BUSINESS PLAN

PRESENTED BY : CHEPCHUMBA VIOLA

INDEX NO. : 295411010213
PAPER NO : 207Ba`
COURSE CODE : 1802
CENTER NAME : OL’LESSOS TECHNICAL TRAINING
INSTITUTE
CENTER CODE : 29541101
PRESENTED TO : THE KENYA NATIONAL
EXAMINATION THE KENYA NATIONAL EXAMINAITION
COUNCIL (KNEC) IN PARTIAL FULFILLMENT FOR THE
REQUIREMENTS OF AWARD OF CERTIPFICATE IN FOOD
AND BEVERAGE
SUPERVISOR : MR. AMOS RUTO
EXAM SERIES : JULY 2019

DECLARATION
This business plan is my original work and has not been presented to any college
or Examination Board.

It is presented for Examination with the approval of my supervisor

Name of student: CHEPCHUMBA VIOLA

Name : ……………………………………….

Sign : …………………………………..

Supervisor: MR. AMOS RUTO

Date:………………………….
Sign ………………………………..
Dedication
I wish to dedicate this to my family , my wife, my daughter Adriana for the
moral support they gave during the entire period.
To my colleagues for the support and also the encouragement through the entire
period (WWT)

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ACKNOWLEDGEMENT
I am grateful to my supervisor Mr. Amos Ruto for His guidance and advice
which enabled me to complete my plan professionally and within the required
time.

Last but not least, many thanks to my beloved family for their understanding,
patience and support during the period of study which included weekends and
late hours.

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TABLE OF CONTENTS
Declaration i
Acknowledgement ii
Executive Summary iii

CHAPTER ONE
BUSINESS DESCRIPTION
l.OBusiness name 1
1.1 Name and Address of business 1
1.2 Type and nature 1
1.3 Location 2
1.4 History of the industry 3
1.5 Premises 3
1.6 Viability 4
1.7 Market area 5
1.8Competition 5
1.9Business goals 5
1.9.1 Entry and growth strategy 6
1.9.2 Growth strategy 6

CHAPTER TWO
MARKETING PLAN
2.0 Marketing 7
2.1 Market 7
2.2 Income charts and their ages 9
2.3 Areas 10
2.4 Promotion 10

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2.5 Product 10
2.6 Price 11
2.7 Competition 12
2.8 Management 28

CHAPTER THREE
ORGANIZATION AND MANAGEMENT PLANS
3.0 Organization and Management plan 14
3.1 Management team 15
3.2 Organization structure 17
3.3 Distribution of responsibilities 17
3.4 Remuneration 19
3.5 Welfare 20
3.6 Health and safety 20
3.7 Public relations 20
3.8 Training 20
3.9 Premises 21
3.9.1 Toilets 22
3.9.2 Rents 22
3.9.3 Water and water bill 23
3.9.4 Security 23
3.9.5 Equipment 23
3.9.6 Government polices 23
3.9.7 Licence and support services 23
3.9.8 Financial plans and accounts opening 23
CHAPTER FOUR
PRODUCTION OPERATION PLAN
4.0 Production (Operation) plan 25

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4.1 Premises (see appendix c) 25
4.2 Labor 25
4.3 Schedule of duties 26
4.4 Cost of labour per month 28
4.5 Raw materials 28
4.6 Equipment 30
4.7 Wastage control 31
4.8 Inspection of work 32
4.9 Production strategy 32
4.9.1 Factors affecting services 32
4.9.2 Regulations affecting operations 33
4.9.3 Reporting time 33
4.9.4 Living time 33
4.9.5 Off duty 33
4.9.6 Conduct and dressing 33
4.9.7 Dressing 34

CHAPTER FIVE 5.0

FINANCIAL PLANS
5.1 Pre-occupational cost 35
5.2 Grapet Financial plan 35
5.3 Anticipated income per day 36
5.4 Profoma cash flow 38
5.5 Grapet Profit and lossA/C for the year ended 31/12/04 39
5.6 Balance Heet as at 31/12/04 40
5.7 Expected profitability ratios 41
5.8 Remedial measures 43
5.9 Repairs and maintenance 43

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5.9.1 Security 44
5.9.2 Water shortage 44
5.9.3 Utilization of profits 44
5.9.4 Critical risks 44
Appendix A 45
Appendix B 45
Appendix C 47

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EXECUTIVE SUMMARY
BUSINESS DESCRIPTION
Grapet hotel will be owned by Chepchumba Viola. The proprietor intends to
launch the business on 1st January 2020. The business will be service industry
and will be concerned with hotel services.
His service will be customer focused and of good quality. Charges will be
reasonable and affordable. This will help attract and retain customers continuous
survey on customer needs will be done in order to improve and add value to its
services.

TARGET MARKET
His hotel will flourish due to increasing urban population and mobility patterns
of the so called Masaai people who are mainly livestock businessmen.
The owner after carrying out a feasibility study is convinced that this ready
market that requires such services.
In order to provide a competitive edge, Grapet will Endeavour to provide quality
and customer focused service by engaging skilled workers who will be highly
motivated to ensure customer satisfaction.

OPPORTUNITY AND ENTTRY STRATEGY

Grapet always had a dream of owning a hotel. He has already saved Ksh.
150,000. He will require abut Ksh. 250,000 in order to start this business.
Therefore the rest 100,000 will be taken as a loan from Ukulima Savings and
Credit society.
The business will start on a small scale but with a competent and motivated
workforce, its expected that the business will expand.
COMPETITIVE ADVANTAGE
Kadisi location is in Ngong division of Kajiado district. Its one of the fast
growing areas in Ngong. Although the land belonged to masaai, its now occupied
by mixed tribes. This has paved way to development. Its an oncoming urban
areas with new schools, dispensary and a shopping center. Most people are both
livestock and vegetable business/*,
The sponsor intends to aggressively market and promote the business and will
offer attractive terms to workforce competitive process in order to suit every
customer.

MANAGEMENT TEAM
The sponsor is a student at Kenya Polytechnic undertaking a diploma in Human
Resources management.
He has acquired a wide knowledge on entrepreneurship through His lecturer Ms.
Rency.
He will therefore have a highly trained, well motivated, well remunerated
workforce to run the business.

CRITICAL RISKS
The business might face critical risks like
i) Unfair competition
ii) Security concern for customers and employees while leaving fee premises
late
iii) Power and water rationing
iv) Accidents arising from use of equipment.

These threats will however be maximized by

• Engaging trained motivating workforce
• Having storage water tank
• Provide a first aid kit
• Employ a watchman
CHAPTER ONE
1.0 BUSINESS NAME

NAME AND ADDRESS OF OWNER

CHEPCHUMBA VIOLA
P.O BOX 25685-00100
Nairobi.

1.1 NAME AND ADDRESS OF BUSINESS

GRAPET TOTEL
P.O BOX 25685-00100
Nairobi
MOBILE NO. 0724417451

1.2 TYPE AND NATURE

The above business shall be dealing with hotel services. It will be owned by
"Nyabuto and its intended to provide hotel services with emphasis of customer
satisfaction and also with an aim of maximizing profit as an entrepreneur.

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1.3 LOCATION
Grapet Hotel will be located at Kadisi sub-location, Ngong division of

NAIROBI
CITY

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1.4 HISTORY OF THE INDUSTRY
Hotel industry has been in existence ever since. The proprietor started

enjoying such services as early as 1970’s when was a young school gift, with only
ten cent coin,
-He could buy Himself a dough nut or a scones from a village hotel.
Even though today ten cent coins has no value due to high cost of living together
with development, Grapet has continued to enjoy such services even at a high cost.

Therefore Nyabuto desires to offer such services that fall under Hotel industry and
He’s convinced that the business will flourish in an area like Kadisi.

Also the research that He has done has given His enough light to go ahead.
Therefore the upcoming school, dispensary, fellow masaai businessmen will
definitely provide more of His customers.
The hotel will endeavour to give quality services at affordable prices to ensure that
all customers are satisfied.

1.5 PREMISES
The proprietor had always a dream of owning a hotel business. One

day on His very home from the church He felt thirsty and hungry. The shops
around Kadisi could not provide the services He needed at that time. He also
observed that so many children disturbed their parents in the church due to hunger.

In these circumstances Grapet remembered -His dream and desired to start a hotel
around kadisi , so that it could serve in the area. When he seriously thought about
it, many thrilling ideas motivated -His. The ideas are as follows:-
 1. One of the things that encouraged His are that the Kadisi area is a masaai route
on their way to Ngong to sell their livestock for slaughter. Masaai are naturally
people who have money and like spending their lives in hotels.

2. The other motivation is that the government has already started putting up a
primary school and a dispensary which will be complete soon.

3. The area is also blessed with agriculture products due to irrigation from Kadisi
river.

4. The road is passable at all weathers. This being the case, with all the targeted
customers the owner finds it a viable place for business.

1.6 VIABILITY
Economically the business is viable since it’s expected to bring some returns. As it
has already been an entrepreneur is to maximize the profits

1.7 MARKET AREA

The proprietor after studying consumer behaviour, customs and the means of their
incomes, He trusts that the services offered within the market area will be
appreciated. He also believed that such an opportunity should not be lost at kadisi
area. Grapet has therefore decided to enter the market and offer the services.

1.8 COMPETITION ,.
Grapet has acquired a lot of knowledge during His part time job at a family hotel
business. He has learnt about dealing with other competitors, practicing good
human relations and the importance of having workers who are skilled. All these
advantages with help the owner to cope with competition and even be able to deal
 with it. Nyabuto therefore trusts that He- will be definitely prosper. Therefore,
although in every field these are challenges of life, Grapet has a wider vision of an
international hotel, which must be born by Grapet Hotel Kadisi.

1.9 BUSINESS GOALS

The owners business goals are
• To provide adequate source of income for His and the family
• To help poverty eradication by providing employment to the then workers.
• Provide customer satisfaction, by providing hotel services to enhance their
health

1.9.1 EN T RY AND GROWTH STRATEGY

The sponsor has already done feasibly studies which indicate that the services will
be faced with stiff competition. Ibis is mainly because, Grapet has been taught that
when one starts a business, these are some types of entrepreneurs called
opportunists and patterned multipliers.
An opportunist doesn’t have knowledge of business but just starts it and employ
people Io work for him. A patterned multiplier waits until a business starts and
then copies.

Although Grapet is a pioneer, He likely to face such competition. Therefore —

Grapet will have well qualified staff. Services will be affordable and satisfying.

To gain entrant in the areas (lie business will advertise itself through the quality
services its going to offer.
1.9.2 GROWTH STRATEGY
The employees will be well remunerated and will be rewarded for their
performance. The sponsor intends to co-ordinate and monitor work force to ensure
that they provide efficient services that will give satisfaction to its customers.
The business will take advantage of its competitors to attract and retain more
customers. Its anticipated that the business will be launched in a elaborate
ceremony that will be crowned by offering free services for potential clients.
Once in a while discounts will be offered to customers. Employees will be given
prizes of appreciation of good work done.
CHAPTER TWO
MARKETING PLAN
2.0 MARKETING
Grapet is the sole proprietor of business. He has done market survey through
observation and has seen the need of His customer on the area He identifies as His
business location. The level of income, age and attitude of His customers has acted
as a catalyst in Grapet’s life to start up a business in Kadisi area of Ngong
Division.

2.1 MARKET
Grapet’s Services are being established to offer hotel services and He trusts that
His services will flourish in an area like Kadisi.

The sponsor has done some research and has identified His customers both
consumers and other business. This is because these are shopkeepers around those
who will actually benefit from Grapet’s Services. Kadisi is a fast growing area,
which has actually many modem buildings coming up. Masions are also a part of
my customers.

A masonary earns five hundred shillings per day which is equivalent to 15,000 per
month which means he can afford a meal of 80/- Shs. Per day.

He has also identified teachers, pupils and nurses as His customers.

Other road users are also targeted customers. Its main route towards Ngong
market whose most of the Maasai’s sell their livestock for slaughter.

Grapet’s vision is to take the advantage of the area before others think about it.
However this does not mean that He does not expect oppositions, because even as
a pioneer, He expects some people to act as Pattern Multipliers.

His customers are therefore men, women and children of all ages and walks of
life.

Grapets intends to provide services to the population of around 20,000

The proprietor shall endeavor to produce and give good quality services at
reasonable prices in order to ensure that all customers can afford. He will not
encourage credit facilities since they are the main causes of business failure.

Grapet has established Kadisi people as customers, through: -

- The way they dress

- Kind of houses they built and
- Type of houses in the area
2.2 Income chart and their ages

2.3 AREAS
Grapets areas of operation is mainly rich in agricultural products. Those who do
not have white color jobs can as well earn their living through selling of their
agricultural products. These is also a river
 flowing around the area that necessitates them to grow their products
through irrigation.

In order for His to meet the customers needs, He will do market

segmentations. This is while the item is packed according to the
customer’s income.

Some of the food staffs like chips will be served in both large and small
quantity in such a way that a customer who has 20/= and then otHis one
10/= will still get something to eat. This will also be an encouragement to
children who at times have ten shillings and would like to eat chips.

2.4 PROMOTION
Grapet will use some posters for advertisement. He intends to install a
video machine which will actually be a way of attracting customers. As
many come to watch, they will buy themselves either foods or drinks.

2.5 PRODUCT
Grapet is focused on providing value added services in order to explore
on customers satisfaction. It will also be a customer friendly management
by a highly motivated staff.

2.6 PRICE
Prices are determined by customers income and willingness to buy.
Grapet will therefore use the knowledge He has received on
enterpreneurship on market segmentation.

This will enable His meet the needs of customers both great and small. He

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 will tHisefore make sure that prices are affordable but must Maximize the
profit.

GRAPETS HOTEL PRICE LIST

c
Tea 10/= 10/=
1 10 Uji per cup

2 Dough Nut 5/= 11 Mala (glass) 10/=

*12
3 Milk per glass 10/= Chapati plain 10/=

4 Chips per plate 25/= 13 Arrow roots (Nduma) 10/-

r
5 15/= 14 Roasted Meat & Ugali 60/=
Chips 14 plate

Meat & chapati 40/=

6

7 Soda 14 litre 25/=

“ 300 ml 20/=
8

9 Toast (with Blue band) 10/=

The size of the populations in the area which Grapet services may be
divided as shown below:-

Population of Twenty Thousand People

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 Children 0-10 years 4000
Teenagers 11-20 years 5500
Middle age 21-50 years 8000
Old people 51-80 years 3000

Grapet got these statistics from the last years general elections. During the
elections only thirteen thousand who registered which means that, the
number of registered votes must have come from teenagers brackets going
upward.

He therefore expects to handle all these as His customers even though a

few work in the urban areas.

2.7 COMPETITION
The proprietor is very much aware of the competition. Its obvious that
when one starts a business, there are others that join as pattern
multipliers.

Since Grapet is a pioneer at Kadisi, He will endevour to practicing

> Good public relations.

> Employ highly motivated employees with good customer care

> He will offer good quality food

> Cleanliness and quick services will be offered. This will enhance the
increase of customers.
> Water facilities, health and sanitary services will be provided.
> He will open a suggestion box in order to deal with customers complains.

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 > He will keep a certain amount of money in the bank for usage during shaky
time.

Through the knowledge acquired, Grapet is aware of His capabilities.

This gives His strength and morale to continue with the hope that He will
cope with the competition and even make profits.

2.8 MANAGEMENT
The proprietor has twenty-three years working experience. During all this
time, He has gained interpersonal skills and a lot of knowledge on
entrepreneur from the Kenya Polytechnic.

He understands well the needs to have good public relations in order to

win and maintain good name of the organization. Workers too should
have a share of the knowledge.

In good management, workers must be well taken care of in order not to

have labour turn over and also to have good output.

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CHAPTER THREE
3.0 ORG ANIZATION AND MANAGEMENT PLAN

Management is getting things done through other people. Any firm that’s
governed by principles of good management usually get good yields.

Grapet has learnt that management must have specific objects, the
environment the means and the people (employees)
Grapet’s specific object of establishing a hotel is to maximize His profit.

The environment means both internal and external in which grapet

operates. This will include good human relations customers competitor
and even suppliers.

The means is the tool that He will use and the people who are the
employees. In order to yield good production all these or principals must
be combined and well managed in order for Grapet to succeed and meet
its goals and objectives.

3.1 MANAGEMENT TEAM

The proprietor is currently pursuing a Diploma in Land Survey. He
intends to start up the business immediately He completes His Diploma
course. Which will end by November, 2018He will have equipped
Himself with necessary knowledge and skills which will enable His
manage the business effectively.

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He will also have gathered much knowledge in management, good public
relations and principles of good management.

These are more important particularly in management because if they are

not practiced in an organization, one may not meet goals and objectives.

Grapet leadership style will be employee oriented and not work oriented
when a manager is employee oriented, these is usually no labor turn over.
Employees feel apart of the organization His employees. His employees
therefore will have high morale and much yield is expected.

The proprietor will have nine employees. These will be manager,

accountant, cateress, two cooks and two waiters, one cleaner and one
watchman.

The Manager
He or He to have a diploma in hotel management from a recognized
college.

The Accountant:

Is expected to have a CPAI and at least three years experience in a

competitive organization.

The Cateress
Qualifications: Certificate in food technology or institutional management
form Utalii college or any other equivalent.

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Cooks:
Are also to be in possession of certificate in food production from a
recognized institution and at least three years working experience in a
busy hotel. They got to produce certificate of good health from a
government hospital.

Waiter:
Are also supposed to have undergone hotel and management course from
a recognized college. They must have a little knowledge of public
relations. This is because they will be involved in dealing with customers.

Cleaner:
Will have a pass in Kenya certificate of secondary education with at least
D- (minus)

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 ORGANIZATIONAL CHART

No. of workers 9
Manager 1
Accountant 1
Catteress 1
Cooks 2
Waiters 2
Cleaner 1
Watchman 1

3.2 DISTRIBUTION OF RESPONSIBILITIES

With the help of the proprietor, the manager s responsibility is to ensure
that work is done at the right time, continuously of work regardless of
absents.

Its therefore the managers duty to make sure the work is well done and
employees are well placed. He’s to ensure that punctuality is

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 observed, food and services are available whenever the customers need.
This is the chart on responsibility and qualification.

TITLE QUALIFICATION RESPONSIBILITIES

Manager Should be in pocession of Bed
in home economics from a
recognized university He/He will be the overall
manager of Grapet in presence
and absence of the owner. All
employees are answerable to the
manager
Accountant To work on Grapet accounting
Should have CPA I and three records
years working experience
Craterless Should possess a
diploma in food and beverage
from Utalii college or its Will co-ordinate all department
equivalent involved in food. Supervise staff
under His and develop them.
Senior cook and junior
cook Certificate in food production Cutting and washing raw foods.
must be Medically fit Doing actual cooking
Waiters They do the actual serving to
Be in possession of KCSE with the customers
at least D+. Two years pre-
service at Kenya Polytechnic or
its equivalent
Cleaner Cleaning the building, tables
Should have undergone a four and the
year secondary education compound
Watchman Should have knowledge in He’s to watch in the night when
Kiswahili business closes down.

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3.3 REMUNERATION
The owner of business in conjunction with the accountant will make sure
that the salaries are paid on time. Employees will be generally rewarded
according to the performance as a way of motivating them GRAPET
SALARY STRUCTURE

MANAGER Salary of Ksh. 30,000 Entitled to 30 days

House allowance annual leave
10,000

ACCOUNTANT Salary 27,000 Entitled to 30 days

House allowance 8,000 annual leave
CATTERLESS Salary 28,000 30 days annual leave
House allowance 8,000
SENIOR COOK Salary 20,000 Entitled to 21 days
House allowance 5,000 leave
JUNIOR COOK Salary' 17,000 Entitled to 21 days
House allowance 5,000 leave
CLEANER Salary' 15,000 Entitled to 21 days
House allowance 3,500 leave
WAITERS Salary 12000 Entitled to 21 days
House allowance 4,000 leave
WATCHMAN Salary10,000 Entitled to 21 days
House allowance 4,000 leave
When profits are high they get some bonus.

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3.4 WELFARE
The owner of business is anticipating expansion in business. He will
meanwhile advise the employers any valid co-operative society. Their
overdue bills will be catered for togetHis with their families.

It’s the business expands, employees will be granted loans, without

interest or even salary advance incase of domestic needs.

3.5 HEALTH AND SAFETY

Health and safely policies will be set all employees will be advised to
members of National Hospital Insurance Fund. Workers to be bought
uniform and aprons and a pair of rubber shoes for easy movement.

3.6 PUBLIC RELATIONS

Matters related to public relations will be dealt with by the manager. Any
grievances and conflicts among workers to be handle amicably.

3.7 TRAINING
Grapet aim is not first to have workers who will just be used by Grapet to
make profits. He also intends to develop them by sponsoring them for
further training. When workers are trained, these are less accidents.

A good manager trains his staff so that in future, in the absence of the
manager, the workers may take over.

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3.8 PREMISES

FLOOR PLAN
3.8 Premises:
The building will be surrounded by flowers. It is the cleaners
responsibility to water the flowers and even remove the weeds. Trees will
be planted to give a natural beauty.

Toilets:
They will be waHed with disinfectant. They will be waHed at least three
times a day ie morning, afternoon and evening.

RENTS.
It’s the account responsibility to make sure that rent is paid promptly,
electricity likewise should be paid to avoid disconnection.

Water and Water Bill:

Though Grapet has water tap which is actually hired from around, He has
also installed two tanks for safety. Incase the tap is dry, tHise is water
from the rain which is tapped from the rain or the upper and the lower
comer of the building.

3.9 SECURITY
The estate is not badly off in terms of security, but however He will have
to hire a watchman who will keep watch over the night. The organization
chart has put the work of watchman into consideration too.

3.9.1 EQUIPMENT
The equipment must be kept clean. Once the cooks finish their work, they
are supposed Io make sure that the equipment are clean. I he Catterless has
 to supervise them.

3.9.2 GOVERNMENT POLICIES

Government policies such as taxes will be taken care of. Grapet will use its
accountant to assess the income of' the business, thus Grapets aim is to pay
tax without being loaded.

3.9.3 LICENSES AND SUPPORT SERVICES

T he proprietor has applied or license of registration of business. The
postage office is nearby. There’s one in Ongata Rongai which is actually
near and convenient. There is also a Bank whose Grapet is going to open
an account purposely for business.
\

Roads are good and are all weatHis . The present government will also
contribute towards the improvement of infrastructure.

3.9.4 FINANCIAL PLANS AND ACCOUNTS OPENING

Since Grapet will sponsor His business from His savings and otHis part
from a cooperative loan. To start off the business, He will require Ksh
250,000. He has already saved a hundred and fifty 150,000. One hundred
to be borrowed from co-operative society.

Attached are Grapets formal on medical certificates. The candidate is to

as the questions first before he/He is examined y the doctor, (see
Appendix A and B)
 CHAPTER FOUR
4.0 PRODUCTION PLAN
4.1 FACILITIES AND THEIR CAPACITY
This chapter will explain on human resources and equipments, how they
will be utilized in offering the best service customers. It will highlight the
compliances and approvals necessary in day today operation.

His objectives are that, in two years to come the business will be able to
attract and retain customers who will be satisfied with the services
offered. Within this period too, He will have acquired a lot of profit and
tHisefore will open anotHis branch.

4.2 PREMISES
Premises will be rented. He also expects to buy His own plot in future -
see Appendix C floor plan

CAPITAL
The capital will be partly from His own savings and some to be borrowed
from His Ukulima Savings and Credit Society.

4.3 LABOUR
Labour is a factor of production too. He has a team of 9 employees whom
He expects to work with hand in hand inorder to offer best hotel services.

These are

> The Manager

 > An accountant
> Cateress
> Two (2) cooks
> Two (2) waiters
> One (1) cleaner and a
> Watchman

4.4 SCHEDULE OF DUTIES

(i) The Manager
His responsibility is to manage the overall business togetHis with its
workers. He will work hand in hand with the proprietor.

He is to make sure that every worker is well placed in order to avoid role
conflict. He is to ensure that conflicts are solved as quickly as possible.
Any hitch has to be reported to the Manager and if any worker has a need
eitHis financial or social he is to take care.

(ii) THE ACCOUNTANT

His main duty is to control the financial flow. He will also make budgets
on weekly basis. He has to see to it that money is banked every morning,
workers to be paid on time and any otHis need should be met without
delay. Payment of bills should be paid on time inorder to avoid
inconveniences which are likely to interfere with business e.g.
disconnection of water and electricity.

(iii) CATERESS
He is to make everydays’ menu, supervise the cooks and waiters too.
With the help of otHis workers, He is to observe general cleanliness of the
 whole business and premises as well. Store to be well arranged and that
foodstuff purchased is just enough quantity inorder to avoid wastage.

(iv) COOKS
Under the guidance of the cateress they are supposed to wake up early so
that no delay is caused to the customers. They are supposed to do the
actual cooking.

(v) WAITER
Their main duty is to serve the customers. They should do their duties
cheerfully so as to encourage the customers to come again. At times they
may assist in any otHis type of duties as directed by the cateress or the
manager e.g. washing utensils. They should make sure that tables are
wiped from time to time.

(vi) CLEANER
He or He will wipe the floor, toilets and compound to be kept clean.

Flowers and fence to be pruned and the grass to be cut. This is to keep the
environment clean.

(vii) WATCHMAN
His job is mainly to keep watch of the compound. He is to watch on
customers’ cars as they have their meals.
4.5 COST OF LABOUR PER MONTH
The cost of labour will include both salary and house allowance

Manager 18,000
Cateress 15,000
Accountant 14,000
Senior cook 10,000
Junior cook 9,000
Cleaner 7,000
Waiter 12,000
Watchman 10,000
Total 95,000

4.6 RAW MATERIALS

Raw materials in this business include, food staffs such as:

> Potatoes
> Carrots
> Onions
> Tomatoes
> Beans
> Vegetables
 > Flour
> Cooking fat and otHis ingredients like spices

The costs of raw materials are not constant. The prices vary from time to
time depending on seasons.

However, the prices can be tabulated as shown below.

COST OF FOOD STUFF/RAW MATERIALS

Material Cost per Unit/Bag Supplied by Terms purchased
Potatoes 1000 per bag Wakulima market Cash
ft
Carrots 600 per bag ft
ft
Beans 2500 per bag Nyamakima
Flour 425 per bundle Kavumbu ff
wholesalers
(Rongai)
ft ft
Maize 500 per bundle
meal
ft
Milk 20 per litre + 5 litres Rongai milk supply
x 7 —700
ft
Meat 130 per kg x3kg x Wambua meat
7days ~3000 supply
(Rongai)
ft
Cooking 2 kg 345 per 2 kg Kavumbu
fat wholesalers
ft
Onions 300 per bag (Net) Wakulima market
ft ff
Vegetabl 1000/= per bag
es
ft
Maize 1200 per bag tf
ff
Spices 30 per bundle Uchumi supermarket
ft
Sugar 50 kg bag 4320 Kavumbu
wholesalers
tf
Tea 200 per kg Uchumi supermarket
leaves
ft ft
Salt 20 per kg
ft
Total 17,405 ~ 20,000

Some of the items must be calculated eitHis per day or per week
 depending on the consumption rate.

The actual told of raw materials is Kshs 17,405 per week but He has
estimated it to 20,000 because at times the demand is high.

4.7 EQUIPMENTS
Equipments are also factors of production. These equipments fall under
capital/assets

Equipments No. required Cost

Four banner cooker 1 27,000
Jiko at 500 per one 2 1,000
Stove at 300 1 300
Plates @ 300/= per dozen 8 2,400
Table cover @ 100 per one 10 1,000
Cups @ 400 per dozen 8 3,200
Spoons @100 per dozen 8 800
Knives @300 per dozen 1 300
Kitchen towels 50/= @ one 5 250
Trays 100 per one 8 800
Sufurias 10 different sizes 10 5000
Dust bins at 200 each 3 600
Miscelleneous 3,000
TOTAL 90,650
 OTHIS COSTS INCLUDE
Rent Water
4,000 p.m. 1,500 p.m. 2,000 p.m.
Electricity
1,000 p.m.
Telephone

6,700 p.m.
4.8 WASTAGE CONTROL
Wastage can be of different types

(i) Production wastage

(ii) Time wastage
(iii) Food wastage

For wastage control, each worker should realize that he/He is supposed to be at
the right place and at the right time. He should also be doing the right thing at
the right time.

Working tools and equipments usually wear out. Thus they should regularly be
serviced and well maintained too inorder to avoid time wastage.

The building is also to be renovated at least once in every two years.

When all the equipments are well maintained such that they are all operational,
Grapet will be productive.

Security is also mandatory inorder for customers to enjoy our services. Hygiene
too is of great importance to Grapet too. This will create a good name of the
 business and workers too will not waste time going to the hospital for treatments.
Customers too will enjoy our needs too.

4.9 INSPECTION OF WORK

As mentioned earlier, the manager is the overall head. Since the business stamp
from 7 am upto 8 p.m., he has to make sure that everything is in place and all is
done at the right time.

Proprietor will also inspect work from time to time.

4.9.1 PRODUCTION STRATEGY

The owners aim to produce the best quality feed and services. This is inorder to
attract customers workers will be trained from time to time. This will help them
catch up with on coming production methods.

Once the workers are trained, they will definitely offer quality services.

4.10 FACTORS AFFECTING THE SERVICES

THise are many factors affecting the production of hotel services. The major one
being prevailing economic conditions in the country, change of prices in food
items due to the climate and weatHis conditions. Sometimes prices of products
keep fluctuating and this may affect the provision of services.

However, Grapet is determined to beat the competitors by offering services by

qualified staff and competent staff. He will ensure that the staffs have
knowledge in customer care. AnotHis problem may be power failure. The
owner intends in the long ran to purchase a generator and extra gas and
cookers. This will ensure that services are not interrupted.
4.10.1 REGULATION AFFECTING OPERATIONS
The proprietor will put into force internal regulations and rules for employees
in time with the Government regulation and by laws.

4.10.2 REPORTING TIME

Employees reporting time will be at 8.00 am but arrangements may be made
for customers who need the services earlier.

4.10.3 LEAVING TIME

Leaving time will officially be 8 p.m. THise will be some overtime allowance
because the official time should be 6 p.m.

4.10.4 OFF DUTY

These will be time off per person per week to compensate difficult work being
done over the week and working late upto 8 p.m.

4.10.5 CONDUCT
Employees should behave well. Any information that should turnish the name
or image of Grapet hotel should be avoided.

DRESSING
Employees should be dressed decently and general cleanliness should be
observed.

The proprietor will provide each worker with a uniform and a bar of soap per
week just to make sure that uniforms are clean.
 CHAPTER 5
5.0 FINANCIAL PLAN
For future running of business, budget on income and expenditure has to
be done.

This is of great importance because it will course the owner to overcome

or avoid inconveniences that are faced in any operating organization.

The continuity of this business will be determined by usage of various

commodities and finances as well.

Grapet hotel is a start up business and will require a starting capital of

KShs. 250,000 (Two Hundred and Fifty Thousand).

5.1 PRE-OPERATIONAL COST

These are costs that must be incurred before the business starts
operating. These expenses include equipments, other legal documents
that are required by the law: such as License and public health
certificate. (See Grapet Financial Plan)
5.2 GRAPET FINANCIAL PLAN
5.2 Main Capital 250,000
Registration of Business 5,000
Renovation 2,000
Rent 4,000
Furniture 20,000
Utensils 15,000
Water Tank 8,000
Sanitary Repairs 2,000
Gas cooker 27,000
Electricity Deposit 2,500
Decorations & table covers 3,000
Miscellaneous 10,000
Workers uniform 15,000
Transport 5,000
Refrigerator 45,000
Total 156,500
Balance 93,500

The balance will tHisefore be kept in the bank account at operating

capital.

5.3 ANTICIPATED INCOME STATEMENT PER DAY

CUSTOMERS EXPECTED SALE PER SHS.
DAY
BREAKFAST
30 CUSTOMERS
30 AT Shs. 50 = 30x50 1500
LUNCH
50 CUSTOMERS
50 @ Shs. 80 = 60x50 4,000
SUPPER 50 @ Shs. 70 = 50x70 3,500
50 CUSTOMERS
TOTAL 9,000

LESS EXPENSES 4,000

PROFIT 5,000
5.4 PROFOMA CASH FLOW PROJECTIONS YEAR 2020

ITEM APRIL MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC TOTAL
Receipt - 59500 36500 23000 17000 18000 23000 31000 29000
Opening balance - - - - - - - - - -
Capital 250000- - - - - - - - 250000
Sales 50000 51000 60500 6800 7500 79000 80000 83000 83000 630500
Total Receipts 300000 110500 97000 91000 92000 97000 105000 103000 11300 880500
Pre-operational cost 156500- - - - - - - -
Purchases 10000 10000 10000 10000 10000 10000 10000 10000 10000 90000
Salaries 50000 50000 50000 50000 50000 50000 50000 50000 50000 450000
Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 36000
Water 2000 2000 2000 2000 2000 2000 2000 2000 2000 18000
Telephone 1000 1000 1000 1000 1000 1000 1000 1000 1000 9000
Loan Payment 3000 3000 3000 3000 3000 3000 3000 3000 3000 27000
Electricity 2000 2000 2000 2000 2000 2000 2000 2000 2000 18000
Statinaries 500 500 500 500 500 500 500 500 500 4500
Miscellaneous 1000 1000 1000 1000 1000 1000 1000 1000 1000 9000
Total Payments 240500 74000 74000 74000 74000 74000 74000 74000 74000 832500
Net Cash Flow 59500 36500 23000 17000 18000 23000 31000 29000 39000

42
5.5 GRAPET PROFIT & LOSS ALL FOR YEAR ENDED 2020
SALES 630,500
Less cost of sales
Purchases 90,000
Less closing stock 30,000 60,000
Gross profit 570,500
Less expenses
Salaries 450,000
Rent 36,000
Water 18,000
Telephone 9,000
Miscellaneous 9,000
Electricity 18,000
Stationery 4,500 544,500
Net profit 26,000

NB/ Dep. of fixed assets is rounded at 5% per annum.

The business is a sole proprietor and therefore cannot be taxed on its own. However, the income
will be taxed on me together with incomes.

43
5.6 GRAPET BALANCE HEET AS AT 2021

AT COST DEP. BOOK

VALUE

FIXED ASSETS 90,650 4,533 86,117

FURNITURE 20,000 1,000 1,900
5,533 115,117
CURRENT
ASSETS

STOCK 10,000
PREPAID RENT 2,600
CASH AT BANK 132,283 144,883
250,000
FINANCED BY

CAPITAL 124,000
NET PROFIT 26,000 150,000
LOAN FROM
CO-OPERATIVE 100,000
SOCIETY
250,000

5.7 EXPECTED PROFITABILITY RATIOS

44
 (i) BREAK EVEN ANALYSIS FOR THE MONTH OF DEC. 2020

= Fixed Costs_________ _ Variable cost

Charges per day

Fixed cost for Dec

Salaries 25, 000

Rent 4,000
Water 2,000
Electricity 20,000

Telephone E000
34,000

Charges per day = Average charges x no. of customers per day.

= Shs. 80/= x 50 = 4,000

Variable cost per day = Average cost per person x No. of customers per day

= Shs. 50 x 50 = 2,500

THisefore:, charges per day = 4,000 - 2,500 = 1,500

Break - even date = 34,000 = 22.6 15

= 23rd day of the month

rd
This means that the point at which the revenue will be equal the cost incurred is 23 date of
the month.

Break Even point (Shs) BEP (day) x Charges per day

45
 = 23 x 4,000 = Shs. 92,000
This means that the total income at break even point is Kshs. 92,000
i. e. at the 23rd day of the month.

(ii) ROCE - Return on capital employed.

= Profit before interest & tax x 100%

year 2004 = 26000 x 100

250,000

= 10.4%
(iii) Return on equity or capital employed (ROE)

= Profit before interest x tax x 100

Equity capital

= 26,000 x 100 150,000

= 17,3%

5.8 REMEDIAL MEASURES

There are eventualities in business world, which are not anticipated. However Grapet will
have to take some measures to carter such risks. Such risks are;-
-Fire
-Theft e.t.c.

He will tHisefore have to get insurance cover for both business and employees.

Such risks are:

- Theft
- Tremors
46
 Theft and power failure and rationing can be prevented but others cannot. As said earlier in
order to overcome power failure one can buy a generator.

With natural calamities, they are unpredictable. Unless risks like fire while one can install a
fire extinguisher machine.

5.9 REPAIRS & MAINTENANCE

Once the machines are properly maintained, these will always be good output.

Repairs and maintenance will be prioritized. This will avoid time wastage and thus
everything will be available at the right time.

5.9.1 SECURITY
The sponsor will employ security guards to watch over business premises. Heavy metal
doors will be fixed to prevent robberies.

5.9.2 WATER SHORTAGE

To overcome water shortages, Grapet will purchase a safety tank, which will also be used to
collect waters during rainy reasons. With time He will purchase a generator.

5.9.3 UTILIZATION OF PROFIT

Profits obtained from this business will be used to:

- Improve owners standards of living

- Expansion of business
- Banking for future use and
- Increase of salaries and wages of workers

47
5.9.4CRITICAL RISKS

Every undertaking of business is risk taking.

It’s normal for every business to undergo some risks.

These risks must be faced with force available.

48
APPENDIX C

49