KIRIRI WOMEN’S UNIVERSITY OF SCIENCE AND TECHNOLOGY.

SCHOOL OF BUSINESS ADMINISTRATION.

DEPARTMENT OF HOSPITALITY AND TOURISM MANAGEMENT.

NAME: NANCY ACHIENG’ OMONDI

ADM. NO.: DHT/310/23

A BUSINESS PLAN SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE AWARD OF DIPLOMA IN HOSPITALITY AND
TOURISM MANAGEMENT TO THE KIRIRI WOMEN'S UNIVERSITY OF SCIENCE
AND TECHNOLOGY.

BUSINESS PLAN

THE LAKESIDE HOTEL

P.O.BOX 561-40105 KISUMU, KENYA

PHONE +254757071301

EMAIL:[email protected]

The Lakeside

Presented by: Nancy Achieng’ Omondi

Registration No: DHT/310/23

PRESENTED TO: THE KIRIRI WOMEN’S UNIVERSITY OF SCIENCE AND
TECHNOLOGY.

FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF DIPLOMA IN:

HOSPITALITY AND TOURISM MANAGEMENT.

DATE OF SUBMISSION: 4TH OCTOBER 2023

DECLARATION STATEMENT

I hereby declare that the document presented is original and has never been presented for any
other program for examination purposes in any other institutions

Name: Nancy Achieng’ Omondi

Registration Number: DHT/310/23

Signature.

Date.

Supervisor’s Name:

Signature.

Date.

ACKNOWLEDGEMENT

Firstly, I want to thank my family especially my sister, Ecklay Akinyi , for her support in my
studies and my friends ,Lynne Cheptoo, Kimberly Adhiambo and Mercy Oduor for their support
towards the preparation of this document.

Secondly, I want to thank my Sponsors Mrs. and Miss. Omondi for their support in my
academics and my supervisor Mr Evans Wekesa for his guidance and advice in writing this
document.

Ultimately, I want to thank God for his favor, support, love and protection throughout my life

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DEDICATION

I dedicate this business plan to my father Boniface Omondi for his love and support.

Contents

DECLARATION STATEMENT…2

ACKNOWLEDGEMENT…2

DEDICATION…3

EXECUTIVE SUMMARY…5

CHAPTER 1: BUSINESS DESCRIPTION…7

1.1 Business Sponsors...7

1.2 Business Name...8
1.3 Business location and address…8
1.4 Form of business ownership…9
1.5 Types of businesses…10
1.6 Products and services…10

1.7 Justification of Business Opportunity…11

1.8 Industry...11

1.9 Business Goals…12

1.10 Entry and Growth Strategy…12

CHAPTER 2: MARKETING PLAN...13

2.1 Customers…13

2.2 Market Share…14

2.3 Competitors…15

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2.4 Methods of Advertising and Sales Promotion…17

2.5 Pricing Strategy…18

2.6 Sales Tactics…19

2.7 Distribution Strategy…19

CHAPTER 3: ORGANIZATION PLAN...20

3.1 Business Manager…20

3.2 Key Personnel…22

3.3 Other Personnel…26

3.4 Recruitment, Training and Promotion…28

3.5 Remuneration and Incentives…29

3.6 Legal Requirements…31

3.7 Support Services…31

CHAPTER 4: PRODUCTION/OPERATIONAL PLAN…31

4.1 Production Facilities and Capacities…31

4.2 Production strategy…34

4.3 Production process…37

4.4 Rules and Regulations Affecting Production…38

CHAPTER 5: FINANCIAL PLAN…41

5.1 Pre-Operational Expenses…41

5.2 Working capital estimation…41

5.3 Projected Cash Flow Statement…42

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5.4 Projected income statement…44

5.5 Projected Balance Sheet…46

5.6 Break-Even Point…47

5.7 Profitability Ratio Analysis…48

5.8 Desired Financing…49

5.9 Proposed Capitalization...49

EXECUTIVE SUMMARY

CHAPTER 1: BUSINESS DESCRIPTION

The name of the business be will The Lakeside Hotel and it will be located in Kisumu County off
the Kisumu-Busia Highway next to KICOMI industry. The Hotel will be a private corporation .
It will be involved in preparation of meals (breakfast, lunch and dinner), provision of conference
services and room services as the major activities while the minor activities will include
facilitating parties and provision of recreational services. The Hotel will offer a variety of
delicacies and focus will be put on the traditional types of food. The justification of this
opportunity is the existence of the need for quality hospitality services and products in the
location of operation due to the enormous growth that is taking place there. The diversity brought
about by the county governments after the promulgation of the new constitution has really
improved the hotel sector. The main goals and objectives of the business will include providing
high quality services and exercising excellent customer relation for competitive purposes and to
increase our customer base by 30% after the first three years of operation. Within the first year of
operation, the business will also purpose to achieve a growth of 4% to 6% and continue that way
for the next five years. The Hotel will provide high quality products and services at a competitive
price to attract and retain our customers and it will also provide a unique package of its products
and services through special combinations with additional free services or gifts to our customers
upon purchase of a specific package in our business.

CHAPTER 2: MARKETING PLAN.

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The Lakeside Hotel will target leisure travelers, business travelers and the general public as its
customers and it aims to capture 15% of the market share occupied by other similar businesses
and target a 4% to 6% annual growth through a well laid down competition strategy to sustain
itself and also grow. The Hotel will maximize its competitive edge over other hotels and ensure it
capitalizes on their flaws. The Hotel will use billboards, social media, radio road shows and
newspaper among other advertisement channels. The Hotel will use psychological, penetrative
and skimming pricing techniques to ensure maximum profits. To ensure maximum sales, the
Hotel will invest in proper and efficient customer care services to take care of customer issues.

We will majorly use producer-consumer distribution channel.

CHAPTER 3: ORGANIZATION AND MANAGEMENT PLAN

The management personnel will include the Chief Executive Officer, Hotel Manager and the
Assistant Hotel Manager. The key personnel will include the human resource manager, sales and
marketing manager, accountant, public relations officer, front office clerk, and the house keeping
supervisor. Other personnel will include the Chief Chef, Cooks, waiters and waitresses and the
general laborers. Recruitment process will be standard to ensure fairness, promotion will be on
the basis of performance and the business will offer trainings to enhance employee performance.
All employees shall be remunerated according to their position and qualifications and they will
also have allowances. The three major positions’ holders will be paid according to their
hierarchical positions and their level of competency. The Hotel will offer free transport and
special gifts for the purpose of employee motivation. The business shall acquire all necessary
licenses, permits from the relevant authorities and it will follow accordingly all by laws that
guides its operation. Support services for the business will include security, legal services, waste
disposal and banking services from Riley Falcon Security Limited, Behan and Okero Advocates,
Kisumu County Waste Disposal Services and the Kenya Commercial Bank respectively.

CHAPTER 4: PRODUCTION PLAN.

The business will acquire necessary machinery such as cookers, freezers, microwaves, kettles
and sandwich makers among others, tools and equipment such as serve ware, drink and
glassware, cutlery, vacuum cleaners among others and furniture and fittings such as chairs, beds,
tables that are necessary for the operation of the business. The Chief Chef will be in-charge of

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food and beverage production. There will be the premises layout in an area of 50 by 100 meters.
It will also have a well-established production process that will entail cooking of various meals
offered by the hotel and this will be guided by an operational strategy and the requirement from
the market. The business operation will also be guided by the following regulations: The Public
Health Act, Cap 254 and Cap 242. Food, Drugs and Chemical Substances Act, Cap 254, the
Employment Act Cap,226, the Companies Act, Cap 486 and the Income Tax Act, Cap 470.

CHAPTER 5: FINANCIAL PLAN

The business will require a pre-operational expense of Khs.3,300,580 working capital of

Ksh.944,745 and a capital of Ksh.4,245,325 financed by owner’s equity of Ksh.2,811,000 bank
loan of Ksh.1,053,175,charged at 10% interest p.a. family and friends’ contribution of
Ksh.381,150. The gross profit is expected to be Ksh.12,567,200. The net profit will be
Ksh.2,590,878. The net profit after tax of 16% is expected to be Ksh.2,176,338. It is expected
that the percentage gross profit will be 95.3%, return on equity will be 77.4%, return on sales
will be 16.5% and return on investment will be 51.3%. The B.E.P will be 0.88. Both the desired
financing and the proposed capitalization of the business will be Ksh.4,245,325

CHAPTER 1: BUSINESS DESCRIPTION

1.1 Business Sponsors

Nancy Achieng’ Omondi:. Diploma in Business Administration ~ Kiriri women university of

science and technology. Diploma in Hotel Management, CPA III, Kiriri women university of
science and technology. Worked at Equity Bank, Busia branch, as a bank teller from 2014-
2015.Worked at Imperial Hotel, Kisumu, as the Assistant Operations Manager from January
2015 to September 2015.

Bonface Omondi: Bachelor of Business Administration (Procurement option),Maseno

University. Degree in Hotel Management, Technical University of Kenya. CPA (K), Strathmore
University. MBA in Finance from The University of Nairobi. Worked as a sales intern at Jubilee
Insurance in December 2008. Worked as the Manager of Kisumu Hotel from June 2009 to
February 2015.

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Dr. Paslisa Omondi: Bachelor of Commerce (Accounting option), Technical University of
Kenya. ACCA, Strathmore University. Diploma in Hotel Management, Technical University of
Kenya. Worked as an auditor at Price Waterhouse Coopers from 2013-2015. Worked at Utalii
College as an assistant manager from May 2015 to December 2015.

1.2 Business Name

The name of the business will be The Lakeside Hotel, which will be obtained from the business’
close proximity to Lake Victoria.

1.3 Business location and address

Physical Address

The Lakeside Hotel will be located in Kisumu County, off the busy Kisumu-Busia Highway. A
five-minute walk from KICOMI industry.

Postal Address

THE LAKESIDE HOTEL

P.O.BOX 561-40105 KISUMU, KENYA

TEL:+254757071301

EMAIL:[email protected]

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1.3

From Kisumu town center

1.4 Form of Business Ownership

The Lakeside Hotel will be a private corporation. It is easy to manage this form of business and
also easy to raise funds for the business. The management has full control of the business
activities and when the need for expansion or growth arises, it is easy for them to pass their
decisions without the long process of consultation as involved in public companies. The risk of
loss of company’s control is eliminated since the business is not affected by the issue of
shareholders who can choose a different leadership leading to the initial founding leaders being
removed. The Management of The Lakeside Hotel will be as follows:

Boniface Omondi as the Chief Executive Officer

Nancy Achieng’ Omondi as the Hotel Manager

Paslisa Omondi as the Assistant Hotel Manager

They will be the owners of the business.

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The business will be financed by owners who will contribute a total of Ksh.2,811,000, bank loan
of Ksh.1,053,175, family and friends’ contribution of Ksh.381,150. The owners’ contribution
will be divided such that each owner will contribute as follows: The CEO will contribute
Ksh.948,000;The Hotel Manager and the Assistant Hotel Manager will each contribute
Ksh.931,500.

1.5 Types of Business

The Lakeside Hotel will be involved in providing restaurant services, dining services, room
services and facilitating activities such as conferences, weddings, training courses, parties and
performance shows. Its major activities will include preparing meals both English and
indigenous (breakfast, lunch and dinner), provision of conference and room services. The minor
activities will include providing recreational services and facilitating parties (anniversary,
birthday, retirement, engagement).

1.6.Products and Services

The Lakeside Hotel will offer different products and services. For snacks, we will have: Omelette
(kienyeji eggs), Sweet potatoes (Viazi Tamu), Yams (Nduma), Mahamri ya Nazi with Mbaazi,
Pumpkins, Mkate wa sinia, Boiled matoke, Toast, Sandwich, Oats meal, Samosa and Sausage.
For vegetables and salads, we will offer Managu, Spinach, Kunde, Ododo, SukumaWiki,
Cabbage, Murenda, Peas, Minji, Mabenda with Biringanya and Mchunga with milk. For the main
course, we will have Ugali, Fish (mbuta, tilapia, kamongo),Githeri, Biryani, Wali wa Nazi,
Maharagwe ya Nazi, Matoke with Matumbo, Chapati, Nyama Choma, Omena stew with
milk/Nazi, Chips masala and Chips plain. For beverages, we will offer Fresh Blended Fruit
juices, Porridge, Coffee, Tea (Black and Milk).For fruits, we will offer Water Melons, Bananas,
Mangoes, Oranges, Passion fruit, Berries, Pineapples, Apples and Pawpaw. The room services
will include Beddings, Toiletries, Hair dryers, iron and ironing Board, Bathroom and free hot
shower, Complementary Wi-Fi, Work table and chair. Recreational services will include
swimming pool, Seesaw and Horse riding. Event services will include Conferences, Weddings,
Parties (birthday, engagement etc.), Trainings and Networking events. Besides offering other
types of delicacies, the Lakeside Hotel will primarily focus on traditional types of food and also
the staple food in that region, which is fish and this will serve as an attraction to people who want

10
to experience other peoples’ way of life. This is different from other hotels which focus more on
western delicacies. As for the services, we will be unique since we will be the only ones offering
them together with the catering services all in one place hence we will be preferred over other
businesses.

1.7 Justification of Business Opportunity

Due to the enormous growth taking place in the proposed location of the business, the need for
hospitality services is evident there, hence the basis of this business idea. It is a great opportunity
for growth and expansion of the business citing the proximity to the recently built Kisumu
International Airport and with the possibility of development in the proposed county of location
which includes the construction of the Standard Gauge Railway which will arrive in the county
in the second phase of its’ construction. The location near a major highway that is very busy and
an international airport that was recently constructed also present a great opportunity for the
business to grow since the large number of travelers and tourists (both local and international)
will be converted into customers. There is also a need for an event venue in the county which
indicates a great opportunity hence the decision of the business to offer such kinds of services.
The large number of mansions in the county by financially stable and wealthy families will also
provide customers because the business will offer a hang out place for such families.

1.8. Industry

Hospitality (Accommodation and food services) industry, hotel sector is doing well especially
with the diversity brought about by the county government system after the promulgation of the
new constitution in 2010. In the proposed area of operation, there are enormous developments
that have turned the place into a potential tourist destination and the need for a first class service
provider in hotel services gives the business a great potential for growth and expansion.
According to The Economic Survey 2016,Accommodation and food service activities recorded a
contraction of 1.3 per cent in 2015, a less severe performance compared to a revised decline of
16.7 per cent in 2014. The contraction was attributed to both internal and external shocks
specifically insecurity concerns, negative travel advisories by some key tourist source countries
and the perceived health risks (Ebola and Corona crisis) in Kenya due to the country’s
geopolitical location and connectivity with West Africa.

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1.9 Business Goals

Short-term

Within the first year of operation, the business will purpose to attain a growth of 4% to 6% and it
will also focus on increasing employee incentives and special gifts so as to motivate them to
working really hard. It will also focus on increasing its sales by 2% to 4% every month within
the first year of operation.

Medium

Within the first three years of operation of the business, we will purpose to start a grocery farm
through greenhouse techniques that will be supplying the hotel with the groceries and also focus
to increase our customer base by 30% through provision of high quality services and exercising
of good customer relations that exceeds our customers’ expectations.

Long-term

As the business expands, it will also be established in other areas with viability of growth in the
long run.

1.10. Entry and Growth Strategy

As for the entry strategy, we will provide high quality products and services at low but
competitive prices to attract and retain our customers. We will also offer a unique package of our
goods and services through special combinations together with additional free services or
products to our customers upon purchase of a specific package in our business. We will conduct
promotional activities via road shows, start “come one, come all with your friends” promotions
that will be accompanied by special offers to create awareness of our products. Besides the
above, we will include an additional product or service that the other similar existing businesses
do not put emphasis on and offer it at an affordable price.

For the growth strategy, we will install modern equipment that are efficient, effective,
economical and easy to use to ensure quality of the products and services is exceptional. We will
employ strategic management practices that will eliminate unwanted processes which in turn
reduces our cost and increases the income e.g. we will get rid of middlemen. We will recruit

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skilled and experienced manpower to ensure the demand is met without any compromise on
quality and status. Once the income increases, part of the profit will be set aside specifically for
expanding the business. Hence it is expected that after the first five years of operation, the
business will grow and open shop in other counties.

CHAPTER 2: MARKETING PLAN

2.1 Customers

Customers of The Lakeside Hotel will be from within the country and foreigners too will be
welcomed. We will also include both low and middle income earners and as the business grows,
it will tap high income earners too. Our customers will be divided into three categories: Leisure
travelers, Business travelers, and the general public with their needs and target services and
products.

For leisure travelers, their needs will be: meals, recreational facilities and accommodation
services. Their meals will include breakfast, lunch, dinner, takeaway meals and snacks. For
recreational facilities, they will have horse riding, seesaw and also use the swimming pool. As
for the accommodation, the products and services they will be offered include beds and beddings,
bath and free hot shower, hair dryers, iron and ironing board, complementary Wi-Fi, work tables
and chairs. They will majorly comprise high income earners coming from within and outside the
country and will mostly include rich tycoons and even politicians.

For the business travelers, their needs will be: conference facilities, meals and accommodation
services. For conferencing facilities, they will be offered conference rooms and training facilities.
Their meals will include breakfast, lunch, and dinner, take away meals and snacks. For
accommodation, they will be offered beds and beddings, toiletries, bath and free hot shower, hair
dryers, iron and iron boarding, complementary Wi-Fi, work tables and chairs. They will majorly
comprise of high and middle income earners also from within and outside the country and will
mostly include business men and women.

And as for the general public, their needs will be: meals, a place to host events and
accommodation services. For meals, they will require breakfast, lunch, dinner, take away meals

13
and snacks. Some of the events that would be hosted include weddings, parties (birthday,
engagement etc.). The accommodation products and services they would be offered include beds
and beddings, bath and free hot shower, hair dryers, iron and iron boarding, complimentary Wi-
Fi, work tables and chairs. They will majorly include middle and low income earners from within
the country and majority of them will be civil servants and also casual laborers.

Payments will be done by cash or cheque for all the above products and services. It is expected
that all the potential customers will purchase all the goods and services on a daily basis.

2.2 Market Share

In the area where the hotel will be located, there are other similar hotels that will compete with it.
An analysis of the major market share of the major competitors is as shown below:

s/No Hotel Size Market Share (%)

1 Imperial hotel 3 star 21

2 Kisumu hotel 3 star 20

3 Grate lakes hotel 2 star 17

4 Hotel Marina Kisumu 2 star 16

5 Others 26

100

Population of people in Kisumu County is 968,879.

 Imperial Hotel~X100%=21%
 Kisumu Hotel~X100%=20%
 Great Lakes Hotel~X100%=17%
 Hotel Marina Kisumu~X100%=16%
 Others~X100%=26%

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Expected Market Share to be occupied by the Lakeside Hotel

X251909=188,932

The Lakeside Hotel intends to capture at least 75% (188,932) out of the 26% (251,909) of the
total market share that is labeled as being occupied by other hotels as shown above.

2.3 Competitors

In the proposed area of location, there are other existing hotels that offer catering and
accommodation services though not all of them do that all at the same place. The Lakeside Hotel
will face stiff competition from four major hotels. They include:

a) Imperial Hotel -This Hotel is located along Oginga Odinga Street in Kisumu County
next to Yatins’ Supermarket. This Hotel uses current technology in the production of its
goods and services. The owner has invested about Ksh.5,000,000 in the hotel. This hotel
has a market share of approximately 21% in the whole of Kisumu County. The quality of
products and services offered are generally of high quality and it also has a wide variety
of them. The hotel was established to target high-end customers hence the prices are high.
This hotel uses producer-consumer distribution channel.

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The competitive edge that the Lakeside Hotel will have over this hotel is that we will offer
affordable prices to our customers, target all categories of customers especially low and middle
income earners.

The Lakeside Hotel plans to offer its products at relatively cheaper but competitive prices. We
will also offer smart packaging of our products, offer discounts to our customers and make
continued improvements so as to tap high end customers.

b) Kisumu Hotel-This hotel is also located along Oginga Odinga Street in Kisumu County
next to Format Shopping Centre. This hotel also uses up to date technology in its
production process. An initial investment of Ksh.4,500,000 was made when starting the
business. This hotel has a market share of approximately 20% in Kisumu County. It
offers a wide variety of high quality goods and services. Just like Imperial Hotel, this
hotel was also established with the main aim of targeting high-end customers hence the
prices of its products are high. It also uses the producer-consumer distribution channel.

The competitive advantage The Lakeside Hotel will have over this hotel is that we will offer
affordable but competitive prices so as to attract customers.

We will offer special discounts to our customers which will serve the purpose of attracting them.

c) Great Lakes Hotel – This hotel is located in Kisumu County along the Kisumu-
Kakamega Highway near Kondele Police Station. This hotel uses standard technology but
not really up to date. An approximate amount of Ksh.4,000,000 was used to start the
business. Its market share is approximately 17% in Kisumu County. It offers a wide
variety of products and services but lacks free Wi-Fi. This hotel was established with the
main aim of targeting middle income and high income earners. It uses the producer-
consumer distribution channel.

The competitive advantage the Lakeside Hotel will have over this hotel is that we will offer free
Wi-Fi and high quality internet services and we will still offer affordable but competitive prices.

We will ensure that our internet connections are really efficient and have fast browsing speeds
and offer continued special discounts on good and services to our customers.

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 d) Hotel Marina Kisumu -This hotel is located in Milimani estate in Kisumu County just a
few Kilometers from Kisumu Hotel. The technology used in this hotel is below standard.
An approximate amount of Ksh.3,800,000 was used to start the business. Its market share
is approximately 16%. It offers a variety of goods and services but it is located at an
insecure location. The hotel was established with the main aim of targeting low income
earners. This hotel also uses producer-consumer distribution channel.

The competitive advantage the Lakeside Hotel will have over this hotel is that it will be located
in a secure location and it will offer its goods and services to a wide variety of customers who
will include low, middle and high income earners.

Besides being located in a secure location, we will employ the services of a security firm to
ensure maximum security and also offer goods and services that are affordable to every member
of the society.

2.4 Methods of Advertising and Sales Promotion

The Lakeside Hotel will use the following advertising methods to reach its target customers:

 Use of Brochures and publications; this will involve the supply of printed brochures
and publications containing our menus and their respective prices to our esteemed
customers and the general public.
 Use of Social Media; this will involve use of social media platforms such as Facebook,
Twitter, Whatsap, Instagram etc. Sharing of photos of our products through these
platforms will be enabled to our target customers and thus enhancing the awareness to our
target customers. These methods are cheap to use since it requires few resources to carry
out the advertisement.
 Use of Billboards; billboards along the main highways will be put up so as to reach the
road users.

By doing so, the business will get itself well known to its potential customers.

In order to remain relevant in the market, advertisements by the Lakeside Hotel will be carried
out daily through social media platforms.

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The approximate cost of advertisements for the Lakeside Hotel for the first month of its
operation will approximately be Ksh.8,000.

Sales Promotion

The Lakeside Hotel will use the following methods of sales promotion:

 Special offers; The Lakeside Hotel will also have offers at certain times strategic to the
business such as public holidays and during specials occasions, but for the special
occasions it has to be upon order i.e. prior communication about the same has to be made
in advance.
 Free gifts; The Lakeside Hotel will also give free gifts to its customers who have spent a
particular amount of money in the business, this kind of promotion will motivate many
buyers to purchase from the business and even increase their preference to the business.
 Combination of products and services; this will involve combining various products
and services where either one of the products in the combination will be free but only
accessible upon purchase of the particular package of the combined goods and services.

2.5 Pricing Strategy

The Lakeside Hotel will use pricing strategies for example discounts during public holidays and
also during special occasions.

The Lakeside Hotel will also adopt the following pricing techniques:

i. Skimming pricing; our special occasion packages and special combination of goods and
services is unique to the business hence charging a higher but relative low price will give
the business a competitive edge over the other similar businesses.
ii. Psychological pricing; this involves quoting a figure that would look less compared to
the next immediate value e.g. Ksh.199 instead of Ksh.200 and this will serve the purpose
of enticing the customers to buy the product thinking it is cheaper.
iii. Penetrative pricing, this will involve offering lower but competitive prices for our goods
and services and this helps the new business tap customers due to the affordability of its
goods and services compared to the existing businesses.

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When setting the prices for our goods and services, we will consider the prices of other hotels
and also who our customers are and what their needs are.

All payments for goods or services offered will be made either by cheque or by cash.

2.6 Sales Tactics

The Lakeside Hotel will sell its products and services directly to the customer and payment will
be done either by cash or cheque. We will have a customer care section that will provide a
platform through which customers will give their feedback on our services and products for the
purpose of improving them.

The Hotel will also have a fully functional public relations department headed by the public
relations officer and it will be responsible for maintaining the image of the company to the
outside world. The Hotel will also keep an up to date record of customers such that for the
second and subsequent times they come to the Hotel, they will be given a special discount with
respect to their preferences. They will have the liberty of choosing which product or service to be
discounted.

2.7 Distribution Strategy

The Lakeside Hotel will use the Producer to Customer distribution channel.

Customers who visit our premises will be directly served by the Business.

For events that are to be held outside the business premises, catering services will be offered at
the venue of the event. The business will take the services to venue of the event to ensure the
services are available to our customers. The main disadvantage of this wil1 be that the business
will have to transport its own tools and equipment to the venue hence this will be more costly.
The best way to avoid this will be to encourage the customers to come and hold their activities in
our venue by enticing them with affordable prices and giving them discounts.

The list of available services and products will be also accessible online where one can view and
make an order for preparation of meals or make room reservations.

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By employing this strategy, the business will have direct contact with customers and will
therefore be at a good position to evaluate their satisfaction level. There will also be reduction in
cost since middlemen are eliminated thus it is the hotel itself that will have control over prices
and discounting measures.

CHAPTER 3: ORGANIZATION PLAN

3.1 Business Manager

The Lakeside Hotel will be managed by Nancy A. Omondi as The Hotel Manager. She holds a
degree in Bachelor of Business Administration (Hotel and Management) from Kiriri women
university, Worked as the Manager of Kisumu Hotel from June 2009 to February 2015. Worked
as a sales intern at Jubilee Insurance in December 2008.

The Hotel Manager must have a bachelor’s degree in a business related course, be a CPA (K)
holder or ACCA level, must have at least five years’ experience in the same position, must be a
Kenyan, team player and proactive. He must be well versed with basic computer skills and
communication skills.

The duties and responsibilities of the Hotel Manager will include providing Leadership to the
employees and always motivating them to be good performers. She should be a visionary and an
information bearer where he ensures staff have sufficient and up-to-date information, looks out
for opportunities, provides a bridge between other parties and employees, and links the Hotel
with the surrounding community. She will be the decision maker where he or she formulates
policies and plans recommendations as well as deciding and guiding courses of action in
operations of staff. The Hotel Manager will oversee operations of the hotel, implement plans,
manage the workforce of the Hotel, and manage financial and physical resources. She will
inform the management on the way forward. He will oversee design, marketing, promotion,
delivery and quality of programs, products and services. She will recommend yearly budget for
board approval and will be expected to prudently manage the Hotel’s resources within those
budget guidelines and according to current laws and regulations.

In order to achieve its goals, the hotel will ensure proper employee remuneration and motivation
and focus will be put in the achievement of the set objectives.

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The Hotel will be organized into various departments so as to make management easy and enable
faster dissemination of information. There will be different departmental heads in the Hotel. The
organizational chart of the Hotel will be as follows:

21
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3.2 Key Personnel

The Lakeside Hotel will have the following key personnel:

Chief Executive Officer

She/he must possess at least a diploma in Hotel Management and any other degree. Must have
professional qualifications (CPA/CIFA). S/He must possess basic computer skills,
communication skills and problem solving skills. S/He must have worked at a senior
management position in a busy hotel.

Duties and responsibilities of the CEO will include being the ultimate decision-maker, approving
all the budget proposals, ensuring that the hotel is well managed as per the required standards.
S/He will be ultimately responsible for all the manpower of the hotel with regards to their
wellbeing when in the hotel and also their remuneration.

Hotel Manager

The Hotel Manager must have a bachelor’s degree in a business related course, be a CPA (K)
holder or ACCA level, must have at least five years’ experience in the same position, must be a
Kenyan, team player and proactive. She must be well versed with basic computer skills and
communication skills.

The duties and responsibilities of the Hotel Manager will include providing Leadership to the
employees and always motivating them to be good performers. She should be a visionary and an
information bearer where he ensures staff have sufficient and up-to-date information, looks out
for opportunities, provides a bridge between other parties and employees, and links the Hotel
with the surrounding community. She will be the decision maker where he or she formulates
policies and plans recommendations as well as deciding and guiding courses of action in
operations of staff. The Hotel Manager will oversee operations of the hotel, implement plans,
manage the workforce of the Hotel, and manage financial and physical resources. She will
inform the management on the way forward. She will oversee design, marketing, promotion,
delivery and quality of programs, products and services. She will recommend yearly budget for
board approval and will be expected to prudently manage the Hotel’s resources within those
budget guidelines according to current laws and regulations.

23
Assistant Hotel Manager

Must have at least a diploma in Hotel Management, a degree in a business related field and
worked at the management level in a hospitality training institution or a four-star hotel. Must be
well versed with basic computer, communication and problem solving skills.

His/her duties and responsibilities will include assisting the hotel manager with the management
of the daily operations of the hotel, accepting delegation of responsibilities from the hotel
manager and taking over the role of the manager in the absence of the manager himself. Advising
the manager on matters concerning management. S/he will be responsible for passing down
information to other employees of the organization (information from the management and the
board).

Human Resource Manager

Qualifications for HRM will include a bachelor’s degree in Human Resources management, a
higher diploma in Human Resources Management, at least five years of experience as a senior
HRM, excellent knowledge of the labor laws, ability to maintain high levels of confidentiality,
have analytical and critical thinking skills, ability to influence others and manage change,
possess excellent communication, negotiation, organizational conflict resolution skills. Three to
five years’ experience in human resource management in a busy organization.

Duties if the HRM will include establishing general policies and ensure the hotel adheres to the
labor laws, overseeing staff recruitment and placement, assisting in scheduling staff vacations,
strengthening employee relations through incentives, handling staff grievances, planning and
implementing effective personnel management and training, conducting of performance
appraisals, ensuring health and safety practices are up to the required standards and handling of
medical and other staff benefits.

Accountant

The qualifications of an accountant are as follows: Must hold a Bachelor’s degree in Bachelor of
Commerce or Bachelor of Science Accountancy and at least be a CPA III qualifier or equivalent,
have at least three years of experience, hands on experience on accounting software preferably
Hansa World Accounting software, demonstrate ability to work under pressure with minimum

24
Supervision, have high level of integrity, demonstrate the ability to meet deadlines and be a team
player. In addition to the above, he/she should have at least a two-year experience in such a
position in a busy organization.

The duties of the accountant will include: auditing and processing all the hotel’s disbursements,
prepare expense analysis and other reports on invoices, prepare monthly statements, keep proper
records of all the amounts due to the hotel on timely basis, prepare and remit payroll reports,
compile all tax returns and payments, prepare the monthly accounts receivable and payable
reports and recording all sales.

Front Office Clerk

The qualification for front office clerk will include: must be a diploma or degree holder in any
field, must be highly skilled in greeting, registering, and assigning rooms to guests, must have
proven ability to assist guests with room booking, changing and cancelling reservations, be adept
at computing bills, collecting payments and making changes for guests, have hands-on
experience in keeping records of room availability and guests’ accounts (manually and by means
of computers), be well versed in performing simple bookkeeping activities including balance of
cash accounts, be extremely capable of answering inquiries related to hotel services, registration
of guests and shopping, dining, leisure, and travel directions, have demonstrated expertise in
providing and ensuring high-quality guest relations, have excellent verbal and written
communication skills and be well versed with computer skills such as MS Word, Excel, Outlook
and PowerPoint. He/she is also required to have worked in such a position in a busy firm.

Duties of the Front Office Clerk will include making appropriate room assignment for arriving
guests, providing daily departure information to the reservations and maintaining daily room
availability control by checking housekeeping reports and handling of guests’ queries.

Sales and Marketing manager

Qualifications of sales and marketing manager will include: a diploma or degree in a related
field, at least four years of experience, demonstrate good ability to present products and services
in the most attractive way, have a good command of English and Kiswahili both written and

25
Spoken, possess excellent communication skills, have a good knowledge of hospitality industry
Products and services.

The duties of sales and marketing manager will include: planning, directing and controlling hotel
marketing functions, reviewing and analyzing market to determine the requirements, compiling
and submitting monthly sales reports and conducting sales campaigns.

Public Relations Officer

Qualifications of a Public Relations Officer will include: a degree in Public Relations or related
field, at least three years of experience, demonstrate excellent communication and interpersonal
skills, have a good level of business awareness and good knowledge of the current affairs and
possess excellent organizational and time management skills.

Responsible for publicity campaigns of special and promotional events in the hotel, liaising with
press and entertainment groups, handling photo captions, magazines and articles for press
release, preparation of advertising budgets and preparation of materials for in-house promotions.

House Keeping Supervisor

Qualifications for a house keeping supervisor will include: a diploma or degree in Hospitality
Management, at least two years of experience, good knowledge of rooms management system,
proven experience in supervising and excellent written and verbal communication skills.

Duties of a house keeping supervisor will include: Chairing all morning and afternoon daily
briefings and assigning daily work schedules to the housekeeping staff, spot checking of
occupied and vacant rooms after cleaning, ensuring all rooms are regularly sprayed by pest
control contractor and maintaining records of all items.

3.3 Other Personnel

Other personnel will include:

The Chief Chef: whose qualifications will include a diploma or a degree in Hospitality
(Professional Cookery), Health and Safety and food hygiene certificates, at least four years of
experience in equivalent position, have a good command of English and Kiswahili (written and

26
spoken), have the ability to work for long hours with minimum supervision, ability to handle
pressure, experience in handling cooking staff efficiently and directing them to ensure handling
of kitchen functions, highly experienced in performing preventative and general maintenance on
kitchen equipment, ability to estimate food requirements and costs, and watch and order supplies,
demonstrate ability to set up and supervise buffets, highly experienced in performing food
quality inspections to ensure that all food items conform to hygiene standards.

The duties and responsibilities of the chief chef will include preparing, cooking and presenting
food in line with the required standards, keeping preparation at the right level, ensuring food is
served promptly, monitoring food production to ensure consistent quality and portion size, stock
control and following the relevant hygiene, health and safety guidelines.

Cooks:

Qualifications will include a certificate or diploma in Hospitality (Commercial Cookery), strong

knowledge of different types of meals and their cooking times, well versed in planning menus,
establishing size of food portions, exceptional understanding of preparing food for cooking,
excellent understanding of mixing the right amount of ingredients according to weight and type,
strong knowledge of operating industry sized ovens and cooking ranges, knowledge of preparing
different types of salads, track record of following best hygiene and sanitation practices aimed at
providing quality food services, absolute flexibility aimed at trying and testing new recipes in
order to add new items to existing menus and committed to maintain a clean kitchen and work
area.

Duties of a cook will include setting up stations and collecting all necessary supplies to prepare
menu for service, prepare a variety of foods; meat, seafood, vegetable and cold food items and
arrange sauces and supplementary garnishes for allocated station, notify the Chief Chef in
advance of likely shortages, use food preparation tools in accordance with manufactures.

Instructions, close the kitchen correctly and follow the closing checklist for kitchen stations,
maintain a prepared and sanitary work area at all times, make sure all storage areas are tidy and
all products are stored appropriately, constantly use safe and hygienic food handling practices,
assist with all duties as assigned by Chief Chef.

27
Waiters and Waitresses

Qualifications for Waiters and Waitresses will be a diploma or certificate in Hospitality

Management ,demonstrate ability to present menus, highly skilled in taking orders and relaying
to kitchen staff, hands-on experience in setting tables and placing decorations, in-depth product
knowledge of different kinds of food and beverages, proven ability to communicate with kitchen
staff, provide orders to customers, collect cash, and maintain proper accountability for orders and
funds, exceptional verbal and written communication skills, exceptionally professional demeanor
and very respectful attitude, excellent skills in maintaining cleanliness and personal hygiene
standards, demonstrate familiarity with hospitality terminology.

The duties of Waiters and Waitresses will include collect payments from customers, take orders
from customers for transmittal to kitchen staff, attending to customers’ issues, serve food and
beverages to customers, prepare checks that itemize and total meal costs, remove dishes and
glasses from tables or counters and take them to kitchen for cleaning, present menus to customers
and answer questions about menu items, making recommendations upon request, inform
customers of daily specials, clean tables and or counters after customers have finished dining,
prepare tables for meals, including setting up items such as linens, silverware and glassware,
garnish and decorate dishes in preparation for serving, fill salt, pepper, sugar, cream and napkin
containers, escort customers to their tables.

General Laborers

Qualifications for a general laborer will include a certificate in Hospitality Management, ability
to work during odd hours with minimum supervision, ability to follow strictly work schedules
and ability to execute properly the assigned duties.

Duties will include cleaning the premises after working hours, cleaning of the washrooms and
ensuring they are kept neat at all times, performing general work such as moving furniture from
one point to another, maintaining the ground by sweeping, watering and tilling flower gardens.

3.4 Recruitment, Training and Promotion

The Lakeside Hotel will recruit those employees it aims to keep for long term so as to improve
them and enjoy the benefits of their expertise. The recruitment process will be as free and fair as

28
possible with regards to equality among all applicants. There will be a standard recruitment
process to help ensure fairness and it will be based on the qualifications of the individual. No
special treatment will be accorded to anyone. Interviews will be conducted and the best
performer will be considered for the job. The business will advertise vacancies through its
website and social media platforms and the application procedure will be online.

The Lakeside Hotel will have training programs both Training Within Industry (TWI) and
outside. It will liaise with training firms to take the employees through various trainings and also
will have locally arranged programs that help improve performances and equip the staff with
better skills.

Promotion of employees will be based on performance, discipline both personal and work
related. The business through the Human Resources department will perform performance
appraisal for all employees which will be the basis of promotion. The promotion methods will
include giving more responsibility with matching compensation, salary increment for best
performers and permanent employment of best performing employees who are on contract.

3.5 Remuneration and Incentives

REMUNERATION AND INCENTIVES

JOB TITLE BASIC SALARY ALLOWANCES TOTAL

MONTHLY
SALARY.

CEO 54000 6000 60000

HOTEL MANAGER 51300 5700 57000

ASSISTANT 49500 5500 55000

HOTEL MSNAGER

HUMAN 38700 4300 43000

RESOURCE

29
 MANAGER

ACCOUNT 31500 3500 35000

SALES AND 33300 3700 37000

MARKETING
MANAGER

PUBLIC 29700 3300 33000

RELATIONS
OFFICER

CHIEF CHEF 24300 2700 27000

COOKS(6) 9900 1100 66000

Ksh.11000 per cook

WAITER/WAITRES 9450 1050 84000

@ Ksh.10500

FRONT OFFICE 20443.50 2271.5 22715

CLERK

HOUSEKEEPING 20250 2250 22500

SUPERVISOR

GENERAL 7929 881 26430

LABORER (3) @
8810

TOTAL 380272.5 42252.5 568645

The Lakeside Hotel will provide transport for the day time employees to work only and for the
night shift employees it will provide transport to home. There will also be special gifts for the
best performers on weekly basis. These will serve the purpose of motivating the employees.

30
3.6 Legal Requirements

The business will require Hotel and Restaurant License as a requirement by THE HOTEL AND
RESTAURANTS ACT Chapter 494 of the Laws of Kenya. This license is obtained from
Hotels and Restaurant Authority (HRA) established through the Ministry of Tourism. This will
be obtained at a cost of Ksh.36000.

The County Council Business permit obtained from the County Council Office at a cost of
Ksh.31000, Kenya Revenue Authority Pin obtained from the KRA offices or from their website
through authorized personnel at a cost of Ksh.150 and National Social Security Fund (NSSF)
certificate, obtained from NSSF offices and also National Health Insurance Fund certificate
obtained from NHIF offices. Both NSSF and NHIF are obtained at no cost.

By Laws that will govern the operation of the business will include

Kisumu County Trade License Act,2015, Kisumu County Finance Act, 2015

3.7 Support Services

The Lakeside Hotel will source from outside the following services:

 Security which will be offered by The Riley Falcon Security Limited (RFSL), P.O Box
7628-40105 Kisumu, Kenya.
 Legal services which will be sourced from Behan and Okero Advocates, P.O Box 1234-
40105, Kisumu, Bando Chambers, Temple Road.
 Waste Disposal which will be sourced from Kisumu County Waste disposal services,
Oginga Odinga Street, P.O. Box 3467-40105 Kisumu.
 Banking services will be sourced from The Kenya Commercial Bank which is located
along Oginga Odinga Street next to Maseno University Town Campus, P.O. Box 17-
40105, Kisumu.

CHAPTER 4: PRODUCTION/OPERATIONAL PLAN

4.1 Production Facilities and Capacities

S FACILITY CAPACITY(level QUANTITY/ COST TOTAL SOURCES/

31
 of output) NUMBER /UNIT COST
REQUIRED
/ SUPPLIER
No

MACHINES

1 Fridge 245litres 7 49950 349650 Samsung

2 Deep Freezer 10 ft 6 45390 272340 LG

3 Microwave 10 litres cavity 3 10000 30000 LG

oven volume

4 Vacuum cleaner 2.5 litre dust bag 5 18550 92750 Ramtons

5 Sandwich 4kg, 900W 4 4750 19000 Philips

toaster

6 Blenders 5speed, 1.8 litres 8 4750 38000 Ramtons

7 Thermos Flask 12 cup capacity 6 5450 32700 Detroit

8 Coffee makers 6 cup capacity 5 7950 39750 Ramtons

Tools and equipment

Servewere 3 pieces 6 5840 35040 Gel
serving
bowl(3
sets)

Cutlery 26 piece set 5 6950 34750 Mealchief

Vacuum 3.4 litres 6 3350 21300 Maggies

flasks

32
 Tea spoon 25 50 1250 Great kitchen

Food spoon 50 60 3000 Great kitchen

Mugs, saucers 20 pieces 5 9150 45750

and cups per dozen
Kot porcelain
Serving 3 litre 25 80 2000
guards
The home shop
Glassware and 5 mugs and 10 5000 50000
drinkware 2 tea pot
sets
The home shop

Sub total 193090

Furniture and fittings

Beds 6 by 6 15 17700 265500 Ja ukwala

furniture
5 by 6 20 10050 201000

4 by 6 25 8100 202500

Working Single sitter 50 5400 270000

table and
chair

Dining tables 2 seater with 15 13200 198000

chairs

4 seater with 13 14450 187850

chairs

33
 6 seater with 10 22050 220500
chairs

8 seater with 8 33050 264400

chairs

Traditional Single seater 40 1060 42400 Onyango

chairs furniture

Sub total 1852150

Layout of the business Premises

The Lakeside Hotel will occupy 2.48 acres of land which is approximately 50 meters by 100
meters and this will offer enough space for expansion as the hotel grows.

50M*100M.

4.2 Production Strategy

The hotel will employ mass production based on the customer attendance, customer behavior,
market research findings and trend analysis. The special meals will only be prepared upon order
and after the deposit has been paid to ensure limited wastage of resources.

The Chief Chef will work together with the cooks to ensure proper execution of the duties. Flow
of authority will be from the Chief Chef to the cooks to ensure proper coordination of the kitchen
activities.

Targets will be set for each department to ensure accountability and efficiency. Junior staff will
be answerable to their supervisors so as to ensure mistakes are corrected as soon as possible.

Employees will be required to sign in upon arrival and sign out when leaving the premises
through a clocking system that captures attendances. This will help in ensuring accountability of
human resources.

34
All other activities conducted by the business will be coordinated from a central point to ensure
no confusion or collision of schedules for the events. The hotel will offer gifts to employees to
motivate them to give their best output.

(A) MONTHLY COST OF RAWMATERIALS

Eggs~Ksh.10100

Matoke~Ksh.5700

Yams~Ksh.1550

Maize flour~Ksh.9650

Wheat flour ~Ksh.27050

Pumpkins~Ksh.1550

Rice~Ksh.32600

Potatoes~Ksh.20100

Vegetables~Ksh.10100

Fruits~Ksh.8050

Maize~Ksh.12550

TOTAL~Ksh.139000

B) MONTHLY COST OF LABOUR

Chief executive officer~Ksh.60000

Hotel manager~ksh.57000

Assistant hotel manager~ksh.55000

Human resource manager~ksh.43000

Accountant~ksh.35000

35
Sales and marketing manager~ksh.37000

Public relations officer~ksh.33000

Chief chef~ksh.27000

Cook(6) ksh.11000 per cook~ksh.66000

Waiter/waitress(8)ksh.10500 per waiter ~ksh.84000

Front office clerk~ksh.22715

Housekeeping supervisor~ksh.22500

General laborer(3) KSH.8810 PER labourer~ksh.26430

TOTAL ~ksh.568645

C.MONTHLY OVERHEADSCOST

Electricity~3500

Repair and maintenance~10500

Water~3500

Stationery~5500

Advertisement~8000

Total~31000

TOTAL COST OF PRODUCTION PER MONTH

Raw materials-ksh.139000

Labor-ksh.568645

Overheads-ksh.31000

Total cost of production-ksh.738645

36
4.3 Production Process

The production process will entail cooking of various menus offered by the hotel. Breakfast
meals will be prepared as early as 5:30 am to ensure the customers who want to leave the hotel
premises early are catered for. The breakfast will either be taken to the rooms courtesy of room
services or taken from the hotel building as per the customer’s preference. For those customers
who want a special breakfast, they will be required to make an order for preparation early enough
prior to the time of departure from the premises so as to create sufficient time for the preparation.
Other general meals for breakfast will be prepared in plenty for any customer who comes for
breakfast in the hotel. The meals that take a shorter time to prepare such as coffee, toast or
omelet can be ordered and prepared immediately; they do not require prior ordering for
preparation.

Lunch and dinner meals will be prepared as from 9:30am and 4:30pm respectively. General
menus will be prepared in bulk to cater for different customer needs but the special ones will be
prepared only upon order and payment so as to ensure that all the requirements for the meals are
outsourced in case they are not available from within the store. The payment is to ensure that the
business does not incur any loss for the preparation of the special meal in the event that the
customer changes their mind about coming to take the meals.

The process will run as the procedure shown below explains:

The chief chef will issue the menu for the day which will guide the process of sourcing raw
materials from the store or the suppliers which are then divided and measured to the desired
quantity as per the day’s requirements.

The special orders made in advance are addressed as required and at the appropriate time and
other general orders from customers are taken and the food is promptly served. For meals not on
the menu and are ordered by customers, priority is given to ensure that our customers are served
to their satisfaction.

Payment is made via the waiters and waitresses or through M-Pesa/ Airtel Money for special
orders that need to be prepared in advance. The customers can also use M-Pesa/Airtel Money for
any payment they want to make.

37
For the services offered by the business, the process will involve coordination between the
various service departments to ensure the availability of particular services. For those services
requiring prior communication such as weddings, parties and conference facilities, customers
will need to make early communication to ensure that necessary arrangements are made for the
services to be offered. There will also be up to date information concerning the availability of
various services to help our customers make informed decisions when planning. The payment
will be made prior to using the services. The advance booking will require a deposit of 30% of
the total charge to ensure reservations.

4.4 Rules and Regulations Affecting Production

The following regulations will affect business operations:

Hygiene Legislation

 The Public Health Act Cap 254 and Cap 242.

 Food, Drugs and Chemical Substances Act, Cap 254. Which addresses issues relating to:
 Environmental Hygiene, Personal Hygiene and Health for staff and guests, Food Safety
and Sanitary Requirement and Water Supply.
 The Design and Construction
 This involves easy prevention of contamination of food as per The Laws of Kenya, Cap
254, Food Hygiene and Subsidiary section 8

The Labor Laws

 The Employment Act Cap 226

Other Laws

 The Companies Act, Cap 486

 Income Tax Act, Cap 470
 Source: Constitution of Kenya

External factors likely to affect operations of the business

38
  Economy – Market fluctuations based on politics, terror attacks, wars and currency
eventually trickle down to the business. If terror attacks are persistent within the location
of the business or even the country at large, it may prevent our target customers from
coming to the business especially the foreigners due to travel advisories that will be
issued.
 Weather -The weather will particularly affect the outdoor events that the business offers
a place where they can be held. When it is raining, it may not be possible to hold some
events e.g. weddings, seesaw etc.
 Infrastructure – If at all the construction of the standard gauge railways stops for any
given reason, there will be negative consequences for the business because that will mean
that its target customers will decrease.
 Laws-If the government decides to come up with new legislation concerning the
hospitality sector, the business may end up getting affected either positively or negatively
leading to either a profit or a loss.
 Trends – If many existing hotels are making changes in their operations according to the
customer requirements e.g. increased use of technology in the production process, it will
also force your business to do the same so as not to be left out because this may have
negative consequences on it.

Solutions to the above external factors

1) Economy -The business will be located in the outskirts of the county and next to the
newly built Kisumu International Airport hence it will somehow avoid some of the
violence and protests that are witnessed in the city center during political unrest.
2) Weather- During rainy seasons, tents will be hired to cater for those who want to conduct
outdoor activities like weddings. Customers will also be encouraged to conduct outdoor
activities during sunny days by offering them discounts so that the business will still
make profits.
3) Infrastructure -In the event that the standard gauge railway fails to reach Kisumu
County, then the business will turn its attention to the passengers of the Kisumu-Busia
Highway and the general public so as to avoid making any losses. We will also target the
customers who use the airport.

39
 4) Laws-The business will comply accordingly to all the rules and regulations that have
been put in place so as to ensure it does not get into trouble with the authorities. Any
activities that are rendered illegal by new laws will be stopped and ways to make it
comply with the regulations will be found.
5) Trends-When something new comes up, the business will be ready to embrace it so long
as it contributes to the overall profitability of the business itself. This will make the
business appealing to its customers.

Internal factors likely to affect operations of the business

Internal Communication-If the flow of information from the top most level of authority in the
organization to the last person in the organizational chart is not that clear, loss of information
will occur somewhere in-between hence the last person in the chart may not be able to do what is
required of him/her.

Structure – This involves the way the hotel is organized into various departments. If the
business is not organized well into different departments whose duties are well stipulated, the
different departments will clash in the dispensation of their duties hence negatively affect the
business.

Leadership Style- The business has to be managed in such a way that all the employees are
contented with their remunerations and also how they are handled. If they are not happy, there
will be some resentment from them and this will mean problems for the business.

Organization culture – If the business is used to do things in a certain way, this style of doing
things may or may not earn profits depending on what it is and how it affects the business.

Solutions to the above internal factors

Internal Communication – The business will ensure that all the information that comes from
the management reaches every employee in the organization in its original form so that it does
not lose any meaning hence it will be acted upon accordingly. This will be done by putting in
place proper communication channels.

40
Structure-Each department in the organization will have its duties clearly stipulated for it so as
to avoid clashes when they are performing their duties.

Leadership Style – The hotel will have its leadership practice good management practices that
will go down well with all its employees. By doing so, all the employees will be satisfied hence
they will be motivated to work hard and also smart.

Organization Culture-If the business’ way of doing things leads to losses, it has to stop doing
things that way so that at least it starts making profits.

CHAPTER 5: FINANCIAL PLAN

5.1 Pre-Operational Expenses

Raw materials-ksh.139,000

Rent-ksh.105,000

Machinery~ksh.874,190

Tools and equipment- 193,090

Furniture and fittings-1,852,150

Licenses-67,150

Insurance-20,000

Contingencies-50,000

TOTAL-3,300,580

5.2 Working Capital Estimation

CURRENT ASSETS

1ST MONTH 2nd MONTH 3rd MONTH

STOCK 139,000 140,500 142,100

41
CASH 300,000 196,000 319,550

BANK 505,745 496,845 496,745

DEBTORS 122,500

TOTAL 944,745 955,845 958,395

CURRENT LIABILITIES

CREDITORS 10,000 11,000

BANK OVERDRAFT 2,100 2,000

TOTAL - 12,100 13,000

WORKING CAPITAL 944,745 943,745 945,395

5.3 Projected Cash Flow Statement

5.3 PROJECTED CASH FLOW STATEMENT OF THE LAKESIDE HOTEL FOR THE
YEAR 2023

PARTICULARS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT
NOV DEC TOTAL

CASH IN FLOW

BALANCE B/F 55,355 324,710 493,415 669,520 999,725

1,318,530 1,492,835 1,671,340 1,730,445 2,052,400 2,451,805
13,260,080

CASH SALES 1,000,000 1,081,000 1,104,000 1,112,000 1,113,000

1,114,000 1,115,000 1,119,000 1,000,000 1,114,000 1,080,000
1,234,000 13,186,000

DEBTORS 122,500 155,900 143,900

151,000 265,100 270,100 1,108,500

42
TOTAL CASH IN FLOW 1,000,000 1,258,855 1,428,710 1,605,415
1,938,420 2,257,625 2,433,530 2,611,835 2,671,340 2,995,445
3,397,500 3,955,905 27,554,580

CASH OUT FLOW

PREOPERATIONAL COST

PURCHASES 139,000 140,500 142,100 142,200 143,600

143,400 144,200 143,500 143,400 145,100 147,200
153,100 1,727,300

PAYMENT TO CREDITORS 10,000 11,000 12,000 14,000 15,000 16,000 17,000

18,000 19,000 20,000 21,000 173,000

SALARIES AND WAGES 568,645 568,645 568,645 568,645

568,645 568,645 568,645 568,645 568,645 568,
568,645 568,645 6,823,740

RENT 105,000 105,000 105,000 105,000 105,000 105,000

105,000 105,000 105,000 105,000 105,000 105,000
1,260,000

ELECTRICITY 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500
3,500 3,500 42,000

WATER 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500
3,500 42,000

ADVERTISEMENT 8,000 7,100 6,050 5,850 5,550 5,350 5,250 5,050 4,850 4,400
4,050 3,400 64,900

INSURANCE20,000
20,000

LOAN REPAYMENT 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000
11,000 11,000 11,000 132,000

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INTEREST ON LOAN(10% P.A.)
105,318 105,318

TAXES(0.16%)
414,540 414,540

STATIONERY 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500
5,500 5,500 66,000

SECURITY 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000
70,000 840,000

REPAIR & MAINTENANCE 10,500 9,400 9,000 8,700 8,400 8,200 8,100 7,800
7,500 7,400 7,300 6,800 99,100

TOTAL CASH OUT FLOW 944,645 934,145 935,295 935,895

938,695 939,095 940,695 940,495 940,895 943,045
945,695 1,471,303 11,809,898

NET CASH FOR THE MONTH 55,355 324,710 493,415 669,520

999,725 1,318,530 1,492,835 1,671,340 1,730,445 2,052,400
2,451,805 2,484,602 15,744,682

5.4 Projected Income Statement

PROFORMA INCOME STATEMENT OF THE LAKESIDE HOTEL FOR THE YEAR

ENDING 31ST DECEMBER 2023

PARTICULARS AS AT 31ST DEC 2023

DEBTORS 1,108,500

SALES 13,186,000

TOTAL 14,294,500

LESS PURCHASES 1,727,300

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GROSS PROFIT 12,567,200

LESS EXPENSES

SALARIES AND WAGES 6,823,740

ELECTRICITY 42,000

ADVERTISING 64,900

WATER 42,000

INSURANCE 20,000

RENT 1,260,000

LOAN REPAYMENT 132,000

INTEREST ON LOAN 105,318

CREDITORS 173,000

SECURITY 840,000

STATIONERY 66,000

REPAIRS AND MAINTENANCE 99,100

DEPRECIATION a) Machines 131,129

(b) Tools and equipment 28,964

(c) Furniture and fittings 148,172

TOTAL EXPENSES 9,976,322

PROFIT BEFORE TAX 2,590,878

LESS TAX (16% of Income) 414,540

NET PROFIT AFTER TAX 2,176,338

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Depreciation for machinery, furniture and fittings, and tools and equipment is calculated as

Follows:

Machinery :Depreciation is at 15%

X Ksh.874,190=Ksh.131,129

Ksh.874,190=Ksh.131,1

Net Book Value is Ksh.874,190-Ks874,190-Ksh.131,129=Ksh.743,061

Tools and Equipment: Depreciation is at 15%

X Ksh.193,090=Ksh.28,964

Net Book Value is Ksh.193,090-K1.193,090-Ksh.28,964=Ksh.164,126

Furniture and Fittings: Depreciation is at 8%

X Ksh.1,852,150=Ksh.148,172

Net Book Value is Ksh.sh.1,852,150-Ksh.148,172=Ksh.1,703,978

5.5 Projected Balance Sheet

PROJECTED BALANCESHEET FOR THE LAKESIDE HOTEL AS AT 31ST

DECEMBER 2023

ASSETS START END OF YEAR 1

FIXED ASSETS

MACHINERY 874,190 743,062

FURNITURE AND FITTINGS 1,852,150 1,703,978

TOOLS AND EQUIPMENT 193,090 164,127

TOTAL FIXED ASSETS 2,919,430 2,611,167

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CURRENT ASSETS

CASH 300,000 419,226

BANK 505,745 556,900

STOCK 139,000 153,100

DEBTORS 270,100

TOTAL CURRENT ASSETS 944,745 1,399,326

TOTAL ASSETS 3,864,175 4,010,493

LIABILITIES

CURRENT LIABILITIES

CREDITORS 173,000

LONG TERM LIABILITIES

BANK LOAN 1,053,175 1,026,493

TOTAL LIABILITIES 1,053,175 1,199,493

OWNERS’ EQUITY 2,811,000 2,811,000

TOTAL EQUITY AND LIABILITIES 3,864,175 4,010,493

5.6 Break-Even Point

Fixed expenses for the year 2023 Amount

Salaries and wages 6823740

Rent 1260000

Electricity 42000

Water 42000

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 Loan repayment 132000

Stationery 66000

Security 840000

Tax 414540

Insurance 20000

Interest on loan 105318

Total 9745598

Variable expenses for the year 2023 Amount

Payments to creditors 17300

Purchases 1727300

Advertisement 64900

Repair and maintenance 99100

Total 2064300

Total sales for the year 2017 is Ksh.13,186,000.

B.E.P.P. of Sales=0.88

5.7 Profitability Ratio Analysis

Return on Sales=x100%

=16.5%

Percentage Gross Profit=x100%

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=95.3%

N Equity=x100%

=77.4%

Return on Investment=x100%

=51.3%

5.8 Desired Financing

Items Amount

Pre-Operational expenses 3,300,580

Working capital 944,745

Total desired financing 4,245,325

5.9 Proposed Capitalization

Source Amount (Ksh.)

Owner’s equity 2,811,000

Bank loan 1,053,175

Family and friends 381,150

Total investments 4,245,325

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