OL’LESSOS TECHNICAL TRAINING INSTITUTE

BUSINESS PLAN

TITLE: KAPELA'S GARAGE

P.O BOX 112,

ELDORET

PRESENTER: SAMUEL ONYANGO

INDEX NO: 295411010435

CENTRE NO: 29541101

COURSE CODE: 2901

PAPER NO: 306

SUPERVISOR: MR. VINCENT BET

SUBMITTED TO: THE KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILMENT FOR THE

AWARD OF DIPLOMA IN PETROLEUM

GEOSCIENCE

EXAM SERIES: JULY,2023

1
DECLARATION

I declare that this is my original work and has never been presented elsewhere, for the purpose of

exams in either award in Certificate, Diploma or in any higher institution of learning, to the

Kenya National Examination Council.

STUDENTS NAME: SAMUEL ONYANGO

SIGNATURE………………………………………..

DATE…………………………………………………

This Business plan has been submitted to the Kenya National Examination Council with my

approval as the supervisor.

SUPERVISOR’S NAME: MR.VINCENT BET

SIGNATURE………………………………………..

DATE…………………………………………………

2
DEDICATION

I dedicate this project to my loving parents, Mr and Mrs Kerich for their guidance ad financial

support they offered to me, also to my brothers and Sister Julie who were a source of inspiration

to me. Also my gratitude goes to my in-law, Frank who helped me in printing this project. May

you all live to blow a thousand and one candles?

3
ACKNOWLEDGEMENT

I would like to offer my thanks to the almighty God for the good health and strength all through

my Diploma course. Special thanks go also to my supervisor mr vincent Bet for the valuable

guidance and support in my project.

I won’t forget the cheerful moment spent with my colleagues especially the 2019 DPG class.

Finally, to my entire family and friends who have been a source of inspiration, encouragement

and support.

May God bless them all abundantly?

EXECUTIVE SUMMARY

The business will be located along Lolwe road because it has a lot of people driving to KISUMU
TOWN for their place of work and on return to their residence. It will also be easily accessible as
there are passable roads. There are a lot of buildings also which will accommodate the facilities
used in the garage, spare parts and equipment for repair and maintenance. The business is
adjacent to various institutes and market as addition to this from KISUMU ,Lolwe buses
terminus who normally use mamboleo will be able to be served by the garage, get services by the
garage and also get equipment needed for repairs and maintenance. Also machines will be made
portable so as to assist in delivery of services to the customers.

This is a long-term plan prior to acquiring own premises and providing substantial Bank guarantee. The greatest
goal we are focusing on to is to narrow the gap between services and the need of tool's and equipment in the
County.

The company will undertake marketing research to enable the management segment its market, target its
customers and position itself strategically within the competitive services markets. It will then develop a sound
marketing plan which will contain objectives of both short term and long-term to be effected within a period of the
first one year. A forecast of sales and profitability will be included in the short-term plans. Budgets to cater for
promotional activities, marketing research, operating expenses and other contingencies will be prepared.

4
The business will commence with a lean staff charged with multi-tasking. The team will comprise of the manager
who oversees all activities, a stores person, a cashier, two counter sales representatives . Additional casual staffs
are slot in during peak periods.

The business will promote morally acceptable values and its operations will be within legal and societal acceptable
standards. The business will ensure that it gets acceptance by obtaining necessary licensing and other legal
documentations. Efficiency and effectiveness will guide all daily operations of the business.

5
CHAPTER ONE

1.0 BUSINESS DESCRIPTION

The name of the business will be KAPELA'S GARAGE, this being derived from the first initials
of the name of the owner SAMUEL ONYANGO. The sponsor of the business will be in charge
of the operations in the business.

KAPELA'S GARAGE

P.O BOX 201 KISUMU

CELL PHONE 0759133401

1.1 LOCATION
The business will be located along Lolwe road because it has a lot of people driving to KISUMU
TOWN for their place of work and on return to their residence. It will also be easily accessible as
there are passable roads. There are a lot of buildings also which will accommodate the facilities
used in the garage, spare parts and equipment for repair and maintenance. The business is
adjacent to various institutes and market as addition to this from KISUMU ,Lolwe buses
terminus who normally use mamboleo will be able to be served by the garage, get services by the
garage and also get equipment needed for repairs and maintenance. Also machines will be made
portable so as to assist in delivery of services to the customers.

The site was chosen as it captures nearly all the drivers as van, Matatu and truck drivers, along
the town, institutes, hospitals and industries. The business will lease high quality equipment and
services so as to attract more customers and grow by expanding the capacity. In addition , the
business will be selling portable items to the clients such as head lamps, sockets out, water
heater, switches , cables of different sizes, buckle clips, tuck hammer, switch boxes, tack nails
junction boxes lamp holders, couples conducts, electric kettles, electric irons etc.

6
1.2 FORM OF BUSINESS OWNERSHIP
The business will be a sole proprietorship form of ownership. The business shall be owned and
managed by the sponsor who will couple up as the general manager of the business. He will be
the bearer of all the profits and losses incurred in the business. The sponsor shall be in charge of
all planning, coordinating, organising and awarding of tenders for the supply and provision of
equipment and also in remunerating the employees. The sponsor’s name will be SAMUEL
ONYANGO, who is currently a student at Ol’lessos Technical Training Institute, undertaking a
diploma in Petroleum geoscience.

1.3 TYPE OF BUSINESS

The business will be dealing with car diagnostic and car repairs, sale of spare parts and general
servicing of cars and its parts. The business will be selling spare parts of different car models.

1.4 PRODUCTS AND SERVICES

The business will be offering quick and affordable services to the clients such as repairs and
maintenance of vehicle and its parts. In addition it will offer quality products which are durable,
properly function and last longer. It will also offer services at affordable prices for the
customers to be able to purchase them. Better services like nut rewinding, maintenance of garage
drills and other services will also be available at affordable prices, thus enabling the firm to
create a friendly atmosphere with the customers. The firm will also be servicing grinding
machines, generator fans and any other garage machines that will require repairs and
maintenances.

1.5 JUSTIFICATION OF OPPORTUNITY

The business will ensure that all repairs and maintenances are checked sand tested before
releasing the machines to the customer. This will verify the effectiveness and durability of the
machines and equipment. The business will also create employment to the local community
through employment to work as service men and provision of mobile services such as tyre
mending, conduct work strategy as well as aiding the manager in other duties during the business
hours.

Training will be offered to these personnel so as to sharpen them in their areas of specialisation
and acquire necessary skills to beat upcoming challenges.

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1.6 INDUSTRY
KAPELA'S GARAGE will fall under the energy and service industry. It will be a sole
proprietorship kind of business that employs other personnel to aid in the daily undertakings of
the business. The business shall employ modern level of technology in order to offer quality and
long lasting products and services. The capital needed for the business to commence is projected
to be Ksh. 400,000, which will rise as the business grows and expands.

1.7 GOALS OF THE BUSINESS

The goals of the business will be to maximise profits and expand the business. It will also strive
to provide quality goods and services to its customers to their satisfaction and also to:

 Promote sales of goods through posters and internal memoranda

 Provide employment opportunities to the people surrounding the business and from other
areas as pertains specialisation
 Purchase a lorry to cater for the transportation of goods and services
 Widen the market for the goods though advertisement

1.8 ENTRY AND GROWTH STRATEGY

The business will start with the sale of small items and accessories such as couples socket,
selling of portable items to the clients such as head lamps, sockets out, water heater, switches ,
cables of different sizes, buckle clips, tuck hammer, switch boxes, tack nails junction boxes
lamp holders, couples conducts, electric kettles, electric irons etc.

The business will put up posters along the streets and at various media stations to attract more
customers. The sponsor of the business will ensure that the customers are well attended to end
ensure that there are no cases of pilferage of goods. The sponsor of the business will open up
other branches of the same business in various points of kisumu town to enhance wider growth
and success of the business.

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CHAPTER TWO

2.0 MARKETING PLAN

2.1 CUSTOMERS
The customers will include the public who will come from various estates and centres adjacent to
the business place also customers from KISUMU and also Lolwe bus terminus will be able to
buy their products from the garage with fair prices. This will increase the sales of the business as
it starts. The expected garage items to be bought by the customers are head lamps, sockets out,
water heaters, switches , cables of different sizes, buckle clips, tuck hammer, switch boxes, tack
nails junction boxes lamp holders, couples conducts, electric kettles, electric irons, adaptors
boxes and thermostats. Residents of Lolwe west will be the first beneficiaries as they will access
the premises easily. This will promote sales of the business and ensure profit maximisation as
this group is the largest of the customers projected to be the clients. The institutions around the
premises such as the Maseno University will also promote the garage and the sale of
commodities such as water heater, cables, sockets outlets and other items as they are the
immediate neighbours. This institution will be of great importance to the garage.

2.2 MARKET SHARE

The sponsor of the business is expected to arrange for the provision of high quality goods and
services such as maintenances of machines and good customer relations.

The number of customers is projected to increase as awareness increases. This will depend on the
quality of goods and services offered, skilled and better service repairs and the technology
applied in the provision of the service.

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 The customers’ projection and the market share will be as follows:

Business name(Garage) Customers No. Market share

Dalyne’s 950 23.75%
NOKIRO’s 800 20%
Washo 850 21.25%
Shamty 600 15%
Ideal 800 20%
Total 4000 100%

The market share projections in terms of products sold and the services offered in comparison
with the competitors as tabled is as follows;

Item No of sales No. of Total no of Charge per Total sales

customers/month items sold item per month
Motor 3 100 150 21,000 60,000

Iron box 6 200 200 500 30,000

Water heater 10 250 150 150 23,000

Cooker unit 2 200 250 800 25,000

Electric fan 4 100 100 600 13,000

Electric kettle 5 250 200 400 20,000

Garage 2 300 200 2,000 40,000

microwave

Total 213,000

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2.3 COMPETITION
The business is projected to compete fairly and be at the top of its competitors as it offers high
quality and goods and services. Attractive displays will be mounted by the employees so as to
woo more customers to the premise and ensure good stock of items always.

The KAPELA'S GARAGE faces competition from other garages as Dalyne’s, Washo, Shamty
and Ideal Garages.

2.3.1 COMPETITORS’ STRENGTHS AND WEAKNESSES

2.3.1.0 DALYNE’S GARAGE

The garage has wider range of products. However these products get poorly stored and thus face
congestion and poor retrieval of items for use in the business.

2.3.1.1 NOKIROS’ GARAGE

The business location is quite unique as it offers a spectacular access to the premise. Thus the
customers are available at the point of entry before reaching the other competitors. Also the area
is expanse and largely opens for the customers to view and even taste the products before buying
them. Also the business put up the billboards for the customers to locate the premises.

2.3.1.2 WASHO GARAGE

Has well trained employees who underwent training on garage and its installation upon
completion of the course were employed by the firm. It had also other subsidiary branches
around the town and other different part.

Its weaknesses include congestion due to limited space for the operation and also their working
periods are not consistent.

2.3.1.3 SHAMTY GARAGE

The garage is ultra-modern, well equipped and uses machines.

However, the garage is inaccessible and often is closed at the time the customers need their
services most. Also it lacks personnel to drive the machines.

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2.3.1.4 IDEAL GARAGE

The garage is located 4km away from KISUMU town. It is involved with the sale of garage
installation of services of services and equipment to customers on request. Its weaknesses is that
it is involved with the sale of garage items but do not offer services such as repairs of motors and
installation of garage equipment to houses or buildings.

The table below shows the NOKIRO’S GARAGE in comparison with the other garages in terms
of proximity to the town and capital employed, size and competitors work.

Business Distance from Capital size No. of competitive Total

name(garage) town workers
Dalyne’s 4 6 4 15

NOKIRO’s 2 4 3 10

Washo 4 5 4 13

Shamty 3 4 3 121

Ideal 5 4 3 12

2.4 DISTRIBUTION STRATEGY

The business will be dealing with the sale of goods and provision of services to the customers.
Distribution of the goods will mandatorily be supplied by the agency. The supply agency will be
bestowed upon the role of supplying to the sponsor of the business. The business shall develop a

12
communication channel upon which the agency and owner will be using to ensure supply on
time and avoid delays.

Below is a distribution channel that will be used by the agency and the garage:

Fig; Channel of distribution

Manufacturer

Distributor/supplier

Wholesaler

Retailer

Customer

The most convenient method of transportation from the supplier to the garage will be the use of
road transport. This will be the most efficient means of transport as it is faster and door to door
services may be available thus may enhance the growth of the business. The expected cost of
transport for the month will be Ksh. 12,000 due to the distances involved and the weight of the
commodities. The problems anticipated to arise in the whole process are delays in the supply
commodities due to shortage at the supplier’s premises.

13
CHAPTER THREE

3.0 ORGANIZATIONAL AND MANAGEMENT PLAN

3.1 RECRUITMENT
The owner of the business will acquire employees from the town centre who are qualified in
GARAGE from the town centre who are qualified in GARAGE installation. This will be done
through advertisement and poster hanged from one plan to another. This will keep the customers
informed. Also other workers will get employment on security cleaner secretary assistant
accountant .The owner of the business expects to get hardworking, disciplined and honesty
employees.

3.2 ORGANIZATION PLAN

The business will be organized from top to bottom. The owners of the business will organize the
business from the manager to other individual involved in the business. The business is expected
to set the following people working under it. The business will have manager who will be in
charge of all activities occurring in the business. The manager will take responsibility of
supervising cash flow in the business signing in new GARAGE materials brought from the
customers.

This will ensure that there is smooth and better flow of income in the business. A sales person
will be needed who will be in charge of total sales of raw materials to the customers on a
monthly and daily basis. He will also be in charge of all items in display to customers. A
technician will also be needed to be responsible for maintenance of machines and worn-out
equipment also he is expected to do wiring of various installations outside the business on a
contract basis.

General Manager
14
 Technician
General Manager

Cleaner
Security Manager

3.3 KEY MANAGEMENT PERSONNEL

This business will have the following employees under the sponsor of the business

1. ACCOUNTS
An accountant will be responsible for all total sales involved in the business premises.
Also will give record of total sales of the raw materials involved in the business premises,
also will give record of total sales of the raw materials sold in the business.

2. TECHNICIAN
A qualified technician will be needed to do goods services to customers that are repair
and maintenance of GARAGE machines and wiring of various installation sites in
relation either the clients available.

3. SALES CLERK

15
 The sales clerk will assist the business in selling raw materials to customers who need
GARAGE equipment and services. He expected to check that all GARAGE items will be
displayed and sell them at the correct rice to create good customers relationship thus
enhance growth and expansion of the business.

4. OTHER PERSONNEL
A security guard will be hired on payment on a monthly basis. He will be responsible of
all items in the business occurs, he will be responsible for scoring all property.

3.4 RECRUITMENT TRAINING AND PROMOTION

The owner of the business expects to recruit workers from the surrounding communities in town
there will be through advertisement through posters memos to keep them informed about the
recruitment to the business premises also letter will be printed and given to various.

16
CHAPTER FOUR

4.0 OPERATIONAL AND PRODUCTION PLAN

4.1 PRODUCTION FACLITIES AND CAPACITY

The following points will be highlighted under these;

 Business operation
 Product design and development
 Product facilities and capacity utilization production strategy
 Relevant regulation affecting the business.

4.2 BUSINESS OPERATION

As explained earlier in the business description the business operation will be carried within the
premises and outside premises. Also the service will be offered.

The business hours of operation will be from 6.00am to 11.00pm but during occasions like
wedding and other ceremonies it will operate according to the time booked.

4.3 PRODUCTION DESIGN AND DEVELOPMENT

It will offer product which will be designed together with addictive or like tomato source and
chillies hips will be prepared according to order and soda kept in refrigerators during hot
weather.

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4.4 PRODUCTION FACILITIES
Machines will be used in most cases to make the work simple the machines to be used are like:

Type of machine Quality Cost per unit Total cost

equipment

Computer 3 1500 45000

Grinder 2 4000 8000

Bending spring 3 500 1500

Hacksaw branches 5 50 250

Welding machines 1 12000 12000

Multimeter 4 250 100

Combination pliers 4 150 600

Phase tester 5 50 250

Screw drivers 6 80 480

Steel tapes 5 200 1000

Total 70080

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The table below shows the amount and number of raw materials required by the sponsor of the
business in order to create smooth work and cash-flow in the business in order to create smooth
work and cash flow in the business premises.

Raw materials Quality Cash per unit Total cost

Metal clip 20pkts 80 1600
Wood clip 20pkts 100 2000
P.V.C screw 200lenghts 300 560000
Soldering iron 3metres 250 750
Cables flexible 8rolls 10000 80000
Cables clips 30pcs 200 6000
Uckles clips 20pcs 150 2000
Total

Repairs and maintenance

The will be done effectively to enhance good relationship either expected customers.

Maintenance for GARAGE machine like motors will be done in the business premises under a
workshop this will enhance use of technology for better services also repair of water heaters and
repair of GARAGE accessories and fitting will be done in the business by a proposed technical
in charge. Also new installation like wiring of house will be done to create more relationship
with available customers around the business this will enhance better growth and expansion of
KAPELA'S GARAGE.

Feature of proposed workshop

As explained before the business will be a workshop for repair and maintenance of GARAGE
equipment. The workshop will contain stationary appliances like bench vices and welding
machines. This will give practical lessons to the workers to gain skills in GARAGE technology.

19
The diagram below shows the layout of the workshop

GATE

S.O.R

T.R
S.O

PA

M.O
A.O W.C.K

The above figure shows the business arrangement. The sponsor of the business will ensure that
there is congestion and also ensure enough free space for work and various duties. Also the
business will have enough space for future expansion like installation of motors and drilling
machines.

OTHER FIXED ASSETS

Other fixed assets include spaces room will be constructed for special cases in the business. Also
furniture will be installed. This will enhance efficiency in the business with existing workers.
Also parking areas will be constructed for parking of cars to ensure proper security services with
the customer’s properties. Also installation of computers that will be used in storing information
concerning the business and preservation of projects will be considered.

20
4.5 PRODUCTION STRATEGY
The owner of the business will have all products available in the market. The products are
expected to be of high quality and durable. Raw materials will also be available due to buying
them in bulk by the customers. New spares part for GARAGE machine like motor will be bought
by our dealer shanty company limited. The sponsor of the business is expected to purchase them
like switches conducts couples fuses top plugs lamp holder water heaters electric fans and all
other commodities. Transport will be catered for by the distributor but as the business grows the
sponsor of the business will purchase a lorry for the carriage of GARAGE products to reduce
cost for transport

Monthly production expenses

The monthly production expenses will be determined by the owner of the business the expenses
incurred by KAPELAS GARAGE are water, electricity, rent and transport. The amount will be
used to cater for all this bills in order to reduce high expenses.

4.6 PRODUCTION PROCESS

KAPELA'S GARAGE will deal with installation rives and goods for sales to the customers. The
owner of the business will install bending machine for steel conducts and purchase of welding
machine.

The items are important in trade activities around the business to capture potential customers.

The business owners intend to make items from the business like steel doors grills and steel gates

The available materials will be in the business that is soldering rod and the welding machine.

Theirs train workers and gives them skills in joint of metals arc welding will be a source of
capital to be business and other GARGE items.

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4.7 REGULATION AFFECTING OPERATION
Regulation affecting KAPELA'S GARAGE will be trade license and registration. Also weights
and measure act by the government policy. If the business shall not be registered then the
authority will take action because it will be rendered illegal in nature. Therefore the owner of the
business will pay for the license to the authority to reduce trouble from the government. The
policy licence amount is projected to be paid for at a cost of Ksh 8000. These include the
business. The amount paid to the government keeps increasing due to the high rate of inflation in
the country. Taxes will be paid to the government through the heads of the municipal council.

The regulations regarding the business and the authority involved will affect the operation of the
business.

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CHAPTER FIVE

5.1 FINANCIAL PLAN

5.2 PRE-OPERATIONAL COST

This are all the expenses incurred in the business to the owner of the business. It will also
indicate the starting and working capital expected before it starts. The table below shows the
operational cost of KAPELA'S GARAGE and electronic services.

Items Amount in Ksh

Machinery and equipment 20000
Electricity and water deposits 2000
Insurance(annually) 6000
License permits 5000
Business permits 3000
Postal servicers’ 2000
Advertisement 4000
Raw materials 7000
Telephone deposits 2000

Total 51000

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5.3 ESTIMATING OF WORKING CAPITAL
This is the total estimates of expected working capital for running the business effectively. The
table below shows the estimates per year for KAPELA’S GARAGE and electronics services.

Items Year 1 Year 2 Year 3

Cash in hand 30000 20000 25000
Cash at bank 15000 20000 35000
Debtors 5000 10000 5000
Stock in progress 35000 25000 30000
Stock of finished good 20000 25000 30000

Total 105000 1000000 125000

5.4 PROFORMA BALANCE SHEET

ASSETS

FIXED ASSETS AMOUNT(KSHS)

Machinery and equipment 1200000
Vehicles 500000
Furniture 300000

Total 2000000

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 5.5.1 CASH FLOW PROJECTION FOR THE FIRST
YEAR: 2020
DATALLS JAN FEB MAR APRI MAY JUNE JULY AUG SEPT OCT. NOV DEC. TOTAL

Operating cash B / F 200,000 200,000 207,000 246,900 309,900 344,100 381,800 396,000 407,200 419,800 437,100 447,700 4,438,700

Sales 14,000 20,000 25,000 50,000 60,000 60,000 61,000 62,000 65,000 65,000 65,000 70,000 682,000

Debtors 36,000 30,000 57,000 50,000 20,000 25,000 20,000 '51,400 289,400

Total inflow 250,000 20,000 289,000 346,000 389,900 429,100 466,600 458,000 472,200 484,800 502,700 566,100 5,410,100

Purchase 8,000 5,000 8,000 9,000 15,000 15,000 9,000 15,000 20,000 20,000 30,000 30,000 184,000

Salaries & Wages 20,000 20,000 20,000 20,000 20,000 20,000 25,000 25,000 25,000 25,000 25,000 25,000 310,000

Water 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Transport Cost 10,000 10,000 10,000 5,000 5,000 10,000 10,000 5,000 5,500 7,000 5,000 82,000

Maintenance 300 500 800

Creditor 3,000 4,000 5,000 5,000 17,000

Electricity 2,000 1,500 1,000 1,500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 14,000

Advertisement 1,000 1,000 1,000 300 300 300 300 500 500 5,200

Insurance 8,500 4,000 4,000 4,000 4,000 24,500

Miscellaneous 1,000 1,000 1,000 500 300 500 500 500 500 6,000

Total outflow 50,000 43,000 42,100 37,000 45.800 47,300 46,300 50,500 52,400 47,700 58,000 67,000 587,400

Total flow L/F 200,000 207,000 246,900 309,900 344,100 381,800 396,000 407,200 419,800 437,100 444,700 499,100 4,792,700

25
5.5.2 CASH FLOW PROJECTION FOR THE SECOND YEAR. 2021
DATALLS JAN FEB MAR APRI MAY JUNE JULY AUG SEPT OCT. NOV DEC. TOTAL
Operating cash B/F 449,100 494,700 508,000 527,900 553,000 561,000 578,100 584,200 619,300 663,700 715,500 777,600 7,082,100

Sales 7,000 80,000 80,000 90,000 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 1,400,000

Debtors 13,000 20,400 30,000 26,100 89,500

Total inflow 582,100 595,100 816,000 644,000 653,000 671,000 678,100 714,200 759,300 875,500 947,600 947,600 8,551,600

Purchase 50,000 50,000 50,000 50,000 51,000 52,000 53,000 54,000 55,000 57,000 57,000 58,000 636,000

Salaries & Wages 25,000 52,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 300,000

Water 5,000 5,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 80,000

Transport Cost 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Maintenance 300 300 300 300 1,200

Insurance 4,000 4,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 57,000

Creditor 5,000 4,000 4,000 3,000 3,000 3,000 19,000

Electricity 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000

Advertisement 1,600 1,000 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 18,600

Miscellaneous 500 500 500 500 500 500 500 500 500 500 5,000

Total outflow 87,400 87,100 90,100 91,100 92,000 92,000 93,900 94,900 95,600 96,600 97,900 98,900 1,118,400

Total flow L IF 494,700 508,000 527,900 553,000 561,000 578,100 584,200 619,300 663,700 715,500 777,600 848,700 7,431,700

26
5.5.3 CASH FLOW PROJECTION FOR THE THIRD YEAR
2022.
DATAILS JAN FEB MAR APRI MAY JUNE JULY AUG SEPT OCT. NOV DEC. TOTAL

Operating cash B/F 848,700 918,800 988,900 1,059,900 1,128,60 1,203,2001,273,3001,343,4001,413,5001,483,6001,553,7001,623,80014,838,500

0
Sales 170,000 171,000 172,000 173,000 177,6000 115,000 176,000 177,000 320,200 608,100 180,000 181,000 2,049,600

Debtors
Total inflow 1,018,700 1,089,8001,660,9001,232,000 1,306,20 1,318,2001,449,3001,520,4001,591,5001,662,6001,733,7001,804,80016,888,100
0
Purchase 59,000 60,000 61,000 62,000 63,000 64,000 65,000 66,000 67,000 68,000 69,000 70,000 774,000

Salaries & Wages 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 300,000

Water 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

Transport Cost 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Maintenance 300 300 300 300 300 300 300 300 300 300 300 300 3,600

Insurance 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 66,000

Creditor

Electricity 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000

Advertisement 600 600 600 600 600 600 600 600 600 600 600 600 7,200
,
Miscellaneous 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000

Total outflow 99,900 100,000 101,900 103,400 104,400 1,004,900 105,900 106,900 107,900 108,900 109,900 110,900 1,264,900

Total flow UF 918,800 988,900 1,059,000 128,6000 1,203,20 1,273,3001,343,4001,413,5001,483,6001,553,7001,623,8001,441,90015,731,700

0

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5.6 PROFOMA PROFIT & LOSS ACCONT

5.6.1 PROFOMA PROFIT & LOSS ACCONT FOR YEAR 1 (2020)

ITEM KSHS. KSHS.

Sales 430,000
Stock 200,000
Purchases 120,000
320,000
Closing stock 80,000
240,000
Gross profit 190,000

EXPENSES
Stationary 2,000
Advertisement 2,000
Telephone 8,000
Insurance 6,500
Office furniture 16,500
Rent 5,000
Licenses 9,000
TOTAL 49,000
Net profit 141,000
Tax 30% 42,300

Net profit after tax 98,700

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5.6.2 PROFOMA PROFIT AND LOSS ACCOUNT FOR YEAR 2 (2021)

ITEMS KSHS. KSHS.

Sales 550,000
Stock 300,000
Purchases 150,000
450,000
Closing 110,500
339,500
Gross 210,000

EXPENSES
Stationary 2,000
Advertisement 3,000
Telephone 6,000
Insurance 7,000
Rent 8,000
Transport 12,500
Salary 15,000
Electricity 12,000
TOTAL 65,500
Net profit 145,000
Tax 30% 43,500

Net profit after tax 101,500

5.6.3 PROFOMA PROFIT AND LOSS ACCOUNT FOR YEAR 3 (2022)

29
ITEM KSHS KSHS
Sales 700,000
Stock 410,000
Purchases 180,000
590,000
Closing stock 130,000
460,000
Gross profit 240,000

EXPENSES
Stationary 2,500
Advertisement 2,800
Rent 6,000
Transport 11,500
Insurance 7,000
Salary 15,000
Electricity 12,000
Maintenance 7,500
Total 100,000
Net profit 140,000
Tax 30% 42,000

Net profit after tax 98,000

5.7 PROFORMA BALANCE SHEET

5.7.1BALANCE SHEET AT THE BEGINNING OF OPERATION 2020

30
 KSHS. KSHS.
Fixed assets
Office equipment 347,000
Furniture 153,000 500,000

Current assets
68,000
Cash at bank
32,000
Cash at hand
200,000
Stock
100,000
Debtors
410,000

Liabilities
11,500
Creditors
21,100
Accruals
131,600
178,400
678,400

Finance by:
400,000
Owner equity
200,000
Loan
_________
Profit
78,400
Friends gift
678,400
TOTAL

5.7.2 BALANCE SHEET AS AT 31ST DECEMBER 2021

ITEM AMOUNT IN KSHS. AMOUNT IN KSHS.

31
Office equipment 350,000
Depreciation 10,000 340,000

Furniture 150,000
Depreciation 5,000 145,000
485,000

Current assets
Cash at hand 77,500
Cash at bank 192,500
Stock 310,000
Debtors 35,000
615,000
Liabilities
Creditors 102,000
Accruals 30,650
482,350
132,650
967,350

Financed by:-
400,000
Owner’s equity
300,000
Loan
75,425
Profit
191,350
Friends gift
967,350

5.7.3 BALANCE SHEET AS AT 31ST DECEMBER 2022

ITEM AMOUNT KSHS. AMOUNT KSHS.

Office equipment 340,000

32
 10,000 330,000
Depreciation
145,000
Furniture 5,000 140,000
Depreciation 470,000

Current assets 178,650

Cash at bank 108,850
Cash at hand 400,500
Stock 64,500
Debtors 752,500

Liabilities 94,000
Creditors 43,300
615,200
Accruals 137,300
1,085,200
475,425
Financed by:-
400,000
Owner’s equity
72,170
Loans
137,605
Profit
1,085,200
Friends gift

Total Sum of Liabilities

Owners’ equity = total assets – total liabilities

5.8 BREAKEVEN POINT

33
Fixed expenses Cost Ksh
License 8,000
Salaries 185,000
Rent 20,000
Total 213,000
Variable expenses
Electricity 15,150
Water bill
Telephone 1900
Total 17050

Total variable expenses

Total sales x 100%

17,050 x 100%

4000000 = 4.2625%

Liabilities

34
Initial cost 3,500,000

Long term liability

Wages and salaries

1,400,000

Tax payable 70,000

Insurance 20,000

Total liability 4,990,000

Total sum of liabilities

Total equity = total assets- total liability= 810,000

Break Even-Point

Breakeven point Cost

Fixed expenses
Licenses 50,000
Salaries 1,250,000
Rent 25,000
Other service
Total 1,325,000

Variable expenses

35
Electricity 4,500
Water bill 31,000
Telephone bill 2,500
Repair and maintenance 3,500
Advertising 4,000

Total 17,500

5.9 PROFITABILITY RATIOS

i. Gross profit = gross profit/sales x 100%

=4997, 500/5, 150, 000 x 100%

=97.038%

ii. Return on equity = net profit after tax/net equity x 100%

=4318, 713.75/200,000 x 100%
=21.593%
iii. Return of investment = net profit after tax/total investment
4,318,713.75/568,050
= 7.6027

5.9.1 DESIRED FINANCING

Details Amount
Purchase of machinery and equipment 317,000

36
Wages 185,000
Installation 150,000
Total 652,000

5.9.2 PROPOSED CAPITALIZATION

Details Amount
Personal savings 2250000
Bank Loan 3200000
Donor 1200000
Total 6,650,000

Table of Contents
DECLARATION…………………………………………….………………………………………………….i

DEDICATION………………………………………………………………………………………………….ii

37
ACKNOWLEDGEMENT….…….…….…………………………………………………………………...….iii

CHAPTER ONE.....................................................................................................................................1
1.0 BUSINESS DESCRIPTION............................................................................................................1
1.1 LOCATION......................................................................................................................................1
1.2 FORM OF BUSINESS OWNERSHIP.............................................................................................2
1.3 TYPE OF BUSINESS......................................................................................................................2
1.4 PRODUCTS AND SERVICES........................................................................................................2
1.5 JUSTIFICATION OF OPPORTUNITY..........................................................................................2
1.6 INDUSTRY......................................................................................................................................3
1.7 GOALS OF THE BUSINESS..........................................................................................................3
1.8 ENTRY AND GROWTH STRATEGY...........................................................................................3
CHAPTER TWO....................................................................................................................................4
2.0 MARKETING PLAN.......................................................................................................................4
2.1 CUSTOMERS..................................................................................................................................4
2.2 MARKET SHARE...........................................................................................................................4
2.3 COMPETITION...............................................................................................................................6
2.3.1 COMPETITORS’ STRENGTHS AND WEAKNESSES.............................................................6
2.4 DISTRIBUTION STRATEGY........................................................................................................7
CHAPTER THREE................................................................................................................................9
3.0 ORGANIZATIONAL AND MANAGEMENT PLAN...................................................................9
3.1 RECRUITMENT..............................................................................................................................9
3.2 ORGANIZATION PLAN................................................................................................................9
3.3 KEY MANAGEMENT PERSONNEL..........................................................................................10
3.4 RECRUITMENT TRAINING AND PROMOTION.....................................................................11
CHAPTER FOUR................................................................................................................................12
4.0 OPERATIONAL AND PRODUCTION PLAN............................................................................12
4.1 PRODUCTION FACLITIES AND CAPACITY...........................................................................12
4.2 BUSINESS OPERATION..............................................................................................................12
4.3 PRODUCTION DESIGN AND DEVELOPMENT.......................................................................12
4.4 PRODUCTION FACILITIES........................................................................................................13
4.5 PRODUCTION STRATEGY.........................................................................................................16
4.6 PRODUCTION PROCESS............................................................................................................16

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4.7 REGULATION AFFECTING OPERATION................................................................................17
CHAPTER FIVE..................................................................................................................................18
5.1 FINANCIAL PLAN.......................................................................................................................18
5.2 PRE-OPERATIONAL COST........................................................................................................18
5.3 ESTIMATING OF WORKING CAPITAL...................................................................................19
5.4 PROFORMA BALANCE SHEET.................................................................................................19
5.5.1 CASH FLOW PROJECTION FOR THE FIRST YEAR: 2020..................................................20
5.5.2 CASH FLOW PROJECTION FOR THE SECOND YEAR. 2021.............................................21
5.5.3 CASH FLOW PROJECTION FOR THE THIRD YEAR 2022..................................................22
5.6 PROFOMA PROFIT & LOSS ACCONT......................................................................................23
5.6.1 PROFOMA PROFIT & LOSS ACCONT FOR YEAR 1 (2020)...............................................23
5.6.2 PROFOMA PROFIT AND LOSS ACCOUNT FOR YEAR 2 (2021).......................................24
5.6.3 PROFOMA PROFIT AND LOSS ACCOUNT FOR YEAR 3 (2022).......................................25
5.7 PROFORMA BALANCE SHEET.................................................................................................26
5.7.1BALANCE SHEET AT THE BEGINNING OF OPERATION 2020.........................................26
5.7.2 BALANCE SHEET AS AT 31ST DECEMBER 2021...............................................................27
5.7.3 BALANCE SHEET AS AT 31ST DECEMBER 2022...............................................................28
5.8 BREAKEVEN POINT...................................................................................................................29
5.9 PROFITABILITY RATIOS...........................................................................................................31
5.9.1 DESIRED FINANCING.............................................................................................................32
5.9.2 PROPOSED CAPITALIZATION...............................................................................................32

39