BUSINESS PLAN.

NAME OF THE BUSINESS :EMERY’S BAHA PLUMBING CLASSIC

HARDWARE

ADDRESS : P.O BOX 10 – 91800, THIKA

TEL : +254718530176

BUSINESS LOGO :

NAME OF THE PRESENTOR : IRENE VAATI WAEMA

INDEX NUMBER :

TO WHOM PRESENTED : A BUSINESS PLAN SUBMITED TO

DATE OF PRESENTATION :

EXAMINATION CENTRE :

CENTRE CODE :

NAME OF SUPERVISOR :
SERIES :

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DECLARATION
This Business Plan is my original work and has not been presented for examination any other
college/institution.

Signature

Date

SUPERVISOR

The Business Plan has been submitted with our approval as the college lecture
Name

Signature

Date

ii
DEDICATION
This work is first dedicated to the Almighty God for his goodness, mercies and favour along this
journey. Secondly, I dedicate this work to my classmates.

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ACKNOWLEDGEMENT
I wish to sincerely thank the Almighty Father for His care, support and grace who have taken me
through this work.
To my lecturer Mr. Lenus Mugendi you have surely been a strong pillar in my academic
endeavors since my Certificate; you have now successfully taken me through this course.
My deep appreciation also goes to my parents who were a source of extra strength throughout the
study. They never got tired of my absence or the many hours I spend on this project while their
concerns took second place

To all who contributed in one way or another, my colleagues at the College and the entire
fraternity of NYSTC main campus Mombasa God reward blessings on them.

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v
TABLE OF CONTENTS
DECLARATION .......................................................................................................................... ii
SUPERVISOR ............................................................................................................................... ii
DEDICATION ............................................................................................................................. iii
ACKNOWLEDGEMENT........................................................................................................... iv
TABLE OF CONTENTS ............................................................................................................. v
CHAPTER ONE ........................................................................................................................... 1
1.1 BUSINESS DESCRITION ................................................................................................... 1
1.2 BACKGROUND INFORMATION ...................................................................................... 1
1.3 BUSINESS NAME ............................................................................................................... 1
1.4 MISSION .............................................................................................................................. 1
1.5 VISION ................................................................................................................................. 1
1.6 BUSINESS LOCATION AND ADRESS ............................................................................. 2
BUSINESS LOCATION ............................................................................................................. 3
1.7 FORM OF OWNERSHIP ..................................................................................................... 3
1.8 TYPE OF BUSINESS ........................................................................................................... 4
1.9 PRODUCTION AND SERVICES ........................................................................................ 4
1.10 JUSTIFICATION OF OPPORNITY .................................................................................. 5
1.10.2 Mark scope ................................................................................................................... 5
1.10.3 Improve beauty ............................................................................................................. 5
1.10.4 Good infrastructures ..................................................................................................... 5
1.10.5 Water and electricity ..................................................................................................... 5
1.10.6 Security ......................................................................................................................... 6
1.11 INDUSTRY ......................................................................................................................... 6
1.12 ENTRY AND STRATEGY ................................................................................................ 6
CHAPTER TWO .......................................................................................................................... 7
2.0 MARKETING PLAN ........................................................................................................... 7
2.1 CUSTOMER ......................................................................................................................... 7
2.1.1 Commercial customer ..................................................................................................... 7
2.1.2 Domestic customer ......................................................................................................... 7

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 2.1.3 Institution customer ........................................................................................................ 7
2.2 MARKET SHARE ................................................................................................................ 8
2.3 COMPETITION .................................................................................................................... 8
Comparison of overall strength and weakness ........................................................................ 8
2.4 METHOD OF ADVERTISING AND PROMOTION ......................................................... 9
2.5 PRICING STRATEGY ......................................................................................................... 9
2.6 SALES TACTICS ................................................................................................................. 9
2.7 DISTRIBUTION STRATEGY ............................................................................................. 9
CHAPTER THREE .................................................................................................................... 11
ORGANISATION AND MANAGEMENT PLAN .................................................................. 11
3.1 0RGANISATION STRUCTURE OF THE BUSINESS .................................................... 11
i) General Manager ............................................................................................................ 12
0THER PERSONNEL .............................................................................................................. 12
ii) Accountant ..................................................................................................................... 12
iii) Salespersons and marketers ........................................................................................ 13
iv) Driver .......................................................................................................................... 14
v) Security........................................................................................................................... 14
vi) Messenger ................................................................................................................... 14
3.2RECRUITMENT TRAINING AND PROMOTION ........................................................... 15
i) Recruitment ...................................................................................................................... 15
ii) Training ............................................................................................................................. 15
iii) Promotion......................................................................................................................... 15
3.3 REMUNERATION AND INCENTIVES ........................................................................... 15
3.5 LICENCES PERMITS AND BY-LAWS. .......................................................................... 16
BY LAW ................................................................................................................................... 16
3.6 SUPPORT SERVICES ....................................................................................................... 16
i) Management advisors ..................................................................................................... 17
ii) Insurance ........................................................................................................................ 17
CHAPTER FOUR....................................................................................................................... 18
4.0 0PERATIONAL/PRODUCTION PLAN ........................................................................... 18
4.1 PRODUCT DESIGN AND DEVELOPMENT .................................................................. 18

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 4.2 PRODUCTION FACILITY AND CAPACITY ................................................................. 18
i) Repair and maintenance ................................................................................................. 19
ii) Preventive maintenance.................................................................................................. 19
4.3 PRODUCTION STRATEGY ............................................................................................. 20
i) Monthly material requirement ........................................................................................ 20
4.4 PRODUCTION PROCESS ................................................................................................. 20
i) Trading license-cap No -236 .......................................................................................... 21
ii) Trade license from authority cap No-236....................................................................... 21
iii) Employment act cap No-226 ...................................................................................... 21
iv) Safety regulations ....................................................................................................... 21
v) Labour regulation act –cap No.237 ................................................................................ 21
vi) Public health act.......................................................................................................... 21
vii) By-laws ....................................................................................................................... 22
CHAPTER FIVE ........................................................................................................................ 23
5.0 FINANCIAL PLAN ............................................................................................................ 23
5.1 PRE-OPERATING COST STATEMENT 2018................................................................. 23
i) Lenses and Permits ......................................................................................................... 23
ii) Initial Advertising .......................................................................................................... 23
iii) Initial Transport .......................................................................................................... 23
iv) Consultancy legal fee.................................................................................................. 24
v) Initial labour payment .................................................................................................... 24
5.2 WORKING CAPITAL REQUIRMENT FOR 2018 ........................................................... 24
PROJECTED CASH FLOW STATEMENT FOR YEAR 2019 ‘00’ ....................................... 25
PROJECTED CASH FLOW STATEMENT FOR YEAR 2021 ‘00’ ....................................... 29
5.4 PROFORMA INCOME STATEMENT FOR THE ENDING 31 DEC 2021..................... 30
5.5 PROFORMA BALANCE SHEET...................................................................................... 30
5.6 BREAK – EVEN ANALYSIS ............................................................................................ 30
1 YEAR ................................................................................................................................. 31
2 YEAR ................................................................................................................................. 31
3 YEAR ................................................................................................................................. 31
5.7 RATIO ANALYSIS ............................................................................................................ 32

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 1) 1 YEAR ............................................................................................................................. 32
11) 2 year ............................................................................................................................... 32
111) 3 YEAR ......................................................................................................................... 32
Return on Investment ................................................................................................................ 33
5.8 DESIRED FINANCING ..................................................................................................... 33
5.9 PROPOSED CAPITALIZATION ...................................................................................... 33

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EXECUTIVE SUMMARY

Chapter One of this business plan comprises of business description i.e.; name, location and
address described the form of ownership and type of ownership. The production and services are
also described including the justification of this business opportunity. The industry, goals of
business, its entry into the market and the growth strategy have also been described.

In chapter two comprises of marketing plan, customer, competition and market share are
described. It also describes advertising and promotion. The pricing strategy and the sale tactics
have also been described; including the distribution strategy.

In chapter three explain about organization and management plan which contains organizational
plan and management plan its key management personnel number and duties of each,
recruitment, training and promotion. The remuneration and incentive are also described
including the license, permits, by-laws and support services are also described.

In chapter four consists of production plans/operational plan contains the product design and
development, product facilities and capacity and also repair and maintenance. It also described
the production strategy, operational/production process including the government regulations
affecting operation.

In chapter five is the financial plan which contains the following:-

i. Pre-operational cost
ii. Working capital requirement
iii. Cash flow statement
iv. Income statement
v. Balance sheet
vi. Break-even analysis
vii. Enterprises profitability ratio
viii. Desired financing

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 CHAPTER ONE

1.1 BUSINESS DESCRITION

The owner of the business is Emery Baha aged 19 years old and resides at Parklands, Nairobi County.

1.2 BACKGROUND INFORMATION

I as the owner of the business underwent 8-4-4 syllabus and completed my primary education at
where I attained my Kenya Certificate of primary education and proceed to high school later
joined NYSTC Best College in Kenya to pursue Certificate in Plumbing. After finishing High
school the owner worked with general motors Industries Limited where the experience and
knowledge to operate this kind of business was gained.

1.3 BUSINESS NAME

The name of the business will be Emery’s Baha Plumbing Classic Hardware. The name was
branded by owner since the business will provide the high quality products (goods and
services).The business is meant to offer their products at very fair and affordable prices hence to
attract more customers. The initiator planned to set up and start the business immediately after
completion of her course. The business will be a sale proprietor.
MISSION
The business tends to provide quality products and development for self-reliance to sustain
customers and attract more customers. Ensure that customers are satisfied and happy with the
products offered by Emery’s Baha Plumbing Classic Hardware.
VISION
To develop competitive that suits dynamic technologies trends for sustainable development
Plumbing services.

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1.4 BUSINESS LOCATION AND ADRESS
The business will be located at Parklands road drive at Nairobi County. The reason for choice of

business location is that the business will make the following contribution to the community:

i). Creation of job opportunities to individuals in the community.

ii). Provide good quality motors which will be durable and economical.

iii) Sponsor charitable events to help the unfortunate children such as orphans and those who are

physically disabled.

The following is business address:

EMERY’S BAHA CLASSIC HARDWARE STORE

P.O.BOX 10 - 91800

THIKA

TEL NO: 0798514536

E-mail: emeryzena@gmail.com

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 BUSINESS LOCATION
Muthaiga road

Getrudes Hospital

City park Estate

EMERY’S BAHA CLASSIC HARDWARE STORE

Parklands road

Limuru road

MUTHAIGA

Second Parklands Avenue

1.5 FORM OF OWNERSHIP

The business will be managed by the owner of the business as the manager. He will be paying
customer in good time and improving delivery of services. The business will be faced by stiff
competition for other similar business data to capitalize on the competitive market with
knowledgeable skill experiences and who are serious at work so as the competitors will learn
from them due to their one work co-operative term.

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The will also be a co-operative between the staff and the customers so as the run very well
without any disturb from workers. The owner decided to start a sole proprietor type of a business
since it is easy to manage and needs only few legal formalities.

The initiator will carry a sole proprietor business and the capital to start the business is scheduled
as follows;

SOURCES OF CAPITAL (SPONSORS) AMOUNT (Kenya shillings).

Owner (personal savings) 2000,000
Loan 1000,000
Friends and well wishers 100,000
Family 100,000
Total 3,200,000

1.6 TYPE OF BUSINESS

Since the business will be a start-up. The will be initiated for the first time by the sponsor to be
of Plumbing materials with moderate price and offering free transport to customer and also
selling of other building materials. The idea of coming up with business the owner of the
business has been working in other Plumbing service industries and he has experience. The
customer will be offered at fair price. The business will also be involved in supplying their
products to customers who goods in bulky for their businesses.

The potential customers would be people work in the Mombasa and its outskirts Indians and the
people who are living around the area. The capital required to start the business will be ksh
3,200,000

The table below shows how the business will operate throughout the week and public holidays.

Days of the week Hours of Operation

Monday-Friday 7.30am-5.30pm
Saturday-Sunday 8.00am-5.00pm
Public holidays 9.00am-4.30pm

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1.7 PRODUCTION AND SERVICES
Emery’s Baha Classic Hardware Store will be selling their products to its customers which
will possess the following characteristics,

High quality products: Emery’s Baha Classic Hardware Store will ensure that its products are original
and durable.

The products will also be durable and affordable that is the products will be offered at affordable
prices

Its products will also be authorized by The Kenya Bureau of Statistics (KEBS) to justify the
quality. The products will also be from the finest and best materials.

1.8 JUSTIFICATION OF OPPORNITY

The need to venture into this kind of business is to satisfy the local demand of good plumbing

services. The business is also located in a conspicuous place in Nairobi where it will be serving

majority of its customers. The presence of super highway will facilitate transportation of vehicles

from the port more easily.

1.8.1 Population

The best place for operating the business is where there is rapid population to come up with good
business you have to look where population is increasing.

1.8.2 Mark scope

Emery’s Baha Classic Hardware Store is an enterprise that will aim at providing good quality products at
fair affordable price.

1.8.3 Improve beauty

The owner of the business will make sure that the mode of building materials in the rural and
urban area is improved.

1.8.4 Good infrastructures

Since roads and communications in urban areas are improved thus supply of Material is good.

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1.8.5 Water and electricity
As the entrepreneur I will look where there is plenty of water for maintaining cleanliness and
where he can access electricity very easily use in security and the power to run the sewing
machines for making some goods .

1.8.6 Security
I will look for a place which is more secure and where there police station has been situated.

1.9 INDUSTRY
The business will be dealing with buying of building materials. Modern technology will be
applied to this business such as use of high quality of goods that will meet the market demand.

Plumbing activities are the backbone of the country where many people depend for day to day
life. The government has carried other investors to invest on this industry by regulating product
prices and funding construction of new industries and reviving the collapsed once .The business
will be selling the goods in retail price and other in wholesale.

BUSINESS GOALS

 It will open new branches around the country; one will be opened in Nairobi town.
 The opportunity in this town will be viable as the population surrounding the town
involved learning institutions and horticultural farming due its favorable weather
condition. It’s also a cosmopolitan city
 Set up education programs which is aim in enlighten farmers on modern improved
personal protective equipment in there farming especially when they are transporting.
 The business will take six months to run efficiently

1.10 ENTRY AND STRATEGY

The owner will specialize in the field he will carry out market research on the price of products
and know the number of competitors. Employing qualified staff to ensure the smooth running of
business and a suitable pricing system will have a steady market hence growth of the business.
The business will enter market by advertising its products through television, radio, magazines
and through activities such as sports by providing cars for carrying and distributing the uniforms
written his company. This will encourage more to visit the business true entrance growth.

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CHAPTER TWO

2.0 MARKETING PLAN

2.1 CUSTOMER
The potential business customer of the proposed business will be people who are working in
Mombasa and it’s environ. The market area has a population of about 80,000 people. The owner
of the business will be purchasing the products for the business of different occupation hence of
different level, some are from high level others are from low level of income and some of these
customer are self-employed.

2.1.1 Commercial customer

Commercial customers who will be purchasing the products include;

i. Shops
ii. Supermarkets
iii. Industries

The customer will mainly purchase the products at cash price and some products will be given on
credit on condition that he/she pay on a given rate and date. The sales number of Plumbing
goods and services will be ksh 10,000 pairs per month.

2.1.2 Domestic customer

There are customers who will buy the goods and services in retail price and they include;

i. House holds
ii. Nurses
iii. Doctors

The number of Goods and services sold per month worth ksh10000

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2.1.3 Institution customer
They include the social service centres e.g. schools, hospitals and companies. The sales amount
of car spare parts will be ksh250, 000 per month.

2.2 MARKET SHARE

The estimated total sales of the business per month will be SH.200, 000 per month. There will be
only two competitors offering the same product in the market and this type of competition is not
expected to be that much stiff.

2.3 COMPETITION
There are generally two main competitors in the nearby market

The two businesses are;

General motors which sells its products at affordable prices, offers after sales services to its
customers, sells high quality products but has no skilled personnel and does not offer credit
facilities to its loyal customers.

Kenya Water Institute (KEWI) has skilled personnel, offers credit facilities to its customers,
hence creating a market gap which Fair Deals intends to fill.

The business will;

Employ qualified personnel, offer after sale services to its customers, offer credit facilities, sell
goods of high quality and offer their goods at affordable prices in order to fill the gap

Comparison of overall strength and weakness

NAME OF STRENGTH WEAKNESS MARKET SHARE
BUSINESS
Emery’s Baha Plumbing Provision of high Stiff competition 35%
Classic Hardware
Address quality goods
Many customers
General motors Good customer Unskilled personnel 40%
relations
Many employees
KEWI Qualified employees Late working hours 35%
Quality services

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2.4 METHOD OF ADVERTISING AND PROMOTION
The proposed business intends to promote its products through advertising. The reasons for
advertising are to create awareness of the existing products in the market to inform the public of
the new products in the market. The advertisements will be done through; Radios, Televisions,
posters, Billboards and newspapers. The total cost for advertisement is estimated to be around
25,000 shillings per month.

2.5 PRICING STRATEGY

This is one of the decisions made as one of the business objectives which aim at achieving target
return on investments, sales stabilizing prices, maintaining competition and maximizing the
profit. There are factors to be considered when setting the price these include:

i. Demand of the product

ii. Expected profit
iii. Competitors selling prices
iv. Government policies.

2.6 SALES TACTICS

The owner of the business should look smart all the time, be friendly, honest, faithfully, kind and
polite to all customer regardless of size and age. The business will offer commission 5% of 1500
to those customers who purchase the products in bulk.

Transport will be offered to those customers who have no transportation means if the purchase
products in bulk. In order to have good public relation the business will launch promotion to
regular customers by providing t-shirts which have the name of the company which will cost ksh,
2000

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2.7 DISTRIBUTION STRATEGY
The business will be purchasing car spare parts and materials will be sold to the customers in
town. Some of the distribution method is very costly since many customers may purchase bulk
products which will require to be offered with transport. In order to overcome this problem the
business will give such customers 20% of the total transport cost. The business will be operating
under the following chain of distribution.

Producer - consumer

This is the shortest and direct route the consumer will enjoy all the services provided by the
producer

Producer- retailer - consumer

The business will sell the car spare parts in bulk to its customers; the customer will be at liberty
to subdivide the car spare parts in to pairs which will be sold to their consumers, the major mode
of transport which will be used by the business will be road transport means

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CHAPTER THREE

ORGANISATION AND MANAGEMENT PLAN

Management is the planning, staffing, controlling an organization of a business. Staffing is an
important principle in the organization management. Emery’s Baha Plumbing Classic Hardware
services intend to employ qualified and experienced personnel in order for the business to meet
its short term and long term objectives. The business will require the services of 10 employees.
The proprietor will be the manager and he is in charge of all Auto city repair and services
business operations. The supervisor and the accountant will report directly to the manager and
the driver, the subordinate staffs, marketers and the cashier will be supervised by the supervisor
and accountant.

3.1 0RGANISATION STRUCTURE OF THE BUSINESS

Manager (proprietor)

Supervisor Accountant

Driver
Plumbers Marketers and Cashier
salespersons

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 i) General Manager
Required qualification for manager

i. Should have done certificate in business administration from recognize institution.

ii. Should be computer literate age of 20 years
iii. Should have good communication skills of English and Kiswahili.
iv. Should have good public relation
v. Salary will be 22,000

Duties/responsibilities of the General manage

i. To chair all the workers in the organization

ii. Ensure no corruption.
iii. Ensure smooth running of the business
iv. Ensure that all workers are paid on time

Supervisor

Requirements

 The incumbent applicant should possess a bachelor degree in business management from
a recognized institution.
 Applicant should be between 25-35 years of age.
 Should have at least three years working experience in the same field.

Duties and responsibilities

 Supervise and coordinate all the activities pertaining the operation of the business.
 Ensure smooth operations of day to day activities of the business.
 Formulate and implement long term goals and objectives of the business.

0THER PERSONNEL

ii) Accountant
Required qualification for account clerk

i. Holder of C.P.A and have at least 1 year of experience.

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 ii. Age of 21 year and above.
iii. Should be computer literate.
iv. Good communication skills.
v. Salary will be ksh 21,000 per month.

Duties/responsibilities of accounts clerk

i. Keeping financial records

ii. Construction financial flow
iii. Dealing with purchases from supplier

iii) Salespersons and marketers

Required qualification for sales representative

i. Certificate in sales and marketing

ii. Age between 23-30 years
iii. Should have good communication skills of English and Kiswahili
iv. Should be computer literate
v. Should be at least 1 years working experience in relevant field
vi. Salary will be ksh 20,500

Duties/responsibilities for sales representative

i. Help in advertising of the products in road show

ii. Keep records of sales from the field
iii. Ensure that customers are served well
iv. Ensure that no corruption taking place
v. Giving report to the manager.

Cashiers

Requirements

 Holder of diploma in accounting and finance.

 Should be between 25-30 years old.
 At least one year experience in a similar position.

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Duties and responsibilities

 Financial records and books keeping.

 Ensure that the orders have been paid and receipts issued.
 Balancing the business books.

iv) Driver
Required qualification for a driver

i. Qualified driver from a recognized institution

ii. Should have 2years experience
iii. Good human and public relation
iv. Salary will be ksh 15000

Duties/responsibilities of a driver

i. Distribution of good and productions to the customer

ii. Driver promoter during their road show
iii. Drive customer products to door step

v) Security
Required qualification for security

i. Should have a certificate of secondary education

ii. Should have a good conduct
iii. Should have 22 years and above
iv. Salary will be ksh.12,500 per month

Duties/responsibility for security

i. Provide security
ii. Perform other duties as order by the manager

vi) Messenger
Required qualification for messenger

i. Age between 20-25 years

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 ii. Should have a certificate of secondary education
iii. Good communication skill, English and Kiswahili
iv. Salary will be ksh 10,000 per month

Duties and responsibilities for a messenger

i. Deliver of documents
ii. Delivering of information to the respective people.

3.2RECRUITMENT TRAINING AND PROMOTION

i) Recruitment
The owner of the business will conduct on interview depending on the job which you have
specialized. Vacancies will be advertised within the district using posters, which will cost ksh.
3000 per month. The applicant will be shortlisted for an interview and those who will pass in
interview will be employed.

ii) Training
New employees will be guided by senior employees by showing the prices of available products
in the business. Senior employees will be sponsored by the manager to attend seminars
organization by various organizations and will cost ksh.2000 per day.

iii) Promotion
The promotion will be done through increasing of salaries to employee of which will motivate
them, hence making performances very high. The will also be done through adding the most
hand working employees and will be promoted according to their education background
experiences and merit.

3.3 REMUNERATION AND INCENTIVES

The salary for employee will be paid on monthly basis. Remuneration of employees will depend
on government policies labour and the realized net profit for the determination of increase the
salaries. The payment will be done on time so that to avoid workers going on strike. The
following is the summary of remuneration.

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Position No. of employees Gross salary (SSP)

Manager 1 20,000

Supervisor 1 15,000

Accountant 1 15,000

Driver 1 10,000

Cashiers 2 10,000

Marketers and sales persons 4 9,000

Plumber 5 2,000(daily)

3.5 LICENCES PERMITS AND BY-LAWS.

A trading license will be obtained from Mombasa municipal council office. The license will
entail the name of the business, postal address, location and the type of the business at a cost of
ksh.60, 000 per year. The table below summarizes the license and permit

BY LAW
It is a requirement for any running business to pay tax and the employee to have a certificate of
the product they are offering. This will enable the business to run smoothly without any
interruption.

3.6 SUPPORT SERVICES

Banking service will be provided by the Kenya commercial bank (K.C.B), which will cost
ksh.5, 000 per month.

Kahawa Branch

P.O box 156

Mombasa

Tel No/mob No. 036274/0729702345

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They will give low at low interest.

i) Management advisors
They will be from East Africa institute of credited studies (ICS) and will cost ksh.6, 00 per
month.

Mombasa Branch

P.O. box 11696

Mombasa

Mobile no. 0710111332/073600154.

ii) Insurance
Stallion Insurance Company

Mombasa branch

P.O. box 100

Mombasa

Mobile no. 0722667101/0752072150

Insurance will cost ksh.20, 000 per month.

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CHAPTER FOUR

4.0 0PERATIONAL/PRODUCTION PLAN

The production plan relates the output of a firm to the amount of input, mainly capital and
labour. Production will be managed by the Emery’s Baha Plumbing Classic Hardware business
to determine the profit of the business.

4.1 PRODUCT DESIGN AND DEVELOPMENT

In order for the business to operate smoothly and effectively, production facilities will be

required. This includes machines, tools and equipment required in to product segment.

4.2 PRODUCTION FACILITY AND CAPACITY

The business will require wide range of machines and equipment for the effectiveness and
efficiency purpose of the operation of the business.

The skill man power will be required for the operation of the machines.

The following table shows some of the recurred machines and, equipment from the capacity and
production purposes required by the business

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Item No. Uses Supplier Cost per unit Total cost
Weighing 4 For measuring the Karagi 5000 20,000
quantity required of the Plumbing
motors. service
Bubble wrap 20 Used for wrapping to Ex U spares 4000 80,000
motors before sale to
avoid any damage.
Gloves 30 Used to put on while karagi 600 18,000
checking to spares. plumbers
This will protect from
contact with germs.
Dust remover 50 Used for removing dust Ex U Sapres 200 10,000
to keep the motors look
new and classy each
day.
Item No. Uses Supplier Cost per unit Total cost
Weighing 4 For measuring the Karagi 5000 20,000
quantity required Plumbers

Bubble wrap 20 Used for wrapping to Ex U spares 4000 80,000

motors before sale to
avoid any damage.
Gloves 30 Used to put on while karagi 600 18,000
checking to spares. plumbers
This will protect from
contact with germs.
Dust remover 50 Used for removing dust Ex U spares 200 10,000

i) Repair and maintenance

The business shall employ people with the skills for repair and maintenance of machines. The
rules and regulation of machine operation will be strictly adhere to the following safety will be
followed immediately the equipment is used should be return to its appropriate position and
followed the manufactures instruction, precaution purpose of the immediate repair of breakages
is to ensure that the business is carried on its operation effectively.

ii) Preventive maintenance

Machine which needs oiling and lubrication shall be lubrication to prevent them from wearing
off quickly.

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Reason for repair and maintenance

 To minimize breakage
 To ensure larger services of the equipment and machines
 To establish a satisfactory condition for the workers
 To minis the cost of maintenance and maximize profitability

4.3 PRODUCTION STRATEGY

The business will employ qualify personnel in management and production machines will also
be purchased to improve on the mode of production.

i) Monthly material requirement

The business will require a number of materials and equipment during it is operation. The table
show the monthly material required.

4.4 PRODUCTION PROCESS

The production or the manufacture of the product is done in the industry or imported from
outside Kenya

The process of the Plumbing Classic Hardware may be done at the industry, overseas or within
the business remises especially orders from customers for the wedding ceremonies, schools
uniform

Also the business will buy and sell to customers ready available in their store

PRODUCER

SUPPLIER

RETAILER

CONSUMERS

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REGULATIONS AFFECTING PRODUCTION

i) Trading license-cap No -236

The business trading license will be from the central government, example the ministry of
commerce and industry with the parliament to provide trade license to regulate the business.

ii) Trade license from authority cap No-236

Plumbing Classic Hardware increase from local authority in which they make sure that the
license is obtained and also renewed every year. This is done in respect to its importance as
unhealthy competition.

iii) Employment act cap No-226

A person to get employment in the Emery’s Baha Plumbing Classic Hardware must be 18 years
and above. Employee who will fail to follow the rules and regulation of the organization will be
punished.

iv) Safety regulations

All the electric equipment must have insulation and employees should be very careful when
handling any of the appliances. Fire extinguisher will be fitted at the corners in the fair deal
enterprise and a first aid kit also is available to avoid careless accidents all the equipment and
materials will be kept at specific place and employees must make sure that after using anything
they are placed back to their respective places.

v) Labour regulation act –cap No.237

These are the law that governs the relationship between the employer and employees, set up
guidelines for the salaries that have to be followed. Call for the registration of the employees
with the union.

The employees are also entitled to use registration with the national hospital insurance fund and
national social security fund. It also entitles employees to be given a leaving and they should be
sacked without prior notice.

vi) Public health act

The business will be registered by public health department to ensure that services and products
are in high degree of cleanness by clean tap drinking water proper sanitation and storage
facilities.

21
 vii) By-laws
Weights and measures act

The business will make sure that all the products are sold at fair price correspond with the quality
as stated in the package and quality. This is in accordance to the manufacturer to bear this cost
and the body involved in those in the bureau of standards.

22
CHAPTER FIVE

5.0 FINANCIAL PLAN

The business intends to solicit funds for running the business from the following contribution:
personal saving, family and relative. The objectives of the financial plan may include. To have
return on capital of 30% per annum in a period of three years, maintain a net profit of 50% per
annum, Maintain a liquidity ratio of 5% maintain a growing profit ratio of 150% of profit,

To maintain prices at the acceptable rate in the market.

5.1 PRE-OPERATING COST STATEMENT 2024

ITEM COST
Trading license 5,000
Electricity deposit 5,000
Research 10,000
Advertisement paid in 25,000
Advance
Rent paid in advance 30,000
Computers 60,000
Pellets and shelves 15,000
Transport 100,000
Store 40,000
Total amount 290,000

i) Lenses and Permits

Figure obtained from lenses and permits documents in chapter 3.6

ii) Initial Advertising

Figure obtained from monthly production cost document in chapter 4.3.2

Paid in advance,

iii) Initial Transport

Figure obtain from monthly production cost document in chapter 4.3.2

23
 iv) Consultancy legal fee
Figure obtained from lenses and permit document in chapter 3.5

v) Initial labour payment

Figure obtained from monthly labour cost document in chapter 4.3.1

5.2 WORKING CAPITAL REQUIRMENT FOR 2024

CURRENT ASSETS COST
Stock 200,000
Cash at hand 300,000
Cash at bank 20,000
Debtors 10,000
530,000
CURRENT LIABILITIES COST
Creditors 20,000
Accruals 10,000
Total 30,000

WORKING CAPITAL 60,000

Bank loan payment rate at 10%

24
PROJECTED CASH FLOW STATEMENT FOR YEAR 2021
PARTICUL SEPT TOTAL
JAN FEB MAR APR MAY JUNE JULY AUG OCT NOV DEC
ARS S
Baldd 138,1 338,3 472,3 582,00 701,50 995,90 998,60 1,008,6 1,016,4 1,028,6 1,136,5 8,416,8
00 00 00 0 0 0 0 00 00 00 00 00
cash sales 250,0 256,0 263,0 269,0 279,00 287,00 296,00 306,00 312,00 321,00 332,00 342,00 3,513,0
00 00 00 00 0 0 0 0 0 0 0 0 00
Capital 200,0 200,0 200,0 200,0 205,00 400,00 100,00 100,00 100,00 100,00 200,00 140,00 2,145,0
introduced 00 00 00 00 0 0 0 0 0 0 0 0 00
Discount 80,00 14,00 12,00 10,00
received 0 0 0 0 12,000 5,000 8,000 8,000 4,800 4,000 4,400 4,500 166,700
credit sales 10,00
5,000 0 7,000 5,000 5,000 4,000 4,200 4,200 3,000 3,000 3,000 5,300 58,700
total inflows 463,0 618,1 820,3 956,3 1,083,0 1,397,5 1,404,1 1,416,8 1,428,4 1,444,4 1,568,0 1,628,3 14,228,
00 00 00 00 00 00 00 00 00 00 00 00 200
Outflows -
Purchases 120,0 110,0 170,0 200,0 206,00 223,50 225,00 230,00 230,00 234,60 249,00 246,00 2,444,1
00 00 00 00 0 0 0 0 0 0 0 0 00
Electricity 3,400 3,500 3,500 3,400 3,400 3,800 3,500 3,400 3,500 3,500 3,500 3,500 41,900
Insurance 30,000
30,000
Rent 40,00 40,00 40,00 40,00
0 0 0 0 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 480,000
Water bill 4,000 3,800 4,500 4,400 4,600 5,800 6,000 4,800 8,000 8,200 8,400 8,400 70,900
Interest
Loan 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Salary 100,0 100,0 100,0 100,0 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 1,200,0
Wages 00 00 00 00 0 0 0 0 0 0 0 0 00

25
Advertiseme 25,00 20,00 27,50 24,00
nt 0 0 0 0 25,000 26,000 28,500 27,500 28,000 27,000 28,100 28,000 314,600
Total Cash 324,9 279,8 348,0 374,3 381,50 401,60 405,50 408,20 412,00 415,80 431,50 428,40 4,611,5
outflow 00 00 00 00 0 0 0 0 0 0 0 0 00
Balbd 138,1 338,3 472,3 582,0 701,50 995,90 998,60 1,008,6 1,016,4 1,028,6 1,136,5 1,119,9 9,536,7
00 00 00 00 0 0 0 00 00 00 00 00 00

26
 PROJECTED CASH FLOW STATEMENT FOR YEAR 2022 ‘00’

PARTIC JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC TOTA LS
ULARS
baldd 1,199,900 1,421, 1,597, 1,721, 1,817,6 2,030, 2,185, 2,425, 2,746,4 3,041,6 3,360, 3,678, 27,227,
800 700 300 00 600 800 900 00 00 600 100 300
cash sales 330,000 339,0 347,0 356,00 364,00 369,00 376,00 387,00 409,00 416,00 422,00 430,00 4,545,0
00 00 0 0 0 0 0 0 0 0 0 00
capital
introduce d 300,000 200,0 200,0 180,00 200,00 201,00 200,00 212,00 200,00 200,00 210,00 100,00 2,403,0
00 00 0 0 0 0 0 0 0 0 0 00
discount 10,000
received 8,000 5,000 4,000 3,000 6,000 7,000 6,500 6,000 5,000 6,000 4,000 70,500
credit
sales 8,000 7,500 4,000 5,000 3,000 4,000 3,400 5,000 3,000 5,500 5,000 4,000 57,400
total 1,847,9 1,976, 2,153, 2,266, 2,387,6 2,610, 2,772, 3,036, 3,364,4 3,668,1 4,001, 4,216, 34,300,
inflows 00 300 700 300 00 600 200 400 00 00 100 100 700
outflows -
purchases 215,60 196,1 246,1 258,70 166,00 235,50 157,50 103,00 133,00 123,00 133,00 142,00 2,109,5
0 00 00 0 0 0 0 0 0 0 0 0 00
electricity 3,500 4,000 4,800 5,000 5,300 6,000 4,500 5,000 6,500 6,000 6,500 6,700 63,800
insurance 30,000 30,000
Rent 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 600,000
Water bill 4,500 5,000 5,000 6,000 6,500 7,000 6,000 6,000 7,000 6,000 6,500 7,000 72,500
Interest
Loan 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Salary 100,00 100,0 100,0 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 1,200,0
Wages 0 00 00 0 0 0 0 0 0 0 0 0 00
Advertise 21,00 24,00 286,40
ment 20,000 0 0 26,500 27,000 23,800 25,800 23,500 23,800 20,000 25,000 26,000 0
Total 426,10 378,6 432,4 448,70 357,00 424,80 346,80 290,00 322,80 307,50 323,50 3,344, 7,402,4
Cash 0 00 00 0 0 0 0 0 0 0 0 200 00

27
Outflow
Balbd 1,421,8 1,597, 1,721, 1,817, 2,030,6 2,185, 2,425, 2,746, 3,041,6 3,360,6 3,678, 3,881, 29,909,
00 800 300 600 00 800 900 400 00 00 100 900 400

28
PROJECTED CASH FLOW STATEMENT FOR YEAR 2023 ‘00’
particulars JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTA
E Y L
Inflows
Cash sales 1100 1105 1110 1320 10,000 1125 1130 1135 114 1145 1150 1155 103910
0 0 0 0 0 0 0 0 0 0 0 0
Debtors 100 100 100 1125 100 100 100 100 100 100 100 100 12350
0
TOTAL CASH 1110 1115 1120 1115 11300 1135 1140 1145 115 1155 1160 1165 126050
0 0 0 0 0 0 0 0 0 0 0
OUTFLOWS
Production and 3100 3110 3150 3180 3200 3220 3240 3200 320 3220 3100 3110 38030
overheads 0
Repair and 200 200 200 200 200 200 200 200 200 200 200 200 2400
Maintenance
Promotional 100 100 100 120 120 120 110 110 110 100 100 100 1290
Gross wages 900 900 900 900 900 900 900 900 900 900 900 900 10800
Location and 2200 2200 2230 2250 2280 2300 2200 2200 320 2250 2250 2250 27810
Administration 0
Loan payment 120 120 120 120 120 120 120 120 120 120 120 120 1440
Owners withdraw 110 110 110 110 110 110 110 110 110 110 110 110 1320
Others expense 450 450 450 400 400 400 400 400 400 400 400 400 4950
TOTAL OUTFLOW 7181 7210 7260 7280 7330 7370 7180 7240 724 7300 7180 7190 86961
0
Net inflow 3920 3940 3940 3970 3970 3980 4220 4210 426 4250 4450 4460 49570
0
Opening balance 380 300 350 350 300 370 250 300 310 320 300 350 3880
Closing balance 300 350 350 300 270 250 300 310 320 300 350 380 3780
Total cash 4000 3890 3940 4020 4000 4000 4170 4200 425 4270 4390 4430 49560
0

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5.4 PROFORMA INCOME STATEMENT FOR THE ENDING 31 DEC 2023
Item 2022 2023
Sales 1,432,000 1,500,000
-cost of sales 200,000 250,000
Gross profit c/d 232,000 250,000
Gross profit b/d
Discount received 5,000 60,000
1,237,000 310,000
2,370,000

5.5 PROFORMA BALANCE SHEET

FIXED ASSETS COST
Building 200,000
Transport vehicle 500,000
Furniture and fittings 100,000
Computers 60,000
Less depreciation 50,000
810,000
CURRENT ASSETS COST
Stock 200,000
Cash at hand 300,000
Cash at bank 20,000
Debtors 10,000
530,000
CURRENT LIABILITIES COST
Creditors 20,000
Accruals 10,000
Working capital financed 1,310,000
Opening capital 300,000
Net profit 320,000
Drawings 20,000
640,000

5.6 BREAK – EVEN ANALYSIS

 Break-even point is the level at which the business is neither making a profit or loss
 IS the level where revenue is exactly equivalent to total expenses

TOTAL SALES = TOTAL EXPENSES\NO PROFIT OR LOSS IS MADE

Revenue = Expenditure

30
 Income

1,014,000 = 1.88

540,000

1 YEAR
Contribution = sale – variable cost

=216,500 – 29,600

=186,900

=186,900\216,500*100

=86.328%

Break-even level = 1,723,425\86,328

=19,963.685

2 YEAR
Contribution = sales – variable cost

=30,000 - 3000

=27,000

=27,000\30,000*100

=90%

Break-even level = 1,723,425\90%

=19,149.167

3 YEAR
Contribution = sales – variable cost

= 350,000-45,000

=305000

31
=305,000\350,000*100

=87.143%

=1,723,420\87.143%

=19,776.918

5.7 RATIO ANALYSIS

1) 1 YEAR
Gross profit % = Gross profit\Total sales×100

= 196,00\2,165,00×100

=90.762%

11) 2 year
Gross profit = 2, 800, 00\300, 00×100

=93.333%

111) 3 YEAR
Gross profit = 300,00\3,500,00×100

= 85,714%

Return on K.C.B = Net profit after tax\owner K.C.B×100

1 Year = 126,750\600,00×100

=21,125%

2 Year =724,125\600,00×100

=120.688%

3 Year =1,302,750\600,00×100

=217.125%

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Return on Investment
= Net profit after tax\Total investment*100

1 Year =126,750\900,00×100

=14,083%

2 Year =724,125\995,650×100

=72.729%

3 Year =1,302,750\1,073,054×100

=121.405%

5.8 DESIRED FINANCING

This is the overall requirement of the business to set up.

ITEM Amount
Pre-operational cost 290,000
Working capital 500,000
Fixed assets 920,000
Total Desired Financing 1,710,000

5.9 PROPOSED CAPITALIZATION

Item Amount
Owners contribution 30,000
Borrowed funds/loans 90,000
Total investment 120,000

33