NAME: KIPRONO RENNY LANGAT

COURSE: B. TECH INFORMATION TECHNOLOGY

UNIT NAME: BUSINESS PLAN

TASK: BUSINESS PLAN

SIGNATURE: ……………………………

MA3
(E-SHUTTLE AND CAR-POOLING SERVICES).

Bachelor in Technology Information Technology

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DECLARATION.
I declare that this is my own original work and has not been presented by any other student.

Signature…………………………………………………………

Date…………………………………………………………………
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Contents
CHAPTER ONE: BUSINESS DESCRIPTION......................................................................................4
1.1 BUSINESS NAME................................................................................................................................4
1.2 BUSINESS LOCATION AND ADDRESS.......................................................................................4
1.3 FORM OF BUSINESS OWNERSHIP..............................................................................................4
1.4 TYPE OF BUSINESS.......................................................................................................................6
1.5 SERVICE OFFERED........................................................................................................................6
1.6 JUSTIFICATION OF BUSINESS OPPORTUNITY........................................................................7
1.7 INDUSTRY.......................................................................................................................................8
1.8 BUSINESS GOALS..........................................................................................................................9
1.8.1 Short-term goals.........................................................................................................................9
1.8.2 Long-term goals..........................................................................................................................9
1.9 BUSINESS ENTRY AND GROWTH STRATEGY.........................................................................9
CHAPTER TWO: THE MARKETING PLAN....................................................................................10
2.0 INTRODUCTION...........................................................................................................................10
2.1 THE CUSTOMERS........................................................................................................................10
2.1.1 Regular Customers....................................................................................................................10
2.1.2 On-time Customers...................................................................................................................10
2.2 COMPETITION..............................................................................................................................11
2.4 MARKET SHARE..........................................................................................................................12
2.5 METHODS OF PROMOTION AND ADVERTISEMENT............................................................13
2.5.1 Promotion.................................................................................................................................13
2.5.2 Advertising...............................................................................................................................13
2.6 DISTRIBUTION OF THE SERVICE.............................................................................................13
CHAPTER THREE: ORGANIZATION AND MANAGEMENT PLAN...........................................14
3.1 WHO WILL BE THE OVERALL MANAGER OF THE BUSINESS............................................14
3.2 PERSONNEL, NUMBER QUALIFICATIONS AND DUTIES.....................................................16
3.2.1 Other personnel.........................................................................................................................16
3.3 RECRUITMENT, TRAINING AND PROMOTION......................................................................18
3.3.1 Recruitment..............................................................................................................................18
3.3.2 Training....................................................................................................................................18
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3.3.3 Promotion.................................................................................................................................18
3.4 REMUNERATIONS AND INCENTIVES.....................................................................................19
3.4.1 Remuneration............................................................................................................................19
3.4.2 Incentives..................................................................................................................................19
3.5 LICENSES, PERMIT AND BYLAWS...........................................................................................19
3.6 SUPPORT SERVICES....................................................................................................................20
CHAPTER FOUR: OPERATIONAL/PRODUCTION PLAN............................................................22
4.1 PRODUCTION FACILITIES.........................................................................................................22
4.1.2 The business premises layout....................................................................................................23
4.2 OPERATIONAL/ PRODUCTION STRATEGY............................................................................24
4.3 OPERATIONAL PROCESS...........................................................................................................26
CHAPTER FIVE: FINANCIAL PLAN.................................................................................................27
5.1 PRE-OPERATIONAL COSTS.......................................................................................................27
5.2 WORKING CAPITAL ESTIMATION...........................................................................................27
5.3 THE PROJECTED CASHFLOW STATEMENTS.........................................................................28
5.4 PRO-FORMA INCOME STATEMENTS.......................................................................................30
5.5 PRO-FORMA STATEMENT OF FINANCIAL POSITION..........................................................32
5.6 BREAK-EVEN POINT CALCULATION......................................................................................33
5.7 DESIRED FINANCING........................................................................................................................34
5.8 PROPOSED CAPITALIZATION............................................................................................................34
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CHAPTER ONE: BUSINESS DESCRIPTION.

For quite some time now we have observed the way traffic congestion has become a menace to

our society and the many attempts to eradicate this problem have not really bore any fruits. It is

for this reason that I decided to look at the problem in a different way. There has been a sudden

spike in employed population leading to import of middle-class cars. Each and every one is

struggling to own a combustible engine for no reasons greater than clout. In a situation where a

regulated bus service that will help this employed population together with students with

learning facilities in town get to their various destinations in time and very efficiently it will

eliminate the many cars in our roads since eventually, they will be saving fuel costs and still

getting the comfort they wanted.

1.1 BUSINESS NAME

Ma3 E-shuttle Services- Customers will be more attracted to a name that is already in existence

with a little wordplay done to it.

1.2 BUSINESS LOCATION AND ADDRESS.

The business being a service will not have a physical address but we will have out headquarters

at a central location. The app will be hosted on Google’s servers and Apple Store’s. For the

headquarters it shall be at Kipro Center, Westlands Nairobi. The address will be:

P.O Box 937-00100 Nairobi, Kenya

Tel: 0708765355

Email: info@ma3.org

1.3 FORM OF BUSINESS OWNERSHIP.

Sole Proprietorship- In sole proprietorship, sole trader becomes in charge of the entire business.
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Advantages of Sole Proprietorship.

1. Easy of formation- You can start it almost immediately you have the resources and have

decided to go into business. You do not need a lawyer. All you need to do is register your choice

of business name with the registrar of Companies by filling a simple form and paying a small

registration fee.

2. Complete Control- You have complete control over your business. No one else but you make

decisions in the business.

3. Flexibility- You are able to respond quickly to business needs in day-to-day management

decisions in the business.

4. Lack of Complexity- a sole proprietorship is straight-forward and there is little of no

government control. You and your business are considered, in the eyes of the law, to be one and

the same.

The amount to invest in business is kshs.2,800,000. The source of income would be loan,

personal savings and borrowing from the family.

Budget:
Kshs. 500,000- For leasing the building from which to operate the business.

Kshs. 1,300,000- For buying equipment like servers, computers, networking devices.

Kshs. 450,000- For insurance services.

Kshs. 350,000- To cater for the expenses of the business and also to cater for employees’
monthly salaries/wages.

Ksh. 200,000- To carter for Bus fuel.

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1.4 TYPE OF BUSINESS

Ma3 is a new venture in the transport business as far as e-shuttle services are concerned. There

was emergence of e-taxi services with the likes of Uber but most people could not afford to use it

as an everyday means of transport since actually cost-wise it is double that of a person who fuels

his car every day. Furthermore, pushing for such a service is only worsening our already present

situation; congestion. Ma3 is set to be launched by the second week of September, not later than

12/09/2019. An official date shall be communicated within the coming months.

1.5 SERVICE OFFERED

Since Ma3 is an online business there is really no physical product being offered per se rather it

is a service. The idea is to regulate public transport via an app. There are two versions of the app

that exist: Ma3Driver and Ma3. The latter is for customers while the former is for drivers. A

driver signs up by visiting our headquarters with his bus together with an original logbook of the

car, his original National ID, original driver’s license, certificate of good conduct and a Huduma

Number. After verification of the documents and the bus has met standards the driver is given his

log in credentials to the app the undergoes a two-week training of how to make trips, navigation

routes and how to use the app generally. A customer’s work is easy as signing up with their

email and phone number and choosing a preferred method of payment.

How to cope with competition.

1. Passion- being passionate about running a small business and making customers happy. Enjoy

creating an inviting atmosphere and serving others.

2. Ability to focus and prioritize- being able to prioritize your time and focus on the top

priorities of your business.

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3. Proud, Yet Humble- it is difficult to be successful without having pride in what you do.

Success should be recognized and celebrated. It is just as important to accept responsibility when

something does not go well.

4. Determined- successful business owner should be persistent and not easily deterred.

1.6 JUSTIFICATION OF BUSINESS OPPORTUNITY.

To get an idea of just what benefits e-shuttle will bring, study results by Vox, indicated that

shared vehicles could make our cities dramatically more livable. The research found that traffic

emissions were reduced by one-third, and 95 percent less space was required for public parking

and the vehicle fleet necessary would only be 3 percent of today’s fleet. Passengers, for the most

part, wouldn’t have to wait around for transfers, and spaces previously devoted to parking would

make way for open, livable spaces. The study does point out, however, that the benefits wouldn’t

be felt until private cars on the road are minimized by at least 60 percent.

The main idea behind e-shuttle is to reduce the number of private cars on the road by providing a

larger facility which carriers higher number of passengers in much less space than individual

cars, which lowers congestion. This will help reduce air pollution from idling vehicles, and

drivers will avoid stress and fatigue which comes from daily driving in highly congested areas.

The E-shuttle is believed to be more environmentally friendly or eco-friendly as compared to

other public transport facilities. The private vehicles emit about double carbon monoxide and

other volatile organic compounds as public vehicles. E-shuttle will reduce the number of cars on

the road which in turn reduces the pollution caused by individual cars.

E-shuttle development can both improve the usefulness and efficiency of public transport system

as well increased business for commercial developments which will impact the economy

positively. They will also offer considerable savings in labor, materials and energy over private
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transport. According to APTA every single dollar invested in public transportation,

approximately $4 of it in economic returns are generated, also in every $1 billion in investments

in the sector, 50,000 job opportunities are created and supported. Further, an investment of $10

million in public transport generates about $32 million in increased business sales, and

residential property values for homes located near public transport. The shuttle will see an

overall decrease in the amount of energy necessary for transportation as it is more fuel efficient

per passenger mile. The use of e-shuttle will definitely save individuals a significant amount of

money each month because they will avoid gas, maintenance, parking, and other expenses.

The shuttle transport will also help free up a significant amount of time and attention, as

someone else is driving, this can give you humble time that could been otherwise wasted,

reading, working, studying, or being entertained instead of having to watch the road. Safety of

the passenger is also highly guaranteed as the vehicles are maintained much more regularly than

a personal car, the professional training is given to drivers before they are officially licensed.

Besides, the e-shuttle is linked to healthier lifestyles, as people who use public transport do more

physical activity per day than those who use private cars, just from walking to and from shuttle

stations and their final destinations. These clearly justifies the need to embrace the compromise

of a fixed route system of mass transport, the e-shuttle.

1.7 INDUSTRY
The matatu industry in Kenya has been present since time immemorial and often even when

celebrities visit the country they are amazed at the passion and love we have for these means of

transport. But when you think about it, the industry is wanting due to the cases of road carnages

the undisciplined matatu driver cause. Therefore, bringing in a well-regulated service will

provide the change we so wished.

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1.8 BUSINESS GOALS

1.8.1 Short-term goals
a) To expand Ma3 Services.

b) Attract and retain potential customers.

c) To listen to customers’ needs and adhere to them.

1.8.2 Long-term goals

a) Expansion of the business to other cities.

b) Increase number of routes in the city.

c) Increasing the supply- this basically means that cars are available almost every 20-

minutes thereby making the process flow smoothly.

1.9 BUSINESS ENTRY AND GROWTH STRATEGY

The business shall make use of the following strategies for effectiveness in market entry:

1. Advertising the app online heavily via social media sites and target marketing.

2. Setting up billboards on route roads in the city

3. Use of Television and radio advertising.

GROWTH STRATEGY
For growth strategy the business will:

1. Develop good relation with higher financial institution for easy access of financial assistance.

2. Expansion through product modification for example adding more routes covered by our
buses and improving app User Interface

3. Ensuring for reliability and availability of the service to the customers. This is because many
businesses of this nature do collapse due to non- availability as the customers hate absence of
services which they have already grown accustomed to.
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CHAPTER TWO: THE MARKETING PLAN

2.0 INTRODUCTION
Due to the fact that the service is basically run by the app it is an advantage since the world right

now is relying more on technology and staying relevant means having customers to use your

product. Smartphones majorly are split into android and apple devices but the likes of Blackberry

still do exist and windows phones too. The app has been developed for these two major

platforms with intermediate bytecode still to be compiled to support other platforms. Target

advertising will be done on residents of Nairobi through their social media platforms and

streaming services such as YouTube via ad mobs

2.1 THE CUSTOMERS

2.1.1 Regular Customers
This is the category of users that use the service on an almost daily basis owing to the fact that

their work or school schedule demands as so. The following table clusters them with the size of

population we are capable of handling in a day spread throughout the day not once.1

CUSTOMERS AGE ( HOW OLD) SIZE OF POPULATION

Employed Population 25 Years to 60 Years 50,000
Students 16 Years to 23 Years 100,000

2.1.2 On-time Customers

This is the category that has heard of the business but use it once in a while maybe due to an

irregular schedule or they have and prefer other means of transport.

1
This means the total number of people that the buses carry per day. This is like the number or non-repetitive
requests that can be made in a day.
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2.2 COMPETITION
Competition rises when another entity is trying to solve the same problem as you are but in a more
efficient way. The following are some examples

i. E-taxi services
These include the likes of Uber, Taxify, Little Cab, Mondo. They provide almost same
service but in a smaller scale.
ii. Matatu Saccos
Currently this is the main competitor as it is the one that too root ages ago and removing it is
quite honestly not going to be an easy task.
iii. Other E-shuttle services
They include the likes of Swvl and Little Shuttle but they too have not taken route as such.

SWOT Analysis - This is the strengths, weaknesses, opportunities and threats and is a
structured planning method that evaluates those four elements of an organization or
business venture.
Strengths – Characteristics of the business that give it an advantage over others.
Weaknesses – Characteristics of the business that place the business at a disadvantage
relative to others.
Opportunities – Elements in the environment that the business could exploit to its
advantage.
Threats – Elements in the environment that could cause trouble for the business.

Example of Ma3 Services (SWOT Analysis)

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
Reputation in Shortage of Well established New competition
Market – Place consultants at position and a well- in the market.
operating level defined market.
rather than partner
level.
Number of Increased Labor Well-skilled Employees
employees. (Tiring). employee personnel. resigning from
the business.
Well-built Lack of good Well-defined Indecisive
customer reputation between customers. customers.
population. the business and
customers.

Well defined Lack of employee Motivation of Employees leaving

salaries. satisfaction. employee working for high paying
morale. jobs.
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2.4 MARKET SHARE.

A table representing the market share.

TYPE OF BUSINESS PERCENTAGE

Private Entity 37.12%
Matatu Saccos 22.28%
Taxi Services 19.6%
Other E-shuttle Services 15%
Ma3 Service 6%
Total 100%

Ma3 Services has the potential to growth, despite customers unpredictability of government
policies towards the transport sector

PIE CHART REPRESENTING THE MARKET SHARE.

PERCENTAGE

Private Entity Matatu Saccos Taxi Services

Other E-shuttle Services Ma3 Service
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2.5 METHODS OF PROMOTION AND ADVERTISEMENT

2.5.1 Promotion
There will be an in-app promotion where by you can get free rides if someone installs using your

promo code. Furthermore, we are linking up to even hosts such that customers can get to their

events via our services at a fee. In turn we send push notifications with promo codes for

attendees.

2.5.2 Advertising
a) Through the use of posters and bill boards

b) Through the use of ads in websites

c) Target marketing using social media platforms (Facebook, Twitter and Instagram)

2.6 DISTRIBUTION OF THE SERVICE

Developer Marketing Drivers Riders

Developers Marketers

Riders Drivers
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CHAPTER THREE: ORGANIZATION AND MANAGEMENT

PLAN.
MA3 SERVICES ORGANIZATIONAL CHART.

MANAGER

DIRECTOR

DEVELOPERS DRIVERS MODERATORS

3.1 WHO WILL BE THE OVERALL MANAGER OF THE BUSINESS.

Manager- Is the overall manager of Ma3 Services business. In charge of all the operations and

activities in the business.

a. Academic.

Doctorate’s Degree in Computer Science St. Lawrence University

b. Professional qualifications.

1. Should have several years of experience.

2. Able to lead an organization of technological nature

3. Have worked as pastry chef at fine restaurants.

4. Managers may be former programmers and developers who have earned promotion through

their work and experience.

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c. Roles of Manager in the business.

1. Set Objectives.

Set objectives and establish the goals that employees need to reach.

2. Organize.

Organize tasks, coordinate his/her allocation and arrange the rights and roles for the right people.

3. Motivate and Communicate.

In order to mold staffers into cooperative teams and to convey information continually up, down

and around the organization.

4. Establish targets and yardsticks.

That measure results and clarify outcomes to ensure that the firm is moving in the right direction.

5. Develop People.

Develop people through finding, training and nurturing employees, a firm’s primary resource.

d. Lines of authority and responsibility.

1. Provides Guidance.

Employee development happens at all levels of organization. Employees look to the managers

work with company executive to improve managerial performance, and the executives draw on

the experience of company owner for business guidance.

2. Provides Career Path.

The hierarchy of authority provides a clear career path for each employee in the organization.
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3. Communication.

A hierarchy helps to establish efficient communication paths between employees and divisions in

the business.

4. Accountability.

In the hierarchy of authority should not be used to point fingers and accuse staff members of

being incompetent. A clearly defined hierarchy creates a path of accountability for every project

and activity within the business.

3.2 PERSONNEL, NUMBER QUALIFICATIONS AND DUTIES.

3.2.1 Other personnel.
1. Director.

a. Academic.

Bachelor’s Degree in Computers Science, Kenyatta University.

b. Professional qualifications.

1. Vast supervisory experience in a technological company.

2. Good understanding of android development.

3. Sound knowledge of commercial apps.

4. Ability to effectively monitor reports and provide feedback to improve performance.

5. Ability to successful coach, train and follow up with team.

c. Personal traits of a Supervisor.

1. Communicates and maintains Team Member safety and security standards.

2. Supports national, regional and stored programs.

3. Establishes and maintains a positive work environment that supports a high Team Member
morale.
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2. Driver

a. Academic.

High School diploma and through apprenticeship program or by attending technical school. No
formal education is required.

b. Professional qualifications.

1. They usually study topics such as social skills and marketing skills.

2. Start as a driver’s assistant and progress into a full-fledged driver as they learn service
techniques.

c. Personal traits of a baker.

1. On-time- Drivers should always keep time as keeping the riders waiting means a punishment
on the driver

2. Math skills- Basic math skills is needed to calculate money and transact it.

3. Physical stamina- Drivers should be able to drive around the city routes for long hours.

3.Moderator

a. Academic.

A bachelor’s degree in I.T or related fields. Background in business management.

b. Professional qualifications.

1. Effective communication.

2. Monitor the driver activity and be ready to handle emergencies

4. Developer

a. Academic.

Bachelors’ degree in Computer Science and related studies with background in mobile app
development

b. Professional qualifications.

1. Performing debugging on the app

2. Making and implementing customer suggestions

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3. Maintaining the service up and running by managing the servers.

4. Be able to stand for long periods and have a great deal of stamina to attend to customer’s
needs.

3.3 RECRUITMENT, TRAINING AND PROMOTION.

3.3.1 Recruitment.
1. Employee referrals- current employees can refer job applicants.

2. Electronic recruitment(e-recruitment)- are based on internet through corporate websites or job

sites.

3. Headhunting (raiding or poaching)- involves looking around for the best person to occupy the
position.

4. Hiring at the gate- involves hiring people who present themselves at the business gate.

5. Advertising- on yards through posting.

6. Unsolicited applications- from those who walk in and deliver applications or write their
applications.

3.3.2 Training
Training of drivers is done upon the completion of registering and verification process and goes
on for two weeks.

3.3.3 Promotion.
1. Performance- promoting employees through assessing their performance over a given period
of time. This is based on customer reviews.

2. Educational/technical qualifications- is also a measure as far as the promotion is concerned.

4. Assessment of potential- amount of potential one has in him to perform in the future or at a
new position should also be assessed before deciding about promotions.

5. Training- amount of training an employee has been given or the level to which he/she has also
been groomed acts as a deciding factor.

Factors to consider in deciding who to promote.

1. Loyalty and dependability- a candidate that is dedicated is more likely to be right person for
the job as he/she will have the goals of the business and their team members in mind.

2. Consulting with other departments.

It is essential that HR meets with other departments to get an idea of how the candidates work
within them.
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3. Examining employee records as well as consulting with other departments within the
organization. Also keeping detailed employee records can help HR departments vet candidates.

3.4 REMUNERATIONS AND INCENTIVES.

3.4.1 Remuneration.
Remuneration are salaries you plan to pay your employees.

SN JOB TITLE BASIC ALLOWANCE TOTAL

(KSHS) SALARY S MONTHLY
(KSHS) (KSHS) SALARY (KSHS)
1 Manager 71,000 23,000 94,000
2 Director 60,000 19,000 79,000
3 Developer 53,000 18,000 71,000
4 Moderator 46,000 13,000 59,000
5 Driver 38,000 9,000 47,000
ETC TOTAL KSHS 350,000

3.4.2 Incentives.
Is something that motivates an individual to perform an action.

Types of Incentives offered by Home Bakery Services.

3.5 LICENSES, PERMIT AND BYLAWS.

1. LICENSES.

a. Operational license.

One needs a license from the state and county in order to operate a business within the city that
deals with members of the public

b. Business license.

Due to the fact that we are generating revenue we will need a business license too.
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2. BYLAWS.

a. Licenses and Permit.

In addition to complying with road safety laws specific to your state, you may be required by
your state laws to acquire specific permits and licenses before you can start and run a transport
business.

b. Legal structure.

Ma3 Service business must set up a legal structure of the service and establish a tax ID for the
business. You may establish a corporation and apply for an employer identification number with
the KRA.

d. Taxes.

You must collect sales tax if your state mandates sales tax on revenue collected. This money is
then turned over turned over to your state’s revenue department. You must file tax forms with
your state to obtain a tax ID number so that you may pay the required sales tax to the revenue
department.

3.6 SUPPORT SERVICES.

1. BANKING.

Commercial Bank Of Africa, P.O BOX 7397, Nairobi. It Is located in Wabera Street at Central
Bank District (CBD).

a. Savings.

If one run a business, you will know how it can be trying to juggle the demands of managing
staff, customers and cash flow. Savings makes things easier, you could look at opening a
business savings account, as well as help things run more smoothly.

b. Credit Cards.

Ma3 services may need some short-term finances as the business needs some finances to move
on. It may acquire a business credit card which is convenient way to quickly access financing for
short-term needs and can increase the business purchasing power.

c. Lines to credit.

A business lines of credit can help a business balance the ups and downs of business cycles.
Because of the cyclical nature of the business, you may need to borrow money to meet your
businesses short-term needs or goals.
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d. Loans.

Ma3 Services will need a loan to cater for some additional expenses. Hence, will borrow a loan
from CBA bank as the rate of interest is the same and payment takes a specific period of time.

2. INSURANCE.

Jubilee Insurance Company, P.O BOX 32436, Nairobi- Wabera Street,CBD.

a. Catastrophic Loss.

Business Insurance protects a business from closing due to a catastrophic loss for example, fires
and floods have been the end of many business. While the business carries insurance against
these types of losses, closure and loss are only temporary instead of permanent.

b. Liability.

Business liability insurance covers accidents that occur on the business premises, roads and
mishaps that occur during normal business operations on and off premises.

c. Theft.

Replacement insurance protects a business in the event equipment is stolen, replacing the
missing items and paying for repairs from damage caused by the invasion.

d. Level of Coverage.

How much insurance to carry will depend on your industry the business structure and the amount
of assets your business has. The location of the business, whether the building is leased or owned
will also be a factor.
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CHAPTER FOUR: OPERATIONAL/PRODUCTION PLAN.

4.1 PRODUCTION FACILITIES.
S FACILITY CAPACIT QUANTIT COST TOTAL SOURCE/SUPPLI
N Y Y COST ER
MACHINE
1. S 2 8,000 16,000 Nakumatt.
2. Microwave 3 2,500 7,500 Kitchen pride.
3. Gas cooker 1 5,000 5,000 Nakumatt.
4. Printer 1 27,000 27,000 Nakumatt.
5. Cash 1 25,000 25,000 Nakumatt.
6. Machine 1 1,500 1,500 Safaricom Shop.
Computer Sub- 82,000
Telephone total

1. TOOLS 2 4,000 8,000 Sunus.

2. AND 3 500 1,500 Sunus.
3. EQUIPME 2 600 1,200 Sunus.
4. NT 30 200 6,000 Uhuru Market.
5. Deep fryer 35 100 3,500 Uhuru Market.
6. Trying spoon 2 600 1,200 Uhuru Market.
Glass display Sub- 21,400
Plates total
Cups
1. Baking pan 2 7,000 14,000 John’s Furniture
2. 20 1,500 30,000 John’s Furniture
3. FURNITUR 2 15,000 30,000 John’s Furniture
4. E AND 10 4,000 40,000 John’s Furniture
FITTINGS Sub- 114,000
Office chairs total
Dining GRAN KSHS.217,4
chairs D 00
Kitchen TOTA
cabinet L
Dining
Tables

TOTAL

4.1.2 The business premises layout.

HOME BAKERY SERVICES LAYOUT.

MANAGER’S
OFFICE.
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ENTRANCE

EXIT EMERGENCY EXIT

Driver’s
Room
SECURIT KITCHEN.
Y DINING ROOM
GUARD.

FOODSTORE.
RESTROOM

GENTS/LADIES.

STORE. DIRECTOR’S
OFFICE

4.2 OPERATIONAL/ PRODUCTION STRATEGY.

a. Monthly Cost of Raw Materials.

Items Cost per Unit Quantity Amount(KSHS)

Cooking Oil 1,500 40litres salad 6,000
Salt 100 4packets 400
Baking flour 150 1full packet 3,600
Sugar 200 8kgs 800
Milk 75 10packets 750
Baking Powder 50 5packets 250
TOTAL COST KSHS. 11,800.

b. Monthly Cost of Labor.

JOBTITLE TOTAL MONTHLY SALARY.

Manager 65,000
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Supervisor 50,000
Baker 42,000
Cashier 30,000
Waiter 18,000
TOTAL COST KSHS. 205,000

c. Monthly Overheads Costs.

ITEMS AMOUNT(KSHS)
Insurance 2,000
Transport 1,500
Electricity 2,000
Training 5,000
Materials 11,800
Salaries 205,000
Lease 60,000
Water 1,500
TOTAL OVERHEADS COSTS. KSHS. 288,800

d. Total Cost of Production per Month.

ITEMS AMOUNT(KSHS)
Cost of raw materials 11,800
Cost of labor 205,000
Overheads costs 288,800
TOTAL COST OF KSHS.505,600
PRODUCTION/OPERATION.
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4.3 OPERATIONAL PROCESS.

PRODUCTION PROCESS.

Developing Marketing Matching Driving

Meetings Customer Review

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CHAPTER FIVE: FINANCIAL PLAN.

5.1 PRE-OPERATIONAL COSTS.
ITEM AMOUNT(KSHS)
Furniture and Fittings 114,000
Tools and Equipments 21,000
Machines 82,000
Cost of labor 205,000
Cost of raw materials for example, baking 11,800
Powder, flour etc.
Overhead costs 288,800
TOTAL PRE-OPERATIONAL COSTS. KSHS. 723,000

5.2 WORKING CAPITAL ESTIMATION.

ITEM JANUARY FEBRUARY MARCH
AMOUNT(KSHS) AMOUNT(KSHS) AMOUNT(KSHS)
Leasing 60,000 _ _
Salaries 205,000 205,000 205,000
Materials 11,800 11,800 5,000
Insurance 2,000 _ _
Electricity 2,000 500 500
Training 5,000 _ _
Transport 1,500 500 500
Water 1,500 1,000 500
TOTAL GRAND TOTAL KSHS. 719,100
WORKING
CAPITAL.

5.3 THE PROJECTED CASHFLOW STATEMENTS.

FOR HOME BAKERY SERVICES.

FOR 2018, 2019 AND 2020 YEARS OF OPERATION.

PARTIC JA FE M AP M JU JU AU SE O N DE TOTAL
ULARS N B AR RI AY NE LY G PT CT O C (KSHS)
L V
CASH
IN
FLOW.
 27

Opening 50,0 50, 55, 58, 67, 60, 70, 55, 43, 80, 85, 75,0 686,000
Balance/ 00 00 00 000 00 00 00 00 00 00 00 00
balance 0 0 0 0 0 0 0 0 0
b/f
Owner’s 100, _ _ _ _ _ _ _ _ _ _ _ 100,000
Equity 000
Bank 600, _ _ _ _ _ _ _ _ _ _ _ 600,000
loan 000
Cash 24,0 25, 10, 10, 7,5 5,5 6,0 7,5 5,5 6,5 7,5 8,00 123,000
sales 00 00 00 000 00 00 00 00 00 00 00 0
0 0
Debtors _ _ _ _ _ _ _ 20, 25, _ _ 50,0 95,000
00 00 00
0 0
TOTAL 774, 75, 65, 68, 74, 65, 76, 82, 73, 86, 92, 133, 1,604,00
CASH 000 00 00 000 00 00 00 50 50 50 50 000 0
IN 0 0 0 0 0 0 0 0 0
FLOW
CASH
OUTFL
OW
Pre- 10,0 10, 10, 10, 10, 10, 10, 10, 10, 10, 10, 10,0 120,000
operation 00 00 00 000 00 00 00 00 00 00 00 00
al costs. 0 0 0 0 0 0 0 0 0
Purchase 20,0 20, 20, 20, 20, 20, 20, 20, 20, 20, 20, 20,0 240,000
s. 00 00 00 000 00 00 00 00 00 00 00 00
0 0 0 0 0 0 0 0 0
Payment 25,0 10, _ _ _ _ _ _ _ _ _ _ 35,000
to 00 00
creditors. 0
Salaries 15,0 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15,0 180,000
and 00 00 00 000 00 00 00 00 00 00 00 00
wages. 0 0 0 0 0 0 0 0 0
Lease 60,0 _ _ _ _ _ __ _ _ _ _ _ 60,000
00
Electricit 500 50 50 500 50 50 50 50 50 50 50 500 6,000
y 0 0 0 0 0 0 0 0 0
Water 500 50 50 500 50 50 50 50 50 50 50 500 6,000
0 0 0 0 0 0 0 0 0
Telephon 300 30 30 300 30 30 30 30 30 30 30 300 3,600
e. 0 0 0 0 0 0 0 0 0
Mail 200 20 20 200 20 20 20 20 20 20 20 200 2,400
0 0 0 0 0 0 0 0 0
Transport 2,50 2,5 2,5 2,5 2,5 2,5 2,5 2,5 2,5 2,5 2,5 2,50 30,000
0 00 00 00 00 00 00 00 00 00 00 0
Advertisi _ _ _ _ _ _ _ _ _ 15, _ _ 25,000
ng 00
 28

0
Insurance 1,00 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,00 12,000
0 00 00 00 00 00 00 00 00 00 00 0
Loan 5,00 5,0 5,0 5,0 5,0 5,0 5,0 5,0 5,0 5,0 5,0 5,00 60,000
repayme 0 00 00 00 00 00 00 00 00 00 00 0
nt.
Interest 50 50 50 50 50 50 50 50 50 50 50 50 600
on loan
Taxes 500 50 50 500 50 50 50 50 50 50 50 500 6,000
0 0 0 0 0 0 0 0 0
TOTAL 140, 65, 55, 55, 55, 55, 55, 55, 55, 55, 55, 55,5 786,600
CASH 550 55 55 550 55 55 55 55 55 55 55 50
OUTFL 0 0 0 0 0 0 0 0 0
OW
NET 633, 9,4 9,4 12, 18, 9,9 20, 26, 17, 30, 36, 77,4 817,400
CASH 450 50 50 450 95 50 45 95 95 95 95 50
FOR 0 0 0 0 0 0
THE
MONTH

ASSUMPTIONS OF PROJECTED CASHFLOW STATE MENT.

1. Cash to be constant for the first three years.

2.Interest on loan is also constant.

3. Machinery and Equipment will depreciate by 10% annually.

5.4 PRO-FORMA INCOME STATEMENTS.

OF HOME BAKERY SERVICES,

FOR THE YEAR ENDED 2019, 2020AND 2021.

PARTICULARS 31STDEC2019 31STDEC2020 31STDEC2021

Sales 918,000 950,000 970,000
Less Total Direct (450,000) (550,000) (550,000)
Cost
GROSS PROFIT KSHS.468,000 KSHS.400,000 KSHS.420,000
LESS EXPENSES
Purchases 120,000 150,000 85,000
Payment to creditors 50,000 _ 40,000
Salaries and wages 85,000 85,000 85,000
Rent/ lease 60,000 _ 60,000
Electricity 1,000 1,000 1,000
 29

Water 1,000 1,000 1,000

Telephone 600 800 500
Mail 500 400 450
Transport 1,500 1,500 1,500
Advertising 60,000 _ 60,000
Insurance 2,000 2,000 2,000
Loan repayment 60,000 60,000 60,000
Interest on loan 500 500 500
Taxes 1,500 1,500 1,500
TOTAL KSHS.443,600 KSHS.303,700 KSHS.398,450
EXPENSES
Net Profit Before Tax 24,400 96,300 21,500
Tax(30% of Income) 7,320 28,890 6,450
NET PROFIT KSHS.17,080 KSHS.67,410 KSHS.15,050
AFTER TAX
ASSUMPTIONS OF PRO-FORMA STATEMENTS.

*Expenses remains constant.

*Direct cost remains constant.

*It is assumed the lending interest rate remains 10% of bank loan repayment for the next three
years.

5.5 PRO-FORMA STATEMENT OF FINANCIAL POSITION.

FOR HOME BAKERY SERVICES,

AS AT JANUARY 2019, DECEMBER 2020AND DECEMBER 2021.

ASSETS JANUARY 2019 DECEMBER 2020 DECEMBER 2021

Current Assets
Debtors 60,000 60,000 60,000
TOTAL CURRENT KSHS,60,000 KSHS.60,000 KSHS.60,000
ASSETS
FIXED ASSETS
Item at cost 105,000 115,000 205,000
Depreciation (75,000) (87,000) (65,000)
Machinery and 82,000 82,000 82,000
Equipments
Furniture and Fittings 114,000 114,000 114,000
Total Fixed Assets 226,000 224,000 336,000
 30

TOTAL ASSETS KSHS.286,000 KSHS.284,000 KSHS.396,000

LIABILITIES
Current Liabilities
Creditors 249,000 61,000 179,000
Bank Overdraft 400,000 50,000 350,000
Total Current 649,000 111,000 529,000
liabilities

CAPITAL KSHS.935,000 KSHS.395,000 KSHS.925,000

EMPLOYED

Long-term liabilities 50,000 40,000 60,000

Owner’s Equity 100,000 _ 100,000
Bank loan 600,000 60,000 600,000
Retained Earnings 85,000 95,000 65,000
Total Long-term 100,000 200,000 100,000
liabilities

TOTAL KSHS.935,000 KSHS.395,000 KSHS.925,000

LIABILITIES AND
EQUITY

5.6 BREAK-EVEN POINT CALCULATION.

The sales of the proposed business equals to KSHS.918,000.

The Total Direct Costs of the proposed business KSHS.450,000.

1. GROSS PROFIT= SALES- DIRECT COST.

YEAR 1(2019)=KSHS.(918,000-450,000)=KSHS.468,OOO.

YEAR 2(2020)=KSHS.(950,000-550,000)=KSHS.400,000.

YEAR 3(2021)=KSHS.(970,000-550,000)=KSHS.420,000.

Sales to increase by 5% annually.

YEAR 1(2019)=5\100 X 468,000 = KSHS.23,400.

YEAR 2(2020) =5\100 X 400,000 = KSHS.20,000.

 31

YEAR 3(2021)=5\100 X 420,000 = KSHS.21,000.

2.GROSS PROFIT MARGIN.

YEAR 1(2019) =468,000\918,000 X 100 = 50.98%.

YEAR 2(2020)=400,000\950,000 X 100 =42.11%.

YEAR 3(2021) = 420,000\970,000 X 100 = 43.299%.

3. THE TOTAL OVERHEAD FOR YEAR 1, 2 AND 3.

FOR THE YEAR 2019= KSHS.288,800.

FOR THE YEAR 2020 = KSHS.287,800.

FOR THE YEAR 2021 = KSHS.281,000.

5.7 DESIRED FINANCING.

ITEM AMOUNT(KSHS.)
Pre-operational Costs. 723,000
Working Capital. 719,100
Contigency Funds. 95,000
TOATAL DESIRED FINANCING. KSHS.1,537,100

5.8 PROPOSED CAPITALIZATION.

SOURCE AMOUNT(KSHS.)
Owner’s Equity 537,100
Bank loan 1,000,000
TOTAL INVESTMENT. KSHS.1,537,100.
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