TITLE PAGE

BUSINESS NAME: LENMWA AUTO-TECH REPAIRS

P.O BOX 53-80311 NG’AMBWA-TAITA

MOBILE: 0740725120

OWNER/PRESENT: LENOX MWANGECHO NGURA

P.O BOX 53-80311 NG’AMBWA-TAITA

MOBILE:0740725120

DESCRIPTION: LENMWA is a sole proprietorship owned by MR LENOX M NGURA.

The owner is to run a profitable business by ensuring that high quality services
and products are offered in order to meet demand and needs of customers
efficiently. Products of the business are to be marketed through advertising,
promoting and networking. LENMWA is working hard in order to win over her
competitors by providing services at a cheap price to increase performance rate.

INVESTMENT: Required Kshs 500,000, ownership contribution is 50% (250,000).

CONFIDENTIALITY: A written statement of non-disclosure is required prior to

viewing of this plan.

ASSUMPTIONS

 The owner is to meet all legal requirements before starting of the business.
 Qualified personnel are to be recruited and retained in the business.
 The business provides high quality services to meet customers’ needs.
 Modern technology is employed in production process and record keeping.
 The business is to purchase a land that will provide space for expansion.

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 EXECUTIVE SUMMARY

0.1 BUSINESS DESCRIPTION

LENMWA AUTO-TECH REPAIRS is the formal name of the business which is to be

established at the start of 2022 as a sole proprietorship. LENMWA commences
immediately in January 2022 and concentrates mostly on the sale of its services
such as major and minor servicing, repair of engines, body work repair and others.
The business is located at Mwatate town in Taita-Taveta County along Mwatate-
Wundanyi road. LENMWA is managed by the owner MR LENOX MWANGECHO
NGURA who has contributed 50% of the capital Kshs 250,000 and attained the
remaining percentage from family members, friends and investors Kshs. 250,000.

0.2 MARKETING PLAN

LENMWA serves various customers including institutions, supermarkets, food

outlets, public servants, individuals and domestic customers. LENMWA holds a
good share even though it takes a lot of competition from its present and
potential competitors such as BIMBO workshop, MAMA JAY Auto spares and RAY
Auto spares and others. LENMWA has come up with strategies such as pricing
strategies, sales policies, promotion and advertisement strategies and distribution
strategies.

0.3 ORGANISATION AND MANAGEMENT PLAN

LENMWA has to grow and expand successfully. Its owner has recruited and
selected qualified employees that are ready to work. Training is done to the
employees mostly at the end of the year or when need arises. This is done to
ensure the employees are equipped with the necessary knowledge and skills.
Policies, rules and regulations have been laid down in the form to guide
employees on what they are supposed to do and not to do. This helps employees
to be cautious and committed. Punishment is given to those who disobey rules
given.

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0.4 OPERATIONAL/PRODUCTION PLAN

LENMWA deals with offering common services though they have a great and clear
distinction from other similar to them. To make sure the uniqueness of LENMWA
services continues, LENMWA will use modern technology and machines during
service offering. The arrival and departure time of LENMWA workers has been
scheduled and each employee has been assigned his her duties.

0.5 FINANCIAL PLAN

The financial plan determines financial requirements of venture which add up to

500,000/= . LENMWA has set up the financial objectives and assumptions
concerning profit and loss which total to 2245400 balance sheet Kshs 306200 and
cash flow of the business pre-operational, operational and personal expenses
have to be estimated in order to calculate the total investment before the start of
the business. Proforma cash flow, profit and loss, balance sheet statement shall
be done yearly to determine the growth of the business. Fixed cost, variable cost
and sales in each year would be used to calculate the breakeven point of the
business. The business requires Kshs 500,000 with 50% contribution of the owner
contribution and the remaining will be obtained from friends, family members
and investors.

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 CHAPTER ONE

BUSINESS DESCRIPTION

1.1BUSINESS NAME

a) Identity

The business name will be LENMWA AUTO-TECH Repairs (LAMW forthwith) The
name LENMWA stands for the owners name while AUTO-TECH had been derived
from the skill and work output that is to be offered to the customers during the
useful life period of the workshop. The name repairs stands for the services that
will be offered to the customers at any point of offering.

The logo is set in a manner that it attracts the eyesight of the customers to an
extent he/she is eager to be offered our services. The logo consists of a half cut
vehicle at the front that has been added with spanners, rear spring suspensions,
oil and a toolbox. These different images will represent the tools that will be used
and the different parts of a vehicle that will either be changed for new parts or be
repaired.

The motto is ’’Good better best, never let it rest till the good is better band better
is best, while the mission is to provide easy, fast, reliable, secure and friendly
services to our customers. The vision of the business is to become a real-time
leading service provider and offer to the customers hence being a problem solver
in the vehicle industry and the mechanical field at large.

b) Opportunity choice

The invention of automobile has birthed a whole lot of business opportunities

around the automobile industry and auto mechanic repair is one of them. This is
so because daily fleet of cars are being added to garages hence you can be
assured that sometime in the future car repair would be inevitable because of the
mandatory wear and tear of machines.

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1.2 BUSINESS LOCATION AND CONTACTS

a) Business location

The county is located on the south eastern part of the Coast province. It borders
Kwale, Mombasa, Tana river, Makueni counties and Tanzania on the other side. It
has got four constituencies Mwatate, Voi, Wundanyi and Taveta. Taita taveta has
got Mwatate as its capital despite its offices being located in Wundanyi. The
county has got an area of 170839km2. A population of 340671 persons. It lies
approximately 140km northwest of Mombasa and 380km southeast of Nairobi.

LAMW will be located besides the petrol station on your way to Kenyatta High
School in Mwatate town situated along Mwatate-Wundanyi road. This will
therefore be an open area to customers in addition creating ease of access to the
petrol station after services have been offered to the customers.

LAMW is to be located in Mwatate town along Mwatate-Wundanyi road a few

metres from the petrol station. The site is a land of ½ acre. As from the agreed
terms with the owner of the land a deposit shall be given on the agreed amount
and a monthly instalment follow up till the full amount is reached and its legally
announced to be the businesses land. Power supply is adequate due to the
presence of a power station near Mwatate hospital. Supply of water is adequate
since there is supply from Tavevo water projects all over.

b) Contact

The owner will be using his own phone number and box office number for the
time being

LAMW MECHAUTO SHOP,

P.O BOX 53-80311,

NG’AMBWA-TAITA,

MWATATE-KENYA.

Email address: lenoxngura@gmail.com

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1.3 FORM OF OWNERSHIP

The business will operate under sole proprietorship with Mr. Lenox M Ngura as
the manager. The owner is from Taita-Taveta County and working as a consultant
engineer at the county offices. Most of the motor vehicles workshop are situated
in Voi and Mombasa hence not easily accessed by people from Mwatate and area
s nearing the town centre. Hence the business at this point won’t take a long time
to be recognised and catch up. The business shall commence immediately as the
start up funds is attained to build up the business.

The business will be funded by the owner, friends and family members who will
help to raise the capital via their contributions in addition the owner has got
personal savings that will also be added on top. Management of the business will
be easy this is accrued since the individual is computer literate and also a Diploma
holder in Mechanical Engineering Automotive Option.

The working capital of the business required is Ksh 500,000 and it shall be sourced
in the following rate as per the expected people:

Personal savings 50% 250,000/=

Investors 10% 50,000/=

Contribution from family members 25% 125,000/=

Contribution from friends 15% 75,000/=

1.4 TYPE OF BUSINESS

The business will be in the service delivery sector and it will be a sole
proprietorship operating at Mwatate. It shall offer mechanical services such as
repairing and replacing automotive engines, perfuming general automotive
repairs and servicing both major and minor, brake repair services, scheduled and
preventive repair and maintenance services and also repairing automotive
transmissions.

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Mwatate is located near a junction and also it being a growing town thus a wide
variety of people will easily access the premises and get to be served our different
services. The business will be looking forward to being a sole and best service
provider to customers from around and all over.

The business shall be a long term business thus would intend to increase its
operation by adding its services as time goes by so that a wider variety is offered.
It will also invest in fixed assets which will help it get its financial stability. Since it
is bound to be a long term type of business it is intended that after a period of
operation it will have to open up more branches in Voi, Mombasa and eventually
Taveta and any other available places that market gaps will be noticed.

1.5 PRODUCTS AND SERVICES

LAMW will offer a wide range of quality services. These services include body
work repair, spray painting, major and minor servicing of vehicles, repair and
replacing automotive engines, general automotive repairs, repair and
maintenance services both scheduled and preventive and lastly but not least
repairing automotive transmissions. As time goes by and the business grows there
will be need to build up an auto spare parts shop to reduce the expenses of
bringing in spare parts from either local shops or outside countries.

In addition the customers will be accrued high quality services offered since there
will be offering of services by use of high technology machines. Just a brief
description for instance in the case of servicing of a vehicle it will include checking
of the throttle condition, checking the status and replacement of spark plugs,
changing of the engine oil and draining of the used oil, lastly but not least
checking and inspection of the brakes.

Customers shall be offered with a discount on services offered at a high price and
also credit shall be offered. Payment will also be done on different basis such as
cash terms, instalments and even credit or debit cards. Security shall be assured
to customers vehicles and products hence they won’t be worried or scared of
losses to incur.

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The business shall target all kinds of level of living customers for instance from
those who require cheap services to highly expensive services. Thus the services
shall be readily available and offered to any customer that will avail
himself/herself ready to receive the services.

In addition the customers shall be offered with free advice on the products that
are best for their use. Unique features of the business which will give it an
advantage over other competitors include free car wash after services offered,
high quality services and also availability of highly skilled personnel in the
respective areas.

1.6 JUSTIFICATION OF OPPORTUNITY

a) Business SWOT

Since the business shall be having highly skilled and trained personnel in their
respective fields or areas thus positively and easily accepted by the customers. In
addition high technology used to provide the services shall also assure growth of
the business within and outside its areas of reach.

Gaining customers shall be easy since the business will be situated along the road.
Presence of petrol station adjacent to the workshop will open a chance to have
more customers who pass by to refill their vehicle’s fuel.

b) Viability

Since the serves a wide range of travellers and users, customers shall be readily
and easily gained. In addition the area is an upcoming town hence most people
try to invest in the area thus creating high chances to gain a nice profit from the
daily to daily activities of the business.

The area around has got a nearby police station that has got police officers who
usually ensure the area is well secured. The roads serving the area are also well
tamarced therefore suitable for use by the relevant parties. The government
various policies also support the growth of the business hence making it easier to
start and make the business successful.

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Raw materials and equipment that will be used in the business for different
purposes shall easily be acquired from Mombasa since there is a well tamarced
road and the presence of a Standard Gauge Railway which is a faster method too.
Much expenses shall not be incurred not only in the case of importing material
from outside country but also transportation too will be cheap.

Modern machines and use of modern technology will be highly used and
amended thus completion of various activities within the premises will be easily
achieved. Due to absence of workshops around, competence is not that stiff to
the business, hence quick growth of the business might be easily achieved.
Presence of well skilled labourers was also a factor that created the urge to begin
the business.

Since the Voi-Taveta highway serves alot of people via Voi, Mwatate, Bura,
Mwakitau and even Taveta gaining of customers won’t be a big deal since
Mwatate is centrally located. Hence this will make it easy to offer services to our
customers readily and accessible to them.

1.7 THE INDUSTRY

The business is under the service industry. It’s a medium scale business. There are
a few competitors in the industry due to low level of education and technology
gained by the individuals from the area. The general level of production will be
high in the industry; this is because the population in the area is growing day in
day out hence leading to a large number of customers. However during rainy
seasons there might be reduction in service delivery since most customers might
be indoors or even at the gardens.

The level of technology that will be applied in the industry will be modern. Hence
technology devices shall be used within the business premises for instance;
computers shall be used for record keeping, communication to the suppliers of
raw materials and customers too will be done through emails and phone calls too.
The business shall employ a few people to aid in office chores, cleanliness around
the business premises and security personnel too.

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Seasonal factors experienced in the industry are fluctuation of customers during
the rainy season hence low rate of offering services. Better computerized systems
in communication and record keeping will be adopted as the business grows. The
industry trends in service offering is that it will be growing this is due to growth of
the town as time goes by.

The business intends to be a large business and service provider to the citizens at
high growing rate in the near future due to use of modern skills and technology.
In addition the business intends to build up rental house, a cafeteria nearby that
will aid in a stable cash flow income to the business financial accounts.

1.8 GOALS OF BUSSINESS

The business has got a mission to become a real-time service provider and offer
to the customers hence being a problem solver in the vehicle industry. In addition
the business has an aim to achieve strategic and commercial objectives.

Some of the short term goals include:

 The businesses’ main objective will be to make sure that services are
flexible and tailored to meet the needs of every client.
 The business also intends to make profits.
 It will intend to create employment by attracting and attaining highly skilled
and competent ready to work employees.
 It intends to attain supply partners and business allies.

Some of the long term goals include:

 The business tends to increase its operation by adding to its services.

 It will also invest in fixed assets which will help it get its financial stability.
 The business intends to open more branches in towns like Voi, Mombasa
and even Taveta.
 The business intends to achieve and maintain competitive advantage over
its competitors.
 It will also intend to get more skilled personnel to improve on the quality of
services offered.

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1.9 ENTRY AND GROWTH STRATEGY

The business intends to commence in January 2022 after the owner who is
undertaking a course in Diploma in Mechanical Engineering at the Kenya
Technical Trainers College-Gigiri, will have completed his training. A good way to
target potential customers will be to post flyers, in notice boards and even give
them out in the streets to the public and even placing bill boards.

The business will also issue card to local businesses, friends and relatives. Placing
an advertisement in the internet will also bring in new clients. The business
intends to employ a few people who must be reliable, trustworthy and
dependable. The business intends to adopt the market penetration pricing
strategy, for a start whereby low pricing is adopted as compared to competitors
so as to allow the business enters the market quickly.

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 CHAPTER TWO

MARKETING PLAN

2.1 MARKETING OBJECTIVES

The marketing objectives of the business will be to:

 Select the market target by identifying the customer’s needs and how to
satisfy the needs.
 Develop the market mix by using the controllable variables.
 Capture a market share of 5% in year 1 and increase to 10% in year 2.
 To achieve 50% of amount of money used to start the business by the end
of year 2.

2.2 CUSTOMERS

The potential customers of the business will be people from all walks of life and
age who will require the services and will be financially stable to pay for the
services provided. Hence this means that all members of the society will be
catered for; individual customers, organisation and businesses, and institutions
are also included. In addition all level of classes both high class and middle class
residents will also be catered for and accrued of good services.

Individual customers include teachers, farmers, business people and residents

who come from Mwatate, Voi, Taveta and the whole county at large. This is
assured by the presence of well tamarced good network road around the county.

Organisations and businesses include large scale businesses and government

organisations offices that are situated within Mwatate and the county. For
instance organisation such as hospitals will also be offered with our services
where contracts will be signed and if they appreciate our job they’ll be renewed
annually.

Institutions will also be included in our customers for instance there are a few
primary and secondary schools within the county in addition there are few
colleges within. LAMW will specifically focus on these as the entry strategy to

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ensure strong visibility internally and externally. The population is high during
normal school days therefore the enterprise keeps its high market demand and
high prefers.

To just add on NGOs, churches, one time customers and people having occasional
ceremonies will also be offered with our services in the situation where they avail
themselves.

2.3 MARKET SHARE

Workshop [industry has made a tremendous growth all over the country due to
new and improve technologies used to the most of the duties. It is really on
demand basing on the growth of individuals and different residents owning
vehicles.

LAMW correct share is 30% compared to its competitors, overall share of small
competitors is 32% the highest main customers is 13%.

LAMW competes with other workshop county and has managed a 40% share
market. LAMW intends to grow bigger and attain a market share of more than
50% in the next two years .currently market share for all workshops is 88% in total
worth LAMW having 25%.The current share4 of the main products to the
suppliers stands at 66% worth public servants 30% business people,12% travellers
and other 13% institutions 20%and others 9%.The highest demand products here
is major and minor servicing of vehicles and the least is body work repair and
spray painting.

LAMW offers services to customers nearly 100 units of vehicles monthly of which
52% of customers are to public servants ,8% business people 20% on others .In
the products major and minor servicing takes 50%,body work and spray painting
30% while the others takes 20%.

2.4COMPETITION

a)competitors

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Although there is a good number of other workshops around the county,the
major competitors are BIMBO workshop, MAMA JAY Auto spares and RAY Auto
spares and repair. They produce the same products as LAMW.LAMW has got one
branches and 30 workers while other workshops have got more branches and
workshops hence main competitors ,prices are different too hence drives
customers to LAMW. LAMW tends to increase its products as time goes by so as
to make our service offering to the market large and diverse.

b) Own Business and positioning

i. Market SWOT analysis

LAMW offers high quality gives discount and its prices are negotiable to the
regular and trusted customers of LAMW has ensured good relationship with its
customers .it uses common media for advertisement such as radio, television,
and posters for promotion and creating awareness .The business is located in an
area with high population ,secured and easily accessible.

LAMW offers high quality products which are highly demanded by customers .The
high population growth in the area is an opportunity that the business faces as
they are also investing and coming up the same business. The fluctuation of prices
of products due to technological changes is a big threat to the output of LAMW.

ii. Positioning

LAMW workshop grows at a high rate with increasing profit. It intends to grow by
other branches in the first two years .The business provides high quality products
with affordable price making it easy to compete with other workshop and Auto
repair business.

2.5 PRODUCT DEVELOPEMENT SRATEGY

LAMW aims at improving the living standards of mwatate town residents and
taita-taveta County at large. It supplies high quality products and are affordable.
All workers are requested to keep and observe safety while around the working
area to prevent injuries and damage of property. Employees of LAWM a taken for
training in case of a new vehicle modelling the industry so as to keep them up
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dated of the new products. LAMW advertises itself even beyond Taita-taveta
County and offer high quality services and secure hence avoiding careless
accidents that occur in the premises during working hours.

2.6 MARKET PENETRATION AND STRATEGY POLICIES:

(a) Pricing strategy

LAMW prices are affordable to all customers. Prices have been divided upon
depending on completion prices and the standards price in the markets. Some of
the products of LAMW a sold at price lower than those of competitors but it’s
done carefully not to in curer large losses. Discount to regular and trusted
customers is given and customers who are offered more than three services are
also offered discount.

(b) Promotion and advertisement

(i) Promotion

LAMW has formulated different forms of promoting their customer by giving

discount or by offering after sales service such as : free car wash, both exterior
and interior which is done thoroughly to any customer.

(ii) Advertisement

LAMW has designed various promotions items which are used in advertising the
business. Such items include signboard, business cards, carlenders, T-shirts, flyiers
and prospectors too. This promotes the image of the business and attention of
customer, the awareness of the business and the products sold hence increasing
customer which accrue the growth of the business

c) Place- Distribution strategy

i) Location

The area has got good infrastructure which makes it easily accessible. There is
good lighting in the area and presence of security because it is situated near a

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police station. Security guards from recognized security firms maintain security in
the area. Drainage is accessible and wastage is disposal is maintained.

(ii) Channels and distribution

The good infrastructure in the area, roads are tarmeced. Distribution of our
products for instance in the case of break down arrival to the sight is quick and in
a few minutes . LAMW offers its products in the channels shown bellow:

LAMW PREMISESE

SECRETARY

STORE

WORKSHOP

CUSTOMER

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d) Peoples/sales tactics strategy

i) Sales team

The workshop team is well trained and relates well with business customer.
LAMW currently has twenty workers who are employed permanently. The
business plan is to be recruiting new members every year in accordance with the
work load. The management keeps evaluating the workers performance.

ii) The selling methods.

LAWM uses advertisement methods lIke billboards, business cards poster flyiers
even calendar to market its products to customer which will cost khs 14,000.00.
Delivery of services to customer who makes call to be attended to where they are
is also a selling method to maintain LAWM customer.

iii) sales projection

Sales forecasting is more challenging for new businesses. LAMW is guided by

market research , knowledge of potential and existing customer as well as the
influence of competition invaluable. When forecasting LAWM focuses’ on what it
did last or setting unrealistic goals which relies on accurate assessment of the
market.

2.7) ACTION PLAN

ITEM ACTION WHAT TO DO AND DEAD LINE

WHEN
Pricing  Different prices  By marketing On going activity
 Category of the team within
product 14 months
 The price should be
affordable to all
customers

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promotion  Pricing the product. Management within Ongoing activity
parts 4 months
 Offering discount
Products  Increasing services  Production Ongoing activity
offered team within
 Ensure product 16 months
quality is maintained
Place  Enlarging workshop By the owner By the end of 2
area as activities year
increase
 Hiring security guards
from recognized
organization
People  Focusing on sales Owner and By the end of 2
 Recruiting new operational team year
members
 Employment of
skilled labour

CHAPTER THREE

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ORGANIZATION AND MANAGEMENT PLAN

3.1 objectives

 Hire two vehicle in year one and five vehicle in year two.
 Pay staff based on the current rates and provide on yearly increasement of
5% annual rate.
 Employment appraisal done after every financial year to acknowledge
efforts of workers
 Management will be done the first Tuesday of every month to check on the
business progress.

3.2 MANAGEMENT AND CAPACITY

a) The team capabilities

Management comprises of the manager and assistant Manager and work
shop manager. The manager specialized in at least degree in mechanical
engineering automotive option and business management so as to have
entrepreneur and managerial skills. Assistant manager should have
principles and should assist in running in managing business. The workshop
manager specializes in a diploma in mechanical engineering hence in the
daily operation. He might act as consultant to the junior members in case
some difficulty arises.

b) Organization structure
The type of organization structure is flat organization structure. The
managers is the overall manager hence the leader. Assistant manager is
accountable to the manager. The workshop manager is accountable to the
assistant manager while the other workshop operators and workers
including the secretary and the storekeeper are all under the assistant
manager.
c) rules and responsibility
Roles and responsibility are divided according to the position qualification
and experiences, motivation of the employees promoted by creating a good

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 working condition and also increment of the salaries to increase work
moral. Due to this workers interrelation is increased also cooperation
during workshop activities is strengthened. The general manger oversees all
the activities being undertaken in the workshop. The assistant Manger
hence is the eyes of the manager whether he/she is around during working.
The workshop manager ensures all the jobs are completed in the expected
time.

3.3 STAFFING

a) Personal needs
LAWM is to start with one member management and ten workers in the
first year. Then one member management and 18 workers the second year.
The employees should be able to work properly and have the required as
per their respective field in the workshop. All the members are expected to
have their ability to work together with each other.

b) Rules and regulation

LAMW has set rules and regulation which have to be followed by all
workers. This includes reporting and departure time should followed .
Absenteeism without permission is not allowed. Thus high level of
discipline are expected. All workers are responsible in maintaining the
business premises and property. Littering of the compound is not expected.
Salary increment is based on performance and is based done after a given
period of time.
3.4PEOPLE AND SYSTEM
a)Recruitment and selection
i) recruitment
LAWM obtains personnel from both internal and external sources. When a
vacancy is indetified, external sources such advertisement is done in the
media: interested person get information and send their application.
Applications are sorted , the ones with required conditions a called for
interview, and after succeeding they are employed.
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ii) Selection.
Using the qualification papers given by applicants, contacts stated on
referees or institution are used to study the applicants contacts , behaviour,
qualification etc. Interview is conducted and this helps to evaluate who to
take or drop. Those selected are contacted via the secretary and given a
report dead line. Once she/he is oriented by the secretary and oriented by
the manager on the people and work local to bring. The rules and
regulation are given to them to study and decide if the still want to take up
the job. This will come at a cost and is estimated to cost kshs 1500.00 per
employee taken and another kshs 100.00 for orientation and gears making
a total of running of the diagnosis program to see if fault has been rectified.
Going through workers note book where every work will be expected to
write all daily activities undertaken by them. A hindrance and customer
relationship will be evaluated.
b) Training and Development
Workers are trained for effective and efficient running of the business.
Training models employees attitude and achieve better cooperation in work
place. Since the electronic world is changing first and every technology is
usually getting outdated in no time. The secret to serving and also offering
best services is to keep one updated and adjusting to any technology
change in ICT. The diagnosis software is to be updated every now and then.
This is a costly project to train and also tap the current software but is
worth as it gives the business a competitive edge. The changes may vary as
charges occur but kshs 7,000.00 is set aside by 1’ year to caterer for all
these.
c) Promotion and retention
Employees are promoted on basis of performance, discipline and
adherence to rules and regulation. In addition they will be paid in a
accordance to the position an individual holds. All employees, salaries are
to be deposited in their bank account. Workers effort is recognised through
incensement of salaries performance appraisal is carried out by owner who
evaluates the performance of workers. It is carried out during the general
audit.
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d) Appraisal/performance.
Appraisal forms are given to each employee by the owner to evaluate
them. Employees are paid according to the position they hold. Salary
payment is to increase yearly as the income and profit of LAMW Continues
to increase.
e) Communication
LAMW has clear channels of communication which creates good
relationship among the staff and the employees. Information flows from
top to bottom efficiently. Meetings between staff and subordinates are
held frequently to ensure good working environment. All employees a
suppose to attend an AGM conducted after four months and in case of any
issues should be raised.

3.5 LEGAL REQUIREMENT

The names submitted for operation of the business in LAMW AUTO-TECH
REPAIRS and the business and the business licence is obtained which is
valid for 12 months and then renewed yearly. Insurance is obtained to
cover the risk of property. Employers and employees are covered by NHIF
in case of risk. The business is to give revenue to the government as
required. The business will set aside kshs 25,000.000 for the legal aspects.
The licence for the advertisement and land rent are to be obtained from
mwatate municipal council and it is to cost kshs 13,000.000 which paid at
the start of the business.
3.6 PROFFESIONAL /EXTERNAL SERVICES
LAMW is to seek professional services from well established Auto-Tech
repair workshop on how to run and manage such type of a busines. In
addition online information and the internet will be important to enable
the business have a wide range of ideas and solution on how to complete
some task.

3.7 ACTION PLAN

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ITEM ACTIVITIES ACTION BY DEAD LINE
Roles and  Ensure the Managers Jan 2022
responsibilities workshop has
skilled personnel
 Delegation of
rules and
responsibilities
to all employees
Recruitment and  Employ skilled Management Jan 2022
selection personnel, Team
orientation and
introduction of
new employee
 Interviewing to
shortlist the
intended
personnel
Training and  Providing regular Management April 2022
Development training to Team
improve
employees skills.
 Offering seminar
and workshop
training to
employees.
Retaining  Salaries Accounting Dec 2022
motivation and incensement and team and
appraisal promotion. management
 Ensuring salary
are paid on time.
Legal and  Obtaining licence Management Jan 2022
professional and paying
services government
revenue

Page 23 of 38
 CHAPTER FOUR

OPERATIONAL AND PRODUCTION PLAN

4.1 OPERATIONAL OBJECTIVES

 LAMW intends to utilize 40% of the initial expenses on business premises.

 To utilize services of the workers skills to the maximum for increase and a
high rate of production.
 Service operation should be done sing modern technology.
 Recover back the amount of cash used to start the business and even gain a
profit within year 1 and 2 of growth.
4.2 FACILITIES AND CAPACITIES

a) Capital Purchases and Assets

The business intends to acquire two second hand vans. The vans will provide aid
and assistance for instance in the case of a breakdown, they’ll be used to rush to
the area/specific place where it has occurred. In addition the vans will be used to
pick up new parts dropped at the SGR station at Voi from either Nairobi or
Mombasa. The business owner will also shop in the available nearby workshop for
the available urgently needed equipment and parts.

b) Layout Plan

The workshop is to be divided into three main parts, i.e. the production area,
offices and a parking place. The production area will cover nearly 50% of the land
for instance where machines will be placed and where services will be offered.
20% of the land will be used for office space where the managing director’s office
will be placed, the store for tools and spare parts and the secretary’s office. The
remaining 30% will be used for parking purposes and the far left corner will be
partitioned a little bit for toilets and a car wash corner.

c) Capacity Limitations

The working area in the workshop can occupy an approximate of 20 vehicles

maximum. For the finished repaired vehicles they’ll be kept in the parking slot

Page 24 of 38
waiting for the owners to pick them up. The removed damaged parts of the
vehicles that have been brought will be displaced in one corner of the workshop
working area where at the end of the month the unrecyclable parts will be sold
out as scrap metal.

4.3 OPERATIONAL/PRODUCTION STRATEGY

a) Labour/Planning

LAMW operations require some skilled labor force. Casual laborers’ who are paid
on a daily basis will be accepted when the work load is large for the fully
employed workers. The workers are expected to attend to the workstation
accompanied with a full PPE (Personal Protective Equipment) which includes
gloves, helmets, overall and even goggles. The secretary is expected to have a
white apron whereas the storekeeper will also put on a black dust coat. A cleaner
will also be entertained who is also expected to avail him/herself everyday early
for cleaning before the rest arrive. In addition the members in the spray painting
and bodywork section will only be sticked in their place.

b) Control Process

To set performance standards appraisal for the workers will be done and during
the midyear and end year an audit is done to have the precise values of stock and
whether a profit or loss is earned. Safety will be accrued for all workers hence
strict rules of the workshop are expected to be followed to the latter. Sanitation,
good drainage and adequate facilities will be accrued.

c) Purchasing and Stock Control

 Purchasing
The workshop equipment will be purchased from the available machine and tools
vendors within the country by the workshop manager in conjunction to the
company of the managing director. In this case the workshop manager is the best
skilled worker among the others. In conjunction with the store keeper details of
the required tools and equipment will be noted down to be approved and
purchased. Approvement is done by the managing director.
Page 25 of 38
  Stock Control
The storekeeper is expected to have a good record of purchases, sales, tools given
out and those returned, so that in the case of precise information it is readily
gotten. In addition in the case a certain tool hasn’t been brought back to the store
the store keeper can know who to follow up.

d) Costing

Materials, labor and overhead costs are decided upon depending on the
consumption of each item. For instance materials pick up 55% since without them
no work/business will be done. Labor will pick up 25% of the total share since the
business is being started though as time goes by the share might increase
depending on level of production and service offering, overhead costs for
example electricity and water will pick up the remaining 20% and others such as
security personnel, Wi-Fi services too.

e) Production Design and Development

Due to high demand in the area for the products and services to be offered by
LAMW, the business intends to develop its advertisement by creating awareness
to the public via flyers, posters and even banners. In addition due to the increase
in growth of modern technology modern machines will be used for production
purposes to ensure the services and products are of high quality.

4.4 OPERATIONAL/PRODUCTION PROCESS

a) Procedure/Methods

i. Overall production/operations
LAMW Ato-Tech main services are body work repair, spray painting, major and
minor servicing, replacing automotive engines and transmissions, and general
automotive repairs. Each service is carried out following different steps and
procedures. The procedure has various steps which are booking, inspection,
preparing of a job card, the worker picks up the vehicle for maintenance, and
finally a road test after which cleaning is done and the vehicle is collected.

Page 26 of 38
Phase 1: Booking

 The owner of the vehicle arrives at the workshop.

 The security personnel picks the details of the owner and his/her vehicle.
 Hands over the customer to the secretary.
Phase 2: Inspection

 The secretary inspects the vehicle damage.

 Calls the workshop manager to have a road test to confirm the problem.
 What is to be bought, repaired and replaced is noted down.
Phase 3: Preparing of job card

 List of things to be used for the specific vehicle are noted.

 List of tools to be used is also noted down.
 Respective parts are issued.
 The job is assigned to the skilled personnel to work on it.
Phase 4: Operations/Production

 Preparing the vehicle for it to be worked on.

 Collection of the expected tools and parts to replace from the store.
 Changing, replacing and removing of broken/worn out parts.
 Test for efficiency and rectification of the identified problem.
 Complete the job card.
Phase 5: Cleaning and Collecting

 The vehicle is cleaned.

 It’s then parked in the parking slots waiting to be cleared up and picked by
the owner.
ii. Major services
a) Major and Minor Servicing
 The vehicle is run for a few minutes so as all the oil is collected in
the sump.
 The vehicle is turn off and raised on stands.
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  Servicing begins where the engine oil is changed and replaced with
a new oil.
 The plugs are checked, brakes both pads and lining are checked, the
rackens and even steering assembly is checked.
 After everything is confirmed to be in good condition the vehicle is
taken for a test and then cleaned later parked awaiting clearing up.
b) Replacing Automotive Engines and Transmission
 In this case the vehicle is raised on stands by use of a jerk.
 The broken down part is removed.
 If it’s beyond repair a new one is ordered and replaced if not its
repaired and returned back.
 The vehicle is tested for correct functioning.
c) Spray Painting and Body Work Repair
 The dented area is first cleaned to remove the destroyed paint
coatings.
 After its clean primer is applied.
 Sand the primer till the area becomes smooth.
 A base coat is sprayed and allowed to dry.
 A final coat is applied and it’s allowed to dry.
 The final shinny coat is then later sprayed and allowed to dry.
d) General Automotive Repairs
 The vehicle is checked and taken for a test.
 The problem is noted down on the job card.
 Respective tools and parts are picked up.
 The job is done and vehicles awaits pick up and being cleared.
4.5 REGULATIONS AFFECTING OPERATION

All workers whether staff or casualties are expected to report at the workstation
early enough as from 8:00 am till 10:30 am where a 30 minute break is offered.
Work is resumed from 11:00 am to 1pm where a one hourlunch break is taken till
2pm where it extends till 5:00 pm in the evening. Overtime is a crucial part which
will always be checked into. Before beginning a job one is expected to have put
on the required personal protective equipment in accordance to the expected
job.

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4.6 OPERATION ACTION PLAN

Area Activities/Strategies Period and Deadline

When
Facilities Evaluating and analyzing Procurement 27/1/2020
and purchases and determining office (5th, 1
Capacity diminishing level 2022) 24/2/2020
Production
Manager
(13th, 2 2022)
Design Analyzing layout and making Production 15/2/2020
Layout decision on plant flow and manager
machine installation 2/1/2020
Operation Setting performance Management 2/2/2020
and standards team
strategy 25/1/2020
Production Analyzing flow chart of General 19/1/2020
regulation services, health certificate manager
and trade mark business
certificate acquiring

Page 29 of 38
 CHAPTER FIVE

FINACIAL PLAN

5.1 FINANCIAL OBJECTIVE AND ASSUMPTIONS

a) Objectives

 Raise kshs 300,000.00 through personal savings and investors.

 Have kshs 250,000.00 networking and rising to kshs 280,000.00 in year 2.
 Raise kshs 300,000.000 cash inflow raising it to kshs 400,000.00
 Make 25.6% DBT on sales in year 1 and 33% in year 2.

b) Assumption

i) Cash flow

 Capital purchases for the fixed parts are purchased before start of business
 Purchases of material are done monthly.
 Miscallenuos is calculated based on 5% total expenditure
 Renewal of utilities takes effect at the end of the year.

ii) Profit and loss

 Cost of sales is equivalent to purchases for month in use

 Expenditure per item corresponds to spread on cash flows.
 Salaries and wages remain constant throughout the year.
 Depreciation of fixed assets remains constant every year.

iii) Balance sheet

 Taxation on sales is done on the first and second year.

 Assets and liabilities should balance at the end of every year.
 Loan repayment are done as from the first year.

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5.2 PRE OPERATIONAL EXPENSES

ITEM DESCRIPTION AMOUNT( KSHS)

Capital purchases 35,000
Installation 40,000
Maintenance 22,000
Deposits 30,000
Advertisement and promotion 25,000
Transport 10,000
Legal fees 14,000
Professional fees 30,000
Purchase production 39,200
Office 30,000
Miscellaneous 31,000

TOTAL 306,200 (A)

5.3 OPERATIONAL EXPENSES

i) Operations

ITEM DESCRIPTION MONTHLY ALLOWANCE TOTAL AMOUNT

Maintenance 1,000 1 1,000
Rent 15,000 1 15,000
Electricity 3,000 2 6,000
Water 2,500 2 5,000
Postage 1,300 1 1,300
Telephone 1,600 3 4,800
Legal fees 400 1 400
Promotion and advertisement 12,000 1 12,000
Remunerations 50,000 1 50,000
Professional fees 1,500 1 1,500
Transport 10,000 1 10,000
Loan premium 10,000 1 10,000
Interest on loan 13,000 1 13,000
Drawings 25,000 2 50,000
Miscellaneous 5% 31,000 1 31,000

TOTAL 177,300 (B1) 211,000 (B2)

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ii) Personal expenses

ITEM DESCPRITION AMOUNT ALLOWANCE TOTAL

Housing 15,000 1 15,000
Food 10,000 1 10,000
Clothing 5,000 1 5,000
Medicine 3,000 1 3,000
Rent 7,000 1 7,000
Entertainment 3,000 1 3,000
Miscellaneous 2,000 1 2,000

TOTAL 45,000 (C2) 45000 (C1)

INVESTMENT = A+B1+C1

Minimum = 306,200+177,300+45,000=528,500

Maximum = A+B2+C2

= 306,200+211,000+45,000=562200

5.4 PROFORMA AND CASH FLOW STATEMENT

ITEMS 2022 (KSHS) 2023 (KSHS)

Beginning cash balance 2,734,000
Cash sales 3,346,000 3,850,000
Loan 270,000
Owner equity 250,000
Total cashflow 3,866,000 6,584,000
Expenditure
Capital purchase 200,000
Rent 241,000 230,000
Electricity 53,000 49,000
Water 53,000 49,000
Postage 21,300 18,000
Telephone 17,000 11,000

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Legal fees 29,000 17,000
Promotion/advertisement 240,100 100,000
Maintenance/renovation 25,000 8,000
Remuneration 800,000 562,000
Professional fees 35,100 6,000
Purchases 420,000 32,000
Inventory 60,000 20,000
Transport 50,000 40,000
Loan- Premium 190,000 35,000
-Interest on loan 27,000 11,000
Drawings 81,000 81,000
Miscellaneous 192,050 86,050

TOTAL EXPENSES 2,734,550 1,355,050

Ending cash/net supply deposit 1,131,450 5,228,950
5.5 PROFIT AND LOSS INCOME STATEMENT

ITEMS 2022 (Kshs) 2023 (kshs)

Cash sales 3,346,000 3,850,000
Lost cost of sales 220,000 250,000
GROSS PROFIT 3,126,000 3,600,000
Expenditure
Rent 125,000 112,000
Electricity 40,000 43,000
Water 44,000 16,000
Postage 7,700 8,000
Telephone 12,000 11,000
Legal fees 18,700 18,200
Promotion/advertisement 23,000 19,000
Maintenance 17,200 8,000
Remuneration 240,000 200,000
Professional fees 11,000 5,000
Office surface 15,000 9,000
Transport 8,000 6,000
Interest on loan 76,000 43,000
Depreciation 103,000 20,000
Miscellaneous 140,000 120,000

TOTAL COST 880,600 651,000

PROFIT BEFORE TAXATION 2,245,400 2,948,800

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5.6 PROFORMA BALANCE SHEET

ASSETS PRE-START YEAR 1 YEAR 2

2022 2023
a) Fixed assets
i) capital purchase 250,000 250,000 229,000
ii)Less depreciation (21,000) (21,000)
Sub total 250,000 229,000 208,000
b) Current Assets
i)Stock/inventory 31,200 63,200 63,200
ii)prepayment 210,000 210,000 210,000
iii) Cash in hand 320,800 420,000 550,000
iv) Less taxation (25,365)
v) Debtors 20,000
Sub total 562,000 687,835 1,031,200
TOTAL ASSETS (a+b) 812,000 916,835 1,031,200

LIABILITIES

Loan 250,000 250,000 250,000

Less repayment 15,000 24,000
250,000 225,000 226,000
Creditors 128,255 250,530
i) Sub total 250,000 354,255 467,530
CAPITAL
Owners equity 250,000 250,000 300,000
Less drawings 200,000 200,000
ii)sub –total 250,000 50,000 100,000
Profit before 500,900 500,950
taxation
Less taxation (25365) 25365
Add profit
ploughed back
iii) sub total 475585 475585
TOTAL L+C (i+ii+iii) 500000 879840 1043115
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5.7 BREAK EVEN ANALYSIS

Based on kshs Sales receipt for

3,346000.00 year 1
Item description FC VC TOTAL
Cost of sales - 550000 550000
Rent 160000 - -
Electricity - 42000 42000
Water - 18000 18000
Postage 17000 7000 24000
Telephone 11000 13000 24000
Legal fees 17000 - 17000
Promotion and 80000 7500 87500
advertisement
Maintenance 7000 - 7000
Remuneration 800000 24000 824000
Professional fees 7700 - 7700
Inventory(office 62000 20000 82000
supplies)
Transport - 230000 230000
Interest on loans 76000 - 76000
Depreciation 108000 - 108000
Miscellaneous 150000 330000 480000

TOTAL 1495700 1241500 2577200

BEP=FC/(1-VC/S) =1495700/(1-1241500/2734550)

FC=FIXED COST =1495700/(1-0.454)

VC=VARIABLE COST =1495700/0.546

S=SALES FOR YEAR 1 =2739377.289

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5.8 PERFORMANCE ANALYSIS

DETAILS ESTIMATED RATIOS INTERPRETATION/ACTION

2022 2023
Working capital 7.01% 12.78% Current assets are more
(WC) than current liabilities.
This indicates that LAMW
IS in stability state.
Quick ration 7.19% 11.42% By comparing the quick
(QR) ration of all the years, the
business is suppose to be
in a position to pay back
all the short term debts.
Asset turn over 2.19% 1.32% The continuous sales
(AT) Of more than 1 % above
that LAMW is able to
make continuous sales
but the business assets
are limited and needs to
be increased,
Gross profit 16.14% 16.02% This indicates that the
(GP) expenses of LAMW are
high. This implies
management policies are
to be previewed to
minimize the cost of
production.
Net profit on 40.31% 41.08% There’s persistence in
sales(NPs) increment which shows
reduced cost of
operation. T o boost the
profit the product prices
are to be moved upwards
in every financial year.
Return on owner 4.06% 4.28% The return on owners
enquiry(ROE) enquiry is more than the
Page 36 of 38
 initial investment. This
indicates profitability.
Return 21.2% 24.3% Rise in the amount
investment invested indicates
efficiency in LAMW’s
operations as it utilises its
assets to generate more
profit.
Margin 54.10% 55.24% Rapid increase in on the
Investment planed sales indicates the
reliability of the projected
sales.

5.9 DESIRED FINANCING

LAMW would be financed by the owner with 50% and the remaining 50% from
friends , family members and investors too. The owner chose these sources since
they are reliable people and they can be conveniently accessed. In addition
investors were chosen since the area is an upcoming town and investors will try
to grow up businesses in the area.

5.10 PROPOSED CAPITALIZATION

This is the source of funds on the expected sources of income of the business.

ITEM AMOUNT
Pre-operational cost 200150.00
Operational cost 100200.00
Personal cost 30100.00
Total investment 356900.00
Owners equity(friends and family) 450000
Investors 50000

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5.11 ACTION PLAN

AREA ACTION PERIOD DEAD LINE

AND BY
WHO
Overplanting  Set appropriate financing for Accountant 2nd Dec 2022
business growth and reward,
develop and overall financing
plan and harmonize entire
business
Cash flow  Preparation of operating Owner 12th Dec 2022
budget  Payment of all obligation for the
business when due.
 Budget for pre operation and
personal expenses

Preparation  Establish profit goals Manager 4th Dec 2022

for profit  Determine plan volume of sales and
 Determine expenses for accountant
planning sales
 Come up with possible
alternative to improve profit
Control of  Decide procedures of financial Accountant 18th Dec 2022
operation control
 Set efficiency level target
enterprises performed
standards and communicate to
workers
 Prepare reports on financing
position of business
Desired  Evaluate business financial Manager 24th Dec 2022
Financing strategies
 Select financing institution and
negotiable on landing
 Allocate finance according to
plan

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