MBALUS' ELECTRICAL DEALERS.

P.O. BOX 1189

KITALE

TEL: 0703541295

E-mail: [email protected]

COURSE CODE : 1601

PRESENTED BY : WAFULA WANGILA MARTIN.

INDEX NO : 5091111279

SUPERVISOR : MR. ROBINSON KIPROTICH

CENTRE : ELDORET TECHNICAL TRAINING INSTITUTE

PRESENTED TO : THE KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULFILLMENT FOR THE AWARD OF

CRAFT CERTIFICATE IN ELECTRICAL AND ELECTRINIC

ENGINEERING (POWER OPTION)

SERIES : NOVEMBER 2021.

DECLARATION.

I declare that this project is my original work after a through research and efforts I carried

out to the best of my knowledge. It has never been presented anywhere for marking.

Name: Wafula Wangila Martin

Signature…………………………………………………………………..

Supervisor Mr. Robinson Kiprotich

Signature……………………………………………………………………

Date…………………………………………………………………………
PREFACE

The main objective of starting this business is to bring goods and services near to the

customers which seem to be scarce in the area.

The second objective was to produce this business plan for anybody to need and

understand, this gains skills and knowledge on how to start, manage and run the business

effectively.

The business was also to act as a source of employment and not only self employment but

also to those paid employment to the workers in the business.

In summary this business plan teaches us a lesson as youths that we should not only

weight to be employed by the government but rather self employment is an immediate

alternative.

May God bless you.

ACKNOWLEDGEMENT

This business plan has been produced through a hand struggle. I would like to pass my

sincere gratitude to the following people because without them it could have been

impossible.

To begin with, God the Almighty is the one who gave the powers, skills and knowledge

on how to produce the business plan. My parents Mr. and Mrs. Dismus Wafula for their

financial and moral support towards the production of this document. Special thanks also

go to the supervisor Mr. Kiprotich for his guidelines and corrections he offered to me.

Other special thanks also goes to my friends that is Antony Wafula and Martin Wanjala

for their moral support to pursue this course.

DEDICATION

I dedicate this project to my father, mother and my uncle who are Mr. and Mrs. Dismus

Wafula and John Juma who encouraged me to pursue nice course and their financial

support.
 EXECUTIVE SUMMARY.

1.0 BUSINESS DESCRIPTION

The name of the business MBALUS' ELECTRICAL DEALERS.

The business will majorly deal with Electrical accessories like generators,

Electrical pipes, cables, conduits motors among others.

The business will ran on the sole proprietorship basis for easy management and

good expansion, for better improvement of the business; the business will employ;

the service men and women in order to facilitate good movement of the work.

The business is located along Eldoret Kapenguria road at Nyayo market

specifically on your right opposite Oilibya petrol station.

For contact one will address it as

MBALUS' ELECTRICAL DEALERS

P.O BOX 1189

KITALE

I brief that the business will succeed because of the following reasons.

(i) Ready market. This is because of the introduction of the new district

headquarters around the area which is a symbol of population increase.

(ii) Enough capital for initiating the business.

(iii) High skills and experience gained in the field of entrepreneur as a subject.

2.0 MARKETING PLAN.

The customers to the business will include, Nyayo market residents, Matisi

administration police, just but to mention a few.

 The business expects to take 50% of the market share that is 7,500 people out of

15,000 in the area, compared to Matibo Electrical dealers that takes 25%, Wegeta

electrical that takes 15% and other small electrical dealers shops on the market

taking 10%.

Further more the competitors will be disadvantaged by their poor service due to

low skills and experience low capital also facilitates to low rate of expansion.

For promotion the business will employ the following tactics:

(i) The business will adopt agents who will talk to customers and other

people about the good quality services of the business.

(ii) Posters, sticklers will be placed in several areas around the area and along

the road heading to several places. This will also make people to be aware

of the business.

(iii) Through Radio Broadcasts i.e. media and discount to customers,

faithfulness and after-sale service to customers will be done in order to

attract them.

In order for the business to overcome their competitors the price of the goods and

service will be slightly less than those charged by its competitors; comparatively

most demanding goods will be charged more while less demanding ones will be

charged less.

3.0 ORGANIZATIONAL/ MANAGEMENT PLAN.

The business will comprise of the following personnel; The manager who is the

sole proprietor, other assistants in the business will be marketing supervisor who

will have a diploma in marketing, Accounts clerk who should have a diploma in
 accounts and in addition must have a certificate and above in C.P.A Secretary

having a certificate in secretarial and a security officer, a driver both having

certificate in their area of specialization.

In order for the business to be run effectively all the employees will be offered

with further studies so that to cope up with the new technological changes.

Further more the manager will allow good communication and expression to

every employee and customers in order to work towards the customers’ desires.

The business will also have to acquire a certificate of ownership from the Kenya

Society of registry, land title deed from the ministry of land and the license from

the county council. This will allow free operation of the business.

Finally the business will have to introduce the by-laws that will govern the affairs

of the business for example, the employee who will not perform his or her duty

effectively will be sacked, no absentees without permission. The laws will

provide a working framework for each person in order to prevent collisions,

laziness, and theft in the business.

4.0 PRODUCTION PLAN

The business will require 9372.30 Kenya shillings for the purchase of production

facilities which will include phase testers, electrical pipes, fluorescent tubes,

grinders, pliers. Further more the business will enhance key maintenance

approaches i.e. preventive and routine maintenances, breakdown maintenance and

rating maintenance.

The following strategies will be observed in the business to ensure maximum

provision of goods and service. A field agent, in addition the business will spend
 48,700 Kenya shillings on monthly labour requirements 46,200 on monthly

material requirements and 55,833.30 on monthly production costs.

Any customers entering the business will be welcomed cordially, be allowed to

express their demand and finally thanked for buying, paying for a service of any

other concern.

5.0 FINANCIAL PLAN

The business will expect to meet the pre-operational costs worth 22,850 Kenya

shilling working capital of Kshs 85,900, Kshs 729,300 and Kshs 735,000 for

working years one, two and three respectively.

The business will also be expected to meet the following ratings, contribution

margin 60.25% break even of sales of Kshs 873,029.05, gross profit margin of

82.88%, 23.03% and 76.84% for years 1, 2 and 3 respectively. The return on

equity for the three consecutive years is expected to be 16.85%,14.85% and

12.6%.
TABLE OF CONTENTS PAGES

CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

1.2 BUSINESS LOCATION AND ADDRESS

1.3 BUSINESS ADDRESS

1.4 TYPE OF BUSINESS

1.5 PRODUCTION AND SERVICES

1.6 JUSTIFICATION OF OPPORTUNITY

1.7 INDUTSRY

1.8 BUSINESS GOALS

1.9 ENTRY AND GROWTH ATRATEGY

CHAPTER TWO.

2.0 MARKETING PLAN

2.1 CUSTOMERS

2.2 MARKET SHARE

2.3 COMPETITION

2.4 METHODS OF PROMOTION AND ADVERTISEMENT

2.5 PRICING STRATEGY

2.6 SALES STRATEGY

2.7 DISTRIBUTION TECHNIQUES

CHAPTER THREE

3.0 ORGANIZATION/ MANAGEMENT PLAN

3.1 KEY MANAGEMENT PERSONNEL

3.2 OTHER PERSONNEL

3.3 RECRUITMENT/ TRAINING AND PROMOTION

3.4 REMUNERATION AND INCENTIVES

3.5 LICENSE/ PERMITS AND BY-LAW

3.6 SUPPORT SERVICES

CHAPTER FOUR

4.0 OPERATION/ PRODUCTION PLAN

4.1 PRODUCTION FACILITIES AND CAPACITY

4.1.2 ENTERPRISE LAYOUT

4.1.3 REPAIR AND MAINTENANCE

4.2 PRODUCTION STRATEGY

4.2.1 PRODUCTION DESIGN AND DEVELOPMENT

4.2.2 MONTHLY MATERIAL REQUIREMENTS

4.2.3 MONTHLY LABOUR REQUIREMENTS

4.2.4 MONTHLY PRODUCTION COST

4.3 PRODUCTION PROCESS

4.4 REGULATIONS AFFECTING BUSINESS

CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATION COST

5.2 WORKING CAPITAL ESTIMATION

5.3 CASH FLOW PROJECTION

5.4 PROFORMA INCOME STATEMENT

5.5 PROFORMA BALANCE SHEET

5.6 BREAK EVEN POINT ANALYSIS

5.7 PROFITABILITY RATIOS

5.8 DESIRED FINANCING

5.9 PROPOSED CAPITALIZATION.

 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

The business will majorly deal with the electrical accessories that is buying and

selling to customers at domestic and commercial levels. The business will be ran

on the basis of sole proprietorship headed by the owner himself as the manager.

1.1 BUSINESS NAME.

The business will be identified as “MBALUS' ELECTRICAL DEALERS.” The

name is meant to catch up with customer’s attention because of its

easiness to be read and pronounced.

1.2 BUSINESS LOCATION AND ADDRESS.

The business is located at Nyayo market along Eldoret – Kapenguria roads. The

advantage of the business is that it’s near the newly District headquarters and thus

it expects high market due to increased population of Nyayo market residents and

its neighboring. The following were the main points based on before the selection

and location of the business.

(i) Availability of roads that links the market from several areas.

(ii) High demand of the products since there are few shops that sale electrical

equipments.

(iii) High security from the administration police because is near.

(iv) Availability of materials for example goods can easily be acquired from

Eldoret town and the neighboring country.

1.2.1 BUSINESS ADDRESS

One will identify the business through the following address

 MBALUS' ELECTRICAL DEALERS

P.O BOX 1189,

KITALE

Contacts 0703541295

1.3 FORM OF OWNERSHIP

The business will be owned by the proprietor because of the following

advantages.

 The proprietor will be the overall boss of the business thus he is the final

decision maker on any issues that arises basing on the business. This also

creates easy time for the proprietor to get the final solution unlike in

partnership form of business where every individual has to contribute in

finding a solution on any matters arising in the business.

 The proprietor enjoys the profit alone thus motivates him to work hard

towards the expansion of the business.

 There is high secrecy in the business because the matters will be handled by

the proprietor and remains with him alone.

Besides the advantages above the sole proprietor will be disadvantage through the

following.

 The business owners suffer losses alone.

 It will be difficult to delegate duties.

 In case of any absentees from the owner who is the controller of the business

then the business might stop working.

  Low rate of expansion for the business only one person is supposed to

contribute towards the success of the business.

Basing on the disadvantages mentioned above the owner of the business will

employ the following techniques so that to overcome them.

 The business will employ personnel basing on their qualifications as far as the

business is concerned.

 The business will lias with the banks in order to acquire loans in case there is

shortage of money.

1.4 TYPE OF BUSINESS

The proposed business will majorly involve in the buying and selling of electrical

accessories like generators, electrical pipes, motors, conduits, cables of different

sizes, pliers among others.

The business will also lias with the residents in order to carry out installation for

them in their houses and even in institutions in the area. Training for installation

practice will also be done to those who will the interest.

1.5 PRODUCT AND SERVICES.

MBALUS’ ELECTRICAL DEALERS will specialize in the buying and selling of

electrical equipments. The goods will be sod to people nearby as far as outside the

country basing on their demand. High quality products and services will only be

offered in order to attract more customers.

Further more transport and installation service will be offered to customers. Those

customers who will buy goods in large quantities will be given discounts and free

transport to them.
 Finally there will be training offered to those people who may have interest in

turning such like business and they will be demanded to pay for the training, for

example installation. Practice will be offered as a course to people on order to

enable them carry out installation of electricity in the peoples houses.

1.6 JUSTIFICATION OF OPPORTUNITY

After sale service will be considered first to customers as it will provide mutual

understanding between the customers and the business.

Training will be offered to the employees of the business in order to update them

with the new technological changes on the market. The business is also

strategically positioned in that it can serve a wider geographical area. High

security, good transport networks, good communication and high population

around the area are additional favors to the business.

High initial costs for starting the business will also add uniqueness to the business

because there is non in the area who have such like a business, many people travel

long distances in searching of the electrical equipments thus the business will be a

great relieve.

1.7 INDUSTRY.

The business is designed in a manner that it is both commercial and service

nature. This implies that it will serve the customers near Nyayo market and extend

up to outside the country (export) basing on its demand and availability of the

products.

There are certain activities that the business will not venture in to. For example

processing of products but it will rather buy the already made product.
1.8 BUSINESS GOALS

The business will aim at both short term and long term goals.

(i) Short term goals.

 To establish the business goals and win their competitors within the

shortest time possible, it should be within three months.

 To provide good quality products and services to customers.

 To acquire qualified skilled personnel.

 To discover more within the business fraternity by its employees and

customers.

(ii) Long term goals.

Expansion of the business by opening several branches within the country and

even outside the country in order to gain more profit.

The business will also aim at maximizing the profit.

Further training to employees will also be given in order for them to be aware of

the new technological changes.

1.9 ENTRY AND GROWTH STRATEGY.

 The business will be made known through the following techniques:

 Through media, the business will be advertised three times per week in

order to alert the customers be aware of the business.

 Posters and signposts will be put in several areas along the road heading to

different places so that people can understand easily where the business is.

 Displaying some of the products on the market.

Also, the owner intends to expand their business after flourishing. They intend

to expand their premise, increase the stock and employ more workers. Pricing

will be such that the products, services and appliances will be as affordable as

possible.
 CHAPTER TWO

2.0 MARKETING PLAN.

MBALUS' ELECTRICAL DEALERS will employ several tactics in selling the goods

and services in order to overcome their activities i.e.

(i) Promotion – will be done by free samples to customers, advertising through

several Medias like Imani FM, Mulembe FM, Citizen among other media in

order to alert customers about the business.

(ii) Price – The price of the good will be as per the demand of the customers for

example, the high demanding goods will be charged higher and vice versa but

in general the price of MBALUS’ ELECTRICAL DEALERS will be slightly

less as compared to other competitors in order to attract customers,

comparatively those customers who will buy goods in bulk will be offered a

discount other than those who will buy one commodity.

(iii) Distribution – Those customers who will buy goods in bulk will be offered

free transport up to their areas of residation while those who will buy few

commodity will be left with them to carry them all along.

2.1 CUSTOMERS.

Potential customers will include institutional customers, commercial customers and

domestic customers.

(i) Institutional customers.

This will include St. Patrick’s secondary school, Manhouse secondary school,

Kitale National Polytechnic and District Hospital among others. They are expected
to buy goods in bulk for example electric cables, conduits, generators almost each

year because of the new constructional structures.

(ii) Commercial customers.

A number of customers will develop some interest in buying of goods from the firm

because of good quality and quantity produced from the business in order to go and

sale them to other people on retail prices. Such like customers will be given

discounts on goods bought from the business. Those customers will therefore be

promoting their business as well as sending goods close to their customers.

Presence of large market Kwanza district and rich business men around the area

will be buying goods in large quantity.

(iii) Domestic customers.

These are regular customers which goods can be offered to them on cash or on

credit. These are the customers whose residents are within Nyayo market. Since

they are regular customers the business is sure of them coming back for more

products. These customers will have on account book where records of credit

products are made. They will indicate the date, when the products were offered, the

quantity, name, cash and when to pay, finally the signature of the buyer and the

seller. Some of these domestic customers will include, teachers, doctors and

business men.
2.2 MARKET SHARE.

The residents of the location of the business have a very positive view and

expectations of the goods and services offered by the business thus the business

looks forward for a very good turn-up of customers hence high rate of expansion.

Below is a table that shows how the market will be shared among its competitors.

NUMBER NAME OF THE PERCENTAGE TOTAL NUMBER

BUSINESS SHARE OF CUSTOMERS

1 MBALUS' ELECTRICAL 50% 7,500

DEALERS

2 MATIBO ELECTRICAL 25% 3,750

DEALERS

3 WEYETA DEALERS 15% 2,250

4 OTHER SMALL-SCALE 10% 1,500

BUSINESSES

TOTAL 100% 18,000

2.3 COMPETITION.

Matibo Electrical dealers and Weyeta Dealers are the only key competitors to the

business though they are disadvantaged and advantaged as analyzed below. These

two businesses do compile with MBALUS' ELECTRICAL DEALERS directly by

offering similar goods and services.

 STRENGTH AND WEAKNESS ANALYSIS TABLE.

BUSINESS STRENGTH WEAKNESSES

NAME

MBALUS  Produce good quality products.  Lacks modern facilities in running

ELECTRICAL  Have good communication to the the business.

DEALERS workers and customers.  Low motivation of staff (workers)

 Have qualified and skilled thus killing their moral.

personnel.

 Enough security.

 Better payment to the workers.

MATIBO  Centrally situated at a ready  Harassment of workers every time

ELECTRICAL market place. thus demoralizing them.

DEALERS  Have qualified personnel.  Poor quality of goods and services

offered.

 Poor communication to the

workers and customers.

WEYETA  Have modern machine.  Have poor communication to both

DEALERS  Have better ways of motivating customers and workers.

staff i.e. better pay.  The business have unqualified

 Have goods in large quantity. skilled personnel

OTHER  Direct contact with the  Lack of adequate capital o goods

SMALL customers hence low rate of expansion.

SCALE
 BUSINESSES  Good communication.  Poor quality of goods offered.

 Poor transport facilities.

 Poor advertisement of their

products.

 Low skilled personnel.

COMPETITION ANALYSIS TABLE

BUSINESS PRODUCT PROMOTION PERSONNEL LOCATION SIZE TOTAL

NAME SERVICE AND PRICING

Mbalus' 5 4 6 5 4 24

Electrical

Dealers

M1atibo 3 5 4 4 3 19

Electrical

Dealers

Weyeta Dealers 4 4 3 2 1 14

Other Small 2 3 1 2 1 9

Businesses

Total 6 6 6 6 6 36
OVERALL COMPETITION ADVERNTAGE.

From competition analysis research that was carried out MBALUS' ELECTRICAL

DEALERS emerges the winner with the following results.

(i) It has enough capital that enable it to run the business effectively.

(ii) It is strategically situated in that customers can reach the place very easily and

quickly.

(iii) It has qualified, trained and skilled personnel who will perform their duties well

thus better quality goods and services offered.

(iv) It has good communication framework both to customers and employees hence

provide mutual understanding.

METHODS OF PROMOTION AND ADVERTISEMENT.

(a) Advertising.

MBALUS' ELECTRICAL DEALERS will adopt the following methods in

advertising their goods and services.

(i) Use of agents – The agents will be moving around and talk to people on good

products and services offered from business.

(ii) Sign posts – This will be placed at strategic places to show the directors of

Mbalus' electrical dealers.

(iii) Media – There will be monthly advertisement on radiobroadcasts stations like

Mulembe FM, Imani FM, Radio citizen Nairobi among others in order to

make customers and other people be aware of the business.

 (b) Promotion

For business promotion the following tactics will be used. The business will give

discount to goods and services offered. The business will also take part in exhibition

sand shows this will increase people’s morale. After sale service and giving of

tangible goods to customers will also promote the business.

2.5 PRICING STRATEGY.

The prices of goods and services will depend on the following factors.

(i) Demand – The higher the demand of the produces, the higher the price charge

and the lower the price charge.

(ii) Competition – When there is stiff competition on goods and services offered

the business will charge slightly less than their competitors but under less or

no competition then the prices of the commodity will be high.

(iii) The quality and quantity of the products – High quality products will be

charged high and vice versa.

(iv) Labour – When high labour is used it will lead to high expenditure from the

business thus high prices charged on the goods and services offered.

2.6 SALES STRATEGY.

The business will employ selling agents who will not only sale goods to

customers but also to offer service to them.

There will be low prices of goods and services from the business in order to

attract customers and overtake competitors.

 Faithfulness after-sale service is also among the tactics that will be offered to

customers in order to encourage and motivate them.

2.7 DISTRIBUTION TECHNIQUES.

The farm will buy one lorry that will be used to distribute goods for long

distances but those domestic customers around the area will be distributed by

agents using bicycles. Below is the distribution diagram that shows the flow of

goods and services.

MBALUS' ELECTRICAL DEALERS

AGENTS
HAWKERS

CONSUMERS
 CHAPTER THREE.

3.0 ORGANISATION/ MANAGEMENT PLAN.

MBALUS' ELECTRICAL DEALERS intends to begin with maintaining a few full

time employees which include: owner manager who is the sole proprietor himself,

marketing supervisor, and electricians, shop attendants who will be the key

management personnel and others like business agents among others.

3.1 KEY MANAGEMENT PERSONNEL

(a) Owner manager

Qualifications

(i) Must have knowledge in Electrical Engineering

(ii) Must be over 25 years of age.

(iii) Must be computer literate.

(iv) Should be of sound communication in both English and Kiswahili.

(v) Must have a working experience of not less than five years in the field.

Duties and Responsibilities.

(i) Recruitment of staff in the business.

(ii) Carry out short-term and long-term planning of the enterprise activities.

(iii) Supervisor all the employees.

(iv) Supervisor the business transaction/ develop capital budget.

(b) Marketing supervisor (1 post)

Qualifications

(i) Must be a diploma holder in marketing from a reputable institution.

(ii) Must have a working experience of not less than two years. Preferably in

electrical field.

(iii) Have the ability to handle confidential and sensitive information.

(iv) Excellent interpersonal and communication skills including ability to work

in a multi-cultural team environment.

(v) Should be decent and have attractive language to customers.

Duties and responsibilities.

(i) To carry out research and establishing sound marketing strategies in the

business.

(ii) Analyzing and regulating the running stock of the business.

(iii) Reporting to the owner manager about the preferences of the customers.

(iv) Establish good relationship between the customers and the business by

improving communication networks.

(c) Electricians (2 posts)

Qualifications

(i) Should have business skills and traits.

(ii) Should have a working experience of at least two years in installation.

(iii) Must be able to work in any environment without supervision.

(iv) Must have a certificate in installation from a recognized institution.

(v) Should be trustworthy.

 Duties and responsibilities.

(i) Selling of goods and services to customers.

(ii) Provision of technical services to customers such as domestic wiring, after sales service

like demonstration of the working performance of electrical goods and appliances.

(d) Shop attendants

Qualifications.

(i) Should be a hardworking person.

(ii) O level education standard and above.

(iii) Must be trustful.

(iv) Should have good relationship with other people.

Duties and responsibilities.

(i) To ensure the workshop is clean and tidy.

(ii) Assisting in the transportation of goods if there need be.

(iii) Report to the electricians if there is any down faults in the business.

ORGANIZATIONAL STRUCTURE

OWNER MANAGER

MARKETING SUPERVISOR

ELECTRICIANS

SHOP ATTENDANTS
3.2 OTHER PERSONNEL

BUSINESS AGENT (1 POST)

Qualifications.

(i) Should have at least a certificate in marketing from a recognized institution.

(ii) Active and ambitious.

(iii) Good communication skills.

(iv) Self motivated.

(v) Hard working

Duties and responsibilities.

(i) Give weekly report to the marketing supervisor on the availability of

business opportunities in the field.

(ii) Assisting the marketing supervisor to implement laid down marketing

tactics such as promotion.

(iii) Reporting to the manager on the results of the implemented marketing

techniques every month.

3.3 RECRUITMENT/ TRAINING AND PROMOTION

(a) Recruitment.

The business staff will be recruited as per the procedures under:-

 Advertisement will be conducted through posters, friends, agents and the

media.

 Successful candidate will be invited for an interview.

 There will be open announcement of members who would have qualified.

(b) Training
The business will enhance support in training its staff members for efficient

service reproduction and up date them with the new technological changes. This

will be provided as follows:-

(i) Orientation.

New employees will be oriented to familiarize themselves with the operation

and requirements of performance in the business.

(ii) On the job training.

In order to be able to catch up with the new technological changes and

competition employees (like electrician) will always be trained on the operation,

handling and maintenance of newly invited electrical appliances on the market,

among other employees.

(iii) Apprenticeship.

Untrained yet potential individuals will after recruitment be trained and allowed

to deliver for the business.

(iv) Promotion

Promotion in the business will solely depend on the good job performance.

 Discipline.

 Loyalty of individuals

 Good public relations

 Field experience

 Level of education.
3.4 REMUNERATION AND INCENTIVES.

JOB TITLE NUMBER SALARY HOUSE MEDCAL TOTAL

PERSONNEL ALLOWANCE ALLOWANCE

Owner manager 1 10,000 2,000 p.a 1,000 13,000

Marketing 1 8,000 1,500 800 10,300

Supervisor 2 6,000 1,000@ 500@ 15,000

Electricians 1 4,000 500 200 4,700

Shop attendant 1 4,000 1,000 700 5,700

Business agent

Total 6 38,000 7,000 3,700 48,700

3.5 LICENSE / PERMITS AND BY- LAW.

(a) License.

These will include:

 Trade license from the trade and industry ministry, municipal council worthy

5,400 p.a and 1,000 Kenya shillings respectively.

 Health certificate from District health officer worthy Kshs. 800 per annum.

 Certificate of ownership worth 500 from the Kenya registrar of societies.

(b) By law.

The employees will belong to the national social security fund (N.S.S.F) and

10% of their salary will be catering for this.

The employees will pay a 7% valued added tax (V.A.T) to the government per

annum.
 At least every employee will be insured with the Insurance Company Limited

(C.F.C) Kitale.

3.5 SUPPORT SERVICES.

The business will incorporate with the following support associates.

(a) Wamalwa and company Advocates of Kitale branch.

(b) Kitale “Transparency” Auditing body in Kitale town.

(c) The co-operative bank services at 500 shillings p.a Bungoma branch.

(d) The Kenya Power and Lighting Company for electricity provision.

(e) The Kiwasco water supplies for water provision.

 CHAPTER FOUR

4.0 OPERATIONAL/ PRODUCTION PLAN.

4.1 PRODUCTION FACILITIES AND CAPACITY.

TOOLS AND QUANTITY COST OF EACH IN TOTAL COST IN

EQUIPMENT KSHS KSHS

Electrical meters 1 1,500 1,500

Sprit level 1 250 250

Blower 1 2,600 2,600

Phase testers 5 100 500

Fluorescent tubes 10 100 1,000

Grinder 1 1,200 1,200

Petrol/ diesel 2 litres per day 700 1,400

Pliers 5 100 500

Total 6,550 8,950

4.1.3 REPAIR AND MAINTENANCE

The following types of repairs and maintenance will be used in the business.

(a) Preventive maintenance.

 This will be done regularly on the electrical equipment such as the generator

and blowers.

 This will include dismantling and cleaning the internal structure of the

equipment in question using a multon cloth wet with petrol or diesel.

 Any loose and faulty parts will be tightened and replaced respectively.
  This maintenance type will be meant to avoid disruptions and minimize,

production cost.

(b) Corrective maintenance.

This maintenance type will be instantaneous.

It will be carried out on already faulty and/ but functional to avoid possible

failure.

The maintenance will be aimed at avoiding disruption of services and saving the

available resources.

(c) Break down maintenance

 This maintenance will be carried out on equipments which have already

failed.

It will be aimed at reducing losses, due to failure of production.

(d) Regular/ routine maintenance.

 Such maintenance will always be scheduled to be carried out at regular

equiduration intervals.

 This will promote efficiency of performance.

4.2 PRODUCTION STRATEGY

The following strategies will be observed in the business to ensure maximum

production of goods and services.

(i) Wider stock

Where the owner will strive to keep many of the customers requested goods on

display.
 (ii) Remuneration.

The business intends to offer better salaries and wages to its employees to

promote and motivate them towards wonderful production of goods and services

to customers. On the job training will also be observed.

(iii) Courtesy and faithfulness

Customers to this business will be handled kindly and the business will practice

trustworthiness towards its customers.

After sales services will always be encouraged both within the business premises

and up to the customer’s residences to maximize on the business reliability. The

business will have an agent who will do field promotion.

4.2.1 PRODUCTION, DESIGN AND DEVELOPMENT

Products within the shop will be well arranged and key procedures of service

offers will be adhered to.

4.2.2 MONTHLY MATERIAL REQUIREMENTS

MATERIAL AMOUNT (KSHS)

Soldiering wires 500

Cell tapes 200

Petrol/ diesel 42,000

Detergent 3,500

Total 46,200
4.2.3 MONTHLY LABOUR REQUIREMENTS.

PERSONNEL AMOUNT (KSHS)

Owner manager 13,000

Marketing manager 10,300

Electricians 15,000

Shop attendant 4,700

Business agent 5,700

Total 48,700

4.2.4 MONTHLY PRODUCTION COST

PARTICULARS AMOUNT (KSHS)

Material requirement 453,330

Labour requirement 48,700

Trade license 1,800

Health certificate 800

Total 504,630

4.3 PRODUCTION PROCESS

Any customer entering this business will always be:-

 Welcomed cordially by the shop attendant.

 In case of any processing issue the customer will always be allowed to meet

either the marketing manager or the owner manager.

  Customers will be allowed to express their needs to the shop attendants and

electricians who will offer goods and services.

 At least customers will be thanked for buying and paying for a service or any

other concern and will be allowed to leave at pleasure.

4.4 REGULATIONS AFFECTING BUSINESS

 The environment within the location of this business will be kept clean and

this will ensure proper hygiene and maximum work performance.

 Customers entering the shop will also be guarded by the shop attendant and

security officers cautioned against any dangerous equipment.

 The workers will be allowed to register with the Kenya National Hospital

Insurance Fund (NHIF) to assure them of their health safety.

 At least every employee will be insured with the C.F.C Insurance Company.

 Workers will be allowed to join workers union in order for them to be aware

of their rights and protection against any problems facing them.

 The business will also be insured against thefty and fire in order to have

maximum assurance of sales to customers at any time of demand

 The business will also register with the international standard of

measurements in order for it to provide better quality and quantity.

 CHAPTER FIVE

5.0 FINANCIAL PLAN.

5.1 PRE-OPERATIONAL COST.

NUMBER DESCRIPTION COSTS (KSHS)

1 License 500

2 Health certificate 800

3 Certificate of ownership 500

4 Tools, machines and 4,000

equipment

5 Banking charges 500

6 Electricity installation 1,000

7 Legal fees 2,000

8 Rent 1,000

9 Furniture fittings. 1,000

TOTAL 11,300

5.2 WORKING CAPITAL ESTIMATION

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Raw material 14,400 660,000 665,000

Stock of finished goods 15,000 69,500 21,000

Debtors 56,500 49,000

TOTAL 85,900 729,500 735,000

 5.3 CASH FLOW PROJECTION.

Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Cash sales 62,000 72,150 60,650 71,000 77,000 58,150 63,000 41,650 56,000 60,000 67,000 56,150 744,500

Debtors 7,000 10,000 10,000 15,000 7,000 7,500 56,500

Discounts received 8,000 9,500 7,000 9,000 9,500 8,500 8,000 10,000 10,500 9,000 9,000 8,000 106,000

Total 77,000 81,650 77,650 80,000 86,500 76,650 71,000 66,650 66,650 76,000 76,000 71,650 907,250

Cash outflow

Purchase 25,000 30,000 25,000 30,000 35,000 25,000 20,000 15,000 15,000 25,000 25,000 2,000 290,000

Electricity 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Wages/ salary 48,700 48,700 48,700 48,700 48,700 48,700 48,700 48,700 48,700 48,700 48,700 48,700 584,400

License 450 450 450 450 450 450 450 450 450 450 450 450 5,400

Total 74,650 79,650 74,650 79,650 84,650 74,650 63,650 64,650 74,650 74,650 74,650 69,650 885,800

Surplus/ deficit 2,350 2,000 3,000 350 1,850 2,000 1,350 2,000 1,850 1,350 1,350 2,000 21,450

Accumulated 2,350 4,350 7,350 7,700 9,550 11,550 12,900 14900 16,750 18,100 19,450 21,450
 5.4 PROFORMA INCOME STATEMENT.

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Cash sales 744,750 745,750 807,500

Discount received 106,000 107,000 108,000

Debtors 56,500 57,500 -

Total 907,250 910,250 915,500

Cost of sales 290,000 291,000 295,000

Gross profit 617,250 619,250 620,500

Expenses

Electricity 6,000 6,000 7,000

Wages/ salary 884,400 585,400 585,400

License 5,400 5,400 5,400

Net profit before tax 21,450 22,450 22,700

Provision for tax 25% 5,362.50 5,612.50 5,675

Net profit after tax 16,087.50 16,836.50 17,025

 5.5 PROFORMA BALANCE SHEET

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Fixed assets
Furniture 10,000 15,000 20,000
Production facilities 15,550 16,000 18,000
Total 25,550 31,000 38,000
Depreciation
10% on furniture 1,000 1,500 2,000
5% on production facilities 777.50 800 900
Total 1,777.50 2,300 2,900
Total fixed assets 23,772.50 28,700 35,100
Current assets
Cash at bank 20,000 25,000 30,000
Stock 15,000 69,500 21,000
Debtors 56,500 - 49,000
Total current assets 91,500 94,500 100,000
Total assets 115,272.50 123,200 135,100
Current liabilities
Creditors 10,000 10,000 -
Total current liabilities 10,000 10,000 -
Long term liabilities
Bank loan - - -
Owner’s equity 95,272.50 113,200 135,100
Total long term liabilities 95,272.50 113,200 135,100
Total liabilities 115,272.50 123,200 135,100
5.6 BREAK EVEN POINT ANALYSIS

DESCRIPTION AMOUNT (KSHS) AMOUNT (KSHS)

Sales 744,750

Purchases 290,000

Electricity 6,000

Total variable costs 296,000

Contribution 448,750

(1) Contribution margin = Contribution x 100%

Sales

= 448,750 x 100
774,750

= 60.26%
FIXED COSTS

Fixed costs Amount KSHS

Wages/ salaries 584,400

License 5,400

Total fixed costs 579,000

Break even of sales = Fixed costs x 100%

Contribution margin

= 579,000 x 100%
60.26%

= Kshs. 960,836.38
5.7 PROFITABILITY RATIOS.

(a) Gross profit margin

= Gross profit x 100%

Sales

Year 1 = 617,250 x 100

744,750 = 82.88%

Year 2 = 619,250 x 100

745,750 = 83.04%

Year 3 = 620,500 x 100

807,500 = 76.84%

(b) Return on equity

= Net profit after tax x 100%

Equity contribution

Year 1 = 16,087.50 x 100%

115,272.50 = 13.96%

Year 2 = 16,836 x 100%

123,200 = 13.67%

Year 3 = 17,025 x 100%

135,100 = 12.60%

(c) Return on investment

= Net profit after tax + Interest on loan x 100%

Total investment

= Net profit after tax x 100%

Owner’s equity

Year 1 = 16,087.50 x 100

115,272.50 = 13.96%

Year 2 =16,836.50 x 100

123,200 = 134.67%

Year 3 =17,025 x 100

135,100 = 12.60%
5.8 DESIRED FINANCING

DESCRIPTION AMOUNT (KSHS)

Pre-operational costs 9,372.50

Working capital (year 1) 85,900

Total desired financing 95,272.50

5.9 PROPOSED CAPITALIZATION

DESCRIPTION AMOUNT KSHS

Owner’s Equity 115,272.50

Total capitalization 115,272.50

 APPENDIX

BUSINESS LOCATION MAP

FROM KITALE TOWN

MBALUS'
ELECTRICAL
DEALER

SHOW GROUND ROAD KAPENGURIA / LODWAR ROAD

CHERANGANI CONSTITUENCY

MANHOUSE HIGH
SHELL PETROL
SCHOOL
STATION
MOI CAMPUS
KITALE BRANCH

FAMILY CHURCH