DOCUMENT: BUSINESS PLAN

TITTLE: SANGAL'S TREE NURSERY PRODUCTION

INDEX NO: 5401010246

SUPERVISOR: MRS CHESOI

SUBMITTED TO: KENYA NATIONAL EXAMINATION COUNCIL

EXAM SERIES: MARCH 2023

PURPOSE: IN PARTIAL FULFILMEENT FOR THE AWARD OF

CRAFT CERTIFICATE IN GENERAL AGRICULTURE

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 DECLARATION

I therefore declare that this business plan is my original work done to the level of my knowledge
and has never been forwarded to any examination body for a fulfillment of any wards of degree,
certificates, Diploma to Kenya National Examination Council for an award of any kind.

NAME: SANGAL SHEILA JEPKOSGEI

SIGNATURE:…………………………….

DATE:……………………………………..

SUPERVISOR DECLARATION

This business plan has been approved with under my declaration supervisor as KNEC advisor

SUPERVISOR NAME:

SIGNATURE:

DATE:

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 DEDICATION

I therefore thank the almighty for his wonderful mercies he has shown upon me and my parents,
brothers and sisters for the financial support and encouragement through my course. I also pass
my gratitude to my relatives; for their moral support and encouragement.

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 ACKNOWLEDGEMENT

I give my gratitude to the Kaiboi technical training institute and to my lecturer; Mr. Kilel who
have been supporting me and guiding and giving directions on how to prepare this business plan.
I also pass my thanks to my candidates for their ideas and encouragement for it was not for them
I would have not finish my business plan

I thank you for your commitment and dedications.

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 TABLE OF CONTENTS
DECLARATION..........................................................................................................................................i
DEDICATION............................................................................................................................................ii
ACKNOWLEDGEMENT..........................................................................................................................iii
1.0 EXECUTIVE SUMMARY..................................................................................................................1
1.1BUSINESS DESCRIPTION..................................................................................................................1
1.2 MARKETING PLAN............................................................................................................................1
1.3 ORGARNIZATIONAL PLAN..............................................................................................................1
1.4 OPERATIONAL PLAN........................................................................................................................1
1.5 FINANCIAL PLAN..............................................................................................................................2
CHAPTER TWO.........................................................................................................................................3
BUSINESS DESCRPTION.........................................................................................................................3
2.1Business Name.......................................................................................................................................3
2.2 Business Location and Address.............................................................................................................3
2.3 FORMS OF OWNERSHIP...................................................................................................................4
2.4 TPYE OF BUSINESS...........................................................................................................................4
2.5 PRODUCTS AND SERVICES.............................................................................................................4
2.6 JUSTIFICATION OF OPPORTUNITY................................................................................................5
2.7 INDUSTRY...........................................................................................................................................5
2.8 GOALS OF BUSINESS........................................................................................................................6
2.8.1 Short term-goals.................................................................................................................................6
2.8.2 Long term goals..................................................................................................................................6
2.9 ENTRY AND GROWTH......................................................................................................................6
2.9.1 Entry strategy.....................................................................................................................................6
2.9.2 Growth Strategy..................................................................................................................................6
CHAPTER THREE.....................................................................................................................................7
3.0MARKETING PLAN.............................................................................................................................7
Customers....................................................................................................................................................7
3.2 Market share..........................................................................................................................................7
3.3 Competition...........................................................................................................................................8
3.4 Methods of promotion and advertising..................................................................................................9

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3.4.1 Advertisement....................................................................................................................................9
3.4.2 Promotion...........................................................................................................................................9
3.5 Pricing Strategy...................................................................................................................................10
3.6 Sales Tactics........................................................................................................................................10
3.7 Distribution Strategy............................................................................................................................11
CHAPTER FOUR.....................................................................................................................................12
ORGARNIZATIONAL/MANAGEMENT PLAN....................................................................................12
4.1ORGARNIZATIONAL STRUCTURE................................................................................................12
4.2 Key management personnel/Business manager...................................................................................12
4.2.1 Manager............................................................................................................................................12
4.2.2 Assistant manager.............................................................................................................................13
4.2.3 Supervisor.........................................................................................................................................13
4.3 OTHER BUSINESS PERSONNEL....................................................................................................13
4.3.1 Distributors.......................................................................................................................................13
4.3.2 Watchman.........................................................................................................................................14
4.3.3 Maintenance.....................................................................................................................................14
4.4 Recruitment training and promotion of personnel...............................................................................14
4.5 Remuneration and incentives for personnel.........................................................................................15
4.6 Licenses, permits and by law...............................................................................................................15
4.7 Other support services.........................................................................................................................16
CHAPTER FIVE.......................................................................................................................................17
5.0 OPERATIONAL PLAN OR PRODUCTION.....................................................................................17
5.1 PRODUCTION FACILITIES AND CAPACITY...............................................................................17
5.2 PRODUCTION STRATEGY..............................................................................................................19
5.2.1 MONTHLY MATERIAL REQUIREMENTS.................................................................................19
5.2.2 Monthly Labour Requirement...........................................................................................................19
5.2.3 Monthly Overhead Cost....................................................................................................................20
5.3 Production Process..............................................................................................................................20
5.4 Regulations affecting operations..........................................................................................................21
CHAPTER SIX.........................................................................................................................................23
FINANCIAL PLAN..................................................................................................................................23
6.0 PRE OPERATIONAL COST..............................................................................................................23

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6.1 WORKING CAPITAL COST.......................................................................................................23
6.3 PROJECTED CASH FLOW STATEMENT 2017.............................................................................24
PROJECTED CASH FLOW STATEMENT 2019....................................................................................25
PROGRAM INCOME STATEMENT.....................................................................................................26
6.2 PROFORMA BALANCE SHEET................................................................................................26
6.6 BREAK EVEN POINT.................................................................................................................27
6.7 PROFITABILITY RATIO............................................................................................................28
6.8 DESIRED FINANCING................................................................................................................28
6.8 PROPOSED CAPITALIZATION.................................................................................................29

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 CHAPTER ONE

1.0 EXECUTIVE SUMMARY

1.1BUSINESS DESCRIPTION

The name of the business will be Sangal's Tree Nursery production.

The business will be located in Uasin Gishu county around cheptiret market. The business will
be in a residential home forest. The farm where the seedling will be planted in near the river.

1.2 MARKETING PLAN

The form of a business is a sole proprietorship and kind of business owned and managed by
individual and it’s because of this reason that owner is able to mobilize business to ensure that
the targeted population and groups are served satisfaction, because of easy and less costly
decision making.

1.3 ORGARNIZATIONAL PLAN

The manager is in charge of every operation being undertaken in the business being assisted by
the Assistant Manager. The supervisor comes after the assistant manager who supervises the
other staff like watchmen, planters and distributes who carry out daily duties of the business. The
business has adopted a flat and smooth structure whereby authorities flows from top to bottom,
therefore enhanced uniformity in the organizational policies.

1.4 OPERATIONAL PLAN

The owner of business selected the right tools and equipment to ensure efficient provision of
customers. Daily maintenance and repair of these tools and equipment are put in order and
consideration. Customers will be offered with products like seedlings from the nursery tree
production and should be served with different types of trees.

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1.5 FINANCIAL PLAN

T he total amount of capital needed to start the business was amounted to twenty five thousand
(38000)

This was obtained from:

Personal savings-20000

Loans-13000

Friend’s contributions-5,000

Sum=20000+13000+5000

Total=kshs 38000

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 CHAPTER TWO

BUSINESS DESCRPTION

2.1Business Name

The owner of the business has decided to name her business Sangal's tree Nursery production.
The name or word "Sangal" i inherited the name from my grand father i named Sangal's tree
nursery production because it's common and unique name

2.2 Business Location and Address

The business is sited next to a busy market a few meters from a well known town Cheptiret.

SANGAL'S TREE NURSERY PRODUCTION

P.O. BOX 36

BURNT FOREST

TELEPHONE NO: 0717001212

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2.3 FORMS OF OWNERSHIP

The form of a business is a sole proprietorship and it’s kind of business owner and managed by
individual. The owner has a number of lessons as to why he chose the sole proprietorship form of
business including; The owner enjoys all the profits alone as compared to other forms like
partnership whereby not less than two people share profits.

The business is flexible and the other owner can be very diligent decisions very easily hence can
commence a number of development project for betterment of the business since he can adopt a
dynamic world of technology without consultation.

The owner is called Sheila sangal and she is 26 years old.

2.4 TPYE OF BUSINESS

The owner of the business has proposed as the production enterprise type of business.

His justification for his production type of business is majority to buy seedlings and plant them
in well constituted set apart land and after someday with an attainment of particular size and
types and thereafter sold to the customers wherever they are found.

2.5 PRODUCTS AND SERVICES

The products that will be offered by the tree nursery will include seedlings of:

 Blue gum
 Cypress
 Mahogany
 Eucalyptus
 Elgon teak
 Kaepples
 Mangoes
 Pines

The owner will be selling these products in seedlings and from the height of about 35cm above
the ground before being sold. The owner will be selling the products in retail and wholesale to
benefit customers both those buying in large quantities and those also buying in small quantities.

Blue gums are green reddish with tiny stems. Kaeplles are green with very small leaves and also
tiny. Eucalyptus is white like when small and has very tiny white stem with rough stems still and
small tiny secreted leaves.

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2.6 JUSTIFICATION OF OPPORTUNITY

A number of factors favours the location of this business and includes; availability of electricity
which is used to propel the fence and also used in tracking the thieves and ensuring maximum
security. The owner also sees vital since there is a nearby forest planted by foreign investors
hence market will be available as this project comes to a successful completion. A number of
secondary schools are available due to increase in population in the area near the site they do
purchase seedlings for their agricultural practical’s purposes.

The Government as the main customer who buys seedlings to do replacement in Uasin Gishu
county.

2.7 INDUSTRY

The owner of the business valued it as a production industry. He starts with small number of
seedlings allows multiplying with his care and thereafter distributing to a number of individuals
for trading commercials activities.

The owner’s business is medium sized and she discourages too much commitments that could
have been if too large. This has also been based by the amount of capital invested and number of
employees who will paid their wages heir incentives and the remuneration to motivate them
more active hence high efficiency.

The labor intensive is kind of technology the owner has preferred and this is more economical as
compared to others and will enable the owner to acquire at least every requirement towards the
satisfaction of human wants.

The employees are as follows:

The one who will be in charge of maintain seedlings area and making sure that the area is well
fenced to ensure proper security. The owner as well decided to employ three workers who will
be watering at specific time, there are enough because of the methods used during watering and
uprooting deserves.

To ensure sales volume is appealing offers discounts to his customers being on their buying
capacity. However the owner is analyzing this very much to avoid too much competition which
is an unnecessary risk. The owner will employ people in the community to carry out all the
endeavours, paying the wages therefore improving their standard of living among residents in the
community.

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2.8 GOALS OF BUSINESS

2.8.1 Short term-goals

The owner of the business would like to maximize his profit selling his product both in ash terms
and offering credits facilities particularly to the potential customers this will enable customers
acquire goods in large bulks that would have attained in cash terms and ensure high demand of
products which intern maximizes credit.

The owner will make sure that there is high communication and good relationships with
customers to keep informed of the products of goods taken credit/remind them on specified time
of making payment. This will finally ensure that debt is avoided at all cost and goals of business
achieved or meet efficiently.

2.8.2 Long term goals

The owner has great plans and determined to achieve her long term goals in a way of acquiring
her own which are normally used by the employees the owner will do this economically reduce
the expenses incurred in renting theses houses. The owner also wishes to acquire a private
vehicle for transportation purposes, which will ensure no delay of or in supply of products.

2.9 ENTRY AND GROWTH

2.9.1 Entry strategy

The creation of awareness is an important factor in every business and the owner would like to
benefit from by advertising his product so as her customers will know the availability of products
and their importance in an economy. The information may be given out through the Radio. The
radio advertisement has a number of importance including widely spread of the nation, advertise
in languages that are easily understood by local people.

2.9.2 Growth Strategy

The owner ensures that there is instrumental opportunity for in the growth of the business the
owner is very innovative and creative in a way of promotion of products and business at large for
effective and efficiency of production. The owner therefore is her regards offers after sales
services like transport to its customers and also offers discount to her potential customers to
maintain high demands of product and customers as well.

The owner for instance will also provide education to his customers and the public at large on
matters relating to his business to ensure her customers buy a their own being coerced(forced)
and this will therefore build plans for expansion of the business.

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 CHAPTER THREE

3.0MARKETING PLAN

Customers

The owner of the business has her potential customers as follows:

a) Individuals:

These include people mainly from the local area who will be buying the products for farming
consumption. Although they may be buying in small quantities, it’s also important that they will
be buying daily as basic needs. And among these individuals are small scale business men and
women who will be purchasing the products for their business activities with the aim of making
profit.

b) Institutions

These are customers who are expected to contribute to a large quantity of product demanded at a
given period because they buy in large quantities or bulks. These institutions will include
schools, particularly high schools and factories which they usually buy for practical purposes as
for the aim of beautifying the surrounding environment. The nearby factory which is about 2kms
from where the business is located is another institution expected for considerable reasons to buy
the products in large quantities hence encouraging the owner to produce more in order to satisfy
her customers.

3.2 Market share

The business or patron age 35yers the total market which is about one thousand kilometer square
which is approximately for thousand people who are expected to be served with the products.

The owner has four competitions who are expected to complete with her in business favorably
and area population control by each competitor is represented in the chart below

The ratio of competitors is therefore given as:

A: B: C: D

1:2:3:4

The owner is now presented by letter ‘A’

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 Sales

36% A
B
144% 72% C
D

108%

Converted percentage
Obj100

A= 36 X 100

360

=10%

B= 72 X 100

360

=20%

C= 108 X 100

360

=30%

D= 144 X 100

360

=40%

3.3 Competition

Competition in any business is vital to those carrying out the business in that one will Strule to
produce high quality products and enough so that customers are retained hence motives the
owner of the business to continue supply and ready market for product

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The owner has competitors namely:

a) Corner tree nursery production

b) Lerruda tree nursery enterprise
c) Nyayo tree nursery supplying group

Corner tree nursery production is located 5 kilometers from EldoretTown where the owner ‘s
business is located, whereas the other competitor tree nursery production is located at the same
area next to each other and is about 7 km from the town which is quite far from the town, hence
advantageous to the owner of the business who will not spent a lot money in transporting product
to the people living in urban centers where god number of customers are found.

The owner business is located near to the customers and she plans to improve her strengths and
reduce weakness so as to boost the business. For this reasons she will improve packaging style
produce high quality enough and avoids over sticking to reduce wastage.

3.4 Methods of promotion and advertising

3.4.1 Advertisement

Creation of awareness of the products to the customers is a vital exercise in business and ensures
smooth running of the day to day endeavors of the business. In this regard the owner has selected
the media to be used for advertisement which is radio maisha station which is widely known and
accepted by the local people. Maisha radio uses both English and Kiswahili language to advertise
hence suitable for the literate since its postures are also used as another method of advertisement
since its relatively cheap and any language can be used to suit the targeted group or people.

3.4.2 Promotion

Promotion is aiming or increasing the volume of sales as well as attaining and maintaining
potential customers. Some of the methods of promotion include:

 After sales service e.g. transport

 Free sample
 Discounts

However the owner will try as much as possible to use less costly means of both advertisement
and promotion

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3.5 Pricing Strategy

As the owner prepares the prices of the products or coming up with a price list she must consider
the following factors that could affect the development of pricing strategy.

 Price of other related goods

 The availability of products and their quality
 The income of the consumer or their purchasing power

The owners will giving out her products in credit terms at a given period to her customers and its
determined by the quality hey should usually or they have purchased. The settlement of debts
will be made at an agreed period of time which is reasonable to both parties to avoid bad debt at
all costs.

Bulk buying of the customers also given them an opportunity to enjoy discount which will be
offered to them. Most of the discounts are of small quantities and this happens at a proper
arithmetic and accounting calculations has been carried out to ensure no loss is experienced at
any one given point time though in some instance of circumstance that this may not be avoided.

3.6 Sales Tactics

A shop will be opened at the scene where the sale will be carried out particularly to the people
who are near and who can reach the place without many expenses.

This will be possible because the tree nursery itself is in the town. The other group of people will
be transporting seedlings to the place next to Eldoret to sell. Where any ceremony will be taking
place that concentrates a crowd of people will be attended by sale force: this will be achieved
because a owner’s place, wheat farmers being paid their monthly cash money at wheat buying
centers and so the milk farmers.

The sales force will be recruited according to their qualifications and experience. Interviews are
conducted by the owner of the business who is qualified for the exercise.

The high level of education individuals may be avoided since they may demand too much pay of
which the enterprise may not be in a position to afford so. The same avoidance may happen to
low or those who may cause loss and wastage of resources, because of carelessness which can b
avoided. The medium once therefore maybe given chance.

The people who carry our distribution process will be motivated so as to increase efficiency of
the business by being given fair wages and salary compensation, good working condition and
organization training while in job. i.e. on the job training.

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3.7 Distribution Strategy

Roads transport is the major mode of transport which is usually used in the area. Its no doubts
that transportation of goods will not much challenge because roads are fairly of good conditions.
Since the business is still small and yet to improve in future, the owner prefers motorbike and
taxi as means of transport. This is because they are at least cheap and will give room for
improvement of activities without a lot of struggle which may end up discouraging and make
someone surrender instead of encouraging and motivating

However the owner will be using the vehicle and big Lorries to transport products in some
instance that may not suit bikes and taxis transportation which may include supply in large bulks
or when they are required urgently are when distance demands a lot.

The vehicle will be hired for a given period of time and owner will be in a position to posses it
with the smallest prices, she can afford. The owner expects a number of challenges in
distribution strategy which includes poor weather conditions, seasonal purchase of products and
shortage of products as demand goes high.

The owner will therefore ensures that there is enough stock to avoid shortage by increasing
production.

The owner is looking forward with strong determination and plans to expand the business
distribution channels in future. Amongst which is purchased of his own lorry to replace the
motorbike hence avoid the slow means and delay and cope with situation of emergency. She also
hopes to recruit more qualified and skilled personnel to ensure that proper management is carried
out to higher standards to achieve the targeted objectives.

Producer wholesaler retailer customers

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 CHAPTER FOUR

ORGARNIZATIONAL/MANAGEMENT PLAN

4.1ORGARNIZATIONAL STRUCTURE

4.1 ORGARNIZATIONAL STRUCTURE

The owner of the business has come up with an organizational structure which entails how the
business co-ordinates to accomplish its objectives or goals.

Below is the structure illustration.

Manager

Assistant Manager

Supervisor

Watchman Maintenance Distributors

4.2 Key management personnel/Business manager

4.2.1 Manager

The manager who is at the top management team is only one. She has pursued a Higher Diploma
in Agricultural and she has an experience of four years after working as an assistant manager at
county agricultural office.

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Her duties and responsibilities in the business include:

 Concerns with policy making and decision making

 Ensures smooth running of work
 Sets the organizational target
 Fight for well promotion of employees

4.2.2 Assistant manager

The business has only a single assistant manager where academic qualification is diploma in
forestry course with an experience of one year his duties and responsibilities includes:

 Training and recruitment of personnel

 Communicate of new policies to the supervisor
 Ensures supervisor office has necessary requirement

However the assistant manager will be standing on behalf of the general manager whenever she
is committed.

4.2.3 Supervisor

Has completed certificate in agricultural and with an experience of six months attachment at
Eldoret agricultural office Sacco

He is also sustained in the business with the basic salary of (5000) five thousand

He is in charge of the below responsibilities

 Ensures proper implementation of policies

 Ensures that employees co-operates together
 Deals with the books of account
 Ensures employees perform their duties to the highest standards
 They are also paid a salary of five thousand shillings(53,000)
 They are also given some allowance of 1000

4.3 OTHER BUSINESS PERSONNEL

The owner of the business has observed that those who will be assisting in conducting business
activities should be very inclusive that is subordinates staff.

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4.3.1 Distributors.

They are three in number form four leavers. They also have an experience of two and a half
years

Duties and responsibilities

 Distributing products to the markets

 Ensures no delay of product supply
 Make sure that products are in god order
 Creating good relation with the customer

4.3.2 Watchman

The watchman are two in number and are form four leavers too

Duties and responsibilities

 They exercise prevails of both day and night

 Ensures enough security of both properties and persons
 Ensures no shortcut around the farm

4.3.3 Maintenance

The business has two maintenance who are class eight leavers and they deal with the
maintenance of seedling nursery.

Duties and responsibilities

 They make sure that the nurseries are clean

 They uproot the weeds that emerges around the seedling
 Ensures watering of the seedlings
 They also spray with insecticides t kill the pest that destroys the god growth of the
seedlings.
 They also try in areas of monitoring general activities in the farm.

4.4 Recruitment training and promotion of personnel

The owner of the business has been that the acquisition and development of personnel is of great
importance

Recruitment:

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The business will use both internal and external source of recruitment under external sources, the
business prefers advertisement method whereby public announcement of vacancies through
different media. Under internal source current or present employees method whereby incase of
vacancy they are asked to recommend a person they think is able to fill up the position from
among them . This will help improve their morale and confidence as are recognized in the
organization as they are recognized in the organization as the key part of firms. This method is
economical due to the fact that les time and money is put into selection process.

Training

On job training has been suggested by the owner whereby individual employees are provided
with training at the work place. This is economical and helps to maintain employees of the
business.

Promotion

After constructive and systematic conduction for the same will be done accordingly so as to
encourage the employees to work hard towards the achievement of he selected goals of the
business.

4.5 Remuneration and incentives for personnel

The table below shows how the personnel will be compensated in the enterprise or in the firm

Personnel No Basic salary Allowances Total monthly

Manager 1 10,000 2,000 12,000
Assistant manager 1 8,000 1,000 9,000
Supervisor 1 5,000, 500 5,500
Distributor 3 3,500 300 3,800
Maintenance 2 2,000 100 21,100
Watchman 2 2,000 100 21,000
Total 72,400

Basic salary=monthly salary +allowance

Incentives

The employees of the business are provided with house by the owner of the business. They are
given holiday of at least one month after a period of six months so that they can have time to
interact with their families.

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4.6 Licenses, permits and by law

The local authorities business licenses, permits and by laws are required so that the business is
operated legally and according to the rules and laws governing it.

Farming license are obtained at Uasin Gishu county council. The permits which should be
possessed or owned at the commencement of the business is worth eight thousand shillings and
licenses acquired at cost of eight thousand. Both are renewed after a period of one year.

4.7 Other support services

The business will open its account number from two banking institutions including: Equity bank
and Kenya, commercial bank. Being a member in or one of these banks will provide an
opportunity to the owner to enjoy the services underlying like borrowing of loans.

Book keeping and accounting services will as well transpire so that the business will be in a
position to evaluate progress that whether it is making any profit or not and later makes a
response accordingly towards realization of its objectives.

The business will therefore hire qualified personnel who will be conducting some auditing
exercises and accounting matters probably at a monthly basis.

Performance appraisal will do apply where the owner of the business will look for merits rates or
evaluator who will evaluate the performance of the employees of the business.

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 CHAPTER FIVE

5.0 OPERATIONAL PLAN OR PRODUCTION

5.1 PRODUCTION FACILITIES AND CAPACITY

The business requires various tools, machinery and equipment necessary for the production and
operations activities. The table below consists of these requirements and the number, the cost,
the capacity and the source of this vital retirement of operations are also indicated.

ASSETS SPECIFICATION NO COST SOURCE

Wheelbarrows 2 2400 Bushiarr’s hardware
Slashers 4 3000 Bushiarr’s hardware
Spades 4 100 Bushiarr’s hardware
Pangas 3 750 Bushiarr’s hardware
Total 6,550

These machinery, tools and equipments will be supplied in the site of the business one month
before the business kicks off so that enough time is taken in addressing those of value and ensure
that they are of the right quality.

The equipment and tools will be maintained by workers concerned every time after use to ensure
that they last longer

The availability of the spare parts was considered before those tools and equipment were
purchased. This will ensure continuous and continuity of production process

The tools are concerned with the expansion of its operations and production therefore a future
plans may include purchase of a vehicle, purchse of high quality tools, machinery and equipment
to ease operation activities. Expansion of tree seedlings nursery will also be a priority as the
owner becomes known or famous because high demand for products is expected in future

The table below shows the facilities that a business requires for it to run successfully.

Machinery specifications cost Date Terms of Source

equipment acquired acquiring
Wire(barbed) 4 roles 24,000 3/4/17 Purchase Bushiarr’s hardware

Wheel barrow 4 16,000 6/4/17 Purchase Bushiarr’s hardware

Pangas 5 750 10/4/17 Purchase Bushiarr’s hardware

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 Slashers 4 3000 14/4/17 Purchase Bushiarr’s hardware

spades 3 4350 17/4/17 Purchase Bushiarr’s hardware

Total 48,100

Total cost= 48,100

The business is sited at Eldoret 64 Building 3rd Floor Room 8 and down the ground is Naivas
Supermarket.

The drawing below shows the ground plan of the business.

Naivas

Reception Care
Office Taker

Managers Maintenance
Office Quarters
Office
Ass. Manager

Tree Nursery
Production

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5.2 PRODUCTION STRATEGY

5.2.1 MONTHLY MATERIAL REQUIREMENTS

The owner of the business has designed and developed an operation strategy to ensure that she
attains her objectives at a reasonable time and therefore monthly with their cost and where
acquired or their source.

Materials Quantity Cost per unit Overall cost

Polythene bags 20gms 1000 2000
Slashers 2pairs 1000 2000
Aprons 2pairs 2000 4000
Seedling seeds 20bags 5400 108000
Total 116,000

This means of transport will be the use of boda bodas because they are the main transportation
means that is fulltime available in the business.

5.2.2 Monthly Labour Requirement

Human resource is the main driver of any operation being undertaken in every business and it is
required in each and every moment.

The personnel available for various department and different responsibility are listed below with
their monthly salaries. However honour may be required to hire other personnel whenever
needed to deal with emergency issues or offer skills which may not be available at the moment.

Types of labour Employees No of Rate per month Total amount

employees
Indirect labour Owner 1 12000 12000
Direct labour Maintenance 2 2000 4000
Cashier Watchman 2 2000 4000
Indirect labour Supervisor 1 5000 5000
Indirect labour Assistant manager 1 8000 8000
Direct labour Distributor 3 3500 10500

Total 43,500

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5.2.3 Monthly Overhead Cost
Cost
Expenses
Rent 20,000
Maintenance and repair 7000
Water 20000
Electricity 5000
Advertisement 15000
Salaries 32400
Bank charges 18000
Total 117,400

5.3 Production Process

The diagram below illustrates the production/operational process of the product being offered by
the owner in the business

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 ORDERING OF THE TREE SEEDLINGS

RECEPTION OF THE ORDER

COLLECTION

PACKAGING

DISTRIBUTION OF PRODUCTS

5.4 Regulations affecting operations

There are various specific rules and regulation affecting this particular type of business, they
include:

a) Safety Regulations

The owner will ensure his business with the Isiolo (Amaco insurance company so as to cope with
the risk of fire, theft and other factors that may be affecting its safety. This will ensure the
continuity of business no matter the risk and loss it may occur because the insurance company
will ensure that the insured is put back to his original position under the principle of indemnity

b) Health Regulations

The ministry of health and material services works under the objectives and policy that aims at
ensuring that the health of both employees is put into consideration and may require the owner to
have necessary facilities and services that will help in dealing with the issues of sickness and
illness particularly for emergency or abrupt cases or casualties.

The owners will therefore acquire some medicines from the recognized chemists and so as well
ensures that every individuals is put under the health conditions

c) Environment Regulations

The owner in cooperation with Isiolo county councils will work hand in hand to keep the
environment lean and free from pollutions majorly caused by cabbages spreads around.. the
owner will therefore obtain copies of rules and regulations from the ministry of environment.

21
The owner’s also required to plant different types of trees in the surrounding environment to
maintain nature and good attractive scenes.

d) Trademarks and copyrights

The owner is also expected to use the trade marks during advertisements to make sure that the
advertisement does not cross to the other nearby towns, like Laisamis and Marsabits and does not
cross beyond the expected places.

e) Government regulation

The business should also be compiled with all local authority regulations like license in order to
conduct the business.

f) Taxes

The business is expected by the government to pay tax on time to avoid misunderstanding as
prescribed by the law.

g) Product Act

The business ensures that the product sold is of required quality that should be checked by the
responsible bodies like Kenya bureau of standards (KEBS).

h) Workman Compensation

The owner will ensure that there should be compensation in case of any accidents, employees
should be compensated.

Cost associated with such compliance is given in the table below

Requirements Costs
Insurance 3000
Health facilities 1500
Environmental copies 500
Registration certificate 1000
Total 11,00

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 CHAPTER SIX

FINANCIAL PLAN

6.0 PRE OPERATIONAL COST

COST
ITEM
Electricity deposit 5000
Rent deposit 20000
Water deposit 20000
Advertisement 15000
Salaries 32400
Maintenance 7000
Bank charges 18000
Total 117400

6.1 WORKING CAPITAL COST

COST
ITEMS
Personal savings 10,000
Loans 10,000
Friends contributions 5,000
TOTAL 25,000

ITEMS Year 1 2018 Year 2 2019 Year 3 2020

Stock of raw materials 650,000 700,000 730,000
Stock of materials in 600,000 680,000 690,000
progress
Stock of finished 15,000 20,000 40,000
goods
Debtors 730,00 760,000 770,000
Cash at hand 182,000 190,000 125,000
Cash in bank 300,000 320,000 345,000
creditors (282,100) (250,000) (285,000)
TOTAL 7,594,900 2,390,000 2,439,000

23
6.3 PROJECTED CASH FLOW STATEMENT 2017
Jan Feb Mar April May June July Aug Sept Oct Nov Dec Total
Item/month

Bal B/F - 491,900 989,800 804,800 1,331,750 1,863,150 2,409,450 2,962,950 3,513,800 4,048,900 4,588,000 514,250 23,518,750

Cash Inflow

Cash sales 116,000 110,000 120,000 120,000 120,000 120,000 120,000 130,000 120,000 130,000 140,000 150,000 51,446,000

Loans 10,000 1,000 - - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 49,000

Debtors 730,000 735,000 740,000 745,000 745,000 745,000 750,000 755,000 760,000 750,000 745,000 740,000 8,945,000

Total received 856,000 1,337,900 1,184,000 1,674,800 2206750 2749150 3305450 3853950 4384800 4919900 647400 6033550 14401002

Cash outflow

Credit paid 282100 280000 280000 275000 275100 270000 275200 270000 2752000 270000 265000 260000 1,089,315

Wages and 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 388,800

salaries

Rent 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000

Telephone 100 100 150 150 200 200 100 150 100 200 150 150 750

Electricity 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,600

Licence 2000 - - - - - - -- - - 2,000

Transport 500 600 600 500 400 500 300 400 400 500 600 500 5,800

Repair 1,000 6,000 6,500 5,000 5,000 5,500 5,000 3,000 4,000 4,000 3,800 3,500 25,600

Insurance 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

Water 20,000 3000 3500 4000 4500 5000 3500 3000 2500 4000 3000 2500 37,000

Total 384,100 348,100 380,650 343,050 343,600 339,700 342,500 340,150 335,900 331,900 331,450 325,350 4,146,450

24
payment/outflow

Net cashflow 491,900 989,800 804,150 1,331,750 1,863,150 2,409,450 35138004048900 4,588,000 4048900 4588000 514550 5708200 10254550

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PROJECTED CASH FLOW STATEMENT 2019

Item/month Jan Feb Mar April May June July Aug Sept Oct Nov Dec Total
Bal B/F 10254550 10746450 11244350 11724700 12246650 12778050 13324350 13324350 13857850 14268800 14817900 15372450
Cash Inflow
Cash sales 116,000 110,000 120,000 120,000 120,000 120,000 120,000 130,000 120,000 130,000 140,000 150,000 51,446,000
Loans 10,000 1,000 - - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 49,000
Debtors 730,000 735,000 740,000 745,000 745,000 745,000 750,000 755,000 760,000 750,000 745,000 740,000 8,945,000
Total received 11110550 11592450 12105350 12589700 13121650 13664050 14200350 14748850 14604700 15149800 15703900 16263450 164,854,800
Cash outflow
Credit paid 282100 280000 280000 275000 275100 270000 275200 270000 2752000 270000 265000 260000 1,089,315
Wages and 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 32,400 388,800
salaries
Rent 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Telephone 100 100 150 150 200 200 100 150 100 200 150 150 750
Electricity 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,600
Licence 2000 - - - - - - -- - - 2,000
Transport 500 600 600 500 400 500 300 400 400 500 600 500 5,800
Repair 1,000 6,000 6,500 5,000 5,000 5,500 5,000 3,000 4,000 4,000 3,800 3,500 25,600
Insurance 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
Water 20,000 3000 3500 4000 4500 5000 3500 3000 2500 4000 3000 2500 37,000
Total 384,100 348,100 380,650 343,050 343,600 339,700 342,500 340,150 335,900 331,900 331,450 325,350 4,146,450
payment/outflo
w
Net cashflow 10746450 11244350 11724700 12246650 12778050 13324350 13857850 14408700 14268800 14817900 15372450 15938100 160,728,350

26
PROGRAM INCOME STATEMENT
2018 2019
ITEM
Sale/opening stock 25,000 25,000
Add purchase
Cost of goods sold
Gross profit 2,550,000 250,000
Less
Rent 240,000
Wages and salaries 388,800 388,800
Telephone 750 750
Electricity 60,000 60,000
License 20,000 20,000
Transport 5,800 5,800
Repairs 58,600 58,600
Insurance 12,000 12,000
Water 37,000 37,000
TOTAL 582950 582950
582950 582950
Profit before tax 1917050
Less tax 575115
Profit after tax 1917050-575115
=1340035

6.2 PROFORMA BALANCE SHEET

YEAR 1 YEAR 2 YEAR3

FIXED ASSETS COSTS COSTS

Wheelbarrow 2400 2800 3000
Spades 400 600 1000
Slashers 3000 2500 2800
CURRENT ASSETS
Debtors 730,000 760,000 770,000
Stock 600,000 700,000 720,000
Cash at hand 182,100 190,000 185,000
Cash in bank 300,000 320,000 345,000
TOTAL 1,812,100 1,970,000 2,020,000

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Capital
Loan(equity)
CURRENT
LIABILITIES
Creditors 300,000 34,500 325,000
Interest on loans 182,100 190,000 18,500
Bank overdraft 730,000 760,000 770,000
Capital employed 600,000 985,500 906,500
Total long-term 197000 2020000
liabilities 1812100

6.6 BREAK EVEN POINT

a) Contribution margin=total sales-variables costs

Contribution margin%=contribution margin x 100

Total sales

5,446,000-4,146,450

=1,299,580

b) Contribution margin %=1299550x100

5446000
=23.86%
c) Total fixed cost/expenses
=4,146,450
d) Breakeven point (in sales)= fixed cost
Cost % contribution margin
4146450
23.86%
=17378.4577

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 6.7 PROFITABILITY RATIO

WORKING FORMULA YEAR 2018 YEAR 2019

RATIO
TYPE
Gross x 100% 45.90% =25,000,000
Total sale
250,000 x 100
544,600
45.90

Return on Net profit after tax x 100 134.1935% 1341935

equity Owners equity
=1341935 x 100
10,000

Return on Net profit after tax x 100

investment 1,000,000
134%
134.1935 134.1935% 1341935

6.8DESIRED FINANCING
COSTS/AMOUNT
ITEM
Pre operational 117400
Working capital 25000

FIXED ASSETS 2400

Wheel barrow 400
Spades 300
Slashers 750
Pangas
6550
TOTAL

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 6.8 PROPOSED CAPITALIZATION

AMOUNT
ITEM
Owners contribution 5000
Friends contributions 10000
Loan from bank 10000
(equity)
TOTAL 25000

30