained the
qualification that they haves specified so as to reduce the number of candidate to be
interviewed.
g) Interview and selection.
The interview will be conducted orally depending on the qualification level hence necessary
document will be more real and relied upon.
h) Decision and notification.
The qualified candidates will be notified through telephone calls so as to reach them as quickly
as possible and are given certain specified date to report to the business so as to start their
work.

3.2.2 TRAINING.
Employees after reporting are supposed to be oriented the first date they are reporting so as to
make them familiar with many sections in the business premises. They will be trained on how
to do certain tasks and how other issues in the business will be handled.

16
 The employees will be trained further for six months until they have become very accurate in
their areas of work. The training offered to the employees will be on-job-training method so as
to make the business operate as well as training goes on. The reasons for training is to
a) Improve existing skills.
b) Improve knowledge and experience.
c) Improve service delivery to customers.
d) To motivate employees.

3.2.3 PROMOTION.
The business will plan to promote its employees in an advanced stage.
Merits of promotion
a) Promotion places employees in position where an employee skills and knowledge can be
better utilized.
b) It creates and increases the interest of other employee in the business as they believe that
they will also get their turn.
c) It creates among employees a feeling of content with the existing conditions of work and
employment.
d) Promotion improves employee morale and job satisfaction.
e) It creates awareness of the existence of the product or service offered.
f) It helps increase market share.
Benefits of promotion
i. Employee gets more money in terms of salary.
ii. More responsibility in the organization or business i.e. manager people.
iii. More say about how things are done in the business.
iv. Possibility of training or studies’ it necessitates extra training.
v. Improved work place meaning that you can be relocated you can get an office of your own.

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3.3 REMUNERATION AND INCENTIVES.

3.3.1 REMUNERATION.
The remuneration will be as follows.
personnel post Salary per month Salary per year Total
Manager 1 25,000 300,000 300,000
Accountant 1 15,000 180,000 180,000
Secretary 1 8,000 96,000 96,000
Electricians 2 20,000 240,000 240,000
Salesman 1 6,000 72,000 72,000
Cleaners 2 6,000 72,000 72,000
Watchman 1 4,000 48,000 48,000
Total 9 84,000 1,008,000 1,008,000

3.3.2 INCENTIVES.
The business will give incentives to employees so as to motivate them to work extra hard for
the benefit of the business. These incentives will be as follows.
i) Giving transport.
The business will give the employees incentives in form of transport either by including the
transport to the salary or even giving them cash or higher a vehicle to collect them in the
morning and return them in the evening which will act as a motivating factor.
ii) Uniform.
The business will issue uniform to its employees for example work coat so as to distinguish
them from the customers and make them more prestigious to work in the organization.
iii) Off during public holidays
During public holidays the business will set all the employees free except the watchman who
will be given overtime payment for that specific day.
iv) Giving recreational activities.
The employees will be given time at least once per month to participate with other institutors in
activities such as games and music.
v) Letter of appreciation.

18
The employees will be given a letter of appreciation in a work well done to as to motivate him
to put more effort in the business activities and also make other workers to work hard so as to
get a letter of appreciation like the other employee.

3.4 LICENCE.
The business will require a trade license in the order for it to commence its activities. The trade
offices of the ministry of commerce and industries of all business issues trade license annually.
The license costs 8500 shillings each year

3.5 PERMITS.
The business will acquire permits as a legal business entity operation under ministry of
renewed and business laws considered and taken in account under registration act constitution
of Kenya of articles of association.

3.6 BY- LAWS.

The business will formulate by-laws pertaining the business rules and regulations. These rules
and regulation are as follows.
i) Giving quality goods and services.
ii) The employees should report to job in time i.e. 8.00 am.
iii) There should be unity of co-operation amongst all employees.
iv) The customers should be served promptly as they arrive in the premise.

3.7 SUPPORT SERVICES.

Support services are rendered by public, government or private sectors which facilitate and
enable business to be carried out successfully. They are;
a) Banking services.
This is suitable for keeping the businesses money which is not required to be used in such
moment. Also it is important for keeping the business’s profit to be used for expansion of the
business when they have accumulated enough. The business will choose Kenya commercial
bank since it is near to the business hence does not incur any transportation cost in going to
bank the money.
b) Postage services.

19
This is suitable for the business since the business will require send receive mails through the
post from their customers. Eldoret post office is suited to use since it is near the business
premise.

20
c) Insurance.
In case of risk that may occur the business will be insured so as to resume its activities as
quickly, as possible even though everything has been spoilt. The business will choose the
AMACO insurance. The business will pay a monthly installment of 2000 shillings every month
for this.
d) Infrastructure.
Infrastructure is a ways which makes a business to be carried out with ease and effective.
These infrastructures are as follows.
i) Roads.
This makes transportation easy for example bringing stationery to the premise. Eldoret town is
situated in a place where it is well accessed by good constructed to come to the business to
purchase or have their service in the business.
ii) Power.
Eldoret town is well supplied with power which is possible for the operation of the operation
of computers. The supplies of power will may the business will have to purchase a generation
in an advanced stage so that in case power goes off the activities does not stop but use the
generator.
iii) Water.
For any business to operate well there should e water available? Eldoret has well supply of
water which is important for the business since water is needed for cleaning the premises and
also the customers might need drinking water.
iv) Premise.
The business is situated in a well constructed building which allows for future expansion. Also
the building is in a safe place which thieves rarely broke in to.

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 CHAPTER FOUR

4.0 OPERATIONAL AND PRODUCTION PLAN

4.1 PRODUCTION FACILITIES AND CAPACITIES.

TOOLS AND QUANTITY SUPPLIER CASH PER TOTAL
EQUIPMENT UNIT
Computer 3 12,000 36,000 36,000
Photocopier 1 20,00 20,000 20,000
Printers 1 4,000 4,000 4,000
Staplers 4 2000 800 800
Scanning machine 1 40,000 40,000 40,000
Chairs 20 350 7,000 7,000
Tables 10 1,000 10,000 10,000
Totals 40 77,550 117,800 117,800

4.2 PRODUCTION STRATEGY.

In order for the business to meet its objectives it will ensure that the tools and equipments are
present all the time especially during the commencement of the business.
The business also will make sure that all the tools and equipment used by the customers in the
cyber café are well arranged and in good condition so as to avoid confusion during the last
minute.
The business will make sure also those petty things that are being consumed regularly in the
business are available all the time so as to make process to go on without any problem.
During the first few days after commencement of the business, there should be investigation on
what the customers like most in order to purchase more of the facilities offering such services.

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4.3 PRELIMINARY COST / RAW MATERIALS.
Raw materials Amount
Printing ink 2,000
Stapling pins 300
Glue 200
Printing papers (10 reams) 4,000
Diskettes (50 diskettes) 2,500
Photocopy papers (10 reams) 3,500
Detergents. 400
Receipt book 200
Totals 13,100

4.4 MONTHLY OPERATIONAL OVER HEADS

ITEM AMOUNT
Registration 1,200
Insurance 2,000
Water bill 400
Electricity bill 5,000
Banking 6,000
Telephone 6,00
Advertisement. 3,000
Permit 1,500
Postage 500
Miscellaneous 1,000
TOTAL 22,600

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4.5 PRODUCTION OPERATION
ITEM AMOUNT
Market research 2,000
Tool/ equipment 100,000
Raw materials 13,100
Overhead expenditure 10,600
Labor 15,000
TOTAL 140,700

4.6 PRODUCTION PROCESS.

The business intended will follow the following production process;
Ordering goods from the suppliers
The supplier will sent the prices of goods ordered for such good as computers, photocopy
machines and other things necessary for the cyber.
After receiving the quotation of the goods the business own will request the supplier to send
the items to the business.
Delivery and checking the goods
The business will check the goods or items after receiving from the supplier so as to be sure if
the right quantities and quality have been delivered.
Payment then is made if the business has proved the goods where the supplier issues a receipt
to the business.
The item is now arranged in the premised and others are put in the cyber for example the
manager, accountant and secretary will be put on their respective places. Items to be sold in the
business will be put on the shelves for the customers to be them.
The customers will now purchase the goods for example stationery and also use the services in
the business for example internet services.

4.7 FACTORS AFFECTING THE PRODUCTION PROCESS.

a) Competition.
Competitors affect production process of the business because they offer the same services and
sell the same goods as the business to the customers.

24
Solution
The business should provide after sale services to the customers so as to attract and retain
them.
Offering quality services than my competitors so as to make more customers come to have
their service and purchase in the Apex communication centre.
b) Political instability
Due to political instability in the county or around the area where the business will be operated
the raw materials will not be accessed due to fear of political clashes hence affecting the flow
of the business.
Solution
Government should make sure that there is peaceful politic in the area.
The intended business should preach for peace love and unity among the customers.
a) Insecurity.
The business will be affected by the insecurity factor because theft may occur in the business
when there is high crime n the area where the business is operating.
Solution
The business will employ more security personnel in the business
Also the business should purchase locks that are very hard to break so as to avoid them from
breaking into the premise.
Also the business should be closed at reasonable time for example latest hour should be nine
PM so as to avoid night that from breaking into the business.
d) Government policies.
Government policies will affect the business in that for business to be operated it should have a
trading license, permit. The government also regulate prices charged to ensure the customers
are protected from unethical; businesses.
Solution
a) The business will adopt changes set by the government.
b) The business will be engaged in social responsibility roles such as environmental
conservation and supporting those who are disadvantage members of society making
regular donated to project such as those supporting orphan children.

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4.8 REGULATION AFFECTING THE PRODUCTION
i. Trade license Act.
Trade license act states that a business should obtain trade license before operating the
business.
ii. Employment Act.
Employment act states that a business should ensure that the persons employed to, operate
the business should be employed according to the employment act. It states that the
employed persons should be paid enough salary, they should be give leave or off at the
business place.
iii. Factory Act.
The intended business should operate according to the factory act. E.g. the business should
be building the right place where there are enough infrastructures.

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 CHAPTER FIVE

5.0 FINANCIAL PLAN.

5.1 PRE-OPERATIONAL COSTS.

ITEM AMOUNT
Rent deposit 10,000
Water deposit 1,000
Electricity deposit. 5,000
Telephone 6,000
License/permit 3,000
Advertising 10,000
TOTAL 35,000

5.2 WORKING CAPITAL

ITEM YEAR I YEAR 2 YEAR 3
Stocks of raw materials. 13,100 15,000 30,000
Debtors 4,000 5,000 4,000
Cash at hand 50,000 60,000 70,000
Cash at bank (loan) 30,000 30,000 20,000
Creditors 500 9,000 12,000
Family and friends contribution 150,000 0 0
TOTAL. 247,600 119,000 136,000

5.3 PROFORMA INCOME STATEMENT.

ITEMS YEAR 1 YEAR 2 YEAR 3
Sales 18,351,500 25,655,600 2,0702600
Cost of goods sold (4,750,000) (4,000,000) (4,050,000)
Gross profit 13,601,500 21,655,600 24,752,600
Expenses
Purchases 780,000 2,740,000 840,000
Salaries and wages 1.200,000 1440,000 1,680,000

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Water bills 15,300 11,100 12700
Electricity 75,000 74,000 103,000
Registration/license 3,000 3,000 300
Advertising 150,000 480,000 180,000
Insurance 24,000 24,000 24,000
Transport 20,000 159,000 33,000
Creditors 69,000 188,000 115,000
Loan payment and 60,000 42,000 24,000
interest 120,000 120,000 120,000
Rent 113,500 98,000 76,000
Telephone 21,000 28,000 29,000
miscellaneous 23,500 29,700 32,000
Total expenses 2,674,300 5,436,100 3,271,700
Profit before tax 10,927,200 16,219,500 21,480,900

Tax provision 20% 21,85440 16,219,500 4,296,180

Profit after tax 8,741,760 3,243,900 17,184,720

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 PROJECTED CASH FLOW STATEMENT FOR THE FIRST YEAR OF OPERATION

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALS
Bal b/f 307350
Sales 900 5000 6500 6500 7000 7200 7000 7000 7200 7200 14900 14900 80000
Owner equity 10000 9000 8000 9000 7500 6000 7000 8000 6000 8000 4000 8000 25000

Total inflows 1000 1500 2000 4000 3000 4000 3000 2500 2000 3000 4000 3500 20000
Equipment 47300 30500 15000 1500 1000 1000 800 800 700 600 500 500 78000
Raw 7500 7000 6500 6400 6000 5500 5000 5000 4000 4000 4200 4000 14000
materials
Salaries 15500 15500 15500 15500 15500 15500 15500 15500 15500 15500 15500 15500 16000
Insurance 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 180000
License 1200 200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 200000
Electricity 1500 1500 2000 2200 2500 2400 2000 2200 2200 2000 2000 2000 180000
Transport 2000 1000 800 600 500 500 400 350 300 250 200 250 20500
Advertiseme 2500 2500 2000 1500 1000 1000 800 750 600 550 500 400 32500
nt
Telephone 1500 500 500 400 350 400 450 500 400 500 400 350 28000
Rent 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Repair and 5000 1000 1000 1200 1300 1400 1500 1200 1100 1200 1000 5000 25000
maintenance

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Water 1000 1000 1500 1200 1300 1400 1400 1500 1400 1500 1400 1400 30000
Miscellaneo 1000 1000 900 800 1400 1000 1000 1000 1000 2000 1000 1000 25000
us
Tax (10%) 800 400 500 400 350 300 250 200 240 250 300 400 18000

Bal b/d 1800 16000 18000 20000 40000 80000 60000 80000 40000 80000 40000 40000 280000
Acce b/d 18000 16000 18000 20000 40000 80000 60000 80000 40000 80000 40000 40000 32000

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 5.6 PROJECTED ASH FLOW FOR YEAR 2
ITEMS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALS
Sales 4000 5000 6500 6500 7000 7200 7000 7000 7200 7200 14900 14900 80000
Cost of sales 5000 4000 5000 6000 5000 4000 5000 6000 7000 8000 9000 8000 84000
G / profit 1500 1000 2000 3000 2500 2000 3000 3500 4000 4000 4000 5000 20000
Expenses 50000 2000 3000 4000 5000 4000 3000 1500 1000 2000 4000 5000 15000
Salaries 15500 15500 15500 15500 15500 15500 15500 15500 15500 15500 15500 15500 186000
License 1500 1500
Electricity 1500 2000 2000 2500 3000 3200 3200 3300 3400 3500 4000 4000 35600
Transport 2000 1800 1600 1500 1400 1200 1000 800 800 600 500 500 10000
Advertisement 2500 2200 2000 1500 1400 1200 1000 1000 800 800 600 600 15000
Water 1000 1200 1200 1400 1400 1400 1500 1500 1600 1700 1800 1800 20000
Repair/Maintenance 5000 4000 2000 3600 3500 3000 2500 2000 1500 1000 1000 1000 30500

Insurance 1500 1500

Rent 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Telephone 1500 1000 800 700 800 500 600 500 400 500 350 400 4000
Miscellaneous 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 5000
Total expenses 50000 2000 3000 4000 5000 4000 3000 1500 1000 2000 4000 5000 4000
Net profit 80000 80000 9000 10000 20000 10000 12000 12000 10000 15000 15000 15000 80000
Less 20%Tax 1000 2000 3000 4000 4000 4200 4000 3500 3000 3500 4000 4000 14000
Net profit after tax 7000 6000 6000 6000 6000 5800 8000 9500 7000 8000 11000 11000 8600

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5.7 PROFORMA BALANCE SHEET.
ITEM YEAR 1 YEAR 2 YEAR 3
ASSETS
CURRENT
ASSETS 500,000 600,000 700,000
Cash in hand 300,000 300,000 200,000
Cash at bank 4,000 5,000 4,000
Debtors collection 13,100 15,000 30,000
Stocks of raw
materials.
TOTALS 817,100 920,000 934,000
Fixed assets
Machinery 3,980,620 3,980,620 3,980,620
Land 2,900,620 2,900,620 2,900,620
Equipment 1,898,420 1,898,420 1,898,420
Total assets 8,779,660 8,779,660 8,779,660
Liabilities
Current liabilities.
Creditors 5,000 9,000 12,000
Bank overdraft. 50,000 1,000,000 90,000
TOTAL C.L (1,009,000) (210,000)
(55,000)
NET ASSET 9,541,760 8,610,660 9,503,660
Long term
liabilities. 500,000 600,000 800,000
Bank loan 300,000 400,000 200,000
Capital employed. - 4,366,760 1,318,940
General reserves 8,741,760 3,243,900 17,184,720
NET PROFIT - - (10,000,000)
Drawings
TOTAL 9,541,760 8,610,660 9,503,660

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5.8BREAK EVEN POINT FOR YEAR 1
Variable cost
ITEMS AMOUNT
Telephone 113,500
Electricity 75,000
Advertising 150,000
Postage 23,500
Banking 21,000
Water 15,300
Transport 20,000
Creditors 69,000
TOTALS 4873000

Fixed costs
ITEM AMOUNT (KSH)
Salaries and wages 1,200,000
Rent 120,000
Loan repayment and interest 60,000
Insurance 24,000
Registration 3,000
TOTALS 1,407,000

Contribution margin = Total sales – total costs

18,351,500 – 487300
= 17,864,200
CM % = Contribution margin x 100

Total sale
= 17,864,200 x 100
18,351,500

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 = 97.34 %
Break even point = Total fixed costs x 100
Contribution margin percentage
= 1407000 x 100
97.34
= 1,445,448.942
BREAK EVEN POINT FOR YEAR 2
Variable cost
ITEMS AMOUNT
Purchases 2,740,000
Telephone. 98,000
Electricity 74,000
Advertising 480,00
Postage 29,700
Banking 28,000
Water 11,100
Transport 159,000
Creditors 188,000
TOTALS 3,807,800

FIXED COSTS
ITEM AMOUNT (KSH)
Salaries and wages 1,440,000
Rent 120,000
Loan repayment and interest 42,000
Insurance 24,000
Registration 3,000
TOTALS 1,629,000

Contribution margin = Total sales – total costs

25, 655, 6000 – 3,807,800

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 = 21,847,800
CM % = Contribution margin x 100
Total sale
= 21847800x 100
25655600
= 85.16%
Break even point = Total fixed costs x 100
Contribution margin percentage
= 1629000 x 100
85.16
= 1,912,869.98

BREAK EVEN POINT FOR YEAR 3

Variable cost
ITEMS AMOUNT
Telephone 76,000
Electricity 103,000
Advertising 180,000
Postage 32,000
Banking 12,700
Water 29,000
Transport 33,000
Creditors 115,000
Purchases 840,000
TOTALS 1,535,000

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 FIXED COSTS
ITEM AMOUNT (KSH)
Salaries and wages 1,680,000
Rent 120,000
Loan repayment and interest 240,000
Insurance 24,000
Registration 3,000
TOTALS 1,851,000

Contribution margin = Total sales – total costs

2027026000 – 1535000
= 19,167,600
CM % = Contribution margin x 100
Total sale
= 19167600 x 100
20702600
= 92.59 %
Break even point = Total fixed costs x 100
Contribution margin percentage
= 1851000 x 100
92.59
= 1,999,135.98

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5.9 PROFITABILITY RATIO.
RATIO TYPE WORKING YEAR 1 YEAR 2 YEAR 3
FORMULA
GROSS Gross profit x 100 1360500 x 100 21655,600 x 247526000 x
PROFIT Total sales 18,351,500 100 100
RATIO =74.11% 256655600 20702600
= 84.41% =119.56%
Net profit after tax 8741760 x100 12975600x 17184720 x
RETURN ON x 100 500,000 100 100
EQUITY Owner equity = 1748.53% 600,000 700,000
=2162.6% =2454.96%
RETURN ON Net profit after tax 8741760 x 100 12975600 x 17184720 x
INVESTMENT x 100 1022,100 100 100
Total investment =855.3 % 1029,000 996,000
= 1260.99% = 1725.4%

5.10 DESIRED FINANCING

ITEM AMOUNT KSH
Pre-operational costs. 35,000
Working capital 1,022,100
Fixed assets 1,407,000
Total 12,464,100

5.11 PROPOSED CAPITALIZATION.

ITEM AMOUNT KSH
Owner contribution 500,000
Cash at bank 300,000
Total borrowed friend, family 200,000
Total investment 100, 000

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