CHAPTER ONE 1.0 EXECUTIVE SUMMARY 1.

1 Business Description The business shall be a sole proprietorship oriented and the business shall be called 3GTECH CYBER CAF. The business shall be located at Nyeri town and the proprietor intends to deal with computer services and products. The main services include offering internet services, typesetting, printing, photocopying, and lamination, binding and also training on computer packages. The justification of the business is the growth in this sector and also the weaknesses of the existing competitors. 1.2 Marketing Plan The business will have individuals and institutions as its customers. The identified competitors are One Stop, Digits, Hedge Hog and Morphil cyber cafe. To achieve competitive advantage the proprietor will consider the operating costs, the prevailing market prices and the profit margin. For promotion, the proprietor will use posters, flyers and banners, personal selling tactics and some sales promotions will be carried out from time to time to keep the clients satisfied. Due to the nature of products/service the distribution will mainly be catered for by the clients and customers coming to the business premises. 1.3 Management and Organizational Plan To run the business the proprietor will adopt a simple organizational structure, with the proprietor at the top who will act as the business manager and will be assisted by an operations coordinator and a support staff. The proprietor intends to increase the number of employees as the business grows. All recruitment will be on merit basis and the remuneration will be according to ones skills and competence. All employees will be taken through an organizational induction and performance will be evaluated on the basis of achieving the set individual goals and targets. All the other services like banking services, insurance services, and security services shall be outsourced from various service providers in order to ensure quality, efficiency and reduce costs. 1

The licenses, permits and By laws regulating the operations of the business like business registration, operating licenses and working environment regulations will be acquired before the business commence operations.

1.4 Operational Plan The various tools and equipments required for effective operations will be acquired at an established cost of Kshs. 300,000. The proprietor will also have to cater for the renovations, redesigning and partitioning of the premises and all this will cost a total of Kshs. 100,000. The materials requirements have also been computed and all the materials will cost a total of Kshs. 300,000. The monthly labor cost will be Kshs. 60,000 and the overheads will cost a total of Kshs. 80,000.

1.5 Financial Plan The pre operational cost will amount to Kshs. 600,000. The proprietor projects that the business will grow with 4%, 8% and 10% for the initial three years of operations. The business will require Kshs: 60,000 and 75,000 as working capital for the two years. The net cash inflow has also been calculated and it amounts to Kshs: 680,000, 815,000, and 1,071,700 for the three years respectively. The proprietor has projected a profit of Kshs: 72,000, 100,000, and 203,000 for the three years respectively. To break even, the business must have sales revenue worth Kshs 521,111 in a year. The current ratio of the business in 2011 is 1.88; stock turnover of the business is on average 57.7% while as the profit margin is an average of 14.73%. The desired financing amounts to Kshs. 680,000 and this will be catered for from personal savings of Kshs. 200,000, from family and friends Kshs. 250,000 and a Loan from the bank of Kshs. 230,000.

CHAPTER TWO 2.0 BUSINESS DESCRIPTION 2.1 Sponsor Name Age Marital Status Residence Education Experience Acquiring the Necessary experience : From current employment as a cyber caf assistant. : : : : : : Frolence Thegetha 30 Years Married Kenyan Diploma in Information Technology Employed as a cyber caf assistant.

Attend workshops mostly organized by Kenya Small Business Association. Attending training seminars for Small Business Entrepreneurs Amount to be invested: Amount to be borrowed: Specific sources of fund: Kshs. 680,000 Kshs. 480,000 From Equity Bank and from family and friends.

2.2 Name of the Business The name of the business will be 3GTECH CYBER CAF. The word 3GTECH was adopted because of its simplicity that makes it unique to customers and conveys a state of art modern technology cyber that our customers needs would be fully satisfied The proposed business would be a start up and the entrepreneur expects to open up the business after completing his studies so as to capitalize on the free time that he will have and also on the skills acquired during his course. 2.3 Location of the Business The business will be located at Nyeri. The postal address of the business is P. o. Box 3589 200, Nyeri. The business phone number will be 0724564468. The email contact of the business will be florencegthegetha@gmail.com. The location is favorable because of the availability of institutions and Hostels, level of rent and rates which are considerably affordable compared to other areas in Nyeri, There are also a number of institutions around that can be considered to be a rich market for the businesses services. 2.4 Form of Ownership The business shall adopt a sole proprietorship structure and management. I will be the sole owner of the business and this is mainly because I have the relevant and appropriate skills to manage the business and also am able to secure the necessary resources for the business. Suitability of the form of ownership chosen i.
ii.

I will have direct contact with my clients and therefore be able to serve them better. There are fewer legal formalities that are required to start the business. To coordinate and supervise this kind of business is easier. The aspect of personal appraisal evaluation of a person and for the business is enhanced by the virtue of its creation and management style. The ability to network with different prospects that will assist in the consultancy and financing of the business. 4

iii. iv.
v.

2.5 Products and Services The Products and Services The main services includes: offering computer services where people can access the internet. The business will also offer printing, scanning, photocopying, lamination, typesetting, stationeries, binding and offer training on computer packages and accounting packages 2.6 Industry The business is categorized under the information and communications technology industry. Within this area, this industry is characterized by small businesses offering very limited or no variety at all in terms of only focusing on one area alone such as cyber caf and at the same time mostly specializing in the provision of internet services. Most of the businesses in these industry are sole proprietorships and due to the nature of services/products that they offer and the accompanying high costs, most of the clients prefer to go to get these kind of services from businesses that offer them at lower prices and therefore most of the businesses have only a handful of customers while others have specialized in one area of service such as bulk printers who target corporate organizations. 2.7 Justification Customers will always want to be associated with a business that conforms to customer requirements and which values the customer as the king. Most entrepreneurs in this sector particularly in Ngara are not aware of what the customer wants most of their business premises provide low quality products and services for instance low speed in internet access, low quality printing services. Etc 3GTECH CYBER CAF comes handy with the efficient and effective products and services that for Ngara customers; this is due to a simple market research which I carried out to determine what customers expect from cyber cafes. The business has good chances of success due to the following factors: Trends and growth potential of the market Off late, there has been an increase in the number of students in learning institutions therefore a strain on the resources of the institution.

Weaknesses of the existing competitors through a market survey, I was able to identify specific weaknesses of the competitors some of which include; limited variety, high costs, lack of reliability i.e. most of the business had inadequate equipment that were too old while others had slow working computers and also most of the businesses operate from 8 to 5 and therefore they are not able to cater for early morning, late evening and weekend clients. 3GTECH CYBER CAF will be a success since the business owner will combine the principles of variety, quality products and services, reliable computer equipments and also offer products and services that customers are able to afford while satisfying their needs

CHAPTER THREE MARKETING PLAN 3.1 Customers: The major customers are as summarized below: Individuals these are persons who purchase for their own consumption. These are the customer who spread the good word of the business to others about our products and services. Hence the business seeks to maintain standard quality on its products and services so as to attract more loyal customers. Institutions these includes: secondary schools, training colleges and universities. These

institutions mostly carry out their day to day activities using most of the products which the business will be selling. 3GTECH seeks to apply for tenders from these institutions to supply them with stationeries and services such a bulk printing and photocopying. Government agencies - Due to high profile and expectations once the business expands to diversify into others related services the others class of customers to target are government agencies. Government agencies will be targeted when it comes to tendering for supply of the stationery like photocopies paper, writing material etc. Understanding of the prime customers: This is analysis under different categories What they buy: They mostly purchase stationeries and computer services such as printing, photocopy.etc For secondary school their purchases mostly consist of exercise books, photocopying papers for examination printing, pens, pencils, paper clips, browse the internet. For colleges and universities they mostly purchase photocopying papers, they also demand services of printing, photocopy, lamination, typesetting, binding, printing, scanning, and browsing

Why do they buy - The major reason why they buy what they buy is to fulfill certain needs for life existence. Like institutions cannot do without stationeries. Hence they satisfy these needs when they make a purchase. Therefore, the customer needs to be treated well by the business by fulfilling his or her needs with quality products and services. Their preferred mode of buying There are different modes which customers use when making a purchase. These are cash or on credit basis. For most learning institutions, they usually buy on credit while as for individual customers the most common mode of buying is cash. Availability of cash enables customers to buy on cash while others request for credit facilities. Already measures are in place to facilitate these two modes of purchase. When they buy In this business there are fluctuations in terms of demand. I.e. there are times when demand is high or low. During the month of January, May and September, these are the period when most individual and learning institutions demand more of the stationeries from the shops for a new terms, it requires high stock levels to prevent any discouragement due to stock outs. 3.2 Competition. There are various competitors existing currently within the chosen location of the business. The major competitors are: One Stop cyber cafe: They operate within the same locality and the business started operating 4 years ago. It is a family business and though they are located near a road network but they have been unable to capitalize on their location since their opening has been very inconsistent and mostly their services are slow. On the other hand 3GTECH CYBER CAF will open Mon to Saturday 7pm to 8pm and on Sundays from 2pm to 6:30 pm. Also one of the distinguishing features of 3G TECH CYBER CAF will be variety and quality and this will automatically draw clients to the business. Digits cyber cafe - has been in operation for the last 3 years. This business is located in an isolated locality. Their prices are also a bit high compared to all the other existing businesses.

To neutralize this advantages, 3G TECH services will have a credit facility in place especially for those who will be taking the training of computer packages, the prices will be lower since I believe in accessible products and services and finally the business will have a modern outlook so as to attract moon light clientele and then offer them much more at a lower cost. Hedge Hog Cyber caf a small cyber cafe shop located within Ruringu. The proprietor usually concentrates on offering only computer services where customers are only offered internet services. To counter these, KENTECH CYBER CAF will offer competitive prices, offer a variety of services and at the same time clients will have an opportunity of accessing the internet faster. And therefore since most of Hedge Hog clientele are students from the Vision Institute of Professionals our business will be able to capture these customers. 3.2.1 SWOT Analysis The SWOT analysis seeks to examine the strengths, weaknesses, opportunities and threats of the proposed business. The analysis will enable 3G TECH CYBER CAF to build its customer base and acquire a certain percentage of market share. 3.2.2 Strengths

Strength is an area in which a company is better off than its competitors. The identified strengths of this business include the following:
i.

Variety; Provide a range of different products lines. Most of the business existing within the same environment doesnt have a wide range of variety in terms of the services that we shall be offering.

ii. iii. iv. v.

Quality service to target customers. Skilled strategic planners in all areas of management. Visionary and good leadership style. Pricing; the intention is to have a competitive price that would allow us to dominate a larger market share and therefore be able to capitalize on the sales turnover.

vi.

Quality of products and services Quality is core for this business and therefore by offering high quality services clients will keep on coming.

3.2.3

Weaknesses

Possible weaknesses of this business will include: i. ii. iii. 3.2.4 The high start up cost of implementation. Coping with competition from well established competitors. Cost of maintenance of the equipments.

Opportunities

A business unit has to monitor key macro environment forces (demographic, economic, technological, political-legal and social cultural) and significant micro environment factors (customers, competitors and suppliers) that affect the ability of the business to earn profits. Some of the envisaged opportunities include:i. ii. iii. Availability of a favorable business environment that is flexible to the business. Employing new technological developments that are more cost effective. Offer promotional prices due to high demand.

3.2.5

Threats

An environmental threat is any unfavorable trend or development that can lead to the absence of defensive marketing action, to deterioration in sales or profits. The business shall classify threats according to seriousness and probability of occurrence. The threats that the business shall be faced with are:i. ii. iii. Rapid changes in technology may warrant the company to keep on changing its equipments to keep up with the pace. Downward pressure from competitors on pricing. Market share strategies are pushing credit prices down. 10

3.3 Pricing Strategy The business shall base its pricing strategy on cost benefit analysis which will enable the business to generate prices that will be equal to or less than those of the competitors while generating a profit at the same time. The pricing strategy will be based on:i. Cost of inventory part ii. Cost of overheads iii. Prevailing market prices iv. Profit margin The prices will be two fold i.e. promotion prices that would attract an 8% discount every time there is a promotion and during the initial 4 months of operation when the business will have a penetrating price. 3G TECH will stabilize its prices after 8 months of operation in which during the same period the organization will still be offering discounts and offers to bulk purchases.

3.4 Sales Tactics Direct selling 3G TECH CYBER CAF will engage the services of individual sales people who will be making direct contact with customers of our products and services close up on any sales opportunity and distribute brochures to potential clients. Inform customers on the changing features of our products, offers and discounts on our products and services. These sales people will be paid on commission basis. Quality of sales staff and their number the business will endeavor to engage professional sales people and since their payment will be based solely on commissions the business will engage with two salesmen. The sales representatives will be engaged in a sales program by which the

11

sole proprietor together with the sales representatives will put in place the strategies to market the products and services to reach the intended customers 3.5 Advertising and Promotion strategy To reach out on the targeted customers the following promotion strategies will be adopted by 3GTECH CYBER CAF. Advertising by means of:
i.

Flyers and Banners; The banners and flyers will come in handy during sales promotions. The banner will cost Kshs. 10,000 and the flyers will be at Kshs. 10 each and to start with we have ordered for 2500 copies. The banner will be creatively designed in order to entice customers from a distance and for the flyers they are very efficient since all potential clients who interact with the sales team will have something to go with which they can use to recommend the products and services to other people and for any other kind of references.

ii.

Personal Selling 3GTECH Services will engage the services of individual sales representatives, who will be making direct contact with customers through door to door selling activities to market the products and services, close up on any sales opportunity and distribute brochures to potential clients. These sales people will be paid on commission basis.

iii.

Sales promotion The business will have an initial opening sale which will run for eight months and then from there onwards we will be having seasonal sale promotions whereby for each season one fast moving item will be on sale in order to ensure that as the clients come for this services they also get to see and buy our other products and services.

12

CHAPTER FOUR ORGANIZATIONAL PLAN 4.1 The Organization Structure The business will adopt a simple structure, with the business manager being at the very top position and then have one person as his assistants occupying the position of an operations coordinator and marketing. The business will be hiring sales representatives during promotion campaigns who shall report to the manager and operations coordinator.

Business Manager

Operations coordinator Coordinator Support Staff Sales Representatives

Fig 1.0 Business Structure 4.2 Key Management Personnel The business will have only one proprietor who will also act as the Business Manager and he will be expected to undertake the following responsibilities:
i.

The business manager shall coordinate all the aspects of the business in collaboration with the operations coordinator. The business manager shall also be responsible for the performance of the coordinator 13

ii.

iii.

The business manager will be expected to be the one responsible for making key business decisions. The business manager shall also coordinate the marketing and operations of the business. Sourcing out business opportunities for the business through hired sales men and also will be expected to organize and coordinate all sales and marketing activities that the business will be undertaking

iv.
v.

The business manager will be paid a salary of Kshs. 25,000 per month Other than the business manager, there shall be only one personal assistant who will be the operations coordinator in the management team. Operations Coordinator This will be one position and to be considered for the position a candidate will have to prove that he/she has prior experience in business management, must have at least CPA part 1, must be computer literate. The operations coordinator will be responsible for sourcing of the various items and equipments that the business will require, will coordinate all service activities, will maintain the businesses books of accounts, will coordinate the general operations of the business which includes amongst others cleaning, security and banking of all cash collections. The incumbent will be given a basic salary of Kshs. 20,000, 4.3 Other personnel Sales men The business shall hiring sales men on contract basis who will be expected to source out business and close deals where applicable. They will also be expected to dedicate some of their time in marketing the business and the products. To start with, the business will engage 2 sales men and then review the number to 5 after the initial one year of operating. The incumbents must have at least a Diploma in sales and marketing with at least 1 year of experience as a sales person dealing with the first moving goods or services.

14

The incumbents will get a salary based on a commission at the rate of 8% of their gross sales. Support Staff This position shall only be one in the business. The incumbents will be expected to assist with the cleaning, arranging of the outlet, and guiding clients within the business. Also when there is a major marketing campaign they will be expected to be part of the campaign. The incumbents will be paid a salary of Kshs. 7,000. 4.4 Recruitment training and promotions All recruitments shall be on merit basis whereby the proprietor will head hunted both the operations and Sales and marketing coordinators. After recruitment, it will now be the coordinators responsibility to organize on how the incumbents for those people reporting to them will be sourced. The proprietor will have to meet all candidates and approve before they are engaged as employees. All employees will have to undergo an initial induction training where they shall be taken through the vision, mission and values of the business. All people under sales will be evaluated on the basis of achieving the set target of Kshs. 50,000 gross sales per month and client feedback. For those under operations, it shall be based on their performance and carrying out the tasks assigned to them 4.5 Remuneration and incentives Table 4.1 Remuneration and Incentives Position Manager Operations Coordinator Sales Men 2 Each @ 14,000 7,000 Support staff Total 1 5 7,000 66,000 7,000 66,000 15 Positions 1 1 Salary 25,000 20,000 Total Pay 25,000 20,000

4.6 Support services i. Banking Services The business will open an account with Equity Bank Ngara Branch. This is mainly because its easy to get a business loan with this bank once you have an active account with them for some time. ii. Insurance Services The business will get a cover with CFC insurance company who has agreed to give a cover at a cost of 10% of the total value of the business per month. iii. Security Services G4S will be contacted to offer security services at a cost of Kshs. 500 per month for one guard.

4.7 Licenses, Permits and By - Laws 3GTECH CYBER CAF will abide by all trading regulations and rules of the local county councils and the country as a whole. 3GTECH CYBER CAF will set out contracts of service and provisions on such matters as summary dismissal, notice on terminating of services of an employee, and the keeping of records of the employees to be hired as per the regulations set out in the Employment Act of 2007.

CHAPTER FIVE OPERATIONAL PLAN 16

5.1 Operational Facilities The business will be operations oriented and therefore the proprietor has picked on a building that will support the operations of the business. The building that will house the business will be rented at a cost of Kshs. 15,000 per month and a deposit of kshs 10,000. The building has an ample parking space that is around the Dubai House. The building is easy to locate and due to its strategic position. To be operational, the proprietor plans to cater for the redesign and restocking of the main operating room so that it can be fitted with shelves, a cashier stand and also increase the ventilation in order to ensure that there is enough air circulation due to the high number of customers that are expected. All these renovations and partitioning will cost a total of Kshs. 100, 000. The owner of the premises has agreed to be taking care of the annual maintenance fee of the premises after the business proprietor gives it the initial face lift. The following information relates to the equipments and tools that the business will need to be able to start off with the operations. Table 5.1 Equipments and Tools for Start up. Item Computer No. Capacity 10 40 Unit Cost T.T Cost 300,000 Manufacturer DELL Supplier Blue Merg

GB, 20,000

512MB memory Printer/Photocop ier/Scanner Laminator ETR Machine Shelves Stapler 1 1 6 2 50 items 24/6 1 30 sheets 150,000 per Min 10,000 27,000 3000 & 200 10,000 27,000 18,000 500 Casio Casio Artech Office Point Blue Merg Blue Merg Artech Tuskys 75,000 HP Copy Cat

17

26/6 Paper Punch 2 18 sheets 300 600 Office Point Tuskys

5.2 Operational Strategy Table 5.2 Material Requirements Monthly Materials Requirements Item Biros Printing Papers Staples Paper punches Ring Binders Empty CDs units 20 250 rims 2 2 1600 300 Total cost 400 62,500 400 600 40,000 3,000 Manufacturer Haco Industry Kasuku & Kartasi Office Point Office Point Haco Industry Imation Supplier Haco Industry Kasuku and Kartasi Office Point Office Point Haco Industry Blue Merge

For all these monthly materials, the suppliers will be delivering the supplies at the business premises at no extra cost to the business. In situations where there will be shortages either due to high demands or delayed deliveries the proprietor will organize to have the materials collected from the suppliers and such costs shall be charged as inventory costs in that particular month. To try and mitigate against shortages the proprietor will ensure that the business adopts an inventory policy and mechanisms that would ensure the business has enough stock of the required materials at all times. Overheads Table 5.3 Overheads Item Cost 18

Rent Electricity Water Advertising Office Stationary Insurance Security License Total

15,000 2500 400 30,000 4500 3000 500 1250 51650

5.3 Operational process All the services that shall be provided will be ready to be offered to the customer or clients. Other than a few services like binding, laminating and typing and printing of which the acquired products will have to be taken through a final processing by the proprietor to be useful to the client.

19

Fig 2.0 Layout of the 3Gtech Cyber Caf

5.4 The Regulations governing Operations These regulations range from government regulations to the local government regulations. The registration of business with the register of businesses must be obtained before any other activity is carried out this will cost the proprietor Kshs. 20,000 The license from the local government also must be obtained before opening the business to ensure conducive environment for the business, this will cost Kshs. 1250 per month Requirements such as value added tax registration and personal identification number (pin) shall be obtained from Kenya Revenue Authority.

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Table 5.4 Government Permits. Trading license V.A.T Certificate PIN NO Registration certificate Nyeri County Council Kenya Revenue Authority Kenya Revenue Authority Nyeri County council 1250 per month 20,000

5.5 Technology to be used So as to avoid inconsistencies in our provision of services especially the internet services, the business will subscribe a 10GB (gigabyte) internet bundle from KDN Limited (Kenya Data Networks) which is reliable at a cost of KSH 10,000. This is because unlike other internet providers, the internet bundle is efficient and reliable, fast in term of speed.

CHAPTER SIX 21

FINANCIAL PLAN 6.1 Pre Operation Costs Table 5.5 Pre-Operation Costs 3GTECH CYBER CAF PRE OPERATIONAL COSTS ITEM Rent Renovations Electricity Water Registration and legal Fees Licenses and Permits Furniture, fixtures and Fittings Tools and equipments Stationery Bank Charges Insurance Advertising Total COST Kshs 15,000 Kshs 100,000 Kshs 2500 Kshs 2000 Kshs 20000 Kshs 15000 Kshs 50000 Kshs 400,000 Kshs 2000 Kshs 8,000 Kshs 3000 Kshs 30,000 Kshs 647,500

i. ii.
iii.

The rent will be at the rate of 15,000 per month. The repainting of the room and the customization is will also form part of the pre operational costs under renovations. Electricity, water, telephone and postage include money that will be deposited with the service providers plus the initial cost of customizing these services. The license will cost Kshs 1250 per month, 22

iv.

v.

Tools and equipments are as reflected under operational tools and equipments

6.2. Working Capital Requirements Table 5.6 Working Capital Requirements 3GTECH CYBER CAF WORKING CAPITAL ITEMS A. Current Assets Inventory Debtors Cash at Bank Cash in hand TOTAL B. Current Liabilities Short term loan Bills payable Creditors TOTAL NOTES
It is projected that the business will experience a growth of 4%, 8% for the initial two

YEAR 1

YEAR 2

150,000 50,000 20,000 5,000 225,000

180,000 45,000 27,000 8,000 260,000

60,000 55,000 50,000 165,000

80000 60,000 45,000 185,000

years and this explains the variance of the figures in the two years. 6.3. Projected Cash Flows Table 5.7 Projected Cash Flows ITEM 2011 2012

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A cash inflows Beginning cash Cash sales Collections from debtors Total inflows B Cash outflows Cash purchases Creditors payment Rent Wages & salaries Electricity Water Telephone Transport Stationery Advertising Repairs & maintenance Tax Insurance Bank charges Total outflows Net Cash Inflow 80,000 30,000 15,000 66,000 2500 5,000 5,000 6,500 2,000 30,000 15,000 5,000 3,000 8,000 273,000 677,000 95,000 20,000 15,000 66,000 3500 5,000 5,000 6,500 2,000 40,000 15,000 5,000 3,000 6,500 287,500 837,500 650,000 250,000 50,000 950,000 750,000 350,000 25,000 1,125,000

6.4. Pro - Forma Income Statement Table 5.8 Pro-Forma Income Statement 3GTECH CYBER CAFE 24

PRO FORMA INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER ITEM Sales Less sales returns Net sales 2. cost of goods sold Opening stock Add purchases Less purchases returns Cost of goods available for sale Less closing stock Cost of goods sold 3. Gross profit 4. operating expenses Rent Wages & salaries Electricity Water Telephone Stationery Advertising Repairs & maintenance Insurance Total Expenses 5. NET PROFIT 15,000 66,000 60,000 60,000 30,000 13,000 30,000 60,000 36,000 370,000 120,000 15,000 70,000 60,000 60,000 33,000 15,000 40,000 63,000 36,000 392,000 133,000 25 15,000 70,000 60,000 60,000 27,000 18,000 50,000 66,000 36,000 402,000 223,000 400,000 40,000 360,000 200,000 160,000 490,000 200,000 250,000 60,000 390,000 160,000 230,000 525,000 230,000 300,000 50,000 480,000 210,000 270,000 625,000 2011 700,000 50,000 650,000 2012 800,000 45,000 755,000 2013 950,000 55,000 895,000

i.

It is projected that the business will experience a growth of 4%, 8% & 10% for the initial three years and this explains the variance of the figures in the three years.

ii.

Insurance will be charged at a cost of 10% on the value of the business for every month Advertising 30,000 comprises of the cost of buying a banner, printing out 5,000 flyers.

iii.

6.5. Pro Forma Balance Sheet Table 5.9 Pro-Forma Balance Sheet 3GTECH CYBER CAF PRO FORMA BALANCE SHEET AS AT 31ST DECEMBER ITEM Assets Current assets Cash in hand Cash at bank Debtors prepayments Total current assets Fixed assets Tools and equipments Furniture & fittings Total fixed assets 400,000 100,000 500,000 470,000 110,000 580,000 26 550,000 130,000 680,000 30,000 60,000 50,000 30,000 170,000 40,000 90,000 45,000 25,000 200,000 50,000 100,000 55,000 34,000 239,000 2011 2012 2013

Total assets Liabilities Current liabilities creditors Bills payable Short term loan Total current liabilities Long term liabilities Bank loan Total long term liability Total liabilities Capital ( equity) Add retained profits Total liabilities and capital

670,000

780,000

919,000

50,000 20,000 30,000 90,000

60,000 25,000 25,000 110,000

70,000 35,000 35,000 140,000

400,000 400,000 490,000 180,000

250,000 250,000 360,000 230,000 190,000

200,000 200,000 340,000 250,000 329,000 919,000

670,000

780,000

The bank loan will have been used in to cater for some of the pre - operational costs Stock will form part of the cash at hand. 6.6 Break Even Point Breakeven point = Operating Expenses 1 - Cost of sales/sales Break Even point (2011) = 402,000 1-160,000/700,000 To be profitable, 3GTECH CYBER CAF will have to make sales worth at least 521,111 27 = 521,111.111

CHAPTER SEVEN 7.1 RISK ANALYISIS

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As the business is in an industry that experience rapid technological advancements, then the business is faced with a risk of having and operating equipments that may run out of date. The business may also run the risk of incurring losses due to frequent power failure and outages. The business may also be faced with the risk of computers crashing as a result of computer viruses which would mean that the anti-virus has to be updated frequently. The business may also be faced with the risk of vandalism especially from thugs, The business may also be faced with the risk of competitors copying or duplicating what we are doing and therefore change in market share. The business may also be faced with the risk of not achieving the targets set which translates not recouping the initial investments.

REFERENCES 1. Amstrong M. (2006), Human Resource Management Practice 10th Edition, Kogan Page Limited, London 29

2. Cole, A. (1959) Business Enterprise in its social setting, Harvard University Press,

Boston, 1959
3. Drucker, P. (1970) Entrepreneurship in Business Enterprise, Journal of Business

Policy, Vol 1, 1970. 4. Stathis, M. (2004) The startup Company Bible for Entrepreneurs Apex Venture Advisors Publishing.

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