BUSINESS PLAN

BUSINESS NAME : : AFRO GENERAL AUTO GARAGE

BUSINESS LOGO :

PRESENTED BY. : STEPHEN GIKIRI GATHERU

INDEX. :

INSTITUTION NAME. :THIKA TECHNICAL TRAINING INSTITUTE

SUPERVISOR :MR. KIERU

PRESENTED TO. :KNEC IN PARTIAL FULFILMENT OF THE AWARD

OF THE DIPLOMA IN ICT

EXAM SERIES :JULY 2023

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 DECLARATION
I declare that this is my own original work and has not been presented anywhere else for the
purpose of examinations.
CANDIDATES NAME: STEPHEN GIKIRI GATHERU
SIGNATURE. ______________
DATE _________________
SUPERVISOR’S NAME: MR.KIERU
SIGNATURE _______________
DATE. ___________

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DEDICATION

ii
 ACKNOWLEDGEMENT
First I thank the almighty God for this far, being with me in this journey. I also thank all
those who have been with me and encouraged me in my research this are, my friends and
family who have been helping with information about this project. Am also thanking the
supervisor Mr. Kieru for his guidance. Finally my gratitude goes to my family who have
supported me financially.

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Table of Contents
Declaration..................................................................................................................................i
Dedication..................................................................................................................................ii
Acknowledgement....................................................................................................................iii
Executive summary..................................................................................................................vii
1.0 Business description.......................................................................................................vii
2.0 Market plan....................................................................................................................vii
3.0 Organizational and management plan...........................................................................vii
4.0 Operational and production plan..................................................................................viii
5.0 Financial plan................................................................................................................viii
CHAPTER ONE........................................................................................................................1
1.0 Business description.........................................................................................................1
1.1 Business name..................................................................................................................1
1.2 Business location and address..........................................................................................1
1.3 Owners Profile..................................................................................................................3
1.4 Form of ownership...........................................................................................................3
1.5Type of business................................................................................................................4
1.6 Products and services.......................................................................................................5
1.7 Industry.............................................................................................................................5
1.8Justification of opportunity................................................................................................6
1.8.1 Goals of the business.................................................................................................6
1.8.2 Long term goals.........................................................................................................6
1.8.3 Short term goals.........................................................................................................6
1.9 Entry and growth strategy................................................................................................7
1.9.1 Growth opportunities.................................................................................................7
CHAPTER TWO.......................................................................................................................8
2.0 Market Plan......................................................................................................................8
2.1 Customers.........................................................................................................................8
2.2 Market share.....................................................................................................................8
2.3 Competition......................................................................................................................9
2.4 Methods of promotion and advertising.............................................................................9
2.5 Pricing strategy...............................................................................................................10
2.6 Sales strategy..................................................................................................................10
2.7 Distribution strategy.......................................................................................................11
CHAPTER THREE..................................................................................................................12
3.0 ORGANISATIONAL AND MANAGEMENT PLAN..................................................12
3.1 Organizational structure.................................................................................................12
3.2 KEY MANAGEMENT PERSONNEL..........................................................................13
3.3 Other business personnel................................................................................................14
3.4 RECRUITMENT TRAINING AND PROMOTION OF PERSONNEL.......................15
3.1.4 Recruitment..............................................................................................................15
3.4.2 Training....................................................................................................................15
3.4.3 PROMOTION..........................................................................................................16
3.5 RENUMERATION AND INCENTIVE PERSONNEL................................................16
3.6 LICENCING. PERMIT AND BY LAWS.....................................................................17
3.7 OTHER SUPPORT SERVICES....................................................................................17

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 3.7.1 Banking services......................................................................................................17
3.7.2 Electricity.................................................................................................................17
3.7.3 Insurance..................................................................................................................17
3.7.4 Telecommunication.................................................................................................17
CHAPTER FOUR....................................................................................................................18
4.0 OPERATIONAL AND PRODUCTION PLAN............................................................18
4.1Production facilities and capacities.................................................................................18
4.1.1 machinery.................................................................................................................18
4.1.3 Workshop layout......................................................................................................19
4.1.4 Fixed assets..............................................................................................................21
4.2 PRODUCT STRATEGY................................................................................................21
4.2.1 . Monthly labour requirements.................................................................................23
4.2.2 Monthly production expenses..................................................................................23
4.2.3 Cost of production...................................................................................................24
4.3 PRODUCTION PROCESS............................................................................................24
4.4 REGULATIONS AFFECTING THE OPERATION.....................................................25
CHAPTER FIVE......................................................................................................................26
5.0 FINANCIAL PLAN.......................................................................................................26
5.1Pre- operational cost........................................................................................................26
5.2 ESTIMATION OF WORKING CAPITAL...................................................................27
5.3 PROJECTED CASHFLOW PRESENTED YEARLY FOR THE FIRST THREE
YEARS.................................................................................................................................29
5.4.1 PROFORMA INCOME STATEMENT PRESENTED YEARLY FOR THE FIRST
THREE YEARS...............................................................................................................31
5.5 PREPARATION OF PROFORMA BALANCE SHEET..............................................32
5.5.1 proforma balance sheet as at the start of the business.............................................32
5.5.2 proforma as at the end of the year............................................................................32
5.6 calculations of break-even points...................................................................................33
5.7 CALCULATIONS OF PROFITABILITY RATIOS.....................................................34
5.7.1 Gross profit margin..................................................................................................34
5.7.2 return on equity........................................................................................................34
5.7.3 Return on sales.........................................................................................................34
5.8 DESIGNED FINANCING.............................................................................................35
5.9 PROPOSED CAPITALISATION..................................................................................35

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 EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION
AFRO GENERAL AUTO GARAGE business is the business I wish to start. The business
will operate under sole proprietorship. The business will be about selling motor vehicle spare
parts as well as repair of motor vehicles. Products that am going to be selling, include; clutch
plate, bearing, air pressure, battery, GPS tracker, headlight. Business’ capital is sh. 500,000.
The business location of my business is in Kiambu county, Thika town, Weteithie house,
along Nkwame Nkrumah road. The address will be,
PO BOX 29_ 7002
Tell 0708015978
Email:[email protected]
One of the ICT components I will be using is the computer. Since I have ICT skills, I will be
able to develop a software that will enable management of a one on one relationship with our
customers despite the increase in number of customers.

2.0 MARKET PLAN

Potential customers will be car owners and also the servicing garages. Products will be
acquired both directly and indirectly. The business’ competitive advantage is the cost,
quality, service and convenience and also the fact that we are operating both physical and
online store. The means of transportation will be by road. Problems am expecting to face
while distributing the products is getting lost when delivering products if the address given is
not clear and lastly bad weather roads that makes marram roads hard to pass through. The
above problems will be solved by using my ICT skills to install an application that gives
clear road directions and as per the road, I will ensure I hire skilled drivers who are patient
enough to drive slowly especially during the rainy season.

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3.0 ORGANIZATIONAL AND MANAGEMENT PLAN
The business is under sole proprietorship and that makes me the manager and CEO of the
business. I will employ three employees that is; an account and two drivers. Equity bank is
the bank a choosing to be responsible for all the transactions the business wishes to have for
example the paying options. Electricity and telecommunication will be offered be Kenya
Power and safaricom respectively. The ICT skills I will employ is that I will use a biometric
machine to ensure that I get the attendance of the employees, time they arrive at the store and
also the time they leave the job.

4.0 OPERATIONAL AND PRODUCTION PLAN

The business will generally be dealing with selling vehicles auto parts. Since the business
will have an online platform to sell products and also advertising products, there will be need
for internet connection. Production process might face problems e.g. Careless and
irresponsible employees and therefore I will have to find solutions to the problems faced in
order to ensure efficiency. Regulations affecting the operation may include taxes.
Since there will be a computer and internet I will use my knowledge in ict to monitor the
store using CCTV cameras. Business calculations will be done using Microsoft excel.

5.0 FINANCIAL PLAN

For a business to be prosperous, a committed and successful manager is essential not
forgetting the employees who should be loyal and strive to achieve growth of the business.
Business Operations will start with an initial capital of Ksh 500,000 whereby 40% will be
produced by the entrepreneur who is me and the rest from family members and friends. I will
develop a financial management system to aid in the daily financial record keeping of the
business. The computer will be the one producing pay rolls and printing them out using a
printer.

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 CHAPTER ONE
1.0 Business Description
1.1 Business Name
The proposed name of my business plan is Afro General Auto Garage. The reason for the
choice of that name is attractive and will easily capture the attention of the customers.
I intend to start the business after graduating from college. The reason for this timing is that
at this time I will have acquired a lot of skills and experience in order to be able to start and
run the business successfully. The business will be a sole proprietor.
The major activities of my business is to provide quality products and also deliver them to the
consumers. The business expect that my principal customer to be vehicle owners and car
garages.
The business is legalized by the government of Kenya. The major activities of Afro General
Auto Garage business is to sell the spare parts of vehicles.
I intend to start the business after am through with my diploma so that at that time I’ll have
the skills and experience to start and run the business. I’ll operate as a sole proprietor hence
I’ll be my own boss. My principle customers’ will be;
Car owners
Auto repair, maintenance and servicing garages
Transport companies

1.2 Business Location and Address

The business will be located in Thika town, Witeithie house along Kwame Nkrumah road,
opposite GT bank ground floor house number 16. Thika is an urban center and it’s really
growing in terms of population and social amenities. In Thika some of the infrastructure
found within the business location include the following; water, electricity supply, highways
and railways. Customers to target will be all vehicle owners and garages.
This location is favorable for my business first because of the presence of the highway hence
many vehicles and there are also a couple of garages .The location of the business is open and
the presence of tarmacked roads makes it a suitable place for this kind of business.
The products can be accessed in the following address;
AFRO GENERAL AUTO GARAGE
P.O BOX 29-7002
Tel 0708015978
EMAIL:[email protected]

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 Kwame Nkrumah Street

Witeithie house
GT bank

Ch Ch
arl arl
es es
Ru Ru
bia bia
rd. rd.

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1.3 Owners Profile
Being a sole proprietor I will have the knowledge and skills to start and run the business in
terms of technology. Currently am working on my Certificate in Automotive Engineering at
Thika Technical Training Institute.
By the time am through with my Course I’ll have attended several attachments to gain
experience. This course will also help me to respond to customers’ needs and orders made
online and also record innovative business transactions. Learnt skills will also help me in
developing a software that will enable us to manage a one on one relationship with our
customers no matter how large the numbers of our customers’ base may grow to.

1.4 Form of Ownership

As mentioned earlier, the business will be under sole the initial capital that the business will
probably need is 1.5 million.
First of all am going to contribute a million shillings for the business and put away five
hundred thousand shillings in case of an emergency in terms of the business.
The startup capital will be obtained from; a loan from the bank that is 50%, 25% from family
and friends, 10% from a Sacco and 15% from my personal savings. The money borrowed I
plan to repay it in a period of two and a half years with 5000 monthly installments. The chart
below is a representation of where I will acquire my capital from.

1.5 Type of Business

The AFRO GENERAL AUTO GARAGE business will operate as a sole proprietorship
business and I will be the chief executive officer (CEO) of the business. I intend to start the
business after my Artisan Course that am working on in Thika Technical Training Institute.
The total startup capital that I’ll be needing is 1.5 million. This capital is going to be drawn
from my savings, from family and friends, from a Sacco and finally take the rest of the
money from a loan from the bank such that the addition of all the money will add up to 1.5
million.
The business will have four employees that is;
Store manager-Will guarantee that goods are properly arranged, easy to locate and that
the warehouse does not run out of products.
Merchandize manager- Will ensure we get good quality auto spares parts and ensure we
purchase goods in a good price that will ensure we get good profit.
Cleaners

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Delivery person

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1.6 Products and Services
Products that will be present in the business include;
Screw drivers GPS trackers
Clutch plate Headlight
Bearings Jump starter
Tires Steering
Battery Gearbox
Driving recorder Air pressure
When it comes to tires and screw drivers, all sizes will be available and all products will be of
high quality. Tires will be of hard and rough texture so that they can be able to resist friction
for a long time hence long lasting. Customers will definitely benefit because of the high
quality of products hence their performance is good. The other thing is that we are convenient
hence the flow of consumers will be high. The products are durable hence saves customers a
fortune.
Lastly our products are warranted. The fact that I will offer free delivery, it will of advantage
over competitors.

1.7 Industry
The automotive aftermarket is the secondary market for the automotive industry, concerned
with auto spare parts selling.Favourable car usage trends have led to growth in demand for
the auto spare parts.
The size of this business will be medium and will use computers and printers thus intensive.
The level of technology will be modern and the average number of employees will be 4.I will
ensure that I hire people that are qualified, honest, customer centric and are ready to work and
help build a prosperous business.
The basic capital will be1.5 million. I really am looking forward to see that the tires will
make the most profit. The profit made by the business at large, I’ll reinvest the money.
In seasonal factors, I expect that in the months of June and December to make the most
profit since it’s in the rainy season that most vehicles and motor bikes breakdown

1.8 Justification of Opportunity

The primary aim of the business is to be able to reduce vehicle hassle of vehicle owners by
providing best condition and durable spare parts of their choosing. One thing for sure is that
vehicles will always be there and the need for the spare parts is inevitable. The business will
contribute a lot when it comes to employment and promotion of indigenous technology

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because as I had mentioned earlier I would also launch an online sales channel for the
products. Employment of the youth is going to reduce crime rate and also raise their living
standards. I will cultivate a good working environment that provides a human, sustainable
approach to earning a living for the employees. The fact that Thika itself is highly
populated ,and in addition an urban centre with very many developed road network , it makes
the demands of the products to be high and hence the inflow of consumers will be high thus
the business will be at a good place when it comes to profits.
1.8.1 Goals of the Business
The goal of the business is to make it a one stop auto parts retail shop for automobile owners
and servicing garages and also for the business to survive on its own cash flow without the
aid of external sources.
I also am looking forward for the business to continuously produce better results and
performances that will heavily influence the health of the business reflected by its financial
position. Another goal is to attain a higher net profit.
1.8.2 Long term goals
 Launch an online sales platform for the products.
 Launch other branches in different towns or even within Thika.
 Engage in partnership with big companies and make my business one of the leading
businesses in Thika town.
1.8.3 Short term goals
 To be able to repay the loans taken as part of capital within the first one and a half
years.
 To never run out of stock
 To ensure the business caters for itself financially without the help of external factors
e.g.; loans.

1.9 Entry and Growth Strategy

The business will have an advantage because at the first opening we’ll be gifting car and
motorbikes key holders and reflector jackets printed Afro General Auto Garage. The business
will also be advertised on televisions, magazines and newspapers.
I’ll also develop strategic advantages that give the business an edge against its increasing
competition. When it comes to pricing strategy, I’ll use price skimming. This will benefit my
business in that it will allow the business to maximize profits on early adopters before
dropping prices to attract more price sensitive customers. This will also help the business in

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that it will create an illusion of exclusivity. Our excellent customer services and various
payment options will serve as an advantage to the business.
The business will be well stocked. Both high and low class consumers will be catered for.
Profits made by the business will help to restock and pay for example electricity bills and of
course refund the loans and money borrowed at the start for capital.
1.9.1 Growth opportunities
I will ensure we have a wide range of auto parts from the leading auto parts manufacturers
hence my products will be of high quality and thus will increase the number of inflow of
customers. I will grow the business by offering short term promotions and investing in the
services offered by the business. I will also ensure fast delivery of products and ensure
products are of high quality.
My plans of growth include the following;
Promote my business by offering free delivery of goods
Be convenient
Stand out from my competitors
Improve my stocking with time
I will also ensure that I create long term relationship with the customers.

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 CHAPTER TWO
2.0 Market Plan
2.1 Customers
An auto spare parts and garage business has a wide range of customers. Every vehicle owner
in one way or another, will definitely have a reason to appear at the business to satisfy his or
her needs. My potential customers will be car owners, auto repair, maintenance and servicing
garages and lastly the transport companies.
In terms of quality, customers will be expecting good quality products and long lasting ones.
The business will ensure that products am going to be selling will come from leading
manufacturers of the products. Customers can acquire the products between 6.00am up to
9.00pm. A market survey will have to be conducted before officially opening of the business
in order to be prepared of the challenges and benefits the business might have to deal with.
The enterprise ideal customers will be the ones we’ll value what the business this will be
makes possible if the clients pay for services offered at the right time or before the agreed
period of time. Customers who will bring other customers will be identified and this will
enhance growth of the enterprise.
Regarding purchase, customers will evaluate packing as positive when it comes to the
proposed business because the business will offer best and prior research focusing mainly on
a particular time of day.

2.2 Market share

The approximate number of people who require the products will be 20 000 customers and
the business is expected to serve 9000 customers. Therefore, about 30% of customers will not
have satisfied their needs hence am going to strive hard to satisfy about 20%. The market
share is expected to increase with increase in the business’s fame.

Sales

ken
10%
Nafta
Alima
25%
50% Jeska

15%

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2.3 Competition
My potential customers are all car owners and garages. My customers will be aged between
18 years and above since car license is granted at 18 years of age. They can either be male or
female. Location of my customers is that garage owners will be located at their garages and
car owners have no specific residence. It is a disadvantage when it comes to delivery of
products to the car owners. One may deliver to the wrong place. The garages are of advantage
when it comes to purchasing since everyday cars breakdown and are taken to garages
therefore garages are frequent customers .The fact that garages are easy to deliver products
to, is of advantage since they are permanently located there.
The size of my competitors is large. Depending on my competitors size my firm is medium
sized. My business’s competitive advantage is the cost, quality, service and convenience and
the fact that we’re operating in both physical and online store. My products will be from the
leading auto parts manufacturers hence high quality unlike my competitors’ products .
Besides, I’ll offer free delivery of products around Thika unlike my competitors. Competition
is high because there many such businesses. The strength of my competitor’s is that they are
older in the market with a wide range of products and their weaknesses is that they close their
businesses early hence an advantage to me.

2.4 Methods of Promotion and Advertising

One of the methods am going to use to advertise my products is by facebook through opening
an account where am going to post them. Am going to use a mobile advertising strategy
because of the online store. Printing posters is another possible method am going to use.
Using newspapers is a media am willing to use to mostly attract customers aged 30years and
above.
The image am going to likely portray is the tires, spanners, bolts and steering. Advertising
products online through Facebook will be regular since its cheap. Costs that am going to
incur in advertising products is as follows;
Newspapers- 40 000 annually
Posters- 15000 annually
The method am going to use to determine the effectiveness of the advertising is setting goals
for example , I expect that my Facebook ads should have at least 5000 likes daily.
The slogan am going to use when am advertising is ‘Crave for quality’. There will be free
delivery for introductory to the market. Promotional methods will be advertising and trade
shows. Trade shows will be performed three times in a year.
Advertising- 60 000 yearly

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Trade shows- 25 000 yearly Effectiveness of promotional campaign will be determined by
the rate at which customers will order products after the campaign of products.

2.5 Pricing Strategy

The selling will be calculated as follows;
Sp = total price +profit +discount
Competitors will be the one to decide the selling price of products. My selling price will be
variable. Criteria am going to use to decide who gets credit is that the one who is the frequent
customer and buys a huge stock is the one who gets credit.
The discount policy I’ll choose is to offer discount only to the new customers so that they can
special. Another policy is to offer discount on holidays.

2.6 Sales Strategy

We’ll first prove our worth to customers to earn their trust and respect. The selling method
we’ll be using as a business is that we are going to be using is we will be selling products
personally to the customers. We’ll also include the two P’s of marketing which are promotion
and pricing. Lowering the price of some products, like the tires will temporarily. This will
increase the value of the product this is because there will be creation of a sense of scarcity of
the product by the customers. When the stock is full I will be able to offer a discount.
Potential customers will order their products through our online platform and goods will only
be delivered after full payment has been verified by the accountant. The following methods
will be used to make sales for the business; communication of the value of products and
services at an earlier date and this will increase of customers inflow. The social media mode
of carrying out business will enumerate the sales by being able to receive payment more
quickly from online transaction and this will improve offers using data gathered by tracking
customers purchase.

2.7 Distribution Strategy

Distribution of my products will be by the business vehicle. Otherwise other regular
customers can acquire the products they want directly from the store. Means of transport to
use is by road since am using the vehicle. Problems am expecting to face when distributing
the products is for example getting lost when delivering products if the directions given by
the customers are not clear and finally bad weather conditions especially the rainy season
and the foggy days.
The above problems am going to solve them as follows; I’ll install an application that gives
clear directions. Am also going to hire a skilled driver who is patient enough to drive slowly

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and lastly am going to ensure that on the bad weather days we don’t deliver products as
frequent a the sunny days.

CHAPTER THREE
3.0 ORGANISATIONAL AND MANAGEMENT PLAN
3.1 Organizational structure
Although our business is not as big as other auto spare parts businesses in town, The business
will ensure I put in place a staff that will support the kind of growth that I have in mind while
setting up the business.
Since am the owner of the business I’ll be the manager. I will also have four other employees
that is; a driver, an accountant and two delivery personnel. As the business grows and
expands I will hire more employees . If the business expands as planned I will hire an
assistant manager.

MANAGER

Mechanics ACCOUNTANT

3.2 KEY MANAGEMENT PERSONNEL

Since the business will be operating under sole proprietorship I will be the manager of the
business. The following are my responsibilities:
3.2.1 Responsibilities
Create, communicate and implement the business’ vision and mission.
Accountable for fixing prices and signing business deals with companies and
other businesses.
Ensuring that insurances and other policies are updated.
Organizing company’s events and meetings.
Responding to complaints and opinions of the employees.

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 Directing the staff on their responsibilities and activities.
Deciding the time the business will start and it’s completion.
Representing the business in business forums.
Safeguarding the business’ assets.
Gives the final decision on matters concerning the business.

Requirements
Have strong managerial skills
Good communication skills
Problem solving skills
Decision making skills
Leadership skills
Time management skills

3.3 Other business personnel

Accountant
There will be one account and the responsibilities are:
Responsibilities
Responsible for developing and managing financial systems and policies
Handles all financial transactions for the business
Ensures compliance with taxation legislation
The accountant is accountable for preparing financial reports, budgets and financial
statement for the business
Advising on how to reduce costs and increase profits
Monitoring the expenditure of the money
Financial forecasting and risk analysis
Ensuring that financial statements comply with laws and regulations
Requirements
A graduate in accounting
Advanced Microsoft excel skills
Enhanced numerical and quantitative skills
Time management and organisation
Good communication skills

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Mechanics
There will be two mechanics and they will be going together in all destinations so that they
can help each other in loading and offloading of products from the vehicle.
Responsibilities
Servicing and repair of motor vehicles.
Transporting business products to places directed to
Requirements
Above 18 years of age
A valid driver’s license and at least one year of drivers experience
Excellent navigation skills and proficiency in using navigation applications to find
delivery locations
Time manager and organizational skills to keep track of deliveries and stay on
schedule.
Communication and interpersonal skills in order to be able to interact with clients
Physical stamina and good strength to lift heavy packages and luggage as well as to
load and offload them from the vehicle.

3.4 RECRUITMENT TRAINING AND PROMOTION OF PERSONNEL

3.1.4 Recruitment
Since my business is by sole proprietorship, I’ll be the one recruiting employees and
hiring them. Recruitment is essential in order to have the correct staff to hire, who will
work hand in hand to achieve the goals of the business.
The employees I’ll recruit and hire will must have to meet their respective qualifications
for the post they are applying for. The personnel interested in the job will first have to
hand in their application letter to and if he or she is qualified recruitment starts.
Ill be using external recruitment method. Mostly I will do online advertising of job
vacancies and also using posters . All the necessary information needed by the applicants
like the telephone number will be indicated when advertising.
3.4.2 Training
In the current world new ideas and skills are overflowing day in day out. Therefore,
employees need consistent additional skills to keep up with ever changing ideas. Hence, I
will allow my employees to attend show exhibitions and seminars since this will add them
knowledge and skills and thus our services will be good.
This will also give them morale and ability to improve their skills and this will be of
advantage to the business since there will be positive energy from employees hence

13
 leading to growth of the business. The fact that there will be a reward for all nice work
done will make them work even harder.
3.4.3 PROMOTION
Raising of individuals positions in the business makes others work hard to achieve that same
raise or even more. AFRO GENERAL AUTO GARAGE business, will offer promotion by
raising salaries.
An employee who will take responsibility for his or her actions at work and has a clear sense
of direction of the progress of his or her career, will be eligible for promotion. Before
promoting the employees, I will have to look out for the character traits and distinguish him
or her from the pack.
I will also put into consideration the work ethic. A good work ethic, is characterized by
punctuality, consistency and commitment to continuous improvement. Therefore, an
employee with a good work ethic will have high chances of benefitting from the promotion.

3.5 RENUMERATION AND INCENTIVE PERSONNEL

It is every employee’s right to have their salaries after a specified period of time.
Once in a while I’ll be profit sharing. This will be of advantage to the employees because
they will have a sense of being the owner and not just a staff. Recognition of their work is
also in the list of incentives and this will be done by adding their salaries. During the
holidays, they will be given bonuses or some fun gifts. The salary offered to the employees, I
will ensure it is enough to cater for their needs. Soft loans will also be available for the
workers will be paid monthly. Salaries will be as follows,

Personnel No.of Basic salary Allowance Net pay

employees

Manager 1 20 000 4000 23000

Accountant 1 12000 3000 14000

Mechanics 2 6000 2000 7000

Total 44000

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3.6 LICENCING. PERMIT AND BY LAWS
For a business to run it must have a trading license. The license be obtained from the Kiambu
county government. The responsible authorities should be enlightened In case the business
decide to change the business premises. Taxes are not inevitable in a business hence the
business will get permit from the Kenya Revenue Authority (KRA) which will be renewed
annually. This will cost sh. 5000.
By laws
Products sold should be legal
Workers should have a medical cover
The environment should be clean and conducive to ensure health of people is not at risk.
Licensing
The trading license is essential for the business to run and it will cost 6000 and will as well be
renewed annually.

3.7 OTHER SUPPORT SERVICES

3.7.1 Banking services
Equity bank is the bank the business will be entrusted to when it comes to paying options of
products, loans and when depositing money.
3.7.2 Electricity
The proposed company to supply electricity to the building is Kenya Power Limited
Company (KPLC). This will cost sh.2000 monthly.
3.7.3 Insurance
This is about the vehicle Insurance. Directline insurance company is the one I’ll be working
with and it is going to be renewed monthly for 7000.
3.7.4 Telecommunication
Since the business still has an online platform for ordering products, safaricom is my choice
and Telkom will be for back up Incase there is breakdown of any of the networks, the
business will always be online and available.

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 CHAPTER FOUR
4.0 OPERATIONAL AND PRODUCTION PLAN
4.1Production facilities and capacities
The business generally will deal with selling auto spare parts.
4.1.1 Machinery
The machinery and equipment needed for operation of the business are:

Machinery No. Of Unit price Total Suppliers

items.

Business telephone 3 2000 6000 Samsung

CCTV 4 2000 8000 Ricoh company

Shredder 1 7000 7000 Xerox company

Computer 2 30000 60000 Dell

Writing tools 20 100 2000 Kasuku company

Stapler 1 200 200 Kasuku company

Paper clips 1 packet 200 200 Kasuku company

Chairs 10 1000 10000 Kakosa furnitures

Office tables 2 5000 10000 Kakosa furnitures

Internet connection 7000 7000 Mbinda technologies

Total 54500 110000

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Since in my business I will have an online platform for ordering products and delivery them
and also advertising product online, internet connection will be essential.
Paper shredder will reduce pollution of environment. The digital cameras (CCTV) will be
necessary to ensure there is full security. It is of advantage to have them because it is cheaper
than having a watchman hence, cost here will be reduced.
4.1.2 Plans of repair and maintenance of machines
Repairing and maintaining is necessary to ensure that the business runs smoothly. Machinery
should be kept in good working conditions to ensure their workability. When our machines
breakdown they will have to be repaired as per the technological equipment like computers
they will be repaired by Tony repairs and as per the furniture it will be repaired by Imani
furniture. The following are some of the measures taken in order to achieve good working
conditions:
Repair broken parts
Ensure the CCTV cameras are working
Keep the computers in dust free places and away from direct sunlight
Update computer software’s to the latest version
4.1.3 Workshop layout
The business premises will be leased for the first few years and after the business has made
enough money and the business needs expansion, will move out and buy a land and build
where the business will be operating at.
I will be leased the place at ksh. 12000 per month

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 shelves store
Toilets

Shelves
Shelves

accountant

Waiting
place
manager

entrance
exit

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4.1.4 Fixed assets
item Number Cost per item Total cost

Generator 1 4000 4000

Desks 2 3000 6000

Shelves 15 1000 15000

Total 18 8000 25000

4.2 PRODUCT STRATEGY

A production strategy, is good since it will enable the business to make operational changes
and good decisions that supports the strategy of operation of the business.
The future of the business lies in the number of loyal customer’s capacity and competence of
employees and the business structure. The proposed business plan will provide quality
services at a cost that enables it to maximize profits. The AFRO GENERAL AUTO
GARAGE business will be selling it’s products from a permanent location hence customers
can acquire the products directly from the shop and still we will be delivering products to
those customers who want their products delivered to them. All we want as a business is loyal
customers and their comfortably.
Research of the market demand will be necessary to ensure that we satisfy the customer’s
needs. The business products will be put down in an inventory, so that potential customers
can have an overview of all products that are available. I will be using communication
technology to market my products and also to keep in touch with the clients. This type of
technology is simple to utilize, it’s flexible to adopt and it is available.
Technology is ever changing and to keep up with it I will put in place this steps:
Have commitment to technological support and training.
Positive mindset
As technology advances, it becomes easier to use and adapt
I will ensure that my employees attend seminars and training events in order to enhance
and sharpen their skills.

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Monthly material requirements
The materials will be available through the year since products will be from one supplier.
Products Quantity Unit cost Total cost Sources

Stationary 1000 Kasuku

Stumping 1 1000 1000 Office stationers

machine

Ream of 6 5000 3000 Jk copier

papers

Office files 4 100 400 Office stationers

Total 5400

4.2.1 . Monthly labour requirements

Workers Number Salary per person Qualifications

Manager 1 23000 Leadership skills

Accountant 1 14000 Graduate in

accounting

Drivers 2 7000 Driving license

Total 44000

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4.2.2 Monthly production expenses
The following are monthly costs that will be incurred
Item Monthly cost

Trading license 6000

Vehicle insurance 7000

Advertisement 5000

Electricity bills 5000

Rent 12000

Banking 4000

Water
500
Trash 1000

Suppliers 100000

Total 140500

Supplying of the products will be done by the supplier’s lorries.

4.2.3 Cost of production

The cost of production will be the total cost of machinery then sum it up with monthly
productive expenses.

4.3 PRODUCTION PROCESS

Production process, is the method of using economic input or resources like labour, capital
equipment or land, to provide goods and services to customers. It also entails efficiently
producing the products for sale to reach customers quickly without sacrificing the quality of
the product. The production process will start after the goods are supplied to us. The
customers will arrive at the shop then they can freely move around the shelves to check on
the product they desire to purchase. The indirect customers, will leave their orders to the
accountant and also their address. Then the drivers , will load the ordered products and
deliver them as ordered by the consumer.
The business will be open from 6.00 a.m. to 9.00 p.m.
Factors likely to affect production process:
Careless and irresponsible employees’ .This may lead to delay in selling the products

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 Lack of enough space if the stock is extremely large
Increase in taxes leading to reduced stock
Stiff competition
High demand than supply
The problems will be solved as follows:
Doing recruitment strictly
Ensuring we offer high quality services
Before entering the room make measurements and estimations
Should have a plan in order to have a competitive advantage
Ensure stock inflow is high to meet demands of the customers

4.4 REGULATIONS AFFECTING THE OPERATION

The business will ensure we pay taxes on time to avoid inconveniences, ensure vehicle
insurance is always renewed and that all the requirements are met before starting the business
and finally meet all the health laws.
Government regulations and approvals must be met. When they are met the business, the
business has advantage because it will have legal, medical and security benefits. I will be
required to maintain federal state for local business permits or certificate to remain legal
depending on business and location.

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 CHAPTER FIVE
5.0 FINANCIAL PLAN
5.1Pre- operational cost
Item Cost

Computer 30000

Shelves 15000

10000
Chairs
6000
Desks
1000
Stump
7000
Shredder
7000
Insurance
6000
License
4000
Generator
86000
TOTAL

5.2 ESTIMATION OF WORKING CAPITAL

Working capital is the net asset needed for Afro General Auto Garage business to start in the
initial financial year.
Working capital = Initial capital-pre operational capital
Initial capital = sh 500000
Pre operational cost= sh 86000
Sh 500000-sh 86000=sh314000
Working capital = sh 314 000

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 Jan Feb March April May June July Aug Sep Oct Nov Dec Total
Opening cash 314000 320000 330000 330000 340000 345000 355000 365000 370000 385000 390000 400000 3914000
Sales 150000 175000 180000 185000 188000 195000 200000 205000 215000 220000 225000 230000 2368000
total inflow 464000 495000 510000 515000 528000 540000 555000 570000 585000 605000 615000 630000 6612000
cash outflow
Purchase 110000 120000 124000 130000 135000 145000 150000 160000 165000 175000 180000 195000 1789000
Rent 12000 12000 12000 120000 12000 12000 12000 12000 12000 12000 12000 12000 144000
License 6000 5000 5500 5000 5500 6000 5000 5000 6000 5500 4500 5300 64300
wages and
salaries 44000 44000 44000 44000 45000 44000 45000 45000 44000 44000 44000 45000 532000
Water 500 600 700 500 600 800 700 450 550 600 800 700 7500
Electricity 5000 5500 5000 4500 5000 4500 5500 6000 5500 5000 5000 4500 61000
Transport 3000 3500 4000 4000 4000 4000 3500 4000 4000 500 4500 3000 155000
total cash
outflow 180500 190600 195200 200000 207600 223500 221700 232450 237050 247100 250800 265500 26518000
Net cash 283500 304400 314800 315000 316500 316500 333300 337550 347950 357900 364200 364500 3959600
Cash flow statement Year 1

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5.3 PROJECTED CASHFLOW PRESENTED YEARLY FOR THE
FIRST THREE YEARS
Particulars 1st year(2024) 2ndyear(2025) 3rdyear(2026)

3914000 4000000 4500000

opening cash
1789000 1978000 2000000
Sales
6612000 6812000 7000000
Total inflow
2651800 2912400 3000000
Cash outflow
1789000 1900000 2000000
Purchase
61000 62000 64000
Electricity bills
7500 8000 9000
Water bills
144000 144000 144000
Rent
532000 540000 550000
Salary
72000 72000 72000
Insurance
64300 700000 750000
Licence
18000 18000 18000
Advertisement
155000 200000 250000
Transport
2651800 2912400 3000000
Total cash outflow
3959600 4200000 4300000
Net cash

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 Marc
Jan Feb h April May June July Aug Sept Oct Nov Dec Total
31400 32000 33000 33000 34000 34500 35500 391400
sales 0 0 0 0 0 0 0 365000 370000 385000 390000 400000 0
11000 12000 12400 13000 13500 14500 15000 178900
purchase 0 0 0 0 0 0 0 160000 165000 175000 180000 195000 0
20400 20000 20600 20000 20500 20000 20500 245000
gross profit 0 0 0 0 0 0 0 200000 205000 175000 210000 205000 0
expenses
electricity bills 5000 5500 5000 4500 5000 4500 5500 6000 5500 5000 5000 4500 61000
water bills 500 600 700 500 600 800 700 450 550 600 800 700 7500
internet 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
salary 44000 44000 44000 44000 45000 44000 45000 45000 44000 44000 44000 45000 532000
insurance 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
license 6000 5000 5500 5000 55000 6000 5000 5000 600 5500 45000 5300 64300
advertisement 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 18000
transport 3000 3500 4000 4000 4500 4000 3500 4000 4000 5000 4500 3000 155000
61700
total expenses 67000 67100 0 66500 69100 67800 68200 68950 68550 68600 67300 67000 807800
13700 13290 14430 13350 13590 13220 13680 164200
net profit 0 0 0 0 0 0 0 131050 136450 141400 142700 138000 0
net profit brought 13700 26990 41420 54770 68360 81580 108365 122010 136150 150420 898965
down 0 0 0 0 0 0 952600 0 0 0 0 0
net profit carried 13700 26990 41420 54770 68360 81580 95260 108365 122020 136150 150420 164220 912765
down 0 0 0 0 0 0 0 0 0 0 0 0 0

5.4 preparation of the proforma income statement

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5.4.1 PROFORMA INCOME STATEMENT PRESENTED YEARLY FOR THE
FIRST THREE YEARS
Particulars Year one(2024) Year two(2025) Year three(2026)

3914000 3950000 4000000

Sales
1789000 1800000 1890000
Purchase
2450000 2500000 2550000
Gross profit

Expenses
61000 63000 66000
Electricity bills
7500 7700 7800
Water bills
12000 12000 12000
Internet
532000 550000 570000
Salaries
72000 72000 72000
Insurance
64300 65000 67000
License
18000 18000 18000
advertisement
155000 210000 215000
Transport
807800 820000 825000
Total expenses
1642000 1680000 1700000
Net profit
Net profit brought 8989000 9000000 9500000
down
Net profit carried 9127000 9500000 9600000
down

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5.5 PREPARATION OF PROFORMA BALANCE SHEET
5.5.1 Proforma balance sheet as at the start of the business
Non current assets Capital
Sh.500000

Equipments and machinery

Sh.86000

Current assets
Purchases. Sh.110000
Total sh196000

Cash in hand sh.314000

Total sh 500000

5.5.2 proforma as at the end of the year

Non-current assets Capital
Sh 500000
Machinery and equipments
Sh 86000
current assets
purchases sh1789000
total sh 1875000

cash in hand sh 732800

Total sh 1142200 Total sh 1142200

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5.6 Calculations of Break-Even Points
Variable costs

Purchases Sh 110000

Sh 18000
Advertisement
Sh 61000
Electricity bills
Sh 7500
Water bills
Sh 532000
Salary
Sh 12000
Internet
Sh 740500
Total

Fixed cost
Sh 72000
Insurance
sh64300
license
Total sh136300

Break even level = fixed cost÷ contribution margin×100

Contribution margin= sales-total variable cost
3914-740500
=sh 3173500
Break-even level=3173500 ×100
3914000
=81.07%

5.7 CALCULATIONS OF PROFITABILITY RATIOS

5.7.1 Gross profit margin
Gross percentage= gross profit ×100

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 Sales
Gross profit= 2450000
2450000 ×100
3914000
=62.5%

5.7.2 Return on equity

Return on equity= net profit / capital employed×100
351000 × 100 =
500000
=70.2%

5.7.3 Return on sales

Return on sales =net profit/sales×100
351000/3914000×100
=8.97%

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5.8 DESIGNED FINANCING
Pre operational cost =Ksh 86000
Working capital =Ksh 500000
Total designed financing = Ksh 228000

5.9 PROPOSED CAPITALISATION

The business will acquire its money from;
Contribution Cash

Family 300,000

Savings 200,000

Total capitalization 500,000

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