MILCAHS MILK QUALITY SERVICES

P.O BOX 30

KISUMU

MOBILE NO: 0707761702

sharonmilcah773@gmail.com

PRESENTER: SHARON MILCAH

INDEX NO: 6191010014

CENTER CODE: 619101

CENTER NAME: FRIENDS COLLEGE KAIMOSI

PAPER NO:

SUPERVISOR: PAMELA YEGO

SUBMITTED TO: KENYA NATIONAL EXAMINATION

COUNCIL FOR THE AWARD OF THE CERTIFICATE IN
SCIENCE AND LABORATORY TECHNOLOGY

EXAMINATION SERIES: JANUARY 2021

3
Declaration
I Sharon declare that this project is my original work and has never been presented to Kenya
national examination council or any other examination body.

NAME: SHARON MILCAH

SIGNATURE:…………………………………….

DATE:…………………………………………….

SUPERVISOR: PAMELA YEGO

SIGNATURE:……………………………………..

DATE:……………………………………………..

i
Dedication
My dedication goes to my supervisor madam Pamela Yego, my beloved mother Eunice, my
loving friends Stacy, Brenda, Pauline and Sharon. May our visions come true us wisdom down
upon you all.

ii
Acknowledgement
My appreciation goes to the almighty God for his protection. Also to my beloved mum and dad
for their financial support to make sure that I complete my studies. Also not forgetting my
supervisor madam Pamela Yego for he support in writing of this business plan.

iii
Table of Contents
Declaration...................................................................................................................................................i
Dedication...................................................................................................................................................ii
Acknowledgement......................................................................................................................................iii
CHAPTER ONE.....................................................................................................................................- 6 -
EXECUTIVE SUMMARY.................................................................................................................- 6 -
CHAPTER TWO....................................................................................................................................- 7 -
BUSINESS DESCRIPTION...............................................................................................................- 7 -
OWNERS DETAILS..........................................................................................................................- 7 -
ADDRESS OF THE PROPOSED BUSINESS...................................................................................- 7 -
THE BUSINESS VENTURE..............................................................................................................- 8 -
ENTRY PLAN....................................................................................................................................- 9 -
GROWTH PLAN..............................................................................................................................- 10 -
CHAPTER THREE...............................................................................................................................- 11 -
POTENTIAL CUSTOMERS............................................................................................................- 11 -
Individual customers.....................................................................................................................- 11 -
Institutional customers...................................................................................................................- 11 -
COMPETITORS...............................................................................................................................- 12 -
PRICING...........................................................................................................................................- 13 -
ADVERTSING AND PROMOTION...............................................................................................- 14 -
DISTRIBUTION...............................................................................................................................- 15 -
CHAPTER FOUR.................................................................................................................................- 16 -
ORGANIZATION PLAN.................................................................................................................- 16 -
STRUCTURE...................................................................................................................................- 16 -
KEY PERSONNEL...........................................................................................................................- 16 -
SUPPORT SERVICES......................................................................................................................- 18 -
CHAPTER FIVE...................................................................................................................................- 19 -
OPERATIONAL PLAN....................................................................................................................- 19 -
PRODUCTION FACILITY..............................................................................................................- 19 -
OPERATION PROCESS..................................................................................................................- 19 -

4
 REGULATIONS AFFECTING OPERATION.................................................................................- 20 -
CHAPTER SIX.....................................................................................................................................- 21 -
FINANCIAL PLAN..........................................................................................................................- 21 -
PRE-OPERATIONAL COST...........................................................................................................- 21 -
WORKING CAPITAL......................................................................................................................- 21 -
PROFOMA BALANCE SHEET.......................................................................................................- 22 -
PROFOMA INCOME STATEMENT...............................................................................................- 23 -
PROJECTED CASH FLOW STATEMENT.........................................................................................24
BREAK EVEN CALCULATIONS.......................................................................................................25
EXPECTED PROFITABILITY RATIO...............................................................................................25
CURRENT ASSETS SHOT WORK IN PROGRESS...........................................................................26
DESIRED FINANCING.......................................................................................................................27

5
CHAPTER ONE

EXECUTIVE SUMMARY
The name of the business is to be set MILCAHS MILK QUALITY SERVICES. It is a sole
proprietorship type of business buying, selling and distributing of milk and offering other
services to the customers. The business will offer quality services to the customers. It also offers
credit facilities, high hygiene standards and has qualified staffs which treat its cost customer with
great courtesy above all; our pricing is very fair compared to those of other competitors.

The manager of the firm ids the owner assisted by other line managers who assists her on
organizing the activities of the business together with other staff. She undertakes all the activities
of the business although she does delegate when needs arises to her immediate juniors. She
makes the vital decision in consultation with other staffs trough meetings. Only qualified staff
are recruited, employed and given salary according to each ones qualification and experience.
The business will increase. The business will increase the number of human labour, financial
input and expand market share of the operation by adhering to customers demand promptly.

6
CHAPTER TWO

BUSINESS DESCRIPTION
The name of the business to be set is MILCAH MILK QUALITY SERVICES. It is a sole
proprietorship type of business buying and selling distributing of milk and offers other services
to the customers. The business location provides it with an opportunity to meet its customers’
needs as it is capable of providing quality services to customers.

OWNERS DETAILS
Sharon Milcah is the sponsor of MILCAH MILK QUALITY SERVICES, as the resident of
Kisumu town, a 21 year old student, studied at Mayenze primary school, went to mungore high
school and currently pursuing a certificate course in science and laboratory technology at friends
college Kaimosi, at the end of this year the sponsor will have attained a certificate having
gathered basic knowledge and academic skills.

ADDRESS OF THE PROPOSED BUSINESS

The business is to be located at Kisumu district Kisumu town about 200m from sawn shopping
center next to the bank.

The business address is;

MILCAH MILK QUALITY SERVICE

P.O BOX 30

KISUMU

TELEPHONE NO 0707761702

7
THE BUSINESS VENTURE
The name of the business is MILCAH MILK QUALITY SERVICES. It will operate in solo
proprietorship basis under which the owner will manage and run the business. The reason for
selecting such type is that the owner is a risk taker, decision making is fast and the owner enjoys
the profits alone. Basing on the research conducted there are three main customers;

a) Individual customers
b) Institutional customers
c) Commercial customers

The existence of Kisumu secondary school and Kisumu polytechnic may be referred to seasonal
customers.

The capital for the business:

Personal savings 150000

Donation from friends 100000

Loan from KCB 550000

800000

8
ENTRY PLAN
The major competitors are Kenya Creaminaries Company and Tuzo Company. Kenya
Creaminaries Company happens to occupy a bigger percentage of the market share. In
assumption it is stable financially but operates under poor management. Another competitor is
Tuzo Company which is ten years old; although it is a well-known company It lacks sound
organization structure. To cope with these competitors the management should involve
subordinates in decision making, reward them positively. Customers need to be adhered to firstly
and skilled personnel recruited to increase customer’s preferences on the product. Good public
relation maintained, packaging be done in such a way to attract customers. The package will
have a writing on its as MILCAH MILK QUALITY PRODUCT.

9
GROWTH PLAN
The business being in existence in town, it will ensure that customers demands are adequately
met by providing quality milk and services all the time. The business will create job
opportunities to the unemployed. The main goals of the business are to maximize profits, provide
employment opportunities to the entire community and expand the business to the neighboring
areas.

10
CHAPTER THREE

POTENTIAL CUSTOMERS
There are three types of customers;

 Individual customers
 Institutional customers
 Commercial customers

Individual customers
These are customers whose their income is low. They buy milk in low quantity. A small
percentage is a working class but earns low salary and majority is substantial farmers.

Institutional customers
The existence of Kisumu school and Kisumu polytechnic may be referred to us seasonal
customers since their orders are only adhered to on opening days though on large quantities. The
business will offer them on credit and payment be made monthly basis if they wish.

11
COMPETITORS
There two major competitors namely;

 Kenya creaminaries company

 Tuzo company

Kenya Creaminaries Company happens to occupy bigger percentage of the market share
covering 60%. Tuzo Company is ten years old, although it is a well-known company but lacks
sound organization.

COMPETTOR PERCENTAGE
Kenya creaminary 60%
Tuzo company 25%
Milcah milk 15%
Total 100%

Sales
15%

Kenya creaminary
Tuzo company
Milcahs milk
25%
60%

12
PRICING
To increase customers preferences on the product, good public relation maintained, packaging be
made in such a way that it attracts customers the business would establish competitive pricing
basing on the below key a factor.

 Government action
Government policy is a crucial factor in price determining. Government depends on
business for fiscal measures such as taxation. An increase in taxation leads to an increase
in priced and vice versa
 Competitors price
Price is set by other competitors should be considered to avoid variation of product price
 Demand
Demand of the product determines the price i.e. the higher the demand the higher the
price and vice versa.
 Productivity/ Quality
Product of high quality is likely to be on high demand compared to a product of low
quality

13
ADVERTSING AND PROMOTION
The company products will be communicated to the potential customers in order to know its
existence. Advertising and promotion method used is exerted to signify company’s products
positively;

 Print media
Posters and signboards bearing the name of the business, location of the operation,
products offered will be distributed and placed throughout institutions markets and
places. It will written in English and Swahili
 Electronic media
An advert will be placed on local radio station and be announced between the news
headlines to capture larger percentage of people since most tune on radio during news
times only
 Exhibition

14
DISTRIBUTION
The business will depend on two major distributors namely;

 OJ DAIRY
 ELPHUS DAIRY

And other upcoming distributors from surrounding firm. Terms and condition of purchase of
product is applied in which good once sold would not be returned. On receiving milk production
their condition is inspected, weighed and transported. The milk will be sold at wholesale price to
various distributors i.e. Kisumu coolers and shops within town and institutions.

15
CHAPTER FOUR

ORGANIZATION PLAN

STRUCTURE

Administration

Personnel Accounting
Marketing Subordinate
departments department
department department

KEY PERSONNEL
The administrative department will consist of general manager and a secretary, both employed
permanently. The personnel department consists of two persons employed on permanent basis.
Accounting department will have one clerk and subordinate department with 5 staffs. Their
duties, qualification and payment are as follows;

1. General Manager
 He is the business proprietor.
 Have a diploma in personnel management
 Be fluent in English and Kiswahili
Duties
 To plan and coordinate organizational skills
 To set organizational goals

Salaries, benefits and remuneration

Basic salary 12000

Medical allowance 1000
Miscellaneous allowances 2000
Total 15000

2. Secretary

16
  Have a certificate in secretarial studies
 Be computer literate
 Be fluent in English and Kiswahili
 Be polite and diplomatic in dealing with customers

Responsibilities

 To receive typing work from various departments

 To attend and direct customers

Salaries, benefits and remuneration

Basic salary 5000

Medical allowance 800
Miscellaneous allowances 1200
Total 7000

3. Personnel
 Have a diploma in personnel management
 Minimum of two year experience
 Be a computer literate
 Have a good leadership style

Duties

 Implement payment policy

 Maintain adequate record of all staffs
 Provide training programs

Salaries, benefits and remuneration

Basic salary 10000

Medical allowance 1200
Miscellaneous allowances 2100
Total 13300

4. Security officers
 Must be a form four leaver with a minimum grade of D+
 Have no criminal offences
 Have a height six feet
 Must be of good health

Responsibilities and duties

17
  Maintain records and of visitors to and from the firm
 Ensure safety of the business premises and Equipments

Salaries, benefits and remuneration

Basic salary 3500

Medical allowance 500
Miscellaneous allowances 1000
Total 5000

SUPPORT SERVICES
The business will start as a small scale thus as a start it may opt to take loan from the bank to
offer me support therefore pay in as installments after earning profit. The business will create
account within the bank under the business registration in the the profit generated and income is
stored in the created account.

18
CHAPTER FIVE

OPERATIONAL PLAN

PRODUCTION FACILITY
For the business to increase its performance and profit, they to adhere to the following, increase
in the number of human labour.

The business will be using the following facilities;

Machines and quantity price Total cost

Equipments
Refrigerator 10 10000 100000
Computers 2 30000 60000
Wheel barrows 5 500 2500
Milk churns 30 400 12000
Fire extinguisher 2 1000 2000
Packages 14000
Strip cup 10 100 1000
Stationary 2000
Weighing machine 2 500 1000
Total 194500
Furniture and 10000
fittings
Total 204500

OPERATION PROCESS
The customers to the business are adhered to at the gate by the security main. On the entrance is
a receptionist who will warmly welcome and allow him/her to freely express himself/herself. The
customer is then directed to respective department on receiving customers supplying milk are
directed to marketing department where irrespective and weighing process is done.

19
 Purchase

Delivery

Reception

Inspection

Weighing

Storing

Packaging

Distribution

REGULATIONS AFFECTING OPERATION

Besides the decision making by the business, the government has set roles and regulations that
shall be followed;

a) Business name act

The business has a trade market and a business logo that is distinctive from any
regulation trade milk.
b) Trade license
Valid license obtained before the business commences at annual expenditure.
c) Taxes
Taxes inform of value added tax imposed on goods depending on amount sold.
CHAPTER SIX
20
 FINANCIAL PLAN
PRE-OPERATIONAL COST

ITEM COST
Transport 1200
Market research 4500
Plan proprietor 2000
Meetings
Photocopying 500
Installations 320000
Total cost 471800

WORKING CAPITAL
This is the sum of current assets and current liabilities; however the business will be
required to take some long term liabilities.

ITEM COST
Stock of raw materials 35000
Stock of finished product 25000
Work in progress 20000
Cash 391000
Total 471000

TOTAL FINANCE
Pre-operational cost 328000
Working capital 471800
800000

550000/12*5=9166.70

YEAR LOAN PAYMENT LOAN INTREST LOAN

PER YEAR
1 9166.70*11 550000=55000 5000
months=550000 10
-100833.70
=449166.30
2 9166.70*12 449160.3/10=44916.63 3743.05
months=449166.30
-110000.4
=339165.9
3 9166.70*12 3391659 2826.32
months=339165.9

21
 -110004
=229165.50
4 9166.70*12 22916.55 1909.71
months=229165.5
-110000.4
=119165.1
5 9166.70*12 11916.51 993.04
months=119165.1
-110000.4
=9164.7
TOTAL INTREST PAID 14472.18

PROFOMA BALANCE SHEET

FIXED ASSETS KSH CAPITAL KSH

Machines and 194500 Personal savings 150000
equipment
Less 10% 19450 Donation 10000
depreciation
175050 Loan from KCB 550000
Furniture and 10000
fittings
Less 10% 1000 Net profit 1058061.3
depreciation
9000
Total 184050 185061.3

CURRENT ASSETS CURRENT

LIABILITIES
Cash at hand 50000 Loan 550000
Cash at bank 190000 Payment less amount 100833.7
Stock of finished 400000
goods
Stock of raw 30000 paid 449166.7
Materials 12675
Debtors 27250 20000
Less bad debts 2850750 69487

Total 3034800 3034800

22
PROFOMA INCOME STATEMENT
Profoma income statement for the end of the year

ITEMS COST
Sales 363500
Cost of goods sold 333500
Gross profit 2849400
Expense
Wages 3000
Rent 41000
Water 20000
Electricity 84000
Advertisement 7000
Transport 22370
Interest 30350
Repair 25250
Net profit before tax 10580613
Tax
Net profit after tax 625427.45

23
PROJECTED CASH FLOW STATEMENT

Yearly Cash JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC
flow
Balance 11650 3860 3860 5030 11260 30910 3890 59920 1800 16500 30900 16900
Cash sales 80000 7600 8000 12000 67500 6700 88000 5950 8000 9000 8000 5760
Debtors 2700 3670 550 8800 3700 600 8000 5780 9140 3600 7000 360
Total cash 186800 18600 18600 203050 203050 36700 88600 37400 41500 3700 880 370
inflow
Cash out flow 32620 140600 60300 44530 55320 42520 38340 50000 560250 29000 27200 92100
Purchase 150000 9500 83700 77500 6700 3700 6170 30400 3700 8000 900 800
Salaries
Creditors 3600 5000 3300 3800 3000 5600
Rent 18000 14000 14000 14000 14000 14000 14000 14000 14000 14000 14000 140000
Electricity 7600 7000 7000 6000 7000 7000 7000 7000 7000 7000 7000 7000
Water 54000 4000 4000 4000 4000 4000 400 400 400 400 400 400
Transport 750 890 890 890 890 890 890 890 890 890 890 890
Telephone 8000 600 600 600 600 600 600 600 600 600 600 600
Advertisemen 3000 4000 3600
t
Insurance 4650 3600 3700 4100 2656 4110 900 8000 4000
License 5600 3800 3600 3700 3500
Loan interest 56250 3890 36900 3200 3900
Stationery 7500 650 650 650 650 650 650 650 650 650 700
Loan payment 13000 8800 600 8650 3740 3660 8110 9700 8800 9000 3000 7000
Taxation 1500 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
Total cash 12490 13460 2780 37818 34790 8890 9900 18180 91011 18090 890 1150
outflow
Balance 44171 3366 8190 89076 88609 3450 6608 6308 1890 8900 7090 7600

24
BREAK EVEN CALCULATIONS
It is a point which determines whether the business runs on profit or loss. In the point the
business has enough income to cover expense with nothing left over for profit.
Break-even point=fixed cost – contribution sales
Contribution sales=variable cost
B.E.P= Fixed cost
C/s
Year 1 =116800-109650= 1058.30

Year 2 =116800-112850 = 1155150

Year 3 = 1368000 -116500 = 1251500

Gross profit margin

Gross profit*100
Sales
Year 1= 1042150*100 =94%
116800

Year 2= 1145650*100 = 90%

126800
Year 3= 1194500*100= 87%
1368000

EXPECTED PROFITABILITY RATIO

Working capital ratio.
Capital assets
Current liabilities

Year 1 53000= 10.6 or 11%

50000

Year 2 607000= 13.48 or 14%

45000

Year 3 681300= 17.03 %

400000

CURRENT ASSETS SHOT WORK IN PROGRESS

25
 Current liabilities

Year 1 530000-170000
50000
=7.2

Year 2 607000-195000
45000
=9.1

Year 3 681300-210000
40000
=12.1

NET PROFIT ON SALE RATIO

Net profit*100
Sales

Year 1 2849400*100
3210150
=88.76%

Year 1 2668040*100
314590
=84.82%

Year 1 2390290*100
2926180
=81.69%

710713.01*100
2926180
=24.9%

DESIRED FINANCING

26
ITEM AMOUNT
Pre-operational cost 825000
Working capital 81500
Fixed assets 1086741
Total 2726745

27