TRUSTWORTHY PLUMBING MATERIAL

SUPPLY
SIAYA INSTITUTE OF SCIENCE AND TECHNOLOGY

PRESENTED BY: MUGANDA DENNIS OWINO

CPLB/0115/S22

COURSE CODE: 705101

INDEX NO: :7051010016
PAPER CODE: 1305/316B

SUPERVISOR: MRS.BRIDGIT AKINYI

PRESENTED TO: THE KENYA NATIONAL EXAMINATION COUNCIL IN THE PARTIAL

FULFILLMENT OF THE AWARD IN CERTIFICATE IN PLUMBING AND PIPE FITTING
DECLARATION

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ACKNOWLEDGEMENT
The project was possible and came to be successful because of support and cooperation of my
project Coach Mr.Mathew and also thanks to my beloved parents for the financial support and to
all my relatives and friends who participated in enabling me to finish the project in time and at a
given period of time with a negotiated cost so thanks to them.

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DEDICATION
I wish to dedicate this business plan to my beloved parents, brothers and sisters and also relatives
and friends who genuinely also took part in the success of my project completion thus enabling
me to go through this project successful. I also want to thank the Almighty for the gift of life and
great love and also protection which enabled me to witness my great success in the project.

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Contents
DECLARATION..........................................................................................................................................i
ACKNOWLEDGEMENT...........................................................................................................................ii
DEDICATION............................................................................................................................................iii
List of figures............................................................................................................................................vii
EXECUTIVE SUMMARY.....................................................................................................................viii
CHAPTER ONE..........................................................................................................................................1
1.0 Business Description...................................................................................................................1
1.1 Background of the owner...................................................................................................................1
1.2 Business Name..................................................................................................................................1
1.3 Business Location..............................................................................................................................1
1.4 Form or ownership.............................................................................................................................2
1.4.1 Advantages.................................................................................................................................3
1.4.2 Disadvantages.............................................................................................................................3
1.5 Product and Services.........................................................................................................................3
1.5.1 Products......................................................................................................................................3
1.5.2 Services......................................................................................................................................3
1.6 Justification of opportunity................................................................................................................4
1.7 Industry..............................................................................................................................................4
1.8 Goals of the Business and Objectives................................................................................................4
1.8.1 Goals of the Business..................................................................................................................4
1.8.2 Objectives...................................................................................................................................4
1.9 Entry and Growth strategy.................................................................................................................4
1.9.1 Entry plan...................................................................................................................................5
1.9.2 Growth plan................................................................................................................................5
CHAPTER TWO.........................................................................................................................................6
2.0 MARKETING PLAN........................................................................................................................6
2.1 MARKETIN OBJECTIVES..............................................................................................................6
2.2 CUSTOMERS...................................................................................................................................6
2.2.1 Commercial Customers...............................................................................................................6
2.2.2 Industrial Customers...................................................................................................................6
2.2.3 Individual Customers..................................................................................................................6
2.3 MARKET SHARE............................................................................................................................7

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 2.4 COMPETITION................................................................................................................................7
2.5 ADVERTISING AND PROMOTION STRATEGIES......................................................................8
2.6 PRICING STRATEGIES..................................................................................................................8
2.7 SALES TACTICS.............................................................................................................................9
2.8 DISTRIBUTION STRATEGIES.......................................................................................................9
CHAPTER THREE...................................................................................................................................10
3. O ORGANIZATION AND MANAGEMENT PLAN.......................................................................10
3.1 BUSINESS MANAGER(s).............................................................................................................10
3.2 PERSONAL NUMBER, QUALIFICATION AND DUTIES..........................................................11
3.3 RECRUITMENT,TRAINING AND PROMOTION.......................................................................12
3.4 REMUNERATION AND INCENTIVES........................................................................................12
3.5 LICENCES PERMITS AND BY-LAWS........................................................................................12
3.6 SUPPORT SERVICE......................................................................................................................13
3.6.1 Training Services......................................................................................................................13
3.6.2 Marketing Services...................................................................................................................13
3.6.3 Business Counseling.................................................................................................................13
3.6.4 Banking Services......................................................................................................................13
3.6.5 Insurances Services...................................................................................................................13
CHAPTER FOUR.....................................................................................................................................14
4.0 PRODUCTION/ OPERATION PLAN............................................................................................14
4.1 PRODUCTION/ OPERATION PLAN OBJECTIVES....................................................................14
4.2 PRODUCTION/ OPERATION FACITIES AND CAPACITY.......................................................14
4.3 PRODUCTION/ OPERATION STRATEGIES..............................................................................14
4.3.1 Geographical Location.............................................................................................................15
4.3.1 Working Hours........................................................................................................................15
4.4 PRODUCTION/ OPERATION PROCESS.....................................................................................15
4.4.1 External Factors likely to affect production Table....................................................................15
4.5 REGULATION AFFECTING OPERATION /PRODUCTION......................................................16
CHAPTER FIVE............................................................................................................................................17
5.0 FINANCIAL PLAN..............................................................................................................................17
5.1 PRE-OPERATIONAL COST.................................................................................................................17
5.2 WORKING CAPITAL..........................................................................................................................17
5.3 PROJECTED INCOME STATEMENT....................................................................................................18

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5.4 PRE-FORMER BALANCE SHEET.........................................................................................................19
5.4 PRO- FORMA BALANCE SHEET.............................................................................................20
5.5 BREAK –EVEN ANALYSIS........................................................................................................21
5.6 PROFITABILITY RATIOS.........................................................................................................22
5.7 Gross Profit of Sales %.................................................................................................................23
5.7.1 Net Profit Sales........................................................................................................................23
5.7.2Return on assets Ratio.............................................................................................................23
5.8 DESIRE FINANCING..................................................................................................................23
5.9 PROPOSED CAPITALIZATION................................................................................................24

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List of figures
Figure 2. 1........................................................................................................................................6

vii
EXECUTIVE SUMMARY
BUSINESS DESCRIPTION
The name of my proposed business is TRUSTWORTHY PLUMBING MATERIAL
SUPPLY ,the business will be located at Bondo town in Siaya County and the business address
will be,
TRUSTWORTHY PLUMBING MATERIAL SUPPLY
P.O BOX 141
SIAYA
Tel No.0794130795
The business will operate as sole proprietorship ,the reason for adopting the form of ownership
is because it is easy to make decisions , enjoying of profits and overhead and the secrets of the
business is maintained
The business will be dealing with pipes,pipe fittings and sanitary applyances as the main product.
MARKETING PLAN
The customers of the anticipated business is expected to come from Siaya as a whole and its
environment where the main work of the business is to distribute products to any

ORGANIZATION/MANAGEMENT PLAN
The business will require employees for successful running of the business where their salaries
will amount to ksh 10000 ,they will be recruited using different methods e.g. interviewing and
many others.

PRODUCTION/OPERATIONAL PLAN
The business requires Ksh 856,875 for it to operate where the amount will be used to purchase
machines and other relevant equipment. Operation of the business will be regulated by the local
authority where regulations affecting operations of the business and permits will be obtained .

FINANCIAL PLAN
Before operating the business will require various pre-operational costs which will amount to
7000000kshs .The estimated working will be 1000000kshs .According to the project income
statement,its net profit after tax will be 102000kshs ,the profitability ratio will be 18.15% taking
accounts gross profit to sales 97.8% considering the net capital will be ksh 2068000 which will
be utilized as follows
Pre-operational cost=602000ksh
Working capital= 2006000ksh
This capital will be obtained from owners saving amounting to ksh 800000, contribution from
friends and relatives ksh300000 and a bank loan of ksh 3008000

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CHAPTER ONE

1.0 Business Description

The proposed business will be registered under the name TRUSTWORHY PLUMBING
MATERIAL SUPPLY which intends to offer products and services which are reliable, quality
and of great communication. The reason for the proposed business is to evolve the creation of
employment to help our people because there’s a big scarcity of employment not only in my area
but country wide. Business will operate under sole proprietorship basis which intends to deal
with sanitary appliances e.g. Water closet (WC), Sink, Bath shower, Wash Hand Basin (WHB)
and drinking fountain, plumbing pipes and fittings It also includes appliances that are not
connected to a water supply e.g. composting toilet or drain e.g. waterless urinal.

1.1 Background of the owner

DISTINCTION PLUMBING ENTERPRICE is owned by Brian Omondi a holder Diploma in
Plumbing Technology from Siaya Institute of Science and Technology. Being a sole
proprietorship business, I Brian Omondi will be the Manager Director and the CEO and by the
grace of God I will be more conversant with all the activities that will be carried out in it.

1.2 Business Name

TRUSTWORTHY PLUMBING MATERIAL SUPPLY is a business name that communicates
business reliability, efficiency and effectiveness . Thus asure customers to get the order materials
in good time and at expected place.

1.3 Business Location

The business is be located at Bondos town in Siaya county along Kisumu -Usenge road.
The address of the business will be:

TRUSTWORTHY PLUMBING MATERIAL SUPPLY

P.O. BOX, 142
BONDO.
CELL: 0794130795

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LOCATION MAP

KISUMU-USENGE ROAD

TRUSTWORTHY
PLUMBING SUPPLY SIBO WATER
COMPANY
BONDO
MARKET

TTC ROAD

BONDO TTC

1.4 Form or ownership

Distinction Plumbing Enterprise as a sole proprietorship form of a business will require
approximately Ksh. 3,000,000.00 as a startup cost to stock the business with esential plumbing
material and accessories such as Wash Basins, sink, Bidet, Shower, Urinals, Water closet and
drinking fountains, plumbing pipes such as plastic pipes, Galvanized iron pipes.
The source of this capital will be;
 Loan from Banks KS. 1,000,000.00
 Friends contribution KS. 500,000.00
 Relatives KS. 500,000.00
 My savings KS. 1,000,000.00

1.4.1 Advantages
 Facilitates competition encouraging high quality products.
 Promotes use of modern technology in especially small-scale manufacturing to enhance
higher productivity.
 A source of generating income and increasing economic growth.
 Leads to development of newer markets.
 Financial gain.
 A means of opening up new businesses especially in the rural areas facilitates
globalization.

1.4.2 Disadvantages
 Miss-management by employees.

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  Fear of losing all that has been invested
 Long working hours
 Bankruptcies and closure
1.5 Product and Services
1.5.1 Products
The business will have quality product and services to all customers in abundance. The products
includes PPRCT pipes fittings, Polymer fittings, Single Layer PE (Polyethylene) and carbon
Steel pipes fittings etc.

1.5.2 Services
The services that will be offered includes Water pressure check, Snaking of a tub and shower
drain, Visual inspection of exposed plumbing, Drain flow check, Sump pump check, Water
heater check, Faucet check and leak check and other apparatus used for bringing the water
supply into a building and removing liquid and water-carried wastes from a building.

1.6 Justification of opportunity

The changing lifestyle demands that people get customized services that match their preferences,
desires, needs, and enough. Besides, the trends in plumbing call lifestyle variables that satisfy the
consumer’s needs. There has a market gap in Siaya County because of a massive investment in
the construction industry. Since construction work is handy in the plumbing sector, the business
will provide modern plumbing accessories, sanitary appliances and services, giving the town a
facelift to match global standards.

1.7 Industry
Trustworthy Plumbing Material Supply will be in Building and Construction Industry. It intends
to introduce modern plumbing materials and sanitary appliances to improve people’s living
standards.
The business will not only provide remote services but online marketing through platforms such
as Facebook, Instagram, Business WhatsApp, and Twitter will all be essential in promoting
online advertisement to reach more customers worldwide and maximize the sale, which increases
business profitability.

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1.8 Goals of the Business and Objectives
1.8.1 Goals of the Business
The major goals of the business are;
 To provide good quality products and services of high intensity
 To employ myself and my fellows who’ve tried harder to get employed by the
government but of no success and at least they’ll get a better sustainable job to raise their
standard of living.
 To obtain maximum profit as possible.
 To create customers awareness by informing them of more product and services offered.

1.8.2 Objectives
The main objective of the business is to provide the best quality possible that satisfy diverse
customers’ needs all over the country by stocking and selling quality and standard sanitary
appliances and other plumbing materials.

1.9 Entry and Growth strategy

Entry plan is an organizational tool that will guide an organization on how to run a business.
A growth strategy is an organization plan for overcoming current future challenges to realize its
goals for expansion.

1.9.1 Entry plan

The target customers of the business comprise of individual company, street customers and also
new construction sites.

1.9.2 Growth plan

The business will be subjected to policy market penetration for entry into the market. Various
ways which will be used to lure customers to buy our products in Distinction plumbing
Enterprise will be as follows;
 Reducing price of products as per the nature of the market at the moment.
 Efficiency in distributions.

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CHAPTER TWO
2.0 MARKETING PLAN
A market plan outline an advertising strategy that an organization will implement to generate
leads and reach its target market.

2.1 MARKETIN OBJECTIVES

 To drive customer’s satisfaction whereby customers are not forced on engaging with a
brand on one channel, but rather on their own preferences and expectations to purchase
on their timeline and channel of choice.
 To identify high value audiences hence top performing customers models come from a
strategic blend of optimal customers subjects, relevant customers characteristics, first-rate
modeling techniques and in-market testing to identify your best audiences
 To increase customers leads therefore will be common for brands to utilize direct mails
marketing early in the buyer journey to increase brand awareness and drive lead
generation.
 To increase customers rendition/loyalty therefore not only you 70% more likely to sell to
an existing customers, but will be more profitable for you to sell to a repeat customers
than acquire a new one.
 To drive first purchase, when it comes to making first-time purchase, a customer must
trust a brand and its offering and this ring especially true as consumers become more
selective in times of uncertainty or financial strain.

2.2 CUSTOMERS
In regarding to how the nature of the business will be and the survey done, the business is likely
to house customers of all age. These includes the following customers;
 Commercial Customers
 Industrial Customers
 Individual Customers
2.2.1 Commercial Customers
These commercial customers be individuals or other corporations who gets engaged with
products or services to benefit a commercial enterprises.
2.2.2 Industrial Customers
The business will be having plumbing appliances which can be purchased by the industry hence
having the business to which the Authority has agreed to supply appliances for the purpose of
manufacturing goods.
2.2.3 Individual Customers
These are customers who purchase hardware commodities for domestics purposes e.g. tools such
PVC pipes, gate valves and etc.

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2.3 MARKET SHARE
The location of the business has an ultimate population of 20,000 people which it day by day it
keeps on increasing to a higher percentage in the nation annually that fluctuate graphically.
Trustworthy Plumbing Material Supply has a target of 6000customers compared to competitors
making it to 30% of the estimated population.
6000/20000*100= 30%
2.4 COMPETITION
This reffer to business selling similar product or materials are selling them at different prices
hence lead to competition
General strength and weakness of the competitors;
 Unique selling point (USP) – If the business person knows what the competitor’s unique
selling point are, they can create their own unique selling point that either rivals their
competitors’, or is completely different.
 Price – If a competitor sells a lot of similar products in the local area at a lower price, an
entrepreneur may also need to charge a lower price in order to compete and make sure
their products sell.
 Quality – If a competitor offered a high quality products, this would be seen as a strength
of the competitor. However if the competitor were selling a low quality product, this
would be seen as a weakness.
 Conveniences and location – If the competitor has a product that is very easy to use, then
it is important for another entrepreneur to try to make their product just as easy to use,
otherwise it is unlikely to sell as well as the competitor’s product.
 Product range – In contrast, if a competitor has a large product range, these could be seen
as a strength, as the competitor is likely to be able to target a wider range of customers
 Customer services – Most small business ensures they provide an excellent level of
customer service, e.g. by serving customers quickly but if a competitor is slow at serving
customers, and this could be a weakness of the competitor.
2.5 ADVERTISING AND PROMOTION STRATEGIES
The business intends to design posters, handbills and etc. that contains the business dealings. The
business will not only be advertised via posters and handbills but also virtually via online which
will encourage customers to sign up to receive email updates with a pop up option when they
first visit the business website and also if the customers are able to purchase the products through
the website, the chance is given for a customer to sign up for email after checking out. In many
cases, we intend to get more customers to sign up in accordance to offer a discount code in
exchange.
On promotions, the business intends to offer free transportation of any ordered products in
accordance to activeness of the customer’s buying’s and persistence.

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2.6 PRICING STRATEGIES
The pricing strategy that the business will use is penetration pricing strategy. This involves
setting up prices that are lower than the existing market price. This will be made possible by the
availability of raw materials which is the major components and also nearness of the market
center which will help cut the cost of transport.
Prices will also be fixed based on the demands of the products, the higher the demands, the
higher the price and the lower the demands, the lower the price of the products. Competitor’s
prices will also be determined to enable the enterprise fix to correspond with that of the
competitors.
The business will also use the market pricing, physiological pricing and cost plus pricing for
calculating the selling price. The business will also use objective factors and market structure for
selling price.

2.7 SALES TACTICS

The business intend to use both selling in cash and debt to customers to reach wholesalers in
town. The business will motivate its agents by offering allowances e.g., health allowance,
transport allowance and food allowances and also their salary will increase in accordance to the
hard work and trustworthy of the agent to motivate them fully.

2.8 DISTRIBUTION STRATEGIES

Much of the enterprise sales will be distributed to customers according to their wish be it to their
premises or the exact place identified by them. The business will have its own trucks, lorry and
pickups for easy transportation of the customers’ needs. This will ensure that the products are
near customers which will increase the value of the business sales. The business will use road
transport as the cheapest and achievable means of transport also faster because of the short
distances covered.

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CHAPTER THREE
3. O ORGANIZATION AND MANAGEMENT PLAN
The business will have a comprehensive plan for the program that clearly specifies the intended
objectives of the proposed project including clearly defined responsibilities, timeliness and
milestone of accomplishing project task.
For Trustworthy Plumbing Material towork appropriately, it needs to have a number of
employees with different department with good working skills.
3.1 BUSINESS MANAGER(s)
The owner of the TRUSTWORTHY PLUMBING MATERIAL SUPPLY will the Manager who
will conduct all the activity in the business and also supervicing the work. He’ll be the one
generating ideas and methods of omproving the business in order to allow future development
and rapid growth in the business.
The elected individual qualifies to the manager of the business at a minimum age of 26years old
and also an educated personel with a Diploma in Business administration and also has the
required experience to run the business.

MANAGER

OPERATIONAL MANAGER

SALES PERSON TRANSPORT

CASHIER EMPLOYEES
MANAGER

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3.2 PERSONAL NUMBER, QUALIFICATION AND DUTIES
PERSONEL NO. QUALIFICATION DUTIES
MANAGER 1 Diploma in business -Control and put the business to
administration. an order.
-Help the team lead manage and
expand a group of specialist.
Perfom data mining to meet th
need of hoc and monthly
reporting
-Assist in finishing the annual
budget for the executive.
OPERATIONAL 2 Certificate in Business -He keeps the records for the item
MANAGER administration sold.
-He act in the absence of the
manager and ensures that the
business flows in order
SALES PERSON 4 -Should be able to -He advice the customers on
communicate in quality, quantity and prices of
Kiswahili, English and goods and services offered.
local Language for
customer’s interaction.
-Should have atleast 2-
3years experience in
business
CASHIER 1 -Computer litarete -He prepares worker’s pay roll
-Diploma in banking and -He also prepares receipt of
finance. transactions.
-He keeps all the records and
accounts of all the business.
TRANSPORT 2 -Must have a driving -Transporting goods from
MANAGER linsence for heavy business to the customer’s
commercial vehicles. premises.
-He/her good conduct -
certificate must be
attached.
CASUAL 5 Hardworking and strong -packing for customers.
WORKER

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3.3 RECRUITMENT,TRAINING AND PROMOTION
The recruitment of the employees will follow the modern channel of advertised through both the
social media and the mainstream media. The available vacancies and the respective
qualifications will be posted through various job sites i.e Brighter Monday and Career Point, the
advertisement will also be aired on radio jambo which has a vast audience.
Successful applicant will be taken through a three stage interview in order to get the most suited.
The training process will take place within the business where the new employees will be able to
the taken through the entire business’s operation and the general orientation process. The process
of training and education will be continual through various business field and exhibitions.
Promotion of the employees will be performance-based as measured by the key performance
indicators on the particular job description.

3.4 REMUNERATION AND INCENTIVES

The breakdown of the monthly salaries of the workers for the first year of operation will be;
PERSONNEL NUMBER SALARY(Kshs) ALLOWANCES TOTAL COST
MANAGER 1 19000 2,000 21,000
OPERATIONAL 2 13,000 1,700 14,700
MANAGER
SALES 2 10,000 2000 12,000
CASHIER 1 10,500 500 11,000
TRANSPORT 2 10,500 400 10,900
MANAGER
CASUAL 3 10,000 400 10,400
WORKER
TOTAL 11 73,000 7,000 80,000

In addition to their remuneration the employess will be registered under a medical scheme, given
annual leaves and sick offs. There will be 10 O’clock and 4P.m tea for all employees.
The employees will be provided uniform and tags showing there various places of work. The
salespersons will earn an additional commission for surpassed sales targets. The managers will
occasionally offer shopping vouchers to employees who are disciplined and hard workers.

3.5 LICENCES PERMITS AND BY-LAWS

Trustworthy plumbing material supply will obtain an operational licence from the county
government of Siaya. This licence will be renewed annual at a cost of Kshs. 2300
The business will also obtain a certificate from health officers from Bondo District Health and
Sanitation. The Business will go by the laws of Kenya according to the Constitution and the

10
Labour Act. The occupational Health and Safety of the workers will also be put in check through
the provision of the protective gears.

3.6 SUPPORT SERVICE.

Trustworthy plumbing Material Supply have advisory services where they can get help with the
running of the business. Some of the support services for the Enterprises include;
3.6.1 Training Services
The business will tend to improve capital in entrepreneurial, management and technical skills.
3.6.2 Marketing Services
The business will determine market demand and provide market linkages.
3.6.3 Business Counseling
The business will help improve management and capacity of small business owners in effective
planning, implementation and control of business operations.
3.6.4 Banking Services
This will enable the business to build credibility, reduce risks of handling cash and save funds
for future use.
3.6.5 Insurances Services
Insurances firms are important to businesses as it enables them to reduce risks associated with
operating business.

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 CHAPTER FOUR

4.0 PRODUCTION/ OPERATION PLAN

Trustworthy plumbing Material Supply keeps a flat organization to facilitate quick decision
making. Ordinarily, high organizational structures drain profit and complicate decision leading to
unnecessary business failures. Trustworthy plumbing Material Supplywill keep management at
minimum with a CEO delegating duties. As the operation continues, the business purports to
establish four “Executive” positions in final year of this business plan. These positions include:
chief operating officer, chief finance officer, chief communication officer and director of
marketing. With the establishment of the physical shop, there is need for Trustworthy plumbing
Material Supply to create sale agents in charge of sale. Finally, Trustworthy plumbing Material
Supply will employ someone who manage online sales to improve business operation. Despite
the expansion of the management structure, the main authority of principle in Trustworthy
plumbing Material Supply is the Chief Executive Officer (Dennis Owino ), who makes major
business decision.

4.1 PRODUCTION/ OPERATION PLAN OBJECTIVES

Since plumbers frequently serves as constructor’s first point of contact when working on a
construction, Trustworthy plumbing Material Supply is aware of the value of making a good first
impression and providing excellent customer service. The meticulous selection of plumbing
accessories and quality plumbing services represent the business’ customer-focused mindset and
devotion to service. Customers that stop at Trustworthy plumbing Material Supply can anticipate
the following high standards:
 Quality and legit plumbing materials and appliances
 Courteous plumbers
 Practicable approach in service delivery.

4.2 PRODUCTION/ OPERATION FACITIES AND CAPACITY

Trustworthy Plumbing Material Supply is divided into two major functioning groups: sales and
marketing and service delivery. To achieve this plan, Trustworthy Plumbing Material Supply
management is broken as a separate entity though it remains an integral part of the business. The
service sector involve installation of sewer and storm-water, hot water system installation and
repairs, toilet, tabs, and sink installation repairs, evaporating cooling installation and repairs, and
subsoil drainage solution. The sales and marketing department handles all business promotion
activities as well as community services.
4.3 PRODUCTION/ OPERATION STRATEGIES
Given the market gap in Siaya county, Trustworthy Plumbing Material Supply will avail specific
plumbing appliances needed by diverse customers. Since the business operates within the
construction industry, the business will focus on out-sourcing consumer needs from different
construction to avail specific items for consumers. Besides, the business will maximize its

12
strength to increase customer satisfaction by offering various products to allow customers to
enjoy choice privileges. Nonetheless, since business is all about maximizing profit, the business
will rely on market research to ensure that the service and product provided are essential to avoid
having dead stock that retains capital leading to losses.
Since Trustworthy Plumbing Material Supply will involve daily exchange of cash, the business
will keep a cash flow projection to keep track of the moving items to avoid shortages. Besides,
the cashier is required to issue receipts for all the items bought to allow
4.3.1 Geographical Location
Although Trustworthy Plumbing Material Supply will be located off the town centre, the business
location is beside the main road which is idea for attracting road users which include pedestrians,
motorists, and riders. Moreover, the location is near a Mbati Supermarket which is frequent by most
people in Bondo town.

4.3.1 Working Hours

Since Trustworthy Plumbing Material Supply is just starting, the business will operate on normal
working hours. The business will open at 7.00p.m and close at 5.00p.m. Nonetheless, the
working hours are flexible depending on the customer needs and convenience .

4.4 PRODUCTION/ OPERATION PROCESS

Trustworthy Plumbing Material Supply being a service and product business enterprise, the
business will outsource the plumbing product and appliances that it sells to consumers. The
business will employ a comprehensive offshore strategy that ensures products are outsources at
minimal cost to maximize profit. Furthermore, a complex strategy will ensure that the products
meet quality control and logistics standards to evade rubbing shoulders with regulatory bodies as
well as losing customers because of selling counterfeit products. Trustworthy Plumbing Material
Supply is customer- oriented, thus, the operation process is highly flexible to satisfy customer
needs.
4.4.1 External Factors likely to affect production Table
Below is a table that highlights external factors of production and how the business intends to
keep them in cheek to ensure smooth business operation:

ITEM ETERNA PRECAUTIONARY MEASURES

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 No. L
FACTOR
S
1. Electricity Although Siaya town is not prone to power shortage, the business intend
to buy a generator to supplement it’s electricity supply , especially when
there is power shortage or blackouts.
2. Water The business has water from Sibo water Company.
3. Weather Whether is a real challenge as the Siaya County experience heavy down
pour during the rainy seasons. Nonetheless, the business has an
extension which acts as store room for customers who wish to keep their
products to keep them from the rains.
4. Insecurity Given the massive investment at Trustworthy Plumbing Material Supply,
the business will be guarded by security men from Sirgon Security
Limited who are skilled at their job
5. Shortage The business does not anticipate any shortage for starters. However,
product shortages will require the business to outsource from other
enterprises to maintain customer loyalty.
6. Roads The impassable road during rainy season may not be very challenging at
Trustworthy Plumbing Material Supply because the business is 50 mtrs
from the remain road.

4.5 REGULATION AFFECTING OPERATION /PRODUCTION

Since the business intends to invest in online marketing to boost its publicity, adhering to legal
requirements becomes a priority for the Trustworthy Plumbing Material Supply.As the CEO, I
will ensure that the business is legally registered with the government of Kenya. As the business
managing director, I will ensure the business has the requisite licenses and permits according to
the Siaya County Government and national government requirements for business operators. The
business will acquire insurance that protects the business and clients in case of risks or damages.

14
CHAPTER FIVE
5.0 FINANCIAL PLAN
This is the course of financial actions which an entrepreneur intends to implement in order to
achieve its objectives

5.1 PRE-OPERATIONAL COST

They are cost incurred before the start of a business. They include;
REQUIREMENT COST (KSH)

Furniture 20000
Vehicle 400000
Power Supply 4000
Water supply 2000
Rent deposits 30000
Licenses and permits 10000
Advertisement 5000
Telephone 2000

Opening Stock 600000

Tools and Equipment 6000

Installation 10000

T transport 6000
TOTAL 1,095,000

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5.2 WORKING CAPITAL
They funds required on daily running of the business and are given by the difference between
current assets and current liabilities.

CURRENT ASSETS AMOUNT IN KSHS

Operational stock 240,000

Debtors 40,000

Cash at bank 500,000

Cash at hand 130,000

Total C. A 910,000

CURRENT KSHS
LIABILITIES
Creditors 26,000

Tax 8,000

Interest on loans 14,900

Total C.L 48,900

Total working capital = Current Assets – Current liabilities

910,000 – 48,900 =861100 (Ksh)

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5.3 PROJECTED INCOME STATEMENT
This shows the profit or loss made by a firm during a particular period.
MATERIAL SUPPLIES
TRADING PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING DECEMBER 2023

ITEM AMOUNT
Sales 160,000

Less cost of goods sold 130,000

GROSS PROFIT 80,000

Less expenses

Rent 22,000

Water 1,770

Creditor 10,000
Salaries and Wages 52,000
Transport 20,000
Electricity 18,000
Insurance and Permits 15,000

Telephone 6,000

Advertising 11,000

Repair and maintenance 7,000

Licenses 6,000
Net Profit 168,770

Tax 16% 117,120

Profit After tax 614,880

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5.4 PRE-FORMER BALANCE SHEET
This shows the profit or loss made by a firm during a particular period.
TIMBERS SUPPLIES
TRADING PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING DECEMBER 2023

ITEM AMOUNT
Sales 1,500,00

Less cost of goods sold 600,000

GROSS PROFIT 900,000

Less expenses

Rent 22,000

Water 1,770

Creditor 10,000
Salaries and Wages 52,000
Transport 20,000
Electricity 18,000
Insurance and Permits 15,000

Telephone 6,000

Advertising 11,000

Repair and maintenance 7,000

Licenses 6,000
Net Profit 168,770

Tax 16% 117,120

Profit After tax 614,880

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5.4 PRO- FORMA BALANCE SHEET
A balance sheet shows assets, liabilities and capital of the business at a given time.
DISTINCTION PLUMBING ENTERPRISE
PR0- FORMA BALANCE SHEET FOR DECEMBER END OF YEAR 2023.

ASSETS CAPITAL
Fixed assets Long term loans = 600,000
Land -500,000 Profit and Loss account
Building -300,000 Equity =200,000
Furniture -150,000
Machinery and equipment -200,000
Vehicle - 700,000
Total = 1,830,000 Current Liabilities
Current Assets Creditors =150,000
Cash at hand - 400,000 Bank Overdraft =30,000
Raw Materials -200,000
Stock - 500,000
Cash in Bank -1000,000
Debtors - 100,000
Total =1,300,000

Total Assets 3,150,000 TOTAL LIABILITIES

620,000

5.5 BREAK –EVEN ANALYSIS

This is when a business hits equilibrium; profits are constant and can sustain itself.
VARIABLE AMOUNT
Telephone 40,000

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 Advertisement 30,000
Electricity 10,000
Repair and Maintenance 60,000
Total 140,000
Contribution Margin = Sales – Total variable costs
= 496000 – 140,000 = 356,000
 Contribution Margin in percentage = Contribution Margin * 100
Sales
356,000 * 100
496,000
=71.77%
 Fixed Cost- These are expenses which do not change.
ITEM AMOUNT
Salaries 480,000
Rent 60,000
Insurance/ permit 40,000

TOTAL 580,000

 Break even of Sales = Fixed cost * 100%

Contribution Margin

580,000 * 100
356,000

= 62.9%

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5.6 PROFITABILITY RATIOS
These are ratios that are computed to access the profitability of an organization in the relation to
the levels of sales and investment.
ITEM KSHS
Total equity 236,000
Total assets 156,000
Gross profit 157,000
Net profit 646,800
Total Sales 396,800
Total 1,594,600

5.7 Gross Profit of Sales %

= Gross Profit * 100
Sales

159,000 * 100
396,800
= 40%
5.7.1 Net Profit Sales
= Net Profit *100

Sales
646,800 * 100 = 63%
396,800

5.7.2Return on assets Ratio

= Net Profit * 100

Total assets

646,800 * 100
156,000
= 16%

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5.8 DESIRE FINANCING.
This is the amount required at the start of the venture.

ITEM KSHS
Pre- operational Cost 471000
Working Capital 1045000
Total 1516000

5.9 PROPOSED CAPITALIZATION

SOURCE KSHS
Personal Savings 200,000
Bank Loan 300,000
Family and Friends 400,000
Gifts 100,000
TOTAL 1,000,000

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