CHAPTER ONE

INTRODUCTION

I hereby introduction this project to entire society so as to come up with new ideas that will bring a
positive as far as paying tax to improve the economy of the nation. Finally believe and trust in my project
that it will improve my skill in entrepreneurship.

1
CHAPTER 2

BUSINESS DESCRIPTION

1.1 MISSION STATEMENT

The business will venture in a hotel kind of business and the main objective is to provide healthy
and clean food to our customers. The business will also be aiming to obtain high profit.

1.2 BUSINESS LOCATION

The name of the business is Motherland Hotel. The business is associated with clean healthy and
good services making us one of the best hotels in Garissa Town.

LOCATION: the business will be located along mosque road next to Equity Bank

Address: Motherland Hotel

P.O Box: 10072

Tel: 0712345626/0723121672

1.3 TYPE OF BUSINESS

It will be composed of two partners who are highly dedicated to the business.

1.4 PRODUCT AND SERVICES

We provide the following product and services

Githeri

Rice

Ugali

Fish

Chicken

2
Matoke

Mukimo

In addition we offer trade discount and after sale services where we deliver orders to our
customer in offices or homes.

A lot has been put in place in order to attract and retain customers. This is because the prices in
our business are unique and we sell food and offer services ast normal rate to attract more clients.

1.5 STRENGTH, WEAKNESS, OPPORTUNITIES AND THREATS

1.5. STRENGTH

Employees are submitted to give the best services various food and drinks for different tastes.

Excellent location

Garissa Town
Mosque Garissa Market

Equity Motherland Hotel

1.51 OPPORTUNITY

-Increasing number of working people who don’t have time to cook meals.

-Increased demand for high quality take-away food.

-Growing interest in healthy organic ingredient.

3
1.52 THREATS

-Difficulty in convincing consumers to spend on quality in home catered meals.

-Competition from restaurants.

-Increased product prices due to growing cost of employee benefits

1.5.3 WEAKNESS

There will be difficulties in making and coming up with decisions thus a lot of time is spent in
decision making.

Poor management of the business especially if each partner has other employment other than
partnership business.

1.6 BUSINESS GOALS AND OBJECTIVE

Retain our existing customers base while growing the hotel by attracting new dinners from the
neighborhood.

Keep food cost at less than 40% of all revenue.

Provide the best services

Maximizing profits while minimizing expenses.

1.60 OBJECTIVES

-Focus on low food waste.

-finding affordable food vendor.

-Maximizing resources

4
-Ensure diners will be greeted within 2 minutes of entry and seated within 10 minutes.

1.7 KEY FACTORS

• Location- the business is located in Garissa Town along Mosque Road next to Equity
bank.

• Transport – Transport mean to the business is ready available, affordable and efficient
given that the business is located along the road. Therefore it will be easier to transport
product to the business.

• Technology – We use modern technology.

1.8 HOW TO ENCOUNTER CHALLEGES

The business uses the following strategies for coping challenges.

• Competition

Due to high competition threats. The business will proceed though fair pricing of product
and services.

• Security Maximization

The business manager will ensure that there will adequate securities. Employing security
guard and taking pledges from police on performance on any person identified with theft
in business will maximize security.

5
CHAPTER 3

2.0 MARKETING PLAN

2.1 CUSTOMERS

We have our best customers who appreciate what we do and willingly pay the price that
we ask, make reasonable request that lead to improvement and expansion of our skills
and services.

Our most troublesome customers are likely simply mismatched to our offering and they
are excessively negative, unreasonably demanding and may be even abusive to our staff
and the business systems.

We deal with the final customer who purchases were products for his/her own needs.
They include individuals, households and institutions

2.2 MARKET SHARE

Our intended market is the primary target market where our marketing efforts are
primarily directed in order to satisfy the needs of our customers.

2.20 MARKET RESEARCH

Forces hindering our success include the general economy, the nature and direction of the
national economy determines the heath of the population which affects consumption thus
minimizing our profits.

2.21 SOCIAL BELIEF AND ATTITUDES

Society imposes beliefs, altitude and lifestyles that are adopted by the masses. Those
altitude changes frequently as people make an effort to accommodate the demands placed
on them by the world around them. As they do so, demand of certain kind of food, leisure
activities and other products and services increase while demand for other alternative
fades away.

6
2.22 MARKETING STRATEGY

The total potential market in units is shown in the following table and chart by type of
market point.

Market analysis (pie)

local workers
local business
other downtown
traffic

Potential customers’ growth

Year1 year 2 year 3

Local business 0% 300 300 300

Local business 2% 20 000

Other downtown 1%

Traffic

7
 2.23 TARGET MARKETING

For the business market we need to focus on specific institution with specific
opportunities for individuals we need to lever off word –of –mouth recommendations,
probably depending on business customers.

The business market has the potential o0f providing large volume sales to the company
during the peak hours of 11 am to 2 pm, both through small groups of business people
visiting Garissa town and delivery orders. Satisfaction of its group will provide a vital
long-term revenue stream. For the business market, the company plans to do specific
target marketing through business discounts and creating a record of fast delivery.

For the individual groups seeking breakfast or lunch down town or take-home meals, it is
necessary for the company to build an effective word of mouth marketing strategy. The
company will do this slowly realizing that much of this will grow from this business
market. The company is also planning on doing a number of joint marketing efforts with
other local companies such as the production and distribution of a referral book to be
given to various individuals. This in turn would help to drive our word –of- mouth
marketing efforts.

2.24 MARKET NEED

As stated before, customers desire fast, healthy food that will appeal to their different tastes and
is provided in a comfortable atmosphere. In addition they desire a memorable dining experience
that provides item with the chance to relax in the middle of the day. All of this need to be
delivered to the customer with the least amount of hussle furthermore customers will also need a
facility that can provide them with delicious convenient take-home meals when there is no
opportunity to cook at home.

2.3 COMPETITION

Location is critical to success proximity to workers is very important so it convenient parking for
the end of work day traffic stopping to pick out dishes.

8
Price is not very sensitive as long as we are not too high. Low price or lowest is not essential
many target customers mistrust low price in Garissa quality of food matters if the price isn’t too
high and its food matters. if the price isn’t too high and the food is good, we will have growth
through repeat business.

Focus is an advantage; focusing on traditional food will draw customers from the competition.

In the immediate, downtown area are two main competitors. These include Savanna Hotel and
Safari Hotel. These hotels have much more of a national focus and the individual managers have
little or no ability to adapt to local desires. In addition these hotels are franchised to individual
owners. This heltod of franchising often leads to friction between the corporate office and the
local owners that inhibit efficiency, cleanliness and other aspects. However they have the ability
to cut prices at will, and have established and secure relations will the suppliers.

2.4 PRICING STRATEGY

Our pricing strategy will focus on providing high quality, healthy food that is quick and has a
unique flair. Because of this we expect to be able to charge come what more for our products
than other stores as long as the customers agree that the food is better than average.

2.5 SERVICING, WRONGLY AND PACKAGING

2.6 ADVERTISING AND PROMOTION

We plan to use local radio as one of the means of promotion. We are currently making
arrangement to have a grand opening party that will include having a local radio station
participate and air it over the radio. One fortunate aspect of the restaurant business is that once a
potential customer steps into the establishment, the chances of purchase are very high so the
promotional plan will be to draw people into Mother Land and then seek to provide them with a
supervisor eating experience.

2.7 DISCRIPTIONS TRATEGY

We intend to use direct distribution where our customers pick their food from the hotel or
delivering to them in their offices or homes. The distribution will be done by one of our own.

9
CHAPTER 4

3.0 ORGANISATION AND MANAGEMENT PLAN

Employees categories include counter clerks, kitchen help and waiters. We assume six
employees total, the owner-founder will be in attendance during normal business hours, 7 am to
6 pm five days per week. In addition, specific other employees will have supervisory olos for
time when owner founder is not able to present.

3.1 ORGANISATIONAL SRTUCTURE

Owners

Counter clerk Counter clerk

Cooks Cooks

3.2 KEY MANAGEMENT PERSONEEL

We as the openers, we are in charge of the overall supervision and management of the business.
The duties of our counter clerks will include.

3.2.0 COUNTER CLERK’S DUTIES

• In charge of the finances in the business.

• Checkout items for customers.

10
 • Provide information for customers who have problems or question.

• Keep records of transactions.

• Answer telephone and queries over the phone.

Currently the counter clerks gains Ksh. 30 000 per month and a guarantee of 5% increment if
work is done effectively.

3.2.1 COOKS’ DUTIES

• Clear food preparation areas, cooking surfaces and utensils.

• Cook the exact number of items ordered by each customer, working on several different
orders simultaneously.

• Maintain sanitation, health and safety standard in work areas.

• Measure ingredients required for specific food items being prepared.

• Verify that prepared food meets requirement for quality and quantity.

Currently, cooks earn Ksh 25 000 per month with 10% increment if work done
effectively.

3.3 PEOPLE’S SYSTEM

11
CHAPTER 5

OPERATION PLAN AND PRODUCTION PLAN

The following are needed in day to day operation in our business.

No Item Quality Unit cost Total cost

1 Cabbage 4 60 240
2 Potatoes 10 kgs 70 700
3 Tomatoes 5kgs 80 400
4 Carrot 6kgs 120 720
5 Onions 7kgs 70 490
Total 2550

4.1 PLANT/FACILITIES/EQUIPMENTS

The following equipments are used:

• Electric blender which cost around Ksh 5 000 a sumsung model.

• Fruit knife which cost Ksh 1000

• Cutting board which cost Ksh 900

• Aprons which cost ksh 500 each

Other facilities needed may include a refrigeration to keep the drinks cool. A dispenser with only
one type of drink in the can, removable and easy to clean drip tray.

Currently the machines we are using have a warranty of 2 years and also it is for high quality e.g.
in order to make sure that the machine saves us for longer time as:

• Check the signs of wear e.g. high temperature car come from extended use.
Kitchen
• Keep machinery clean and maintain a clean environment.

• Have maintenance and repair schedule, and keep good record e.g. test the oil to diagnose
problems, change filters frequently.

Sink&
washroom
12
 Parking
Area
Dinning
Gate Motherland
Hotel Area

Store

4.2 PRODUCTION STRATEGY/OPERATION PROCESS

We offer traditional dishes and modern dishes which are the best within town. The following tips
help in product development.

• Consulting members of our team about development plan, they may contribute insight
that you are overlooked.

• Test lots of ideas at the start of a project. It cost around 10 000 to assess which are most
promising , but we make sure to stop work on ideas that don’t meet our criteria before
committing a lot of time and resources.

• Ask our best customers what they think of our plan.

• Looking beyond the new product or service immediate potential and consider longer
time.

We use modern technology example fridgerators, electric cooking device, as technology

advances; we are ready to change to the most productive technology.

We mainly rely on Thika market because their products are cheaper and of high quality
compared to local markets in Garissa. In case of shortage of supply from our main market we

13
have some greenhouses located few kilometers from Garissa town which produce goods of high
quality.

Monthly production cost

Considering the distance from Garissa to Thika we spend around 100 000 per month because of
the service offered by the suppliers e.g storage cost, cooling cost of perishable products.

Purchasing and stock control

The business is in a fast –moving environment where products develop rapidly, the stock is
expensive to buy and dtts items are perishable or replenishing stock is quick and easy. We keep
lots of stock, which is and advantage because it is easy to manage, low management lost, never
run out and also buying in bulk may be cheaper.

Working hours

We normally open from Monday to Friday at 7.00 am to 12.00 pm

4.3 PRODUCTION PROCESS

To ensure that the manufacturing process is not disrupted and production plan is achieved the
equipment used to require a level of maintenance.

From the time the raw material are derived to us the first step to check f there are of good
quality, then there are washed to maintain good hygiene, passed to the cook for verification
sliced to the desired shape and size and now ready for use.

PROCEDURE USED

When cooking Ugali the following procedure should be followed

Ingredients

14
Six cups of water in the cooking pot.

Four cups of finely ground white maize meal.

Boil the water in a heavy cooking pot, stir in the maize meal slowly.

Reduce heat to medium low and continue stirring regularly, smashing any lumps that may form
with a cooking stick. As ugali continues to cook it gets very thick. You can continue adding flour
until it is thicker than mashed potatoes.

Leave it cooking for about 25 minutes, but make sure you keep burning it so that it does not got
burned.

Using the cooking stock, mash it into a dome shape.

Tip out your ugali onto a serving bowl.

External factors affecting production

Environmental factors example floods, droughts

Political factors- influence by politicians which may lead to political violence hence loss of
property lives etc.

4.4 REGULATIONS AFFECTING OPERATIONS

In Kenya in order to operate a business (hotel) one must comply with laws and regulations which
include labor laws, food safety, anti-smoking rule, compliance becomes more challenging as the
restaurateur needs to stay a breast with the dynamic changes in applicable laws.

Government regulation and approval (positive)

• Government incentives such as offering security to the business encourage investors to

invest in that business.

• Favorable working coordination which help employers to work hard.

Negative

15
 • To many formalities to be followed which take a lot of time

• Dynamic changes of the law, where the entrepreneur use a lot of money and time.

Required licenses

• Certificate or registration /incorporation of company which costs Ksh 50 000.

• Copy of the current health clearance certificate (less than three months only) Ksh 4000

• Copy of menu and tariff where applicable.

• Medical certificate of food handlers.

CHAPTER 6

FINANCIAL PLAN

We have a budget for marketing and advertising and will continue to reinvest residual profits
into company expansion and personnel. Although we anticipate substantial growth in year two
we are forecasting a very conservative 10% growth rate.

16
5.1 PRE- OPERATIONAL COST

The total pre-operational funding amount is shown in the table below. This includes liquid cash
for operating expenses, unforeseen expenses to help cover wages and cost of the equipments.

Item amount

Equipment 110000

Business license 40000

Water installation 15000

Electricity 16000

Maintenance 110000

Total 29100

5.2 OPERATIONAL COST/WORKING CAPITAL

Current assets

Items year 1 year 2

Suck of raw material 10 000 11 000

Stock in progress 4 000 5 000

Stock of finished goods 5 000 4 500

Debtors 5 000 4 000

Pre-paid expenses 30 000 2 000

17
 Current liabilities

Creditors 41 000 61 000

Unpaid expenses 8 000 60 000

39 000 38 500

Working capital = assets – current liabilities

53 500 -24 000 = 29 500

5.5 PROJECTED CASH FLOW STATEMENT

Items Jan Feb March April May June July Aug Sep Oct Nov Dec
Cash sales 1000 8000 9000 11000 10000 1400 7000 12000 17000 1000 1400 12000
(inflow) 0 0 0
Credit sales 4100 31000 2000 3500 4000 3800 2700 1600 1800 1000 1700 1200
0
Capital 6000 6000 7000 8600 6000 1200 5300 11200 1620 1400 1330 1000
Other 2000 4000 5000 1500 2300 2400 1600 6000 5500 4200 1700 2300
incomes
Total inflow 1800 21000 23000 24000 23300 2140 16600 20800 25920 21600 1873 16500
0 0 0
Payment overflow
Payment 2000 2000 1800 3000 2500 2700 1600 2800 2000 1600 2700 1800
creditors
Sales & 3000 3000 2000 3500 2500 2500 2000 3500 3500 2500 3500 3500
wages
wages
Rent 3000 3000 3000 2000 3000 2000 2000 2000 2000 2000 2000 2000
Water 2000 2000 2000 2500 1000 1000 3700 3600 3500 3400 3300 1200
Electricity 2000 2000 3500 3800 2700 2300 3200 2400 2300 3800 2000 2200
Advertise & 3000 2500 2800 2700 2600 3400 2500 2000 1800 2000 1800 27000
maintenanc
e

18
Taxes 2800 2000 28000 2800 2000 2000 2000 1000 2000 1000 4000 1800
total 1780 16000 16900 20300 14300 1670 17000 17300 16300 14900 1930 15200
0 0 0

Net cash = inflow – out flow

Inflow = 250850

Outflow = 202000

250850 -202000 = 48850

5.4 PRO-FORMER PROFIT AND LOSS ACCOUNT

Items year 1 year 2

Sales

Cost of sales 220 000 230 000

Discount 315 000 416 000

Gross Profit 248 850 250 000

Overheads

Expenses 10 000 11 000

Salaries 30 000 30 000

Rent 20 000 20 000

Water 15 500 15 400

Electricity 4500 5000

Total 39 000 40 400

19
Net Profit before Tax

= sales – overhead

1679850 – 340900 = 1338950

10/10 x1338950

Net Profit = 133895

5.5 PRO-FORMA BALANCE SHEET

The following table explains the projected balance sheet.

Year 1 year 2

Fixed assets 250 000 300 000

Current assets 70 000 80 000

Stock 80 000 90 000

Debtors 40 000 30 000

Fixed Liabilities (35 000) (30 000)

Current liabilities (50 000) (45 000)

Creditor 20 000 30 000

Total 210 000 530 000

5.6 BREAK- EVEN POINT

Year 1 Year 2

20
Fixed cost 108 000 120 000

Rent 10 000 x 12 10 000 x 12

Wages 9000 x 12 9000 x 12

Total = 228000

Variable cost

Direct Materials

Onions 70 x 7 = 490

Cabbages 60 x 4 = 240

Carrots 120 x 6 = 720

1450 x 365 days = 529 250

Year 1 = 529 250

Assumption year 2 = 600 000

Total contribution margin = sales – total variable cost

1679850 -1129250 = 550 600

Total fixed cost

Breakeven Point = fixed cost x 100

C.M

22800 x 100 = 41.40

330 600

5.7 DESIRED BUSINESS FINANCING

Pre-operational cost 291 000

21
Working Assets 170 000

Fixed Asset 550 000

Total 1 011 100

5.8 PROPOSED CAPITALIZATION

Sources of discord capital

Items

Equity 200 000

Bank loan 750 000

Family contribution 61 000

Total 1 011 000

5.9 EXPECTED PROFITABILITY RATIO

Gross profit percentage

G.P = G.P x 100

Sales

498850 x 100 = 29.69 %

1679850
Return on = Net profit of tax x 100

22
Investment total investment
133895 x 100
1011 000
= 13.24

Return on sales = Net profit tax x 100

Net sales
133895 x 100
450 000
= 29.75

CHAPTER 7
Motherland hotel is one of the best hotels in town because we ensure that our food is of high
quality, lean and affordable.
SUMMARY DESCRIPTION

BUSINESS DESCRIPTION
Motherland hotel was started on 30th May 2014 with an aim of been the best. We are located
along Mosque road next to Equity Bank. Our products and services are unique because we offer
the best services and we maintain a good hygiene. Been in town where traditional foods are more

23
appreciate we opted to cook traditional food in order to fulfill our customers in the next 3 years
we are planning on how to maximize our profit and also have a branch in Wajira and Madera.

6.2 MARKETING PLAN

We mostly deal with the final consumers who purchases products for his/herself own needs.
They include individuals, households and institutions. We offer delivery to institution and
households who are within town. Our biggest competitors is Savanna resort where they have a
name and most people opt to go their because they have recreational facilities to enable them
relax when there are not working. Their weakness is that their food is too spicy and of low
quality hence we have a chance to grow big.

6.2 MARKETING TEAM

The management teams include Mary and Ann who are the owner in charge of the overall
supervision, counter clerks in charge of finances and the cooks in charge of Kitchen work.
Owners
Mary is a hardworking lady, time conscious, patience and creative. Ann is hardworking lady, bit
impatience but draws strength from Mary and she is good in management.

Counter clerks
They are two Daniel and James. They are hardworking, ready to work under pressure, passionate
about their work and ready to sacrifice their time for the business.
Cooks
They are also hardworking, qualified cooks; maintain good hygiene and good sense of. humor.
We would like to expand our business we may need 6 more employees.

6.4 PRODUCTION OPERATIONS

Been the best, our little secret is that we always ensure that the materials we use are of high
quality and fresh.

6.5 FINANCIAL PLAN

24
In order to expand our business we require Ksh.1.2 million to cater for all our need sources of
raising the money include Equity, loans contribution from friends and family. Part of the money
will be used for renting a house, legal formalities and for buying the materials required.
In order to maximize our profits we try to cut our expenses by recycling.
Our plan to open branches in Wajir and Mandera will be highly profitable because in those
regions people mostly practice pastoralism as their main source if livelihood, hence opening up
a hotel has high chances of more profit.

CHAPTER 8

EMERGENCY THREATS

7.0 Insufficient funds

Due to insufficient circulation of fund it is becoming so difficult to run the business sector as it is
a big challenge as far as payments is concerned.

7.1 Outbreak of water bone diseases

25
As the climate changes on daily basis their an outbreak of cholera in the area that has led to burn
of hotel business in the area this has led to several losses in the business production

7.2 Poor supply of products and commodities

Due to poor road network goods and commodities are delayed to be supplied since there is loss
of customers in the area as it is considered to be poor services given leading to losses

7.3 Poor working techniques

Due to poor techniques used in the preparation of meals customers are running away in the name
of poor serves offered hence leading to poor production and marketing

7.3 Poor working techniques

Due to poor security customers are afraid to be served as late as 7:00 pm fearing for their safety
hence leading to poor operation and delivery of goods to the customers that later brings losses.

26