SHIK'S ELECTRICAL AND ELECTRONIC REPAIR SHOP

P.O BOX 996

KAKAMEGA

CALL 0723966139

E- MAIL: shikangajoseph2018@gmail.com

PRESENTER : JOSEPH SHIKANGA

INDEX NUMBER : 509111255

PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULFILLMENT FOR AWARD OF

A CRAFT CERTICATE IN ELECTRICAL AND

ELECTRONIC TECHNOLOGY ( POWER OPTION)

CENTRE : ELDORET TECHNICAL TRAINING INSTITUTE

DATE OF PRESENTATION : NOVEMBER 2021

SUPERVISOR : MR. ROBINSON ROTICH

TABLE OF CONTENT

DESCRIPTION

DECLARATION

PREFACE

ACKNOWLEDGEMENT

DEDICATION

EXECUTIVE SUMMARY

CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

1.2 BUSINESS LOCATION AND ADDRESS

1.3 FORM OF OWNERSHIP

1.4 TYPE OF BUSINESS

1.5 PRODUCT OR SERVICES

1.6 JUSTIFICATION OF OPPORTUNITY

1.7 INDUSTRY

1.8 GOALS OF THE BUSINESS

1.9 ENTRY AND GROWTH STRATEGY

CHAPTER TWO

2.0 MARKETING PLAN

2.1 POTENTIAL CUSTOMERS

2.2 MARKET SHARE

2.3 COMPETITION
2.4 METHODS OF PROMOTION AND ADVERTISEMENT

2.5 PRICING STRATEGY

2.6 SALES TACTICS

2.7 DISTRIBUTION STRATEGY

CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

3.1 KEY MANAGEMENT PERSONNEL

3.2 OTHER PERSONNEL, DUTIES AND NUMBER

3.3 RECRUITMENT, TRAINING AND PROMOTION

3.4 REMUNERATION AND INCENTIVES

3.5 LICENSE, PERMITS AND BY LAWS

3.6 SUPPORT SERVICES

CHAPTER FOUR

4.0 PRODUCTION, OPERATION PLAN

4.1 PRODUCTION FACILITIES AND PLAN

4.2 PRODUCTION STRATEGY

4.3 PRODUCTION PROCESS

4.4 REGULATIONS AFFECTING EMPLOYMENT

CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COST

5.2 ESTIMATION OF WORKING CAPITAL

5.3 CASH FLOW

5.4 PROFORMA INCOME STATEMENT

5.5 PROFORMA BALANCE SHEET

5.6 BREAK EVEN ANALYSIS

5.7 PROFITABILITY RATIO

5.8 DESIRED FINANCING

DECLARATION

I declare that this is my own original work and that it has not been presented before to

any examining body for the purpose of examination. This work is presented to the Kenya

National Examination Council as partial requirement for the award of craft certificate in

electrical and electronic technology (power option).

Student’s Name: Joseph Shikanga

Index no 509111255

Signature: J.S

Date: 16./10/2021

This project has been presented to KNEC with my approval as the project supervisor

Supervisor‘s Name: Mr. Robinson Rotich

Signature……………………………………………….

Date ……………………………………………………….
PREFACE

This project plan has been prepared according as per the requirement of the Kenya

National Examination Council for the award of craft certificate in electrical and

electronic technology.

This project shows how to establish and start a business with the proposed capitalization.
ACKNOWLEDGEMENT

I thank God for being my guidance and master of my life for giving me dear parents who

have greatly contributed to my success and for tireless efforts to sponsor my education up

to this level.

More gratitude to my project supervisor Mr. Rotich for his guidance and support in the

success of this project. Special thanks goes to my sister Nekesa and my friends for their

support.

To all, may the almighty God bless you all.

DEDICATION

I dedicate this business plan to my family members for making my education a success

up to this level. Thanks to other sponsors who made tireless effects towards my well

being and lastly, I dedicate too to my classmates for the support and company they gave

me while writing this plan to make it a success.

 EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

The proposed name of the business will be SHIK'S ELECTRICAL AND

ELECTRONIC REPAIR SHOP while will be managed and owned by JOSEPH

SHIKANGA, the business will be engaged in production and serving activities of

electronics equipments it is located at Kakamega Town.

2.0 MARKETING PLAN

The business activities designed to achieve indicates the marketing objectives

which are at a certain period of time. The targeted customers includes local

institutions, commercial customers and domestic customers. The market share

held by competitors approximately 35 % while the remaining 65 % is occupied

by Josephs' Electrical and electronics repair shop.

To gain more customers, the following will be put in place; promotion,

advertisement, after sales service, discount and transportation.

3.0 ORGANIZATION AND MANAGEMENT

There will be co-ordination from different level of authority and segment of

specialization for the purpose of achieving business objectives. The management

staff will include manager, supervisors, technician for the purposes of achieving

business objectives. Other established services will include licenses support

services to acquire its objectives.

4.0 PRODUCTION / OPERATION PLAN

This deals with production facilities and plan. The equipments like computers,

machinery enterprise layout. In addition, the services like repair and maintenance
 require ……….will be provided. The figures for monetary expenses are also

stimulated. Production process such as purchasing, repair/fault items and

collection. There some draw backs in the business i.e. registration, insurance,

safety regulations, labour and general cleanliness.

5.0 FINANCIAL PLAN

It includes calculations and the totals of different financial plans even include the

pre-operational cost which is estimated to be 674910. The estimation of working

capital 556240 for year I, 682250 year 2 and 76540 year 3. Cash flow projection

for year 7 which is accumulated to ksh 658700. The other calculations include the

proforma balance sheet and the income statement net profit after taxation 416765

year I, 165815 year 2, 416765 year 3. The break even add to

191000……………….. margin 69.5%. The profitability ratio which shows the

level of success of the business are calculated. The gross profit margin for year 1

= 146.3% year 2 =201.1% and for year 3 = 243.8%.

Return on investment for year 1 = 19.6%

Year 2 = 19.5 %

Year 3 = 19.3%

The desired financing on how the business shown use the money in calculated as

556240. Finally the proposed capitalization (total investment is estimated to be

7170700)
CHAPTER ONE

1.0 BUSINESS DESCRIPTION

The proposed business will be engaged in the repair and selling activities of

electronic equipments like radios, TV sets, CD’s players and mobile phones etc.

1.1 BUSINESS NAME

The name of the business will be SHIK'S ELETRICAL AND ELECTRONIC

REPAIR SHOP which will be managed and owned by JOSEPH SHIKANGA.

1.2 BUSINESS LOCATION AND ADDRESS

Shiks' electrical and electronic repair shop will be located in Kakamega town. The

business is off Kakamega road next to Masinde Muliro University. The location is

busy and favourable due to the following reasons.

i) Ready market: from students in the nearby University who have electronic

equipments which are prone to damages and residents of ease estate.

ii) Supplies of items needed for the operation of this business is available from the

town. For convenience of the business operation, the following address will be

used:-

SHIKS ELECTRICAL AND ELECTRONIC REPAIR SHOP

P.O. BOX 996

KAKAMEGA

TEL: 0723 966 139

1.3 FORM OF OWNERSHIP

The business will be a sole proprietorship form of business. It will be owned and

runned by Joseph Shikanga as the owner. The proprietor is in favour of this form

of business ownership because of the following reasons.

i) He will earn all the profits

ii) He will be the boss

iii) He will be secure of the job

iv) Easy to start and run

v) Involves in decision making alone

1.4 TYPE OF BUSINESS

The business will be an Electronic shop engaged in maintenance and repair,

selling of a wide variety of electronics spare parts i.e. capacitors, resistors,

transistors, switches, sockets outlets lamp holders and the services will include

radios, TV sets, CD’s players and mobile phones repair. In addition it will offer

special services of repairing bulky or heavy electronics items like refrigerators,

cookers, motor at special consultation.

1.5 PRODUCTION OR SERVICES

The services provided by Shiks electrical and electronic repair shop are more

profitable operated since the business has specialized in electronics products and

services. Also due to less competition from Wanyama electronics and repair shop

which specialize on one field of work. The uniqueness of products and services

features are that they are good and proper quality, customers satisfactory and

affordable prices.
1.6 JUSTIFICATION OF OPPORTUNITY

The business will be necessary in this location because there will be ready market

owing to the fact that it is located to an institution and is a busy area. Secondly it

will provide employment for the proprietor himself as well as the other staffs

whom he will have a change to put into practice her acquire entrepreneurial skills

and managerial skills acquired in college.

1.7 INDUSTRY

The proposed business will fall under the trade/service industry, dealing with the

provision of a wide variety of electronic equipments. The main challenge in this

industry is the rapid change in technology both in electronics and

telecommunication. Before entering into this industry, it is essential to comply

with policy, rules and regulations of registration and acquisition of licenses. It

also calls for technological know – how.

1.8 GOALS OF THE BUSINESS

1.8.1 LONG –TERM GOALS

To diversify the project and hold a large industry sector.

1.8.2 SHORT - TERM GOALS

To stock a wide variety of items in order to meet the clients needs and to be able

to pay back the loan after one year through ploughing back the profit.

1.9 ENTRY AND GROWTH STRATEGY

The business will first acquire a premise and all other items for the necessary

trading so as to avoid confrontation with the authority. Lastly it will attract the
attention of the customer of the existence of the business by erecting a sign board

outside the building and only different strategic places in Kakamega.

The pricing strategy is determined by the demand and the cost of production of

the products and services. Also the extend of the fault and time consumed in

repair of an item.

The plan to attract and retain customers is to give them quality products.
 CHAPTER TWO

2.0 MARKETING PLAN

The business activities designed to achieve indicates the marketing objectives

which are set for ascertain a period of time. The following objectives lead to the

marketing plan:-

To develop and implement customers oriented sales and promotion for health

business growth.

To activate good will trust from esteemed customers so as to increase sales.

To motivate its staff by giving them good salaries and time, projective measures

will be implemented to them and allowances medical care incase of any.

2.1 POTENTIAL CUSTOMERS

There will be many groups at potential customers targeted by Shiks electrical and

electronic repair shop. The main targeted groups are as follows

(i) Local institutions

This group includes primary, secondary schools and the colleges around. These

institution needs maintenance of their electronics devices such as computers

photocopies, printers, telephones etc. their unique and buying trends contributes

up to 15 % of the total customers.

(ii) Commercial customers

This group of customers includes those who buy things and sell them. They play a

major role in the business due to their bringing items for servicing. These

customers will buy on daily basis.

If 100 % = 360
75 % =?

= 75 x 360 = 270 (General public)

100

15 % =?

= 15 x 360 = 54 (Local institutions)

100

10 % =

= 10 x 360 = 36 (Government agency)

100

Pie chart

(iii) Domestic customers

This includes the customers staying around which may had institution of their

commitments repairs and maintenance of their working equipments. This class

contributes to a total of 10 % of the customers. This can be summarized in the

chart.

POTENTIAL CUSTOMERS DEGREE (%)

Local institutions 54

Domestic customers 36

Commercial 270

Total 360
2.2 MARKET SHARE

Shiks electrical and electronic repair shop will need at least 100 people on daily

basis. the market share held by major competitors is approximately 25 % the

intended business will target a market share of 65 % minor competitors will

occupy 10 % of the market competitors will occupy 10 % of the market

competitors of the intended business are KEY electronics with 15 , LIGHT

electronics with 10 % and KEVOS electronics. The monthly competitors are the

roadside sellers among the street. The two main competition will be stipulated as

follows.

Name of business % share customers

Light Electronics 10 36

Key Electronics 15 54

Kevos Electronics 65 234

Minor Electronics 10 36

Total 360

10 % = 10 x 360 = 35 (Light electronics)

100

15 % = 15 x 360 = 54 (Key Electronics)

100

10 % = 10 x 360 = 36 (Minor Electronics)

100

65 % = 10 x 360 = 234 (Kevos Electronics)

 100

2.3 COMPETITION

Shik’s electrical and electronics competitors includes key, light Electronics. They

are after same products and services but are not to the standard. To overcome

these competitors, Shik's electronic shop intends to capitalize this competitive

weakness and strength as shown below.

Name of business weakness strength

light electronics - no room for expansion - good promotion and

- poorly located advertisement

-have no enough stock - have got a variety of

- poor approach to goods

customers - famous to many customers

Key electronics - no promotion given to - experienced in the

customers since in business

memorial - famous to customers

- poor services

- lack of equipment

Shik's electronics - not famous - there is room for

- lack of enough capital expansion

- promotion not upto date - good management

- have a variety of goods

and services
Competition analysis table

name of production pricing promotio personnel location size TOTAL

business n

Light 11 12 13 8 13 57

electronics

Key 9 8 7 10 7 54

electronics

Shik's 20 12 8 10 6 56

electronics

maximum 6 6 6 6 6 6 36

score

2.4 METHODS OF PROMOTION AND ADVERTISEMENT

Promotion is the communication of a business enterprise with the potential

customers. Shik's electrical and electronic repair shop will practice various

promotions

2.4.1 Promotion

Promotion includes the following after sales services, giving discounts which will

pay a key role in popularizing and making known of the business and its various

offerings.

2.4.2 Advertising
The intended business will use sign posts, posters and notices for advertising. This

kind of advertising shall provide directions to the business locations, operations

time. Media such as newspapers (local) TV which will be used for advertising the

intended business products. Hand bill may be used at the start of the business than

………….. an expansion bill boards will be constructed a long side various streets

in town.

2.5 PRICING STRATEGY

The pricing strategy for Shik products and services will be a stepping stone.

Towards achieving good sales which include; the methods of calculating the

selling price of the products will be determined by the cost of producing/

achieving the time it will take to service factors influencing the price, selling will

be compared with the competitors price so as not to be too expensive or too

cheap. This is to make an equal and balanced market price which will be

satisfactory to all in the business. Discounts to be offered to the customers will

depend on the cost of the item or the extend and degree of the fault.

The business will offer sales services on goods bought and purchased with order

so as to direct and guide the user on how to operate and simple maintenance of the

item. This makes the customers sure and confident of the investment he/she has

made. The relevant cost after sales services will be determined by the distance and

complexity of the services. This will be considered before undertaking any

activity so as to avoid operating at a loss.

2.6 SALES TACTICS

 Sales tactics for purposes of increasing sales of Shik's electrical and electronic

repair shop sales tactics will be as follows.

i) Offering discounts of 3% to regular customers

ii) Music in the business to make customers drawn to the place and feel

entertained while waiting for service delivery.

iii) Offering after sales services

2.7 DISTRIBUTION STRATEGY

The customers will access goods by coming to the premise ordering the number of items

required and the workers will assist the customers to the nearby transporting place for

off-loading and loading to customer’s destination. At the expansion of the business, it

will have its own means of transporting which will help the customers to transport goods

to the destination.
CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

Organization and management refers to a group of people co-coordinated into different

level of authority and segment of specialization for the purpose of achieving the business

objective. The main purpose of organization and management plan is to have;

 Flow of authority

 enhance chain of command from which it will strengthen and sketch

throughout the business

 To serve customers diligently by maintaining excellent customers relation

through staff who save.

 To serve for and recruit a work force that is well trained and experienced as a

target for success

 To motivate staffs through rewarding them generously so as to maintain high

motivation spirit.

ORGANIZATION

electronics will have a simple organization because the property will be a sole manager.

The sole proprietor/ manager will have qualified and these are some of the qualifications.

Academic qualification up to college level of which currently is at the final stage of

obtaining a diploma in electronics engineering. She also gained experience during

attachment in a well established organization. Other special qualities of will be good

leadership skills, creative, innovative among others and she is computer literate.

3.1 KEY MANAGEMENT PERSONNEL

For every successful enterprise there should be proper management personnel.

The enterprise will have a manager, supervisor, technician, secretary and cleaners.

3.1.1 THE OWNER MANAGER

This will be the overall boss of the business thus he/she have ……………. to recruit,

employ and sack unreliable employees.

ORGANIZATION CHART

MANAGER

SUPERVISOR

TECHNICIAN SECRETARY CLEANER

3. 2 OTHER PERSONNEL, DUTIES & NUMBER

3.2.1 Duties and responsibilities of the supervisor

 Be in charge in the absence of the manager

 Keeping records of all hard items, bought goods and cashing the amount got from

sales

 Purchase of equipment and items for selling

 Collecting cash from daily distributions and ensuring that the cash tally with the items

distributed and sold

 Carrying out stock – taking weekly to ensure that physical stock of items match as per

records.

3.2.2 TECHNICIAN

He is in charge of the work or services carried out in the enterprise

QUALIFICATION

 Have a certificate in electrical, electronics and instrumentation

 Computer literate

 At least one year working experience

 Age of 24 -35 yrs

3.2.2 SECRETARY

She will be in charge of all minutes and typing in the enterprise and have;

 Computer literate

 diploma in secretarial

 good public relation

 she must be eloquent in English and Kiswahili

QUALIFICATIONS

3.3 RECRUITMENT, TRAINING AND PROMOTION

3.3.1 RECRUITMENT

This is the process of searching prospective employees and stimulating them to apply for

jobs in the organization. WAGEMI electronics intends to utilize the qualified people who

reside around Kitale town and neighboring regions, applicants should be fairly examined

and considered for interview.

3.3.2 RECRUITMENT PROCESS

The recruitment process will be done by managers and it will involve the following pool

of steps.

 Selection: this is a process where the instruments will be used to choose from a

pool of applicants

 Short listing: this is where the interview panel chooses the applicants who meet

the required qualifications.

 Interview: include questions asked that involve one’s personal details. It is known

as the applicant’s capabilities and interests in the jobs applied.

 Introduction/ orientation: it involves taking the new employees through this job

description and even physical orientation of the business premise.

3.3.3 TRAINING

There will be job training where there will be need to educate and train them on the

proper business language to enable them relate well and attract more customers. The

training strategy will be on job training and occasional seminars.

3.3.4 PROMOTION

This will be done at the expansion of the business in that vacant position will be created

consideration of promotion will include;

 Excellent capabilities for development most have been shown in a staff in order to

qualify for promotion.

 Promotion in the intended business will also be for motivation purposes to the

employees.

3.4 REMUNERATION AND INCENTIVES

The remuneration and incentives in the table below

JOB TITLE NUMBER BASIC INCENTIVE MANDATORY NET

REQUIRED SALARY DEDUCTION PAY

MANAGER 1 20,000 4,000 1,500 25,500

SUPERVISOR 1 16,000 2,000 500 18,500

TECHNICIAN 1 11,000 1,000 150 12,150

SECRETARY 1 11,000 1,000 150 12,150

CLERK 1 11,000 1,000 150 12,150

TOTAL 5 69,000 9,000 2,450 80,450

WAGEMU electronics will ensure that employees stability and high morale by making

payments of salaries on good time and allowing employees/ staff to participate in

decision making a basic salary of Kshs 11,000 each per month. They will also have …….

day off duty every three months to enable them attend there personal activities hence

motivating them.

3.5 LICENSE AND PERMITS AND BY LAWS

The proposed business cannot operate effectively without requiring services from other

established business and organization. To avoid collusion and description the intended

business from Kitale country council, costing approximately 7,000 and be renewed after

every financial year of operation. The certificate of ownership the insurance from blue

shield insurance company & a public health act which will ensure good hygienic

conditions etc.

3.6 SUPPORT SERVICES

WAGEMU electronics cannot operate effective without requiring services from

established organization. The major support services include;

(i) Banking services

The intended business will require banking which will enable it to deposit money

collected each day, loan services will also be provided to the business by this services.

The banks that will be used include National bank of Kenya. Address

NATIONAL BANK OF KENYA

P.O BOX 142- 30100

KITALE

TEL: 061-2246150

(ii) Insurance services

The proposed business will require the services for insurance cover of the forms assets,

which include human resources, other properties from five, theft, and accidents while at

work. The insurance services comfortable for the intended business will be

BLUE SHIELD INSURANCE

P.O BOX 6120 – 38100

KITALE

TEL: 061 -2610710

iii) Postal services

Postal services will be needed for the sending and receiving letters and documents to and

from the proposed business customers.

WAGEMU ELECTRONICS

P.O BOX 55 – 50200

KITALE

CHAPTER FOUR

4.0 PRODUCTION/OPERATION PLAN

Since WAGEMU electronics will be engaging in repairing and maintenance of electronic

goods mainly, it will have the following operation plan:-

I. Offering high quality services to its potential customers so as to counter and

complete other such business.

II. A part from high quality items and services it will hold fashionable technological,

durable and well designed collections in its stones.

III. To source for equipment and facilities required by the business to be able to

provide its customers with products and services they require

IV. To acquire high quality products and services

V. To provide flexible operation items in turn with customers needs and desires,

while at the same time meeting the business objectives and goals.

4.1.1 PRODUCTION FACILITIES AND PLAN

The intended business will require a premise from which to operate them. The premise

will be one of the rooms opposite Kitale technical. It will be a three roomed premise with

one serving as a workshop, the other as the manager’s office and the final one as the

supervisor’s office.

Generally the facilities that will be required by WAGEMU electronics services will be as

follows:-

EQUIPMENT QUANTITY COST/UNIT(KSHS) TOTAL COST

Computer 1 25,000 25,000

cash registers 1 1,000 1,000

furniture/ cabinets 3 1,200 3,600

chairs/ tables 8 1,500 12,000

telephone 1 2,000 2,000

testers/ meters 6 1,500 9,000

soldering iron 5 700 3,500

screw drivers 5 sets 200 1,000

insulating tapes 10 20 200

pliers 10 80 800

spanners 8 250 2,000

TOTAL 58 33,450 60,100

MANAGER STORE

4.1.2 ENTERPRISE LAYOUT WORKSHOP

SUPERVISOR

SECRETARY

ACCOUNTANT
4.1.3 REPAIR AND MAINTENANCE

WAGEMU electronics will have three types of repair and maintenance as follows

4.1.3.1 PREVENTIVE MAINTENANCE

The maintenance will be done by ensuring that all the tools and equipments are cleaned

after work. Also they will b stored in the corrective manner as required by the workshop

rules in order to avoid breakage.

4.1.3.2 REGULAR MAINTENANCE

There is need of regular servicing of the tools and equipment in the workshop. some of

the reasons for regular maintenance include:-

I. To increase machine efficiency

II. For durability of the tools and equipment

III. Reduce injuries resulting from machine which are not serviced

IV. Reduce the cost of buying new tools and equipment.

4.1.3.3 CORRECTIVE MAINTENANCE

This type of maintenance will be done when the need arise like sharpening correctly,

greasing moving parts etc.

4.2 PRODUCTION STRATEGY

4.2.1 PRODUCTION DESIGN AND DEVELOPMENT

4.2.2 MONTHLY MATERIAL REQUIREMENT

TYPES OF QUANTITY COST PER UNIT TOTAL

MATERIAL

receipt book 14( 8 X 10 inch) 1,200 16,800

soldering bits 1 meter 50 50

super glue 1 dozen 60 60

insulating tape 10 20 200

TOTAL 26 1,330 17,110

4.2.3 MONTHLY LABOUR REQUIREMENTS

JOB TITLE NO BASIC INCENTIVES DEDUCTION NET

REQUIRED PAY PAY

MANAGER 1 40,000 4,000 1,500 22,500

SUPERVISOR 1 16,000 2,000 500 17,500

TECHNICIAN 1 11,000 1,000 150 11,800

ACCOUNTANT 1 11,000 1,000 150 11,800

SECRETARY 1 11,000 1,000 150 11,800

5 69,000 9,000 2,450 75,550

4.2.4 MONTHLY PRODUCTION PROCESS

ITEM AMOUNT

rent 10,000

water bills 500

materials 17,110

wages and salaries 75,550

telephone bills 500

transport 3,000

advertisement 1,200

electricity bill 400

insurance 2,000

miscellaneous 1,000
TOTAL 87,600

4.3 PRODUCTION PROCESS

There are various procedures to be followed for effective production. This will include:-

1. Purchasing

When a customer purchases an item, it’s tested for proper functioning and for the

customers satisfied with the operation. Then a receipt is issued bearing the stamp with the

name of the business. The receipt also bears the item purchased, name and the details.

2. Repair / fault items

i) Receiving

A customer brings in the item for the reception table then the item is forwarded to the

technician for fault diagnosing and after diagnosing the customer is issued with a card

containing the details of the item, the fault and the repair cost. Also the card will contain

the name of the customer, conditions which governs the repair of the item so as to reduce

claims and misunderstanding as to a reason other electronic components can be

permanently destroyed.

ii) Repair

After diagnosing the description are stacked to the item then forwarded to the workmen

to undertake the repair process and after it the item is assembled back ready to be

collected.

iii) Collection
The customer should present the card issued when the item was received to the supervisor

in which payments are made and a receipt is issued in which it will be used to collect the

item through the technician.

4.4 REGULATIONS AFFECTING OPERATION

For business to start its operations and run smoothly, it has to following regulations.

4.4.1 Registration

The business have to be registered under the registration act cap 514 governing electrical

and electronics shops in which it must give all the details (i.e. ownership, type of business

and specific operations) the permits and licenses are going to be acquired from the Kitale

municipal council. This will amount to a cost Kshs 4,000 to obtain it. Due to the rising up

of electronic tax registers, therefore all electrical and electronics goods are being taxed

depending on its cost and value. This tax is payable to the Kenya revenue authority.

4.4.2 INSURANCE COVER

The business will have an insurance covering it from any risk that may occur. Also the

employees should have an insurance policy from …………… known company. These

policies may include:-

i) Fidelity policy

This is a form of insurance where the business is insured against dishonest employees

who may steal from the business. The business will claim compensation against

infidelity.

ii) Workmen compensation

This insurance covers that employee against losses or accidents occurring when to work.

iii) Fire and electricity insurance

This insurance covers the business against fires and faults caused by electricity.

4.4.3 SAFETY REGULATIONS

The staff should adhere to the regulations for effective production since all the employees

have to be protected by offering the right tools for the job protective clothing and a first

aid kit.

4.4.4 Labour hour

WAGEMU electronics will be operating from 8.00 a.m to 5.00 p.m. this will aim at

attracting more customers keen on reliability workers will be informed on time

accordingly so as to work effectively.

Work schedule time table

8 a.m – 12 p.m

TIME ACTIVITY

8 a.m – 12 p.m opening, tea break & normal operators

12.05 pm – 1.00pm lunch break

1.00 pm – 4.00 pm normal operations

4.00 pm – 4.30 pm tea break, normal operations

4.30 pm – 5.00 pm cleanliness and closing

4.4.5 CLEANLINESS

This regulation will be highly observed in the entire premise as it will be done every

evening after the day’s schedule.

Costs incurred regarding safety and regulations of the business will include:-

Water 500

cleaning powder 100

aprons, gloves, helmets 500

TOTAL 1,100

CHAPTER FIVE

5.0 FINANCIAL PLAN

The ultimate objective to be the financial plan in relation to efficient management of the

business finance will be:-

I. To be able to determine the financial position of the proposed business at any

particular time.

II. To show the projected amount of money that WAGEMU electronics will require

and how it will be raised and utilized

III. To ensure keeping of account and up to date records of the business transactions.

IV. Invest prudently to ensure growth of the business.

5.1 PRE – OPERATIONAL COST

DESCRIPTION AMOUNT(KSHS)

Rent 10,000

water bills 500

telephone bills 500

transport 3,000

advertisement 1,200

electricity bills 400

insurance 2,000

materials 17,110

post office box 1,500

stationery 10,000

stock 608,700

furniture 10,000

tools and equipment 10,000

TOTAL 674,910

5.2 ESTIMATION OF WORKING CAPITAL

ITEM 2010 2011 2012

CURRENT Kshs Kshs Kshs

ASSETS

opening stock 608,700 628,900 656,800

cash in hand 345,540 380,400 401,350

cash at bank 100,000 130,000 170,000

movable 50,000 70,000 9,500

debtors 30,000 29,000 31,200

TOTAL 1,134,240 1,238,300 1,354,350

CURRENT KSHS KSHS KSHS

LIABILITIES

bank loan 440,000 400,050 390,500

creditors 80,000 95,900 105,010

rent 48,000 48,000 48,000

insurance 10,000 12,100 14,300

TOTAL 578,000 556,050 557,810

Working capital = current assets – current liabilities

Working capital for year 2010 = 1,134,240 – 578,000

= 556,240

Year 2011 = 1,238,300 – 556,050

= 682,250

Year 2012 = 1,354,350 – 557,810

= 796,540
 5.3 CASH FLOW PROJECTION

DESCRIPTION JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Cash in flow
Cash sales 207,525 236,105 232,695 230,510 232,695 243,310 242,115 241,715 242,305 242,500 248,300 2,505,225 2,850,300
Debtors 2,450 2,400 2,850 2,900 2,850 2,750 2,070 2,250 2,130 2,150 2,000 3,100 30,000
Dividends 1,500 1,350 1,600 1,870 1,620 1,750 1,510 1,640 1,430 1,590 1,790 2,350 20000
Total 211,475 232,855 237,145 W235,290 237,165 247,810 245,075 845,605 245,865 246,340 250,090 259,875 2,900,300
Cash out flow
Purchases 50,320 49,200 W50,400 49,570 49,530 48,310 52,100 52,370 51,169 51,901 59,130 52,700 608,700
Creditors 7,450 4,700 6,400 6,500 6,450 6,670 6,750 6,550 6,870 6,450 6,780 6,400 80,000
Rent 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 48,000
Wages and salaries 121,000 121,000 121,000 121,000 121,000 121,000 121,000 121,000 121,000 121,000 121,000 121,000 1,452,000

Telephone 375 375 375 375 375 375 375 375 375 375 375 375 4,500
Electricity 250 240 260 230 240 270 260 200 220 270 260 300 3,000
Water - - - - - 200 - - - - - 200 400
Advertisement - - - - - 5000 - - - - - 5,000 10,000
Licence - - - - - - - - - - - 5,000 5,000
Transport 791 790 792 791 792 790 791 792 790 791 792 798 9,500
Postage 208 - - - - - - - - - - - 208
Stationary - - - 3,334 - - - 3,334 - - - 3,332 10,000
Repair and maintenance - 1,667 - 1,667 - 1,607 - 1,668 - 1,665 - 1,666 10,000
Total 184,394 184,179 183,436 187,674 182,595 188,51 185,484 190,496 184,633 186,670 184,544 200,984 2,243,600
Net cash 27,081 55,676 53,709 47,606 54,570 59,299 60,211 55,109 61,232 59,670 69,546 54,991 658,700
Accumulated cash 27,081 82,751 136,466 184,072 238,642 297,941 258,154 413,261 474,493 534,163 603,709 658,700
5.4 PROFORMA INCOME STATEMENT

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

COST(KSHS) COST(KSHS) COST(KSHS)

sales 285,300 433,700 625,700

discount received 100,000 120,000 140,000

debtors 70,000 80,000 84,000

TOTAL 455,300 633,700 765

Cost of sales 55,000 60,000 70,000

gross profit 400,300 573,700 695,700

EXPENSES

salaries & wages 115,000 120,000 122,000

rent & furniture 18,000 20,000 21,000

license & permits 12,000 12,000 12,000

electricity bills 10,000 14,000 15,000

insurance 12,000 12,000 12,000

transport 18,000 20,000 22,000

loan payment 28,000 30,000 30,000

telephone bills 6,000 6,000 7,000

advertisement 6,000 6,000 7,000

repair & 7,000 8,000 9,000

maintenance

water bills 8,000 8,000 9,000

TOTAL 240,000 256,000 257,000

net profit before tax 160,300 317,700 438,700

less provision of tax 8,015 15,885 21,935

5%

net profit after tax 152,285 165,815 416,765

5.5 PROFORMA BALANCE SHEET

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

ASSETS

FIXED ASSETS

tools and equipment 40,000 40,000 40,000

furniture 10,000 10,000 10,000

TOTAL FIXED 50,000 50,000 50,000

ASSETS

CURRENT

ASSETS

stock 508,700 509,450 509,450

debtors 30,000 30,750 34,050

cash at bank 100,000 100,000 103,300

cash at hand 90,000 90,000 90,000

TOTAL 728,700 730,200 740,100

CURRENT

ASSETS

TOTAL ASSETS 778,700 780,200 790,100

CURRENT

LIABILITIES

creditors 20,000 20,500 21,500

rent 48,000 48,500 48,500

TOTAL 68,000 69,000 70,000

CURRENT

LIABILITIES

LONG TERM

LIABILITIES

bank loan 440,000 440,000 440,000

insurance 270,700 271,200 280,100

TOTAL L/TERM 710,700 711,200 720,100

LIABILITY

TOTAL 778,700 780,200 790,100

LIABILITIES

5.6 BREAK EVEN ANALYSIS

DESCRIPTION KSHS

sales 285,300

variable costs
purchases 60,000

telephone 6,000

advertisement 6,000

repair & maintenance 8,000

TOTAL 87,000

Contribution = total sales – variable costs

= 285,300 – 87,000

= 198,300

i) Contribution margin = contribution x 100

Sales

= 198,300 x 100

285,300

= 69.5%

ii) Break even level of sales

fixed costs Kshs

salaries 115,000

license/ permits 12,000

rent 18,000

insurance 12,000

loan repayment 28,000

interest on loan 6,000

total fixed assets 191,000

Break even level of sales

Fixed costs x 100

Contribution margin

= 191,000 x 100 = 274,820. 1439

695

5.7 PROFITABILITY RATIOS

A) Gross profit margin

= Gross profit x 100

Sales

YEAR 1 = 400,300 X 100

285,300

= 140.3%

YEAR 2 = 573,700 X 100

285,300

= 201.1%

YEAR 3 = 695,700 X 100

285,300

= 243.8%

(B) RETURN ON EQUITY

= Net profit after sales x 100

Equity contribution

Year 1 = 152,285 x 100

270,700

= 56.3 %
Year 2 = 152,285 x 100
271,200

= 56.2 %

Year 3 = 152,285 x 100

280,100

= 54.4 %

(C) RETURN ON INVESTMENT

= Net profit after tax x 100

Total investment

Year 1 = 152,285 x 100

778,700

=19.6%

Year 2 = 152,285 x 100

780,200

= 19.5%

Year 3 = 152,285 x 100

790,100

= 19.3%

5.8 DESIRED FINANCING

pre-operational costs Kshs

working capital (Year 1) 556,240

TOTAL 556,240

5.9 DESIRED FINANCING

Bank loan 440,000

owners equity 270,700

TOTAL 710,700