1

TITLE PAGE
BUSINESS NAME: JEFFKAR METAL WORKS
P. O. Box 1525, Nakuru
MOBILE: 0715675168

OWNER/PRESENT: KARIMI JEFFERSON MAINA

P.O BOX 1525, Nakuru
MOBILE; 0712530256

DESCRIPTION: JEFFKAR is a sole proprietorship owned by MR KARIMI JEFFERSON. The

owner is to run a profitable business by ensuring that high quality services and products are
offered in order to meet demands and needs of customers efficiently.
Products of the business are to be marketed through advertising, promoting and networking.
JEFFKAR is working hard in order to win over her competitors by providing services at a cheap
price to increase performance rate.
INVESTMENT: Required Ksh 1,000,000, ownership contribution is 50% (500,000).

2
AKNOWLEDGEMENT
I would wish to thank God for this far. I also appreciate my parents and relatives for the financial
support they offered to me during the preparation of this document. I cannot forget my friends
who motivated me in the process of writing it. Finally, I acknowledge my trainer for giving me
enough knowledge and skills.

3
 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 customer’s needs.
 Modern technology is employed in production process and record keeping.

4
 CONCEPTUAL MAP

PRIME OBJECTIVES: To maximize profit and ensuring that each year profit increases by 15%.
EXECUTIVE CHAPTER ONE CHAPTER TWO CHAPTER THREE CHAPTER FOUR CHAPTER FIVE APPENDICES
SUMMARY AND
BUSINESS MARKETING PEOPLESPLAN OPERATIONAL FINANCIAL REFERENCES
DESCRIPTION PLAN PRODUCTION PLAN
PLAN
 Business  Business  Objectives  Objectives  Objectives  Objectives/ Chapter 1
description name  Customers  Management  Facilities and assumption
 Marketing  Location and  Market share team capabilities s Chapter 2
plan contact  Competition  Staffing/other  Operations/p  Pre-
 Organization  Business  Product/ personnel roduction operational Chapter 3
and ownership services  People system strategies  Operation
managemen  Type and development o Recruitment/  Operational/  Preformat Chapter 4
t plan nature of  Market selections production cash flow
 Operational business penetration o Training and process statement Chapter 5
production  Products/ser o Pricing development  Regulations  Preformat
plan vices o People(sal o Promotion, affecting income References
 Financial  Justification es) retention operations statement
plan of o Promotio o Appraisal  Action plan  Preformat
opportunity n/advertis o Remuneratio balance
 Industry ement n and sheet
 Business o place incentives  Break even
goals  Action o Communicati analysis
 Entry and plan on  Desired
growth  Legal aspect finance
strategies  External services  Capitalizati
 Action plan on
 Action plan

5
28

CHAPTER ONE
BUSINESS DESCRIPTION
1.1 BUSINESS NAME
(a) Identity
“JEFFKAR METAL WORKS” is the formal name of the firm and (JM) forthwith.
JEFKAR consist of two names JEFFKARIMI. The metal work part is a clear indication
of the main activities expected to be carried out in the firm.

JM’s main mission is to provide both reliable goods and services to all esteemed buyers
and intended customers while the motto is “Ambition is hard work” which will act to
bring more vigour to the workers

(b)Opportunity choice
The owner Jefferson Karimi has been brought up in a highly industrialised Thika
Makonnen town which has acted and played a major role in all perspectives to ensure
both mentally and physically growth. The discovered intended area ‘Thika industrial
centre’ has been greatly researched and identified as a suitable place for
setup.

6
1.2: BUSINESS LOCATION
(a)location
(i)Market area -Kiambu county
Kiambu County is located in the central area of Kenya surrounded by several counties including
Muranga to the north, Machakos to the south east, Nairobi to the south and Nakuru to the and
Nyandarua to the west. It is the capital is in Kiambu and its largest town is Thika which is
among top growing town in the country. It has a population of 2,417,735, the total ward is
61and sits in an area of 2,448.2KM

(ii)Trade area -Thika

The business will be located around Thika town. Thika town is an industrial town lying on the
A2 road 42 KM northeast of Nairobi this has led to many people leaving in and the town thus
will promote the growth of the business. It has a population of 279,429 which is growing
rapidly. Its elevation is approximately 9.03m.

(iii)Premise site
JK is located in Thika town in Kiambu county along Murunga road near classic
shopping centre 50 km from Thika police station and the county offices .The business
sits on 100 by 50 piece of land .The business will start by renting the land at 20,000 per
month and a deposit of 30,000.There will be need of water and electricity supply
connectivity that requires a deposit of 15,000/=.A monthly consumption is estimated to
be ash 3,000 and ash 7,000 respectively.

(b)Contact
JM communication mode of contact will be done through mobile phones, internet, emailing, and telephone.
The business will buy its own Safaricom line at ash 100 , land line for telephone connection
requires deposit of ash 5,000 ,Internet connection is free with Safaricom with Safaricom Fib with a
monthly pay of ash 1,500 .JM will open an email address jeffkar56@gmail.com

7
The business will be operating as a sole proprietorship under the ownership of Mr
Jefferson Mania Karimi. this owner decided to run on a sole
(a)Ownership
proprietorship because it is easy to raise the capital, easy to form and share profit.
The owner is to manage and control the business with the skills that he acquired
after working under Doshi company for 2 years. A registration fee of ash 200 and
creating of KRA account and getting other requirements from the government and
local authority operation commences in January 2021.
(b)Sponsorship
The owner of the business is a youthful graduate in Mechanical Engineering
(Production option) who can work effectively under no supervision. He has
worked in some companies such as Demonte Kenya, KCC Kenya and as a welding
all as an intern. He has also acquired a lot of technical skills and entrepreneurial
skills which he will use in day to day running of the business.
The initial cost of operation will amount to ash 1,000,000 and 45 percent of it will
come directly from owner’s contribution (ash 450,00)

1.4: TYPE AND NATURE

(a)Type
JEFFKAR METAL WORKS is a production and service type of business that
mainly deals with steel structures such as room terraces frames, windows, shelves,
doors and mounting locks which is termed in the service industry.

(b)Nature of the business

JM is a start up business , it is new in the market area but wit already existing
current products but its uniqueness comes with new and modern technology and designs
.JM will be operating 12 hours in five days of the week and closed during holidays and
only on Saturday for eight hours .The business uses the latest technology available in

8
the market to produce products of the highest quality to meet the needs of the
customer and to easen the work of the employees.
1.5 PRODUCTS AND SERVICES

(a)Swot Analysis
(i)Internally analysis
The business JM is located in an easily accessible location on the main road that goes out of
town and on open ground. It is difficult to our way the competitors as they are more established
in terms of both capital and customer management.
(ii)Externally analysis
Thika town and its surrounding has a population that is growing rapidly. A lot of residential
places are coming up such as the Binder estates and Tatu city. This will offer a wider range of
market of this business. Getting the work material i.e. raw material to the business will be a
challenge since the firm lacks its own means of private transport.

(b)Viability of opportunity
The business sits at a strategic place surrounded by residential places which are coming up as
well as industries which will play a greater role in provision of customers to the business
and lead to immerse profits which will lead to continuity of the business .
Thika town is growing fast thus a lot of infrastructure are coming up such as
government ofiices and hospitals.The area is well connected with a tarmacked road .Ther
is a police post just adjacent to the business therefore security is assured.Most of the
raw materials that will be used will be bought around the county as ther are more
industries that regard to steel production.Only in a few circumstances the business will
acquire raw materials fromm other counties.
The stuffs will be highly qualified and experienced with the best skills so as to achieve
the organisation mission and vision.The JM will use modern equipments such as the arc
welding machine ,gas welding torch and plasma cutter.
Marketing of the business will be done through posters that will be placed at strategic
points in the town.It will also take the advantage of internet mostly on social media.The
business will raise its market share ny giving ofeers to its clients such as free delivery
on things that will be fabricated on o
ur work shops.
It is located on around thika town Mang’u road and it well accesed from all regions of
the town and its sorroundings easily.

9
1.7 :INDUSTRY
(a)Identity and size
JM fall under manufacturing business. It will create job opportunities as it will have an estimated
number of workers to be eight who will be main welders and seven structural people and one
watchman. Competitors have the biggest share market but also the business is planning in the
next two years to be at pace with some of them and overtake them by the next year.

(b)Characteristics
The business will start small with a few workers and starting capital of one million that will be
acquired from different sources like personal savings, contributes from friends and relatives and
borrowing loans. At first raw material will be brought by suppliers but later the business will find
its own means i.e. pick up from main stores.

(c)Trends and Future

In this line of business using modern technology and having the best and most creative ideas are
needed so that full utilisation and manipulation of every available resources is achieved fully. In
future the business is planning to come up with a ware house to keep raw materials and the
already made items.

(d)Own business position

Currently the business will start with eight workers but in a year, it will add more who will be
doing installation works out in the field. It is also estimated to increase its profit by 5% after one
year and after 3 years by 10%.

10
1.8 BUSINESS GOALS AND OBJECTIVES
JM vision is to be the highest in producing quality well designed and crafted so to increase profit
and market share.
Short term goals
(I)Create employment
(ii)Satisfying customers demands
(iii)Offer good qualities services

Long term goals

(i)To expand the business and open a warehouse
(ii)To achieve 30% of the market share at the end of 3 years.

11
1.9 ENTRY AND GROWTH STRATEGY
(a)Entry Strategy
This shall be done through posters that will be placed at strategic points in the town
.The name will be designed clearly and displayed colourfully on a sign board placed
infront of the business location.It will also advertise itself on social media accounts .

(b)Growth Strategy
The business will raise its market shares through;
(i)Offering high quality products which are creatively crafted and designed to fit in the
day today market.
(i)Develop attractive language with customers

CHAPTER TWO
2.1 :MARKETING PLAN
-Capture of market share of 10% per year
-Capture 20% 0f unit customer within the marketing area
-To achieve ksh 6,800,000 sales limit in a year raising to 7,200,000.
-Spend 71% of the total sales on promotion and marketing in year maintaining to 10% in
years .

2.2 Customers Market (Target Market )

(a)Overall
The the targeted market for JM are local residential places institutions ,retail ,shops ,offices
and small shops .It is estimated that the potential market opportunity supplying an
average of gates , 100 windows and 32 shelves and 50 doors per month .The customers
will range from low middle and class levels in Thika town ,Makongeni ,Ngoingwa estate
and south of Murang’a.

(b)Residential Places

12
They receive roof terraces ,frames,gates ,doors and houses furnitures .Majority of the area
around AF are coming estates which are growing rapidly and the business target them.

(c)Institution includes the schools around primary schools, colleges, and universities. They
receive chairs, doors, roof terraces shelves gates from the business.

(d)Retailers
This category includes supermarkets ,stores ,shapes and kiosk which spread around the
Thika town area .Thet receive the shelves ,frames ,tables ,chairs from JM.

(e)Business Premises
This includes the offices both offices both public and government and private sectors
.They will receive tables ,shelves, chairs and frames .

(e)Others
This group of customers includes farmers,churches and one time customers.

2.3 MARKET SHARE (DEMAND ANALYSIS)

(a) Overall potential demand
The industry is growing very fast in Thika county due to the very high groth in
population .It will be high in demand due to the infrastructure coming up in the
county ,JM current share is 30% compared to its competitors , overall supply shares is
50% the highest ,main customers making 20% highest and major customers making 50%
.

(b)Current supply of products by customers

JM business competes with other fabrication business in the county and has managed a
40% share market with others attaining 60% .JM intends to grow bigger and attain a
market share of more than 50% in the next 3 years.Currently the market share for all
fabrication business is 75.56 in total with JM.

(c)Current supply of products to customers

The current share of main products to all suppliers stand at 42% local residents ,
35% institutions ,15% businesses and 95 others .The highest demanded products is
frames roofs and terraces.

(d) Own business apportionment and per major customers

13
JM produce 400 units monthly of which 35% of customers are local residents ,20%
institutions ,15% business enterprice ,10% others, in products roof terraces take 40%frames 33%
gates 25%, windows 15% and shelves 5%. The projected steel structures in a year are 95% and
80% respectively.

2.4 C0MPETITION ANALYSIS

(a) Competitors
The major JM competitors are Farrel services ,Doshi welders ,Diamond trust fabricators
,JB and sons fabricators in such a way that they offer similar products .They are
located in and around Thika town.
(i)Farrel services
Location -Makomgeni sub location 10 km from JM
Market size -40% of the market
Products-Gates ,doors ,windows, shelves ,roof traces
Operation _8 hours 6 days
Strength_have competitive price on products
Weakness_use of poor technology

(I)Doshi Welders
Location _inside Thika town
Market size _15% of the market share
Products _windows,doors,gates,chairs
Operation _6 hours 7 days
Strength_ have been in thr market for many years
Weakness _sell products at a higher price

(iii)Diamond Trust Fabricators

Location_Mang’u ,Mang’u road 15 km from JM
Market size _15% of market share
Products _gates , shelves ,windows , roof traces
14
Operation _8 hours 5 days
Srength _have a good strategic location to customers
Weakness _poor road network

(b)Own business analysis (SWOT Analysis)

(i)Marketing business analysis
JM oofers high quality products and gives discounts and its prices are negotiable to
the regular and trusted customers .JM has ensured good relationship with its
customers .JM uses media for advertisement such as radio ,use internet i.e social media
and posters for promotion .JM is located in an area whose population desity is high

(ii) External analysis

The business offers products of high quality with good finishing touch .The rapid
population growth of the town is an opportunity for the business .

(iii) Positioning of JM
JM currently have a market share of 5% but it is projecting to have a wider share of
10% at the end of one year .It plans on increasing its customers by giving more offers
on various products and adjusting prices of commodities and also offering free deliveries
of products.Its survival highly depend on the residents and the upcoming infrastructure in
the area.

2.5: DEVELOPMENT STRATEGY

JM business aims on improving the living standards of Thika residents and the entire
county .It will be producing goods of high quality and all the products will have a
warranty of 6 months .There will also be free installation of shelves if they are directly
made from the workshop .The business will create job opportunities to community
surrounding Thika at large and the whole government benefits from revenue collection.

2.6 MARKET PENETRATION STRATEGY POLICIES

(a)Pricing Strategy
The business prices of products will be affordable .Prices have been divided upon
depending pn the completion prices and the standard price in the market.Pricing will also

15
depend on cost of materials and time taken to completely fabricate a product fully , the
first the product is completed the lower the price .Some of the products are sold at a
lower price than those of competitors but this is done carefully not to incur losses
.Customers who buy products in large quantities are given discount depending on the
product they have bought.

(b)Promotion and advertising strategy

(i) Promotion
JM has formulated different methods of promoting their customers by giving free
delivery ,discounts on some products and free installation of shelves once fabricated in
the workshop.

(ii) Advertisement
JM has designed various promotion items for advertising the business .This methods used
include calendars , leaflets ,sign boards and handouts.This will approximately cost ksh
15,000 annually .This will promote the business as it makes products and services offered
to be well known hence attacting customers and thus growth of the business.

(c)Place(Distribution)
(i)Location Area
The business is located at a good strategic place with quick access to road facility for
customers conveniency and also for the benefit of the business as it need to bring raw
materials using same route.The security is also assured due to the police station just
neighbouring the business .The are is well connected with water and electricity.

(ii) Distribution Channels

There are good tarmacked roads in the area within every boundary making the area
greately accessible by customers as the main transport is by road.

(d) People \sales tactics strategy

(i)Sales team
JM will form a team of three people who will promote the business to the
community.They will go round the community searching for potential customers and for
every customer they bring they get a commission of 5%.

(ii)The selling methods

The business will develop a good communication with the customers and even use the
local language if possible.Customers will be given a receipt on any money paid to

16
protect them from any incident and also for maintenance of records .A warranty is
issued to encourage the customers to buy our products.

(iii) Sales projection

JM is projecting to be making ksh 70,000 from gates and ksh 100,000 from doors and
windows ,ksh 50,000 from shelves and ksh 150,000 from roof traces

2.7: ACTION PLAN

ITEM ACTION WHAT TO DO DEADLINE

AND WHEN
Pricing -Category of the _By manager within -On going activities
products. seven months.
-Different prices
-Price should be
affordable.
Promotion -Pricing the produc -By the owner within .By the end of
three months.
-Offering free March
transport
-Offering discounts
Product -Offering good -workshop leader in .Ongoing
qualities. two years time.
-Doing good finish
work.
Place Enlarge business -By the owner . In three years time.
area
Respoonsibility -Ensure firm has -Manager .December 2020
competent personell.
-Delegation of rules
and responsibility to
all employees.
Training and -Ensure skilled -By manager .December 2020
recruitment
personell are
employed.
-Provide regular
trainind to improve
employee skills.
Promotion -Creating new -Manager .December 2020
posters and

17
 advertisements.
Capital of operation -Design mechanism -Owner manage .Year one
of controlling
throughout the
finances.
month.
-Control credit
collection and
account receivable..
-Report on financial
position of the
business.
Cash flow (Budget) -Prepare the Every month .End of every
operation budget by accountancy.
financial year.
combining pre-
operating and
personal expenses.

CHAPTER 3

ORGANISATION MANAGEMENT

3.1 :MANAGEMENT OBJECTIVES

Hire the machines so as to get funds to purchase new machines the following coming
financial year.
Initially the owner is to manage the business and in two to three years time the will
have to employ a manager to reduce the tsk force.
The stuffs are to be pain with an annual increase and also there will be extra bonuses
for motivation.

3.2 :MANAGEMENT TEAM

(a) The team
The management team comprises the owner as the manager and workshop leader as the
assistant manager.The assistant manager is required to have the ability to manage and
develop employees to ensure good quality services and value for money and should in
running and managing the business .Democratic form of leadership should be employed
to allow ever employee to fully participate in decision making.The manager and the
assistant are responsible for laying out rules and regulation shat will govern the entire

18
business at large.Employees are to be notified on every new rule amended to avoid
resistance.

(b) Organisation structure

The type of organisation structure is fruit type.The owner is the overall manager ,
assistant manager is accountable to the manager and the secretary followed by the sales
people, fabricators the lastly the security guards.

(c) Roles and Responsibilities

Responsibilities are divided according to the position, qualification and experience.The
sub-ordinate are motivated by giving them promotion to senior level ,increment of salary
and providing good working condition and this leads to increase in individual and team
spirit of workers and thus read to fully cooperate with one another and work together as
a team.During recruitment advertisement is done via social media ,poster and reference
from the stuffs.In JM employees are allowed to consult with the manager on any issues
arising.

3.3 :STAFFING
(a) Personell requirements
JM is to start with one member management and 10 workers and in year 3 a two
managerial system will be undertaken.
The employees should have atleast a certificate in what they are qualified in.The
fabricators should have atleast a certificate in mechanical engineering.

(b) Rules and regulations

JM has set rules and regulations which have to be followe by all the workers from top
to bottom irregardless of the managerial position.This include the reporting time to work
must be adhered to and also the work closure time ,abseetism without any viable reason
will not be tolerated.Icase of an immergency one will be required to attache reasons for
abseeitism and the date due this form is to be signed and stamped by the assistant
manager.All the workers should have the responsibility of taking care and maintaining
all the equipments and machines.Littering of the compound isn’t allowed .Employees
welfare is observed by maintaining and observing and conducive environment and ensure
that all the working equipments are in good condition.Salary increment is based on the
performace and is done after a given period of time.

3.4 :People system

(a) Recruitment and selection
(i) Recruitment

19
The business obtain personell from both internal and external sources.When a vacant
position is identified external sources are used where advertisement is done and interested
persons send in their applications.The applications are sorted and those with the
required conditions are called for interview and there will be an application fee.

(ii) Selection
Using the qualification papers given by the applicant contacts stated on references or
institutions are used to study the conduct behaviour ,qualification etc.The interview
conducted helps to evaluate or estimate who to drop and who suits the job fully.Those
that manage to pass the interview are to be contacted and rules and regulations of the
business sent to them by the secretary.A medical report which is also updated will be
required

(b) Training and development

Workers are trained for effective and efficient running of the business .Every worker is taken
through all machines and equipment in use.Taking advantage of the technology the business has
to utilize and train all the workers through the internet and watching videos .This is done to
increase the knowledge and skills of the workers ksh 2,000 is set aside for this activity.

(c) Promotion and retention

Employees are promoted on basis of performance, discipline and adherence to rules and
regulations. Workers who perform their work best are recognised and encouraged by being given
motivations thus to keep working for the better. Performance appraisal is carried out by the
supervisor who evaluates the performance of the workers.

(d) Communication and team building

JM has clear channels of communication that creates good relationship among stuff
communication flow is from top to bottom efficiently. Office of the manager is open as such any
one willing to express themselves is free. The management uses notice board, suggestion box,
telephone messages to pass information. Ksh 5,000 is to be set aside for the purpose of
communication.

20
3.5: LEGAL REQUIREMENTS
The name submitted for operation of the business is JEFFKAR METAL WORKS and the business
licence is obtained which is valid for 18 months and the renewed one and half a year. Insurance
is obtained to cater for the risk of employees’ properties and also for the business ,the business
is also insured such as fire.The licence for advertisement and land rates are to be obtained from
Thika municipal council ,licences are renewed yearly.

3.6: PROFESSIONAL /EXTERNAL SERVICES

JM has to seek professional assistance from other well established workshops on how to ru the
workshop with the current technology .Industrial training is also conducted to improve the skills
of workers .The amount set aside for this services for the first year is KSH 5,000.

21
ACTION PLAN

ITEM ACTION ACTION BY DEADLINE

Training and _Ensure skilled _Manager and _Ongoing every year.
requirement people are employed. secretary.
_Orientation and
introduction of new
employees.
_Create new post for
advertisement.
_Provide regular
trainings for
improvement of
employee skills.
_Responsibilities _Delegation of rules _Manager _Dec 2020
and responsibilities to
employees.
_Ensure business has
competent
employees.
_Appraisal _Assessment of _Assistant manager _Every 5 months.
employees.
_Quality check for
products.
_Reward and _Giving promotion to _Assistant manager _End of 2020
Recognition best employees.
_Offering incentives
to encourage
employees.
_Communication and _Information move _Secretary on going _Ongoing
team. from top to bottom.
_Information passed
through notice
boards, suggestion
box and telephone.
_Legal and _Registration of _Owner _Feb 2020
professional services business.
_Acquiring of
licence.
_Taking insurance of
the business.

22
 PERATIONAL PRODUCT PLAN
4.1. OPERATIONAL OBJECTIVES
i) Production should be based on current technologies.
ii) Utilize the service or production staff in year 1 to year 3.
iii) Utilize 40% of the initial expense on facilities.

4.2 FACILITIES AND CAPABALITIES

a) Capital purchases and assets
JM will start by renting a small godown for fabrication work and storage of its product. The
business will acquire machine/equipments during the production activities, that will help in
fabrication work. It will also buy a few equipments.
b) Store/plant layout
The business will be in an open godown that will be portioned in different sections. The front
office desk and the manager’s office, fabrication sector store and washroom. The store will be at
the corner and the the washrooms to the

Entry customer care office

c) Capacity limitation
JM operations lines of its product are very important. At first most of the products will be
produced on the order placed by customers. The manager will monitor the daily sales.

4.3) OPERATION/PRODUCTION STRATEGIES

a) LABOUR/PLANNING
Workers are requested to work six days a week, eight hours a day, tea breaks, lunch breaks.
Weekends and holidays are taken as overtime. The business intends to increase its supply’s of
the products when demand is high. The business has also employed skilled and most qualified
workers especially in the production department.
b) CONTROL PROCESS

23
JM aim is to produce product of high quality standards so as to maintain this all quality controls
are checked and tested for any kind of defects. The workers will be provided with all safety
gears.
c) PURCHASING AND STOCK CONTROL
i) Purchasing
Purchases of the business requirements are done by the manager. The workers team has
effective method of purchasing by raising a requisition through the front office who will forward
to the manager.
ii) Stock control
the business uses inventory as the method of stock where it involves recording of stock balances
after receipt issues of materials so that balances it anytime can be attained immediately .the store
keeper who will be one of the workers is to be maintaining good records of the stocks.
d) Casting.
The production cost ,material , labour and overhead cost are decided upon depending on the
soles per month .The raw material gvt the biggest share of roles as they are the main aim of the
business .overhead such as electricity and water is opp 20% of the total costs delivery cost is
Ksh 20,000.
e) production design and development
JM intends to develop its advertisement to keep track of the evolving market and thus also use
modern technology to put more emphasizes and encourage on products thus the customers
preferences.
4.4 OPERATIONAL/ PRODUCTION PROCESS
A chart on production stages from when a customer places on orders until that time when the
products are collected can be shown as follows

Procedure/methods
i)Overall production /operations
ORDER
RECEPTION
FABRICATION
COSTING

24
RECEPTION
PACKAGING
COLLECTION
All the processes shown will be strictly followed when giving services to customers .an order
from the customer is received by the reception who then looks at it and considers all the details
where its forwarded to the manager. The product is then processed ,fabricated,replaced and then
collected by the customer and order form is filled for future reference. If transportation is
needed, the business will hire transport for the customer on the day of delivery.
JM will mainly deal with aluminium structures such as frames, windows and gates made of mild
steel and roof terraces and shelves.

ii) major products

a) Aluminum frames
 Taking measurements
 Picking materials from stores
 Marking out and cutting
 Joining by fabrication
 Painting
 Delivery to customers

b) Roof terraces
 Taking materials from field to stores
 Taking measurements
 Marking out and cutting aluminum tubes
 Joining by screwing

c) Window frames
 Picking materials from store
 Taking measurements
 Cutting and marking out
 Fabrication work of joining
 Paint work
 Drying
 Selling to customers

25
d) Shelves
 Picking materials from store
 Taking measurements
 Marking out and cutting
 Fabrication work and joining
 Grinding and painting
 Drying
 Selling to customers

4.5) REGULATIONS AFFECTING OPERATIONS

The business will ensure that it complies with legal requirements, operational licenses and
registration. Though they will be time consuming to acquire to prevent future crisis that may
result to government interference.
The business will also take insurance cover that will also cover the employees. It will also take
approval on health and safety regulations that will be given a lot of attention to ensure that
workers stay in a conducive environment. Acts such as factory which makes provision for safety,
health and general welfare of workers will be complied with.
JM will take environmental regulations that will protect the workers and ensure that they stay in
a very conducive environment free of danger.
4.6 ACTION PLAN
AREA ACTIVITIES PERIOD AND WHO DEADLINE
Facilities and Evaluating and Procument officers 25TH Jan 2021
capacities analyzing the 10th Jan 2021 25th Feb 2021
purchases and Production manager
determining 2nd Feb 2021
depreciation level
Design layout Analyzing the layout Production manager 10th Jan 2021
and making decision 1st Jan 2021 2nd Feb 2021
on the plant flow
installation of
machines
Operational Setting the General Manager1st 10th Feb 2021
stratagies performance Feb 2021 10th March 2021
standards
Design and Designing the posters General Manger 2nd 15th Jan 2021
development and updating the Feb 2021
promotion items

26
 Operational/ Analyzing the General Manger 3rd 31st Jan 2021
Production flowchart of each Jan 2021
product to be
fabricated
Regulations Acquiring the trade General Manger 7th Jan 2021
mark ,business
licenses and health
certificate

CHAPTER FIVE
FINANCIAL PLAN
5.1: FINACIAL OBJECTIVES AND ASSUMPTIONS
(a)Objectives
_Raise Ksh 1,000,000 through loans ,owners equity and contribution from friends .
_Make 30% of the market share at the end of three years ..
_Make 40% on sales DBT year one and 42% year two.

(b)Assumptions
(i) Cash flow
_Capital purchases for next two years are purchased before start of the business.
_Purchases of bills of materials are purchased monthly .
_Miscellaneous is calculated evenly through the year .
_ A grace period allowable on loan is 6 months after commencement of business.
_Sales receipts spread evenly throughout the year .

(ii) Profit and loss

_Cost of sale equivalent of purchases for month in use.
_Customers remain constant over the year so do the sales
_Expenditure per item corresponds to spread on cash flows.
_Wages/salaries or renumerations remains constant throughout the year.

27
28
iii) balance sheet
 Proforma balance sheet is done for every year.
 No depreciation accountable in fixed assets for the start up but as for the next three years.
 Taxation on sale is done on the first and second years.
 Loan repayments are done as from the first year.
 Assets and liabilities should balance at the end of every year.

5.2) PRE-OPERATIONAL EXPENES.

Item description Amount (kshs)
Capital purchase(tools, equipment, machines) 25600
Remuneration/installation 30000
Maintenance 10000
Deposits (rent, electricity,water,telephone) 63000
Advertisement and promotion 15000
Legal fees 60000
Professional fee 1500
Purchase production 40800
Other 5000
Miscellaneous 35000
Total 285900

5.3) OPERATIONAL EXPENSES

i) Operations
Item description monthly Allowance Total amount
Maintenance 500 1 500
Rent 20000 3 60000
Electricity 7000 1 7000
Water 7000 1 7000
Telephone 1000 2 2000
Legal fees 500 1 500
Promotion and 1300 1 1300
advertisement
60000 1 60000

Professional fees 300 1 300

Transport 15000 1 15000
Loan premium 55000 1 56000
Interest on loan 14500 1 10000

29
 Miscellaneous 35000 1 35000
Total 217100 257600

ii) Personal expenses

Item description amount allowance Total
Rent 20000 1 20000
Clothing 3000 1 3000
Food 5000 1 5000
Medicine 1000 1 1100
miscellaneous 500 1 500

Total 24500 29500

Investment
Minimum=A+B1+C1
=285900+217000+24500
Maximum
=532500
Maximum=A+B2+C2
= 285,900+257600+29500
==573000
5.4 PROFOMA CASH FLOW STATMENT
Items 2021(kshs) 2022(kshs)
Beginning cash balance 4,100,00
Cash sales 5,800,000 5,950,000
Loan 400,000
Owner equality 300,000
TOTAL CASH FLOW 6,500,000 10,050,000
Expenditure
Capital purchase 150,300
Rent 240,000 240,000
Electricity 84,000 80,000
Water 84,000 30,000
Telephone 12,000 5,000
Legal fees 6,000 6,000

30
Promotion &advertisement 15,600 5,000
Maintenance/ renovation 6000 3,000
Remuneration 720,000 600,000
Professional fess 3600 2,000
Purchases 150,000 10,000
Inventory 1000 1500
Transport 180,000 20,000
Loan –premium 20,000 151,000
Interest on loan 174,000 150,000
miscellaneous 420,000 380,000

TOTAL EXPENCES 2,266,500 1,550,000

Ending cash/ Net surplus of 4,233,500 8,496,000
deposit

5.5PROFIT AND LOSS INCOME STATEMENT

ITEMS 2021`(kshs) 2022(Kshs)

Cash sales 5,800,000 5950000

Loss cost of sales (25,000) 32000
GROSS PROFIT 5,775,000 5918000
Expenditure
Rent 210,000 210,00
Electricity 40,000 40,000
Water 50,000 45000
Telephone 10,000 8000
Legal fees 6,000 5000
Promotion & Advertisement 14,000 12000
Maintenance 5,000 3000
Remuneration 680,000 500000
Professional fee 3,000 15000
Office surface 1,000 4000
Transport 150,000 15,000
Interest on loan 170,000 150,000
Depreciation 50,000 20,000
Miscellaneous 420,000 38000

TOAL COST 1,818,000 13,90500

Profit before taxation 3,457,000 4527500

5.6) PROFORMA BALANCE SHEET

Assets Pre start 2021 2022

31
 a) Fixed assets
Capital purchase 162000 162000 153500
Less depreciation (8500)
Sub total 162000 1535000 105000

b) Current
assets
Stock/inventory 20000 50000 50000
Pre payment 245000 245000 245000
Cash in hand 180000 150000 300000
Less taxation (20325)
Debtors 5000
Sub total 345000 244675 545050
Total assets (a+b) 507000 48175 690050

LIABILITIES
Loan 400000 400000 400000
Less repayment (12000) (24000)
400000 388000 376000
CREDITORS 50000 65000
i) Sub total 400000 438000 441000
CAPITAL
Owners equality 250000 259000 330000
Less drawings 85000 85000
ii) Sub total 250000 165000 245000
Profit before taxation 275400 275400
Less taxation (20325) (20325)
Add profit ploughed
back
iii) Sub total 255075 255075

Total L+C (i+ii+iii) 65oooo- 858075 441075

5.7) BREAK EVEN ANALYSIS

Based on kshs 5800000 sales receipt for year1 2021
Item description F.C V.C Total
Cost of sales 40000 40000
Rent 225000 225000
Electricity 40000 40000
Water 50000 50000
Telephone 8000 5000 13000
Legal fee 5500 5500
Promotion and 14000 12500 26500

32
 advertisement
Maintenance 300 300
Remunerations 620000 680000 1310000
Professional fees 1500 1500
Inventory(office 1000 800 1800
supplies)
Transport 150000 150000
Interest on loan 174000 174000
Depreciation 50000 50000
Miscellaneous 35000 380000 15000

total 1194300 1358300 2552600

BEP=FC/1-VC/S
FC=Fixed cost
VC=Variable cost
S=sales for year one
=1194300/1-(1358300/580000)
=1194300/1-0.234 =1554.52451

5.8) PERFORMANCE ANALYSIS

Details Estimated 2021 Ratios 2022 Interpretation and
action
Working capital 6.3% 15.01% Current assets are
WC more than current
liabilities. JM is in
stable state.
Quick ratio 7.2% 13.6% The comparing the
QR QR of all the two
years the business is
supposed to be in a
position to pay back
all the short term
debts.
Assets turn over 3.56% 1.72% The continuous sale
AT of more than one
percent shows that
JM is able to make
continuous sales but
the business assets

33
 are limited and needs
to be increased.
Gross profit 20.15% 20.75% It indicates that the
GP expenses of JM are
high; this shows that
the management
policies are to be
previewed to
minimize the cost of
production.
Net profit on sales 50.41% 49.59% There’s persistence in
NPS increment showing
reduced cost of
operation.
Return on owner 5.07% 5.14% The return on
equity owners’ equity is
ROE more than the initial
investment.
Return on investment 82.5% 95.7% Rise in the amount
invested indicates
efficiency in JM
operations as is
utilizes its assets to
generate more profit.
Margin on investment 70.1% 72.1% Rapid increase on the
planned sale,
individual, reliability
of the project sales.

5.9) DESIRED FINANCING

JM will be financed by the owner 35% and the rest from pamoja development sacco. The owner
chose this sacco as it has low rates of loan repayment and the owner has an account with the
sacco and getting the loan will be easy.

5.10) PROPOSEED CAPITALIZATION

This is a source of fund on the expected source of income of the business.
Item Amount
Pre operational cost 285900
Operational cost 217100
Personal cost 24500
Total investment 573000
Owners equality 350000

34
loan 600000

5.11) ACTION PLAN

Area Action/activities By who Deadline
Over planning Do financial planning Owner 7th Dec 2021
for JM gross and
continuity.
Check errors in loop
holes for
accessibility.
Cash flow budget Preparation of flow Owner 20th Dec 2020
budgeted two years.
Budget for pre
operation and
personal expense.
Payment of all
obligations for the
business when due.
Preparation for profit Establish profit goals Manager 7th Dec 2021
Determine plan
volume of sales
Come up with
possible alternative to
improve profits.
Control of operation Decide procedures of
control
Control/credit
correction of account

35