CHEMORUT HARDWARE

BUSINESS TITLE : CHEMORUT HARDWARE

TELEPHONE NO : 0759295140
INDEX NO :
EMAIL :[email protected]
m PRESENTED BY :GILBERT KIPNGENO

SUPERVISOR :

1
 DEDICATION
This book have been dedicated to my parents for
moral support, my classmates, sisters and mostly my
teachers.

2
 DECLARATION
I hereby submit this project to Kenya national
examination council as passion fulfilment for awarded
of craft certificate in plumbing.

I declare that this project is my original work and as

never been presented before and by other person.
NAME :GILBERT KIPNGENO

INDEX :
SIGNATURE:
DATE :
SUPERVISOR NAME :

3
ACKNOWLEDGEMENT
First and foremost I will like to thank the almighty
God for good health he has give hand to me as I was
writing this business plan.
My parent who gave me all the support not only
physically, financially, moral but also emotionally.
My sisters and brothers who are in south Africa who
supported me with ideas to complete this project
may God bless you in abundant.
I would also like to acknowledge my friend and my
classmate and not forgetting my supervisor for
guidance and supervisors.

4
TABLE OF CONTENTS
CHAPTER ONE
1. Background of
owner…………………………………………………………………………
…………………………..
1.1. Business
name………………………………………………………………………
…………………………………..

5
 1.2. Business location and
address……………………………………………………………………
………………
1.3. Form of
ownership………………………………………………………………
……………………………………..
1.4. Product and
services……………………………………………………………………
………………………….
1.5. Justification………………………………………………………
………………………………………………………
1.6. Industry……………………………………………………………
………………………………………………………..
1.7. Goals of the
business…………………………………………………………………
…………………………..
1.8. Entry
strategy……………………………………………………………………
……………………………………….
1.9. Objectives of the
business…………………………………………………………………
……………………..
CHAPTER TWO
2. Marketing plan
6
 2.1. Customer
2.2. Market share
2.3. Competitions
2.3.1. Advantages
2.3.2. Disadvantages
2.4. Methods of promotion and advertisement
2.5. Pricing strategy
2.6. Sales tactics
2.7. Distribution strategy
CHAPTER THREE
3. Organization and management
3.1. Management team
3.1.1. Manager
3.1.2. Accountant
3.1.3. Suppliers
3.1.4. Drivers
3.1.5. Casual workers
3.1.6. Security
3.2. Recruitment/ training and promotion
3.2.1. Recruitment
3.2.2. Training
3.2.3. Promotion
3.3. Renumeration and incentives
3.4. License and registration
7
 3.5. Support services
3.5.1. Insurance
3.5.2. Communication
3.5.3. Banking
3.5.4. Legal services
3.5.5. Health services and water supply
CHAPTER FOUR
4. Productional and operational plan
4.1. Production facilities and capacity
4.2. Firm layout
4.3. Production process
4.4. Regulation affecting operation
4.4.1. Environmental pollution
4.4.2. Sanitation
4.4.3. First and kit
4.4.4. Fire extinguishers
4.4.5. Trading license
CHAPTER FIVE
5. Financial plan
5.1. Introduction
5.1.1. Overview
5.1.2. objectives
5.2. Pre-operation costs

8
 5.3. Proforma statement
5.4. Balance sheet
5.5. Break even analysis
5.6. 1st year cash flow statement

5.7. 2nd year cash flow statement

5.8. 3rd year cash flow statement
5.9. Desired business financing
6. Proposed capitalization
6.1. Potential risks

EXECUTIVE SUMMARY
1.1 Chapter one
It consist of introduction to business name, location,
address, form of ownership, type of business,
production and services.
It also add products and services one is selling,
satisfaction of the opportunity the industry goals entry
growth strategies and plan under business description.
CHAPTER TWO
9
 MARKETING PLAN
In this chapter describes the strategies the will use to
market is business
CHAPTER THREE
Consist of organization and derangement of the business
which will be able to indicate growth or collapse in the
business. This include labour, law license, permit and by-
laws support services organization alert among others ,
that influences strategic plans for the business.
CHAPTER FOUR
It consist of operational plans under which an employer
overseas the business and implement rules and
regulations to his employees and implements rules and
regulations to his employees and also provides tools and
equipment to ensure smooth flow of the business consist
of financial that enables the business to operate that is
working capital pre-operation tasks projected cash flow
that enable to identify the structure that assists the
business.
CHAPTER FIVE
Financial plan

10
This chapter entails the balance sheet source of the
business, finding, trading profit and loss accountant.
Break analysis, profit and loss account , project cash flow
in ksh for business per month for a duration of one year.

CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.0 BACKROUND OF THE OWNER
NAME:GILBERT KIPNGENO
1.1 MARITAL STATUS: SINGLE
AGE: 24 YEARS OLD
EXPERIENCE:
1.2 BUSINESS NAME
The name of the business will be called CHEMORUT
HARDWARE
1.3 BUSINESS LOCATION AND ADDRESS
11
The business will be located in KERICHO COUNTY,
LONDIANI SUB-COUNTY.
The address will be
P.O BOX 42841-00100,
LONDIANI
TELEPHONE NO :0759295140
EMAIL : [email protected]

12
1.4 FORM OF OWNERSHIP
This will be a sole proprietorship and GILBERT KIPNGENO
will be the director of the business
1.5 PRODUCT AND SERVICES
The business will be selling cement, pipes, plumbing
joints, iron sheets equipment all masonry tools and
equipment.
1.6 JUSTIFICATION OF OPPORTUNITY
I decided to locate my business at LONDIANI along the
highway since their were no other hardware around the
area there is growth of town around the area due to
construction of highway and the increasing of population
of people working on the JAMES FINLAY flowers
company and students from LEMOTIT TECHNICAL
INSTITUTE that has accelerate the number of people
building rental houses, shops and hotels around the area
which make ready market for my products.

13
1.7 INDUSTRY

The business falls under building civil engineering

department and plumbing section.

CHEMORUT

HARDWARE

14
My business will have advantage because in our locality
there is no other hardware.
In my business I will make sure it made the wants of the
customers by ensuring there is all products and
equipment are available at all time in the hardware and
selling of products on recommended and standard prices
and also selling of quality products.
I will also offer free transport to a customers who buys
the materials worth 10,000 and above.

1.8 GOALS OF THE BUSINESS

The business will me to earn a leaving as well as my
employees.
In future I would like to expand my business and to open
other branches in other towns.
I am also aiming to contracts large tenders to supply my
goods and to do business with big companies and is
possible nationality.

15
1.9 ENTRY STRATEGY
In my business I will be offering free transport and
discount on a customers buying goods worth KSH 10,000
and above.
Yearly CHEMORUT HARDWARE would be giving out T-
shirts and overalls to customers to market the business
name outside the area.

1.10 OBJECTIVE OF THE BUSINESS

My business ensure there is no bending bills for the first

five months to avoid risks of my business to collapse.
I will subsids goods and giving out commission to my
customers.
1.10.1 GROWTH STRATEGY
for the business to grow I most sacrifice and utilize
resource and the profit gained in two years and reinvest
for the further expansion of the business.
This will be achieved through establishing a market to
plan in order to gain competitive advantage.

16
The location of the business is also advantageous since it
is near to the market and also along the highway.
During week days the business will operate from 8:00 am
to 5:00 pm.

CHAPTER TWO
2.0 MARKETING PLAN
2.1 CUSTOMER
We have many strategic plans to achieve it’s objectives
and to reach the market demands.
These are like expanding it’s operation and also
employing staff personnel to help in management.
The business will be located in place where can be
reached by many people thus capturing many customers
. The business will do through advertisement , offers
promotions giving out discount, to win the customers
interest and wants . The pricing of goods will be friendly
to customers to avoid losing customers . The products
will be readily available at all time needed by customers.

2.2 MARKET SHARE

17
On the research done shows that the business serves
around 1200 customers who are frequent and potential
customers . The good news is that we are soon opening
another businesses outside the area.
2.3 COMPETITIONS
Since my business is the only business selling the building
products , I will make sure I do all the needs of the
customers to satisfy them and to capture many
customers in the area.

2.3.1 Advantages
We also offer free transportation of goods,
The location of a business area easy since we are located
in the highway and signposts indicate and shows of our
premise.
2.3.2 DISADVANTAGES
Some time in our premise we run-short of products due
to high demand of products and also supplier failing to
supply goods in time.
Revenue and taxation is challenging because the business
is located between two counties which we give the

18
business challenges in terms of revenue and tax
collection by the two county government of KERICHO
and NAKURU.

2.4 METHODS OF PROMOTION AND ADVERTISEMENT

I prefer the use of internet in marketing my business
since now days internet commonly used by many people
and the development of E-commerce this will reach out
to many customers and also it’s the fast means of
communication.
I will also use printed T-shirts and aprons to give out to
customers buying goods of a certain amount. This
method will also to win the customers interest and also
marketing of the business.
2.5 PRICING STRATEGY
On the selling and pricing of my products will depend on
many reasons:
 The durability of the goods
 Fluctuation of market price

19
  Through the buying price
 The price of the products will be fare
and pocket friendly to all customers
products Units cost Selling price Profit
margin
W.C cistern 7.500 8,000 500
PRR pipe 250 3,000 50
Tap 70 100 30
Tee 50 70 20
Valve 150 200 50
Cement 850 1,000 250
Iron sheet 800 1,050 250
union 40 60 20
TOTAL =9,710 =10,780 =10,70

2.6 SALES TACTICS

We will employ some methods so that my business may
succeed
 We will ensure we sell first moving products
 We create good relationship with our employees

20
2.7 DISTRIBUTION STRATEGY
The means of transport will be road since, it is more over
and it is reliable means in the area and it is also only
effective method of transport used in the area give that
air and water transport are not available ,
In our we have develop E-commerce so some of our
products will be sold only and some delivered straight
to my clients directly to their premises and site by my
trusted driver , and other we sell on the center.
3.0 ORGANIZATION AND MANAGEMENT
3.1 MANAGEMENT TEAM
We will be putting strategies on how our business can
perform better .
One of the ways will be having capable staff who will be
helping me achieve my goal and be efficient as possible.
3.1.1 MANAGER
 He will be the custodian of the business the head of
business
 Supervise business transactions and operations
 Carrying out short term and long term planning of
the business
 Recruit the required personnel or staffs
21
 Experience
At least 2 years of working in the same field of
specialization
Qualification
 He/she must have done course in building
technology or civil engineering’
 He/she must have at least certificate or diploma in
building technology or civil engineering course
 He/she should have no criminal record
 He/she must provide clearance certificate of the
company he worked before
3.1.2 ACCOUNTANT
Qualification
The person should have done at least certificate in
accounts and finance to have our approval
 He/she should have a K.C.P.E certificate and K.C.S.E
certificate
 He/she should have no criminal record
Experience
At least 2 years of experience with recognized firm or
workshop

22
 Duties
 The person to be making sure all is well handling of
finances and calculating of balance sheet as well as
cash book entries
3.1.3 SUPPLIERS
Qualification
 Have certificate in supply chain management and
also have a certificate in computer course and 2
years experience

Duties
 He/she to ensure the customers who orders goods
delivered safely
3.1.4 DRIVERS
Qualification
The person most have gone to reconised driving school
and have a valid driving license
Experience
He/she must have been driving for at least 3 years on the
same track or vehicle

23
 Duties
The person will transporting goods from companies to
my firm as well as delivering goods to customers
3.1.5 Casual workers
Qualification
 He/she must be physical fit
 They should have cleared o level and have a
certificate to show that they at least have some
knowledge.
Duties
 Cleaning
 Loading and offloading
 Labeling of items
 Arranging the store
 Delivering of goods in short distance
3.1.6 SECURITY
Qualification
 He/she must have Identification card (ID), valid
certificate and good conduct
 He/she must have cleared O level education
 The person with N.Y.S discharge is added advantage

24
Duties
Guarding the goods against theft.
Making sure there is order in the premise.
3.2.0 RECRUITMENT/TRAINING AND PROMOTION
3.2.1 Recruitment
The recruitment of workers would be done through bill
board advertisement.
After recruitment the qualified person would be
interviewed according to his/her department
Of work, and the best persons would be shortlisted.
3.2.2 TRAINING
For the employees to deliver to the required standard
they must go through induction and short training to
enable them to be capable of handling tasks ahead of
them with lot of professionalism.
For the security personnel must undergo a compulsory
training on how to react and to handle emergencies
incase of fire outbreak, robbery and also to know how to
use alarm and fire extinguishers incase of such
emergencies occur in the premise.

25
We will be taking manager and accountant to other big
hardware for bench marking on how things are done.
3.2.3 promotion
The promotion woll be done according to the following:
 Experience
 Those who are working hard
The hand of promotion they will receive in salary
increment , allowances and presence.
We do promotion to boost the moral of our workers so
as deliver to the required standard.
3.3 RENUMERATION AND INCENTIVES
Different workers in different categories will be paid
differently as per the agreement or proposed salaries in
terms of payment.
SALARY SCHEDULE
Title Month salary Total pay per
year
Manager 34,000 408,000
Accountant 15,000 180,000
Suppliers 13,000 156,000
Driver 12,000 144,000
Casuals 9,000 108,000
26
 Security 7,000 84,000
personnel
TOTALS 90,000 1,080,000

3.4 LICENSE AND REGISTRATION

LICENSING COST PLACE OBTAINED
Business 6,500 KERICHO
registration OFFICIAL
Trade license 17,000 KRA
Business permit 5,000 COUNTY
GOVERNMENT
TOTAL 28,500

3.5.0 SUPPORT SEVICES

The business shall need support services such as :
3.5.1 Insurance
The business will need insurance in order to protect the
business against risk, such as theft and fire outbreaks.
The services will be provided by AMACO insurance
company Kericho branch.
3.5.2 Communication

27
The business intends to install FAIBA network for
effective E-commerce business within the department.
For external link, the business will also use Safaricom and
airtel network respectively. It will use Londiani post
office for holding its mail services.
3.5.3 Banking
The business will open accounts with equity and KCB
bank. The account will be current account. In case their
agency needs a loan.
The business will contact the bank or other financial such
as financial advisers, experts from the bank would be
contacted when needed.
3.5.4 Legal services
The business will also require the lea services of the:
KERICHO ADVOCATES
P.O BOX 396
LONDIANI
3.5.5 Health services and water supply
The business will acquire health services from Kericho
general hospital and water supply from
KEWASCO(Kericho water and sewerages company).

28
CHAPTER FOUR
4.0 PRODUCTION AND OPERATION PLAN
PRODUCTION FACILITIES AND CAPACITY
CHEMORUT HARDWARE will sell quality and first moving
products.
The facilities required in the operation and smooth running
of the business are listed in the table below.
ITEM SPECIFICATION UNIT QUANTITY TOTAL SUPPLIER
COST
COMPUTER HP 35,000 2 70,000 HI TECH
100,000 1 100,00 IZUZU
KENYA
STATIONARY WRITING 300 8 2,400 KASUKU
MATERIALS

29
4.2 FIRM LAYOUT

MANAGER

ACCOUNTANT

MAIN DOOR SECURITY STORE

PRODUCTION PROCESS
This involve steps to be followed efficiently to ensure
the business operates positively to the customers.
 To attend the customers immediately he/she
comes to the customers
 To direct and assist customers where they need
our assistance.
 Listening to our customers compliance and
remarks and working on them when
necessary.
4.4.0 REGULATION AFFECTING OPERATION
My business will adhere to all rules and regulation
governing the business in Kenya.

30
The following are regulations.

31
4.4.1 a) Environmental pollution
My business will participate fully in cleaning and conserving
the environment by collecting all litters and waste matters
from cutting of materials.
b) Sanitation
in my hardware I will build well trained sanitation like
toilets and bathrooms of required standards be used by
customers and some times customers.

c) Protective clothing’s
the enterprise will purchase protective clothes to every
worker in the premise this includes dust coats or overalls,
hand gloves and safety boots.
d) First aid kit
There will be a first aid kit in every room to help when there
is an injury case in the premise.
e) fire extinguishers
there will be a fire extinguisher in every room to help in
fighting fire incase of outbreak.
f) Trading license

32
For legal operation of the business to take place to
enterprise will obtain license from county government of
Kericho through the office of the county registrar.

CHAPTER FIVE
5.0 FINANCIAL PLAN
5.1 INTRODUCTION
In this chapter all activities concerning finances of the
business will be covered. The includes it fixed capital and
working capital , with access to both stated capital the
overall objectives of business will be achieved by the good
administration for the success of the business.
5.1.1 OVERVIEW
This chapter deals with financial aspects of the business is built
financial planning and budgeting is permanent requirement for

33
every business in order to achieve optimum management of
financial resources. It shows a firm expected investment ,
capital employed and expected returns.
It involves a preparation of a projected profit and loss account
balance sheet and cash flow statement. A well managed
business will lead to it’s success and leap maximum benefits.
5.1.2 OBJECTIVES
The financial objectives of CHEMORUT HARDWARE, will include
the following;
i. To maximize that rate of the return on capital
employed
ii. To maximize profit
iii. To ensure business has funds to enable it to remain
in operation.
iv. To maintain prices at the acceptable rate in the
market.
5.2 PRE-OPERATION COSTS
Means the cost incurred before the start of the business.
SOURCE OF FINDING
1. The family and friends contribution
2. Donation from well wishers
3. Personal savings
4. Loan from the bank
We will represent the data in a table form
34
 Item Cost (Ksh) per month
Salaries 1,080,000
Stationary 3,000
Electricity 15,000
Telephone 4,000
License and registration 12,000
Advertisement 1,000
Rent 8,000
TOTAL 1,123,000

5.3 PROFORMA STATEMENT

In this section we show annual income expected from table
either profit or loss depending on the balance between the
total annual income annual expenses.

35
 Description Year 1 Year 2 Year 3
Sales 3,460,000 3,830,000 3,900,000
Debtors 75,000 75,000 75,000
Total 3,535,000 3,905,000 3,975,000

Cash purchase 2,450,000 2,500,000 2,590,000

Gross profit 1,728,400 2,098,000 2,168,000
Expenses 70,000 70,000 70,000
Salaries 1,080,000 1,080,000 1,080,000
Electricity 15,000 15,000 15,000
Insurance 12,000 12,000 12,000
Advertisement 1,000 1,000 1,000

Total 12,426,400 13,601,400 13,886,400

Net profit before tax
389,400 390,000 391,000
net profit after tax 2,542,080 2,155,000 2,569,080
Less provision of tax
16%
146,700 192,000 194,200

5.4 BALANCE SHEET

ASSETS CAPITAL
Fixed assets
Furnitures 130,000 2,155,000
Computer 120,000
Telephone 5,000
Equipments 1,200,000
Toyota Pick-up 1,700,000
TOTAL 2,155,OOO 2,155,000

36
5.5 BREAK EVEN ANALYSIS
Break even analysis for the first year
Details Sales Fixed cost Variables
Sales 3,460,000
Expenses 70,000
Advertisements 1,000
Rent 8,000
Salary 1,080,000
Insurance 12,000
License 7,000
Stationary 6370
TOTAL 3,460,000 1,096,000 14,570

Total contribution margin= sales – variable

3,460,000-82,000
=3,378,000
Contribution margin = total contribution margin/ sales
=total contribution * 100%
Sales
=3,500,000 * 100% =324.074

37
38
 1,080,000

Breaker profit = fixed cost/ contribution margin

Fixed cost * 100
Contribution margin

39
5.6.0 desired business finances
The total desired capital to start the business will be Ksh
3,500,000
5.7 Proposed capitalization
The amount of capital required to start and operate the
business will be obtained from the source.
Item Amount
Bank loan 1,500,000
Own saving 500,000
Donation 800,000
40
 The family and friends 700,000
TOTAL 3,500,000

5.8 Potential risks

The business will buy two fire extinguishers and train
employee to fight during incidences of fire outbreak.

The business will employ one security officer to guard the

business against theft.

Low sales to attract more customers by offering discounts

after services.
In order to avoid cases of accidents we will train the workers
on safety measures during operation of various business
activitie.

41
42