BUSINESS PLAN

BUSINESS NAME : SHARON CYBER CAFE

CANDIDATE’S NAME : SHARON CHEPNGENO

INDEX NUMBER : 5121170021

INSTITUTION CODE : 512117

INSTITUTION :
KERICHO TOWNSHIP TECHNICAL

AND VOCATIONAL COLLEGE

COURSE : DIPLOMA IN INFORMATION

COMMUNICATION TECHNOLOGY

PRESENTED TO : THE KENYA NATIONAL

EXAMINATION COUNCIL FOR PARTIAL AWARD OF DIPLOMA

IN INFORMATION COMMUNICATION TECHNOLOGY

COURSE CODE : 2920

SUPERVISOR : MR VINCENT
EXAM SERIES : JULY 2024

DECLARATION

1
Declaration by the Student
I declare that this project is my original work and has not been submitted for an award of a
diploma in any institution for examination purposes.
Name…………………………………………… Date..................................................
Signature......................................................

Declaration by the Supervisor

This project has been submitted for examination with my approval as the college supervisor.
Name…………………………………………… Date..................................................
Signature......................................................

ACKNOWLEDGEMENT
Am grateful to Almighty God for His faithfulness, love and protection. I also appreciate my
supervisor for guiding me tirelessly in writing this project.

2
Finally, I extend my gratitude to my family members and colleagues for their moral and
material support towards the success of this study.

DEDICATION
This project is dedicated to my family members for the moral, financial support, and
encouragement they have accorded to me during my learning period. Without them i would
not have been able to complete this project.

3
4
Contents
DECLARATION ............................................................................................................................i
ACKNOWLEDGEMENT.............................................................................................................ii

DEDICATION............................................................................................................................. iii
...................................................................................................................................................... iv
SUMMARY .............................................................................................................................. vii
CHAPTER ONE ............................................................................................................................1
1.0 Business
description ........................................................................................................................................................
1.1 Business
name ..........................................................................................................................................................
1.2.1 Description of the location ............................................................................................. 2
1.2.2 Reasons for the location ................................................................................................. 2
1.2.3 Address for business ...................................................................................................……2
1.5 Products/Services ...............................................................................................................……. 3
1.6 Justification of opportunity ................................................................................................….. 3
1.7 The industry .......................................................................................................................... …….4
1.8 Goals of the business ............................................................................................................ …..5
1.9 Entry and growth strategy ...................................................................................................… 5
1.9.1 Entry Strategies .............................................................................................................. ….5
1.9.2 Growth Strategies.................................................................................................6
CHAPTER TWO ...........................................................................................................................…………..7
2.0 Marketingplan ………………………………………………………………………………………….7
2.1Customers...............................................................................................................................…………..7
2.2 Market...................................................................................................................................... ………...8
2.3Competition.............................................................................................................................……….. .9
2.4 Methods of promotion & advertising .................................................................................10
2.4.1 Promotion .....................................................................................................................……..10
2.4.2 Advertising ....................................................................................................................…….11
2.5 Pricing strategy .....................................................................................................................……11
2.6 sales strategy .......................................................................................................................……. 12
2.7 Distribution strategy.............................................................................................................….13
CHAPTER THREE ........................................................................................................................…………14
3.0 Organization and management plan ................................................................14
3.1 Business manager and qualifications ...................................................................14
3.2 Personnel Number and Duties.................................................................................................15

5
 3.3 Recruitment, Training and Promotion ...................................................................................16
3.3.1 Recruitment ......................................................................................................................…………16
3.3.2 Training ...............................................................................................................……….. 16

3.3.3
Promotion ........................................................................................................................................................17
3.4 Remuneration and
Incentives ........................................................................................................................................................…17
3.4.2
Incentives ..........................................................................................................................................................17
3.5 licenses, Permits, Government regulations .........................................................................…18
3.6 Support services ..................................................................................................................………….19
CHAPTER FOUR ........................................................................................................................………………20
4.0 Operation plan ......................................................................................................……………20
4.1 Production facilities and capacity .........................................................................…....20
4.2 Production strategy ...............................................................................................……….21
4.3 Production/service process ..................................................................................…….22
4.3.1 Stationery ..............................................................................................................…….23
4.3.3 Other Expenses .....................................................................................................…. 24
4.4 Regulations affecting the
business ........................................................................................................................................................….25
CHAPTER FIVE ..........................................................................................................................……………..26
5.0. Financial plan ......................................................................................................................................................
…………26
5.1. Pre-operational
cost ......................................................................................................................................................………….26
5.2 Estimation of working capital ...........................................................................................….….27
5.3 Project cash flow........................................................................................................................
..................................................................................................................................................……………….28
5.4
proforma income statement (profit & loss account) for the ............................................. 29
year ending 31st
December 2024............................................................................................... .......................………...29
5.5 Balance sheet .................................................................................................................………….30
5.6 Break- even analysis .........................................................................................................……….31
5.7 Profitability ratio ...........................................................................................................…………32
5.7.2 Return on Equity ........................................................................................................ ..………..33
5.7.3 Return on Investment ....................................................................................................………33
6
 5.8 Desired financing ...........................................................................................................……….33
5.9 Proposed capitalization................ .................................................................................…….34
EXECUTIVE SUMMARY
BUSINESS DESCRIPTION

The proposed business plan will be called SHARON CYBER CAFÉ which is named after my
name. It is going to be located at Kericho county P.O BOX 20-200 along Nakuru highway. The
business will be a sole proprietorship which will deal with various online services suitable
for many customers. It will be environmental friendly in internet service providers in terms
of space and online services provided. There have been unavailability of resources pertaining
computer services in the county. The location will be suitable for the business due to the
availability of raw materials around.

MARKETING PLAN

The business will use posters to create awareness to the public, use online communication
and name branding the business in the premises and even vehicles. Sharon cyber cafe will
also conduct some promotions to capture customers in large volume. The business will
penetrate deeply in the market after knowing its competitors and their strength and
weaknesses to exploit them in order to improve the production.

ORGANIZATION AND MANAGING PLAN

I will be the manager of Sharon cyber cafe. I will employ partners who holds a diploma in
information communication technology who will provide capital and resources. The
company will acquire license from county government of Kericho banks will support the
company in loaning and financial advice. I will be planning, directing and controlling the
business

PRODUCTION AND OPERATIONAL PLAN

The company will have various equipment like scanners, printers e.t..c. It will run 8 hours a
day to meet production capacity. Raw materials like reams are readily available in a nearby
paper industry. Enterprise will be made up of workers like accountants, managing directors
e.t.c.

FINANCIAL PLAN

Pre- operational expenses will amount to one million five hundred and seventy thousand
which will be contributed from friends, family and loans from bank. Company’s cash will flow
in a systematic way creating good profit and balance in liabilities and assets favoring the
company.

7
8
 CHAPTER ONE

1.0 Business description

This chapter introduces the business name which will be Sharon Cyber Cafe. It also gives
the location, address, explains the form of ownership, type of business, services offered,
justification of opportunity, industry, goals of the business and the entry and growth
strategy.
The Internet first became available in Kenya to a small group of technical enthusiasts in
1993. The only means of accessing the Internet then was through a service known as
Gopher which offered access to text based information. In July 1999 the government
officially liberalized the telecommunications market in Kenya. The Communication
Commission of Kenya (CCK) was formed to regulate the sector. The ISPs, which had never
been officially acknowledged, were now authorized to operate after obtaining a license
from CCK. However, Telkom Kenya, formed from the telecommunications arm of the
former Kenya Post and Telecommunications (KPTC), was allowed a monopoly to operate
an Internet backbone for five years. The use of Internet in Kenya is on the steep rise.
Applications such as e-commerce are now being used by quite a good number of businesses
so will be Sharon Cyber Cafe.

1.1 Business name

The business name will be SHARON CYBER CAFE.
The name SHARON is of the assistant manager who studied at Lagos Nigeria who got a
degree in Information Communication in Technology. He has an experience of more than
ten years working in networking. He is also one of the starters of the newest generation of
computers.

1.2 Business Location

Sharon Cyber Café will be located 100 Metres from Litein town in Kericho Counnty around
Kenya Medical Training Institute opposite Naivas Supermarket. The reason for selecting
that site is because it is a central point to a number of clients who include the entire
community of Kenya Medical Training Institute, people from Naivas supermarket and those
around Litein town.

1
1.2.1 Description of the location
Sketch map

LITEIN
TOWN

Sharon KMTC
cybers
NAIVAS
entry
SUPERMARKET

1.2.2 Reasons for the location

The proposed location has several major unnamed roads as well as numerous small feeder roads

which makes it easily accessible from all corners. Other amenities such as water and
electricity are available and are in adequate supply.

1.2.3 Address for business

The contacts of the business are:-
2
 SHARON CYBER CAFÉ .
P.O BOX 20 – 200 KERICHO.

1.3 FORM OF BUSINESS OWNERSHIP

It will be a medium size kind of business which will be offering high speed internet
services. The company will be using both direct and indirect methods in offering her
services and will have different groups of customers. The business will also have
supportive activities such as photocopying and faxing.
1.4.1 Mission
To enable people and businesses throughout the world to realize their full potential.
1.4.2 Vision
Provide highest level of customer service to each client thereby establishing a long lasting
relationship of trust and commitment. Our expertise and professionalism allows us to
provide our clients with utmost beauty experience.

1.5 Products/Services
These are the services the business will be offering:

⮚ Browsing which is faster and more convenient sitting styles

⮚ Photocopying which is more clearer

⮚ Fax, both local & International at cheaper rate

⮚ ICT consultancy

⮚ CCTvs Installation

1.6 Justification of opportunity

The company has vast experience at hand on information technology. It will specialize in
the production of services which will be of high quality. Internet and internet applications,
hardware and software application will be covered exhaustively and again working in both
3
Ministry of Environment and Natural Resources and Ministry of Tourism and Wildlife
where there lot of surfing and day to day troubleshooting hardware problems and doing
software installation.
The company has carried out extensive research around the KMTC way and its
surroundings and found that there is high demand for internet services as those providing
the service there do not fulfill customers need to the desired levels. The service currently
offered is of low value and the population is high taking in mind that the community of the
entire KMTC is covered.
Sharon Cyber Cafe will give quality service, which is satisfactory to customers, and the
company is assured they will keep on coming back.

The computers will be installed in booths to enhance privacy for customers. Lack of
privacy denies customers full usage because they might shy off accessing all web Sites
which meet their needs especially health related websites and e-commerce for getting
information on trade related matters.
The capital required to start this type of business is small putting into consideration that
the cost of computers has gone down. The number of computers required for a start is also
low and only a few employees will be employed at the start of operation. More employees
and more computers will be increased with time as the business grows.
Transport and communication networks around the location of the business are good
considering that it is at the junction of the KMTC way.
Ordering and delivery of raw materials will not be problem. The internet service provider
will be Kericho net (K) which is just next to the Norwich Union Towers which is an added
advantage in case of breakdowns.

1.7 The industry

The proposed business falls in the Information, Communication and Technology Industry.
Nowadays, almost everything is becoming computerized hence the need to have the best
computers for best services. The use of computer has made manual typewriters obsolete.
As a result, demand for computer services has become very high through information and
technology computer users are able to surf and browse computer to get information from
various parts of the country and the world as a whole.

4
Communication has also been made easier hence saving time and money. Competition in
this business is very high thus the need for good techniques and tactics in doing the
business. Therefore, the company intends to offer the best café services so as to survive in
the market and satisfy all the customers.
Most offices have gone paperless, by exchanging only emails, undertaking video
conferencing thereby lessening the hassle of having to travel may be abroad to attend a
conference thus very expensive to meet the travelling expenses.
The industry is one of most competitive industries in Kenya today – it witnesses new
entrants everyday more than any other. This high traffic almost automatically leads to
newer and smarter methods of marketing making competition cutthroat. The size and type
of market depends on the amount of capital outlay. The quality of services need to be high,
customers’ needs checked around the clock, tastes changes almost constantly.
It is therefore important for those who are in this industry and wish to remain relevant to
be weary of the changing needs of their customers and how these needs can be met.

1.8 Goals of the business

1.8.1 Short term goals

The main aim of the business is to create employment for employees and others in order to
improve their standards of living.
1.8.2 Long term goals
It will be important for the business to have other branches in town and other towns. This
expansion is also a goal that will be aimed at. Bringing services closer to people and not just
mediocre but the best services are goals the business will aim at. It will offer quality
services that will be different from its competitors. Since the business premises will be
rented, the company will work hard to purchase land and construct in the soonest time
possible in order to avoid long term renting cost. The business will help employees
maintain and improve performance and organization, at the same time attracting
customers in Machakos Central Business District and its outskirts. Creation of awareness
of the business will be vital and will be done through advertisements.

5
1.9 Entry and growth strategy

1.9.1 Entry Strategies

Sharon Cyber Café is expected to start operating in1st of June 2024 and gain access into the
market in that the demand around its location is high. Dan communication which is a
competing firm has not been able to meet the high demand and in most cases long queues
are witnessed. The price for the services to be offered will be slightly lower than the pricing
at Dan communications. For example browsing will be charged at ksh.1/= per minute
unlike Dan where it is charged at ksh.1.50/= per minute, making a difference of cents 50/=.
This is mainly to attract the KMTC students most of whom are still dependent.
The first customer’s every day for a week will be offered free browsing for 5 minutes.
All computers for Sharon Cyber Cafe will be installed in booths unlike Dan where they
are on open benches. This will enhance privacy to customers as they will be in a position to
access all websites that meet their needs. These include e-commerce websites for trade
related matters and health related websites.

1.9.2 Growth Strategies

After one year of service the company intends to increase more computers in order to
capture the market on the ever growing field of Information and Communication.
The business premises will be painted and refurbished annually to maintain the attractive
look to customers. This will keep on instilling the customers’ mind that the business is still
new and hence better service is offered.
After 5 years of service the company intends to expand the business horizontally. It will
diversify into the sale of computers and computer accessories. After 10 years the company
intends to expand the business vertically. That is, it will start a computer college.
Qualified personnel will be employed in order to capture and retain customers. Aggressive
advertisement will be done through billboards, posters, business cards, media etc. This is
meant to inform people about the services being rendered.
To establish and maintain the business, market research will be carried out to locate
potential customers. Training of employees to be productive and organized, for them to get
acquainted with new changes in trends and technology. Profits obtained from the business
will be re- invested for expansion.

6
CHAPTER TWO

2.0 Marketing plan

Marketing plan identifies the business customers, defines its market share, business
competitors, it also gives the methods of promotion and advertising used by the business to
ensure it maximizes on making profits.
The business will have a free training session for beginners with no internet experience or
those who are not sure on how to use the internet. They will be trained for free by our staff
who are employed fulltime. The business will offer one hour free for regular customers
after visiting our cyber for more than five times in two weeks. The business will offer very
fair rates on downloading of documents to almost half the prices of other cybers, and this
will draw more customers to the business. The business will buy its materials for the
business in bulky as this will cost less and the business will be able to make good profit. By
being fair in pricing and not overcharging will make our business to grow as more and

7
more customers will keep coming). The business will be opening very early by 6.30 am and
also closing at 9.30 pm to give working customers the opportunity to access the Internet.

Customers
Mostly it is the youth who uses the internet services due to their education and interacting
with their friends. The business will employ youthful staff and for the other group which is
past the youth bracket will be handled by staff who look more mature. The business will
consider customers of all walks of life and their categories. The business will have a home
page which every customer will read to ensure that they comply with laws and regulations
of the business to avoid dirty images on the computers. This will be free and no charges for
this page. This will give our customers that trust of respecting others and feeling secure.

a. Individuals

Students from KMTC

The students from this KMTC will offer the highest percentage of customers. Most of them
depend on the Internet for their research papers. The business will also have the open
learning students who rely on the Internet for their notes and examination.

Putting into consideration that these are students and so are dependent, Sharon Cyber
Technologies will offer a lower price than its competitor. The number of customers
expected from here is 2000 per month.

2.2 Market share

Customers to SHARON CYBER CAFE will come from the KMTC Kericho, students to Higher
Education Loans Board and the entire community of Anniversary Towers. Due to the
feasibility carried out by the entrepreneur in the market for number of months, Sharon
Cyber Café will enter the market at 23%.
The business will consist of the following categories of customers
a. Those who will buy

b. Those who will be willing to buy but don’t have money

c. And those who will not buy

8
According to a market survey carried out, the market share of such kind of the business is
as shown in the table below and presented in a pie chart in percentage.

Customer Category No. of Market share

customers Percentage

Actual Buyers 300,000 70%

Willing Buyers 120,000 20%

None Buyers 50,000 10%

Total Market Share 470,000 100%

PIE CHART: MARKET SHARE

As presented in the pie chart above, the business will have to depend on actual buyers and
willing buyers which is estimated at a population of 420,000 out of a total population of
9
470,000 people. In order for the business to meet its success targets and customer
satisfaction, then it will have to do its best to acquire greater control over the existing
market share.
Customers to Sharon Cyber Cafe will come from the KMTC Litein students to Higher
Education Loans Board and the entire community of Anniversary Towers and there have
been numerous complaints around the area that some available cyber cafes have no
qualified staff to take through their customers in browsing. The world of ICT examines the
ever-evolving landscape of technology put to business applications; technology will also
inform the business management on exciting new possibilities to apply technology to
address the most pressing business challenges.

2.3 Competition

Sharon Cyber Cafe will offer services that are also offered by other businesses targeting the
same market.

SWOT Analysis
AREA Bosnia Wheezy Viza Byte Funguo e- Dan Sharon Cyber
Centre
Cyber Cyber Cyber Communications Café
Cafe Cafe Cafe

Pricing Fair Expensive Fair Fair Expensive Cheap

Technology Modern Modern Modern Modern Modern Modern

Personnel Aged Qualified Trained Highly Well trained Highly

qualified qualified

Location Strategic Not strategic Not strategic Strategic Not strategic Strategic
(Undergro (Upper
und) ground)

10
 Advertising Friends & Customers Customers Pamphlets Display Various
methods
Customers

Experience Years 7 years 4 years 8 years 3 years

2.4 Methods of promotion & advertising

2.4.1 Promotion
The enterprise will make goods known and admirable to customers in order to pull
and retain them by introducing and reminding them about the availability of goods.
This will be done through the following means:
a. Free Samples: Customers will be given free internet time if they
introduce new customers.
b. Personal Sale: Some personnel will be employed to moving around in
places like buses, matatus, bus stage terminuses, schools, colleges in
order to inform people about the availability of products.
c. Gifts: Customers will be encouraged to buy in bulky in order to get a
gift.

d. The business will have customer contact telephone numbers whereby

they will be calling customers to confirm if they like the services.

2.4.2 Advertising
The following methods will be used for advertising the business:
(i) Pamphlets
The pamphlets will include the name of the business, physical and postal address,
telephone and email address. It will also include the services to be offered and the price of
each. These will be distributed to the customers and any other visitors to Sharon Cyber
Cafe. This will cost Ksh.15, 000/=.
(ii) Sign Post
This will be displayed at a strategic position on the KMTC way side. It will be in bold letters,
well displayed to both entrances to Anniversary Towers. This will cost approximately
Ksh.5, 000/=.

11
(iii) Business Cards
The Company and all the other staff of Sharon Café will have business cards bearing their
names and designation. Other contents of cares are; the name of business, location,
addresses and the services to be offered. These cards will be distributed to friends and
relatives outside the business premise. This will cost Ksh.10, 000/=.
(iv) Friends and Relatives
It is expected that workers at Sharon Cyber Cafe will work as a family and they will spread
the word on the business to their friends and relatives verbally. They will also pass the
word to some other people and in a short while the business is expected to be known
through word of mouth. This method will cost nothing.
(v) Website
Sharon Cafe website will be used for promotion and advertising the services rendered.

2.5 Pricing strategy

The business will use the following methods to determine the price of its services;
Dictated by manufacturers
Competitors’ price
Cost of production
Demand and Supply

However the business expects to use the competitor’s price as its main method of
determining the price.

Price list Service Unit Charge

Price
1. Browsing per minute 1/=
2. Photocopy per copy 2.50/=
3. Binding per document size 40/=
4. Lamination per paper size 50/=
5. Typing per page 30/=
6. Printing per page 30/=
7. ICT Consultation 2000/=

12
8 CCTVS installation 10,000 /=

2.6 sales strategy

Free time
i) The business is expected that when a customer brings someone some free internet
time of twenty (20) minutes is awarded to him/her.
ii) Sharon Cyber Cafe will be offering sales promotion once in a while. This is whereby
browsing is offered for the first five customers every day for a week and given five
minutes free browsing or for every ten minutes of browsing two minutes are offered
free.

2.7 Distribution strategy

The browsing period is timed and cost given per minute; thereby the customer is charged
depending on the amount of time spent.
Four methods to be used to retain customers or provide customer satisfaction are:
Music
There will be soft music played from the radio and speakers will be installed at each corner
of the room. The music will be in low volumes enough to entertain and sooth clients.

Newspapers
The three dailies i.e. East African Standard, Nation and the People will be available for
customers taking a break and wanting to update themselves with current affairs. This will
deter customers from reading on the web as they will be charged.
Booths
Since the computers will be installed in booths unlike in most of the competitors,
customers will keep on coming back. This is because privacy will be enhanced and so
customers will be free to access any websites that suit their needs.
Advice
Any customers who may not be familiar with internet services will be offered free advice
and assistance.

13
CHAPTER THREE

3.0 Organization and management plan

Sharon Cyber Café is expected to come out successfully. The organizational plan will have a
well scheduled programme of operations for the employees, proper and sound
management.

3.1 Business manager and qualifications

The day to day management of the operations of the business will be carried out by the
Business Manager. The Business Manager will form the management team. The business
manager will be in charge of strategy, planning and implementation of policies necessary
for business growth and development.

14
 OWNER MANAGER QUALIFICATION DUTIES AND
RESPONSIBILITIES

1. Bachelor Degree in 1. Supervision of all the

Information Technology other staff

2. Diploma in Information
Handling proc rement
2.
Technology
matters
3. Proficiency in Computer
applications Keeping watch
3. of the
environment
for
competition

4. Dealing with other

stakeholders e.g.
financiers

5.
Ensuring that all resources
are well
utilized

6. Banking of cash

3.2 Personnel Number and Duties

PERSONNEL NO DUTIES & RESPONSILITIES SALARY TOTAL
SALARIES

15
Supervisor 1 • Supervision of the other staff below 15,000
him

• Assisting clients who are not

computer literate

• Training first time internet users

• Ensuring that all machines are

switched off at the end of the day

• Checking on stocks to ensure that

everything is available

• Supervision of the other staff below 12,000

him

• Assisting clients who are not

computer literate

• Training first time internet users

• Ensuring that all machines are

switched off at the end of the day

• Checking on stocks to ensure that

everything is available

Secretary 1
• Standing in for the manager when
not in

16
  Opening and closing of
business daily

 Reporting any breakdowns to the

suppliers

 Training first time internet users

 Doing messengerial duties

 Binding of documents

 Standing in for the secretary

 Cleaning of the computers

together with the booths

Attendant

3.3 Recruitment, Training and Promotion

3.3.1 Recruitment
The vacancies will be advertised by word of mouth i.e. personal selling. The company will
do this through the manager. Those people who will show interest and have the necessary
qualifications will apply to the Manager, an IT specialist by profession having a diploma in
Information Technology from Kenya Polytechnic attaching the curriculum vitae and
necessary certificates that will include a Certificate of Good Conduct from the Criminal
Investigation Department.

3.3.2 Training
After recruitment and selection, the training will follow through:
a. Orientation: Employees will be shown around to familiarize with the culture of the
organization and to be shown how work is done in the

17
 organization. This will enhance adaptability to the new environment
and the employee will feel welcomed and secure.

b. Professional Training: Workers will be allowed to train through refresher

courses and attending workshops. Employees will also be allowed to
enroll in part-time courses sponsored by themselves in their areas of
specialization in order to increase on their skills and quality of work.

3.3.3 Promotion
Promotion is moving higher from one’s current status. Employees will be promoted on
merit and higher levels of training. Promotion will enable employees become more
productive, committed and loyal to the enterprise.

Appraisal system of measuring performance will be used. The promotion will come with
an increased pay package and a certificate of recognition. This will increase the employees’
morale and work will be done more effectively.

3.4 Remuneration and Incentives

3.4.1 Remuneration
The enterprise will offer an attractive salary package to its employees to enhance
motivation and success of the enterprise.

Employees’ salary

Job Title No. of Employees Salary (Kshs) Total

Manager 1 15,000.00 15,000.00

Supervisor 1 12,000.00 12,000.00

Secretary 1 8,000.00 8,000.00

Attendant 1 5,500.00 5,500.00

Total 4 40,500.00 40,500.00

3.4.2 Incentives
Incentives bring motivation and hence increase performance.
18
 The enterprise will offer its employees the following incentives:

a. National Hospital Insurance Fund (NHIF)

b. National Social Security Fund (NSSF)

c. Maternity and Paternity Leave

d. Whenever the business does exemplary well by increasing profits, the

manager will offer lunch and can take employees on short courses to
build on their curriculum vitae. These incentives would be given at that
particular time only depending on the rate of percentage profit made.
These would make employees work even harder and bring in more
profits

3.5 licenses, Permits, Government regulations

A legal business should have an operating license. By laws acted by the Government for the
purpose of governing the existence of a business in a given locality. It also ensures safety
and suitability of the business premises.
They also ensure that the workers have medical certificates if the business has good
enough ventilations and also they know how the refuse is disposed. This is the work of the
local authorities. The business premises will be under the legal art of the local government
for example Trade License Act (Cap 497).

The legal requirements are as follows with the fees charge.

Licence/Permits Issuing Authority Fees

Name Search 100

Business Registration City Council 200

Single Business Permit (trade licence) 6,000

Public Health 500

Income Tax

VAT 16%

19
TOTAL 6,800

3.6 Support services

The following are the names of the suppliers
Ricon Copiers Ltd.
Best Computer & Office products Ltd.
Ibico (K) Ltd. Avenue
Stationers (K) Ltd.
a. Companies to service our machines are
i. Abacus Computer Systems Ltd. ii.

Ricon Copiers

b. Audit Firm will be;

Jasmine Doris Associates
Shankadrass House, 7th Floor
P.O Box 40112, Nairobi.
c. Insurance Firm will be;
Explico Insurance Company
Development House, 3rd Floor
P.O Box 3005
Nairobi

20
 CHAPTER FOUR

4.0 Operation plan

In proper running of the proposed business, enough machinery and equipment will be
required to ensure continuous flow of work. Production planning is a course based on
action established in advance to make product and serves from which a demand has been
felt. This ensures that machines and resources have been used to achieve the maximum
efficiency through directing and co-coordinating the business. Some of the machines and
equipment to be used will be computers, chairs.

4.1 Production facilities and capacity

These are tools that enable work to be performed.
These are machines and equipment to facilitate the business
QUANTITY ITEM SUPPLIER UNIT TOTAL COST
COST(KSH)
(KSH)

MACHINES

4 Computers Best 8,000 32,000

Computers &

1 Hp Laserjet Office “ 4,500 45,000

2300dn
1 Gestetner Ramtons 40,000 120,000
Photocopier Copiers Ltd.
1 Laminator Ramtons(K) 3,000 12,000

1 Spiral Ltd.Ibico (K) 2,000 18,000

Ltd.
1 Binder Ibico (K) Ltd. 1,000 5,900
Guillotine

Machine
1 Sony Radio LG Electronics 2,000 5,000

1 Paper “ 300 700

1 Stapler “ 100 500

4 Back-up “ 3,000 12,000

2 system Panasonic 2500 5000

Telephone

Heads

21
 1 Modem Nairobi Net 2,000 2,000

TOTAL 258,100

FURNITURE AND FIXTURES

1 Executive Umoja Office 3,000 3,000

Chair Furniture
1 Office “ 2,000 2,000
5 Chairs “ 1,795 8,975
4 Computer “ 3,000 12,000
Booths
Partitioning “ 20,000 20,000

UTENCILS
1 Electric Cooker Kitchen 1,500 3,500
1 Electric Kettle “ 1,000 2,000
1 Doz Cups “ 600 600
1 Doz Tea Spoons 5 60
2 Sugar Dishes 150 300
2 Flasks 550 1,100
CONNECTIONS
2 Telephone Telkom (K) 6,000 12,000
Networking Machakos Net 30,000 30,000
TOTAL 95,535

4.2 Production strategy

To be able to factor in benefits in the enterprise the manager will ensure that:
(a) It prepares requisition forms to be used to show the materials that are being

used in production and or those that are purchased. This will enable

to management to

utilize materials to the maximum and avoid wastage by using only what is
needed and available.

(b) It employs professional employees who have knowledge of what is supposed

to be done in the business.

22
 (c) It produces quality products admirable to the eyes of clients at affordable
prices.

(d) To enhance efficiency and competency in performance of duties.

Office layout

KEY
- ENTRANCE
- EXIT
← - PARTITION
← - SHELVES

- RECEPTION
DESK

4.3 Production/service process

Production/service process in the enterprise will depend on customer needs such as
purchase of stationery products, typing and printing. The following are procedures of the
production process

23
 Step 4
Step 3 Stapling/binding
Step 1 Step 2
Enquiring Printing of printed data
Browsing
Services form the data
reception

Step 5
Step 6 Final
Step 7 Payment for
Client leaves at data/material
the services handed over to
his/her pleasure
client

4.3.1 Stationery
Quantity Item Supplier Unit Cost Total Cost

190,000 Browsing Nairobi Net Ltd 12,000

20 Rms Photocopying papers Avenue Stationers 300 6,000

2 Photocopier Toner Avenue Stationers 7000 14,000

2 Printer Toner “ 9000 18,000

15 Doz Transparent Covers “ 10 1,800

15 Doz Embossed Covers “ 10 1,800

15 Doz 8 ml Spiral “ 10 1,800

15 Doz 10 ml Spirals “ 12 2,160

15 Doz 12 ml Spirals “ 14 2,520

2 Pkts Staple pins “ 250 500

3 Receipt Books “ 1,000 3,000

6 Biro pens “ 10 60

1 Cash Register 18,000 18,000

24
 1 Paper punch 700 700

3 Pkts Flash disks 210 630

TOTAL 82,970

4.3.3 Other Expenses

Item Amount

Stationery 2,000

Licenses 6,750

Repairs & Maintenance 2,000

Telephone 2,000

Electricity 5,000

Transport 3,000

Water 1,500

TOTAL 32,250

4.4 Regulations affecting the business

Regulations Affecting Production/Operation
The business will be required to adhere to regulations, which are imposed by the
government.
They include:
Trade license
Is regulated by the Trade Licensing Act of the Laws of Kenya which stipulates that “No
person may conduct any business in Kenya except under and in accordance with the terms
of a current trade license.

25
Labor Law
Includes the Employment Act, Workmen’s Compensation Act and National Social Security
Fund. These regulations are administered by the Ministry of Labor and deal with
regulation of wages and conditions of employment, compulsory compensation for injury or
loss of limb while undertaking work and providing for a retirement benefit as Social
Security.

Taxation
Forms of taxation that will affect this business include Value Added Tax (VAT), Income Tax
(PAYE). The owner of this business must register with Kenya Revenue Authority.

Public health
The Public Health Act relates to the sanitary and hygienic conditions of buildings
(ventilation, cleanliness, toilets).

26
 CHAPTER FIVE

5.0. Financial plan

5.1. Pre-operational cost

These are costs that will be incurred before the business starts its operations. It involves
obtaining items required for preparation of start of the business. These financial
obligations are as shown below:
QUANTITY ITEM SUPPLIER UNIT TOTAL
COST(KSH) COST
(KSH)

MACHINES

4 Computers Best 8,000 32,000

Computers &

1 Hp Laserjet Office “ 4,500 45,000

1 2300Gestetner dn Ricon Copiers 40,000 120,000

Ltd.
Photocopier
1 Laminator Ibico(K) Ltd. 3,000 12,000

1 Spiral Ibico (K) Ltd. 2,000 18,000

1 Binder Ibico (K) Ltd. 1,000 5,900

Guillotine
Machine
1 Sony Radio LG Electronics 2,000 5,000

1 Paper “ 300 700

1 Stapler “ 100 500

4 “ 3,000 12,000
Back-up system

27
2 Telephone Panasonic 2500 5000
Heads
1 Modem Nairobi Net 2,000 2,000

TOTAL 258,100

FURNITURE AND FIXTURES

1 Executive Baraka Office 3,000 3,000

Chair Furniture
1 Office “ 2,000 2,000
5 Chairs “ 1,795 8,975
4 Computer “ 3,000 12,000
Booths
Partitioning “ 20,000 20,000

UTENCILS
1 Electric Cooker Kitchen 1,500 3,500
1 Electric Kettle “ 1,000 2,000
1 Doz Cups “ 600 600
1 Doz Tea Spoons 5 60
2 Sugar Dishes 150 300
2 Flasks 550 1,100
CONNECTIONS
2 Telephone Telkom (K) 6,000 12,000
Networking Nairobi Net 30,000 30,000
TOTAL 95,535

5.2 Estimation of working capital

This is the amount required to meet day-to-day running expenses. It is the difference
between current assets and current liabilities and represents the funds necessary to fund
the operations.
The table below shows the working capital estimation for the first month.

Estimation of Working Capital

Current Asset Current Liabilities

28
Cash at Bank 31,400.00 Workers’ salaries 43,000.00
Stock 87,700.00 Electricity 5000.00
Machines 258,100.00 Water 1500.00 Rent
Furniture/Fittings 95,535.00 10,000.00 transport 3000.00
__________ Office Expenses 2500.00
472,735.00
65,000.00

407,735.00
Estimated working Capital

29
 5.3 Projected cash flow
Cash Flow Statement for the 1st Year –end of 2019
JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
Cash-In-Flow 140,000 120,000 130,000 125,000 115,000 120,000 135,000 140,000 150,000 120,000 130,000 125,000 1,550,000
Total Cash-In- 140,00 120,00 130,000 125,00 115,00 120,00 135,00 140,00 150,00 120,00 130,00 125,00 1,550,000
Flow 0 0 0 0 0 0 0 0 0 0 0

Rent 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
Salaries & 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 516,000
wages
Advertisement 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
stationery 2,000 2,500 2,600 2,400 2,600 2,700 2,800 2,900 3,000 3,100 3,200 3,300 33,100
Licenses 6,750 0 0 0 0 0 0 0 0 0 0 0 6,750
Repairs & 2,000 2,100 2,200 2,200 2,300 2,350 2,400 2,450 2,500 2,550 2,500 2,400 27,950
Maintenance
Telephone 2,000 2,100 2,000 2,200 2,000 2,000 2,000 2,100 2,000 2,000 2,000 2,000 24,400
Electricity 5,000 5,100 5,000 5,200 5,000 5,100 5,000 5,000 5,200 5,000 5,000 5,000 60,600
Transport 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Office Expenses 2,000 2,300 2,400 2,500 2,600 2,700 2,500 2,600 2,700 2,800 2,900 3,000 31,000
Loan 10,400 10,400 10,400 10,400 10,400 10,400 10,400 72,800
Repayment
Total Cash Out 80,750 75,100 75,200 75,500 75,500 86,250 86,100 86,450 86,800 86,850 87,000 87,100 988,600
Flow
NET CASH 59,250 44,900 54,800 49,500 39,500 33,750 48,900 53,550 63,200 33,150 43,000 37,900
Accumulated 104150 158950 208450 247950 281700 330600 384150 447350 480500 523500 561400
Cash For the
yr

28
 5.4 Proforma income statement (profit & loss account) for the

year ending 31st December 2024

This statement will show whether the business is making profit or loss. The calculations of
Gross Profits as well as Net Profit are shown in the statement below.

Table II: Proforma Profit and Loss Account as at December, 2024

ITEM AMOUNT

Cash Sales
1,550,000.00
Less Purchases
87,700.00
Gross Profit
1462300.00
Expenses
Salary
Loan 516,000.00
Transport 72,800.00
Rent 36000.00
Water bill 120,000.00
Electricity bill 18,000.00
Stationery 60,000.00
Miscellaneous 2,930.00
60,000.00
____________

885730.00
Net Profit before Tax
576,570.00
Tax 16%
Net Profit (After Tax) 92,251.00
484,319

32
5.5 Balance sheet
A balance sheet is a statement of assets and liabilities extracted from the accounting
records at a particular period of time. It shows the financial health of a business. Below is
a balance sheet for 3G Technologies.
Table III.
Venus Cyber Cafe Balance Sheet as at 1st June, 2024
ASSETS LIABILITIES

Fixed Assets Long term Liabilities

Machines 258,100.00 Loan 200,000.00
Furniture/fittings 95,535.00 Interest on Loan 20,000.00

Owners’ Equity 79435.00

Current Assets
Stock 40000.00
Cash in hand 280000.00 Current Liabilities
Cash in bank 700,000.00 Salaries 516,000.00
Rent 120,000.00
Electricity Bill 60,000.00
1121635.00 Water Bill 18,000.00
Transport 36000.00
Stationery 41100.00
Office Expenses 31100.00

1042200.00

1,121,635.00 1,121,635.00

33
 5.6 Break- even analysis

Break even shows the level at which the business can remain in operation without either
suffering a loss or earning profits. Break even calculations are as shown below:

Table IV
Fixed Costs Amount Variable Expenses Amount

Salaries 516,000.00 Purchases 87,700.00

Rent 120,000.00 Miscellaneous 31100.00
Electricity Bill 60,000.00
Water Bill 66,000.00
Transport 36000.00
Stationery 21000.00
Bank Loan 72800.00

Total 636,000.00 Total 374600.00

Contribution Margin
Sales = 1,550,000.00
Total Contribution Margin = Sales – Total Variable Costs
TCM = 1,550,000.00 – 374600.00
= 1,174,500.00

Contribution Margin Percentage = Total Contribution Margin

Sales
CM% = 1174500.00 x 100% = 77.75%
1,550,000.00

Fixed Costs = 636,000.00

34
Break Even Level = Total Fixed Costs
Contribution Margin %

= 636,000.00 = 8180.06
77.75

5.7 Profitability ratio

These are ratios that deal with the issues of the trend that a firm will make profit in relation
to some elements representing what it took that amount.
5.7.1
Gross Profit Ratio (Percentage) = Gross Profit x 100%
Sales

= 1462300.00 x 100%
1,550000.00

Gross Profit Ratio (percentage) = 94.34%

=94%

Net Profit Ratio (Percentage) = Net Profit x 100%

Sales
= 484319.00 x 100%
1550000

35
 Net Profit Ratio = 31.25%
5.7.2 Return on Equity

Return on Equity = Net Profit (after tax)

Owners’ Equity

= 484319.00 = 1.16
300,000.00

5.7.3 Return on Investment

Return on Investment = Net Profit (after tax)

Total Investment

= 484319 = 0.97
500,000.00

5.8 Desired financing

The assets of the business enterprise will be portioned into current and fixed assets. The
current assets represent the operating assets necessary to finance the day to day activities,
necessary to generate revenue and profits. This involves transferring figures i.e.
preoperational costs, working capital and total fixed assets as shown in the table below.

36
ITEM AMOUNT

Preoperational Costs 353635.00

Working Capital 407735.00
Total Fixed Costs 636,000.00

Total 1397370.00

5.9 Proposed capitalization

It refers to the financing structure of the enterprise. Sharon Cyber Technologies is financed
by both equity and Sacco loan as shown in the table below:

ITEM AMOUNT

Owners’ equity 300,000.00

Sacco Loan 200,000.00

Total 500,000.00

37