SCHOOL: OL’LESSOS TECHNICAL TRAINING INSTITUTE

DEPARTMENT: AGRICULTURE AND EXTENSION

TITLE: PIONEER AGROVET

PRESENTER: MARGRET ALFRED MWENDWA

INDEX NO: 5411011042

CENTRE NO: 29541101

COURSE CODE: 2425

PAPER CODE: 307

SUPERVISOR: MR HARRISON CHIRCHIR

PRESENTED TO: THE KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILMENT FOR THE AWARD OF
DIPLOMA IN GENERAL AGRICULTURE

EXAM SERIES: NOVEMBER

i
DECLARATION

I declare that the work presented is my own work, that it has not been submitted to the Kenya
national examination council by any one.

Name: MARGRET ALFRED MWENDWA

Signature: Date:

This project report is submitted to Kenya national examination council with approval of college
supervisor.

Supervisor : MR HARRISON CHIRRCHIR.

Signature: Date:

ii
 DEDICATION

I dedicate this business plan with love and admiration to my parents, my brothers and sisters; not
forgetting my friend. Thanks for the assurance and encouragement to this far.

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 ACKNOWLEDGEMENT
I fully acknowledge that this business plan would not have been successfully written without the
sincere assistance from my classmates and other individual. Therefore, I take this opportunity to
return gratitude to all those who helped me in one way or another.

Secondly, great thanks to my parents for giving me psychological support and made my dreams
of pursuing this course come true.

Also great thanks to my supervisor for having got time to see me through and for his model in the
subject finally.

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Table of Contents
DECLARATION............................................................................................................................ii
DEDICATION...............................................................................................................iii
ACKNOWLEDGEMENT..............................................................................................iv
CHAPTER ONE..............................................................................................................2
1.0 BUSINESS DESCRIPTION.....................................................................................2
1.2 BUSINESS LOCATION AND ADDRESS..............................................................2
1.3 FORM OF OWNERSHIP..........................................................................................2
1.4 TYPE OF BUSINESS...............................................................................................3
1.7 THE INDUSTRY......................................................................................................4
1.6 JUSTIFICATION OF THE BUSINESS...................................................................5
SHORT – TERM OBJECTIVES.....................................................................................5
LONG – TERM OBJECTIVES.......................................................................................5
1.9 ENTRY AND GROWTH STRATEGY....................................................................6
1.8 OBJECTIVES AND GOALS....................................................................................6
CHAPTER TWO.............................................................................................................8
2.0 MARKETING PLAN................................................................................................8
2.1 CUSTOMERS...........................................................................................................8
INDIVIDUAL CUSTOMERS.........................................................................................8
COMMERCIAL CUSTOMERS.....................................................................................8
2.2 MARKET SHARE....................................................................................................9
2.3 COMPETITORS......................................................................................................10
COMPETITIVE ANALYSIS TABLE..........................................................................11
DESCRIPTION.............................................................................................................11
SCORE..........................................................................................................................11
BUSINESS NAME........................................................................................................11
COMPETITORS STRENGTH AND WEAKNESS ANALYSIS TABLE...................11
2.4 PRICING STRATEGY...........................................................................................12
2.5 SALE TACTICS......................................................................................................12
2.6 ADVERTISEMENT AND PROMOTIONS...........................................................12
2.7 DISTRIBUTION CHANNEL STRATEGY...........................................................13
CHAPTER THREE.......................................................................................................14

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3.0 ORGANIZATION AND MANAGEMENT...........................................................14
3.1 KEY MANAGEMENT PERSONNEL...................................................................14
3.1.1 THE MANAGER.................................................................................................14
QUALIFICATIONS......................................................................................................14
DUTIES AND RESPONSIBILITIES...........................................................................15
3.1.2 ASSISTANT MANAGER....................................................................................15
QUALIFICATIONS......................................................................................................15
DUTIES.........................................................................................................................15
3.2.0 OTHER PERSONNEL.........................................................................................16
3.2.1 SUPERVISOR......................................................................................................16
QUALIFICATIONS......................................................................................................16
DUTIES.........................................................................................................................16
PUBLIC RELATION OFFICERS................................................................................16
3.2.2 ACCOUNTS CLERK...........................................................................................16
QUALIFICATIONS......................................................................................................16
DUTIES.........................................................................................................................16
3.2.3 PURCHASE CLERK...........................................................................................17
QUALIFICATIONS......................................................................................................17
3.2.4 DRIVER...............................................................................................................17
QUALIFICATIONS......................................................................................................17
DUTIES.........................................................................................................................17
QUALIFICATIONS......................................................................................................17
3.2.6 COMPUTER OPERATOR..................................................................................17
QUALIFICATIONS......................................................................................................17
3.3 RECRUITMENT TRAINING AND PROMOTIONS............................................18
RECRUITMENTS.........................................................................................................18
3.3.1 TRAINING...........................................................................................................18
3.3.2 PROMOTIONS....................................................................................................18
3.4 REMUNERATION AND INCENTIVES...............................................................19
INCENTIVES................................................................................................................19
3.5 LICENSES AND PERMITS...................................................................................20
3.6 SUPPORT AND ADVISORY SERVICE...............................................................20
3.6.1 BANKING SERVICE..........................................................................................20
3.6.2 INSURANCE SERVICES....................................................................................20

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 3.6.3 TRANSPORT SERVICES...................................................................................20
3.6.4 SECURITY SERVICES.......................................................................................21
3.6.5 AUDITING SERVICES.......................................................................................21
3.6.6 POSTAL SERVICES...........................................................................................21
CHAPTER FOUR.........................................................................................................22
4.0 PRODUCTION PLAN............................................................................................22
4.1 PRODUCTION FACILITIES AND CAPACITY...................................................22
DESCRIPTION OF ITEM............................................................................................22
QUANTITY...................................................................................................................22
TOTAL COST...............................................................................................................22
4.2 REPAIRS AND MAINTENANCE.........................................................................23
4.2.1 PREMISE LAYOUT............................................................................................23
4.3 PRODUCTION STRATEGY..................................................................................24
4.3.1 PRODUCTION DESIGN AND DEVELOPMENT.............................................24
4.3.2 PRODUCTS REQUIREMENTS..........................................................................25
4.3.3 COSTS OF PRODUCTION.................................................................................25
4.4 PRODUCTION PROCESS.....................................................................................25
4.5 REGULATIONS AFFECTING THE ORGANIZATION......................................26
CHAPTER FIVE...........................................................................................................27
5.0 FINANCIAL PLAN................................................................................................27
5.1 PRE – OPERATIONAL COST...............................................................................27
ITEM..............................................................................................................................27
COST (KSHS)...............................................................................................................27
5.2 WORKING CAPITAL REQUIREMENT..............................................................28
PROJECTED CASHFLOW STATEMENT.................................................................29
5.4 PROFORMA INCOME STATEMENT..................................................................30
5.5 PROFORMA BALANCE SHEET..........................................................................31
DESCRIPTION.............................................................................................................31
FIRST YEAR.....................................................................................................................31
SECOND YEAR...........................................................................................................31
THIRD YEAR...............................................................................................................31
5.6 BREAK EVEN LEVEL..........................................................................................32
VARIABLE COST........................................................................................................32
DESCRIPTION.............................................................................................................32

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KSHS.............................................................................................................................32
FIXED COSTS..............................................................................................................33
DESCRIPTION.............................................................................................................33
KSHS.............................................................................................................................33
5.7 PROFITABILITY RATIO......................................................................................33
5.8 DESIRED FINANCING.........................................................................................35
5.9 PROPOSED CAPITALIZATION...........................................................................35
BUSINESS PLAN MACHAKOS TOWN…………………………………………...36

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EXECUTVE SUMMARY
BUSINESS DESCRIPTION
The name of the business is PIONEER AGROVET .It will be situated in Machakos town
machakos county. Its objective is to provide quality services according to customer’s
demand and preference. The business objectives also is to plough back profit which will
be operated by Alfred Mwendwa who is the sole owner. the address will be
PIONEER AGROVET
P.O BOX 1186,
MACHAKOS.
PHONE: 0717378247.

1.2 MARKETING PLAN

The business entity mainly targeted to serve customers from a wide range depending on
their demand. The price will be slightly lower than those of competitors in order to pose
direct completion to the competitors.
1.3 ORGANISATION AND MARKETING PLAN.
Mr. Alfred mwendwa will be the manager of the business who will run the business and
coordinate activities to ensure the planned activities are achieved. The business will
acquire new employees to help in running the business, the selection of employees done
by manger, the employees will be motivated in order to increase productivity, and
salaries for employees will be paid on time.
1.4 OPERATION/PRODUCTION PLAN.
Equipment in the shop like telephone should be brought before the commencement of the
business to ease communication between customers and employees who will be making
orders to the shop, the owner will invest Ksh 40,000 to buy the equipment and expansion
of the agro vet if needed.
1.5 FINANCIAL PLAN.
Pioneer Agrovet will require a working capital of KSH 500,000 of which the owner’s
contribution was 200,000, family contribution and friends was160,000, bank loans
140,000 and loan to be paid after one year of business operation.

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CHAPTER ONE
1.0 BUSINESS DESCRIPTION
The proposed business will be called PIONEER AGROVET. The name indicates that the

business will optically be dealing with farm inputs animal feeds and animal drugs. High quality

goods and services will be provided to the customers.

1.2 BUSINESS LOCATION AND ADDRESS

The owner intends to locate the business at Machakos town. The town is growing rapidly due to

more investment in it. Generally, the infrastructure has been improved by the local authority

facilitating the expansion of small business enterprises and increment in population within the

area.

The business enterprise will be situated at Machakos town Opposite Machakos country bus. This

will be along kitui highway. This will be strategic point of the business since it is easily

accessible and can be noticed easily.

The address of the business will be; -

PIONEER AGROVET
P.O. BOX 1186
MACHAKOS.
Email: alfredcounquretheworld@gmail.com

1.3 FORM OF OWNERSHIP

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The proposed business will be a sole proprietorship entity. It will be owned by MR ALFRED

MWENDWA. The owner proposed a sole – proprietorship form of ownership because the

business will be a new one in the market and also starting up cost are low. However at maturity

stage, other branches will be opened outside the town.

1.4 TYPE OF BUSINESS

The business will specialize in sale of goods and services mostly animal feeds ,farm inputs and

tools . Services to offered will be M pesa.

1.5 PRODUCTS AND SERVICES

The major products the business will offer include fertilizers, chicken feeds, acaricides, dairy

feeds, dairy drugs, planting seeds, injecting syringe and also Mpesa services.

The said products will be of high quality. The business will provide effective and efficient

products to its customers thus meet their needs. Products will be ordered from a reputable

manufacturer whose goods are proved by Kenya Bureau of standards to be of the acceptable

quality and not harmful to human and animal health.

Goods will be packed in papers / wrappers or carrier bag that are attractive to customers. The

name of the business supply of goods by the manufacturers will be kept at constant.

This will lead to increase in customer satisfactory thus widened the market.

The owner shall employ people of good interpersonal skills to ensure good customer care

services. They will further enhance their customer care services and selling skills through

organization of short courses and seminars.

The business will have a competitive advantage over potential competitors since they do not have

customer care service, customer – staff relations and they are not flexible in repackaging their

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goods e.g. Chick mash, layers and growers mash are packed at 10kg and 50kg. This does not

cater for a low – class group of customers who make the large part of the market.

Therefore the owner will pack beginning from half a kilogram, one kilogram and other goods

starting from a half a kilogram going up hence the low- class community will be in a position to

afford.

1.7 THE INDUSTRY

The size of the industry will be a medium sized and fall under commercial service industry since

it will be selling already manufactured and packaged goods to final customers very few people

have ventured into this type of business in Machakos town. This was revealed.

The purchase and supplies department will be ordering the goods after asserting the quality

required. The owner anticipated to capture 45%of the total market share due to the strategic

position of the business and increased hours of operations including the weekends.

Since most customers use Motorbikes as their means of transport, the owner will set aside a

parking area for Motorbikes for the customers to ensure safety and convenience.

Since the population of the town is growing rapidly the owner intends to expand the business

premise as demand increases. The owner will the expand the business on two floors so as to

accommodate a large number of customers at once.

The owner intends to use the modern technology (Computerization). The price tags and bar

closed of every good will be entered into a computer system to eliminate pilferage.

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1.6 JUSTIFICATION OF THE BUSINESS
The owner anticipated that the business will be viable. This is because of the fact that this type of

business has not been ventured into by many people in town as per now.

Considering the fact that since the introduction of the local authority transfer fund and Road

maintenance levy by the government, the town got roads, water supply, telephone, electricity.

SHORT – TERM OBJECTIVES

 Within the period of nine months after the start of business, it will be able to employ

five full time employees and then ten casual workers.

 Within one year, ten more shelves will be contracted.

 Within Two month the shelves would have been constructed to make a boundary.

 Efficient lighting system will be put in place.

LONG – TERM OBJECTIVES

 By the end of two years, three more branches would have been opened preferably in ,

Kikima, Tawa and Masii

 By the end of one and a half years, the business would have employed three more full

time employees and is casual workers.

 By the end of second year, the business will open a wholesale shop within Machakos

town By the end of third year, the business would have purchased four lorries to

assist in transporting of goods.

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1.9 ENTRY AND GROWTH STRATEGY
The products to be offered by business would be a high quality and standard. The suppliers are

expected to be the manufacturers of high quality and standard goods which are expected to be

wrapped nicely in glittering sacks and carrier bags.

By the research carried out by the owner. This industry has not satisfied the need customers.

During the end of the month, beginning of planting season and harvesting seasons customers que

to obtain the necessary products and customers from the retail shops available resulting into poor

services to customers.

The competitors have located their enterprises in an area. i.e. (central business district) leaving

the other side of town. The PIONEER AGROVET is located at entrance of Machakos town

country bus station and also along the Kitui highway. This will be easy and accessible for the

customers since it is easy to locate it.

This will be facilitated by normally offering low prices but still make some profits in the long

run.

Goods will also be re- pack gable into very small units and this will go a long way in attracting

and serving many customers, However acquiring of fast skills and knowledge in entrepreneurship

education management course and hand on experience has motivated the owner to venture into

this kind business with a mind of success.

1.8 OBJECTIVES AND GOALS

The business is determined to achieve both long-term and short term objectives.

In case the customers buys goods in bulk, they will be transported to this destination using

business means. This is not done by any competitor in them. To penetrate the market, prior to

start operating of the business, through advertisement will be carried out. This will be inform of

6
placing posters in all parts of the town, distribution of leaflets and address systems using a vehicle

or Motorbikes. Advertisement will cover low prices, discounts quality good services and gift to

customers who purchase a certain quality of goods. The offer given will then last for a

predetermined period e.g. one month, afterwards withdrawn slowly after winning the customers.

The exercise will then be repeated to maintain the good will.

The owner will organize and sponsor, prominent sports in the town and other related activities

like sponsoring soccer, beauty contests, hunger walks, clean ups, tree planning exercise etc.

During these occasions, T- shirts and caps with the business name printed on them will be issued

and soft drinks and snacks will be given out, thus, this will go a long way promoting and

advertising the business to the community and countrywide.

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CHAPTER TWO
2.0 MARKETING PLAN
PIONEER SHOP will be service product oriented enterprise particularly dealing in sale of animal

feeds, farm inputs, farms implements and mpesa services.

It will supply goods and services to customers through tenders.

2.1 CUSTOMERS
INDIVIDUAL CUSTOMERS
The enterprise targets living within Machakos town Town and the surrounding environment

INSTITUTION CUSTOMERS

There are many farms and young growing farmer around the town outskirts and the surrounding

environments, while the enterprise that offer services needed are few hence they are not well

attended to.

The proposed enterprise will target farmer and small and big farms to ensure that their needs are

well attended to.

COMMERCIAL CUSTOMERS
In Machakos town where the proposed business will be located, there is a population of

approximately 100,000 people. Some of them living in rental houses and others in the outskirts

of the city and other parts of the neighboring ward most of them depending on income from their

8
business hence the retail shop will offer readily available goods and services to the business

owners (small business) to sale directly to their customers.

2.2 MARKET SHARE

Due to the rapid development of the town, population has increased to approximately 100,000

people. This population has been distributed in houses with each having an average of four

people.

This means that there are about 25,000 farmers homes that entirely depend on retail shop for

farm input and animal feeds and services out of this, 40% are to get their services from Pioneer

Agro vet.

Total Population = 100,000

Number of people per house = 4

Number of houses = 100,000

= 25,000 houses

10,000 homes needs agro vet services

Number of people per home = 4

Total number =10,000 x 4 = 40,000

Market share = 40/100 x 40,000 = 16,000 people

Services to individual tenders shall be as efficient as possible in order to retain them and be a

source of inspiration to others, this will be through the provisioning of up to date services that are

9
high tech and sale of quality parts required by customers immediately as per the orders that has

been placed.

2.3 COMPETITORS
The proposed enterprises will get strong competition from thwake agrovet located near Genesis

booking office,Peter mulei and familywholesellers which are also located directly opposite to the

country bus ststion..

However these Agrovets that are in operation do not satisfy the needs of their customers due to

lack of basic knowledge on how to operate a business.

The proposed enterprise will capitalize on the above mentioned points to top and retain its

customers.

His will be done through offering of gifts to customers especially when buys goods worth 1,000

shillings unlike other established businesses which offer gifts to customers only after purchasing

goods worth 2,000 shillings and above therefore not catering well for the low income earners.

The proposed business will also have lottery for promotional purposes. If a customer purchases

products he/she may win something else if the product bought has a lucky number.

The enterprise will be furnished with and educative posters on the need and importance of

purchasing its goods.

The enterprise will be particularly in campaigning against AID and poverty which are the national

disasters dragging behind development of the Nation.

The proprietor’s efforts are intended to attract many customers by offering quality goods and

services.

The enterprise shall be in operation for five days and a half – day on Saturday.

Pioneer Agrovet will operate from 7. Am to 6Pm.

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 COMPETITIVE ANALYSIS TABLE
DESCRIPTION SCORE BUSINESS NAME
mwailu R.B shah Peter mulei Thwake Pioneer Agrovet

wholeseller Agrovet

Product 10 7 8 8 8 9

Pricing 10 8 4 6 5 9

Promotion 10 6 5 7 6 8

Personnel 10 5 4 5 7 9

Location 10 4 5 5 6 8

Size 10 6 4 5 7 9

Total score 60 36 30 36 39 52

COMPETITORS STRENGTH AND WEAKNESS ANALYSIS TABLE

BUSINESS NAME STRENGTHS WEAKNESS
MWAILU Experienced personnel Poor internal layout
Fair priced
Advanced promotion
R.B SHAH Good location Small size
Fair pricing Unqualified personnel
PETER MULEI Good location Lack of promotion
WHOLESELLERS

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 Fair pricing Unqualified personnel
THWAKE AGROVET Good location Poor internal layout
Qualified personnel Lack of promotion
PIONEER AGROVET Advance promotion Small size
Fair pricing Small scale
Qualified personnel Promotion poor
Good location

2.4 PRICING STRATEGY

The proprietor shall use competitive pricing for example if competitor A and B sell the same

commodity for a hundred shillings and one hundred and ten respectively, the proposed business

will sell at ninety – five shillings if conditions allows, psychological pricing will serve as a major

and good promotion strategy a product valued satisfaction of the customer. Customers will get

goods and services at an affordable price and the business will be still making a profit.

Prices will also determine basing on the market conditions of prices of products and services.

2.5 SALE TACTICS

The proposed business will concentrated on selling goods and business services that do well with

the condition of Machakos Town. Since the town is agricultural based, mostly farm implements

will be available for sale, jackets, gumboots and foodstuffs will also be sold.

The manager or owner will listen to customers specifications to know exactly what they want the

enterprise to produce. A suggestion box will be introduced at the entrance of the retail shop. It

will be opened every morning by the manager to read suggestions from the customers.

Employees will utilize their skills to give the best that is required of them.

2.6 ADVERTISEMENT AND PROMOTIONS

The proprietor shall increase customer awareness through advertisement. Sign posts will be

placed in strategic points in town one at the road near Shell Petrol station, another one shall be

12
placed along Kitui high way, Wote road, Nairobi road and another one inside the Machakos bus

station.

Employees will utilize their skills to give the best that is required of them.

The enterprise building will be clearly painted indicating the business clearly. Beautiful stickers

will be produced and distributed to vehicle owners especially Matatus, Boda- Bodas, Cyclists

and many others. The stickers will also be mounted at social places like clubs, hotels and social

halls.

2.7 DISTRIBUTION CHANNEL STRATEGY

One channel type of distribution strategy will be adopted by the enterprise as shown below.

 Goods will be bought from the producer through the retailer and to be sold to the

customers two – channel will also be utilized by the enterprise.

 Goods will be bought from the producer to the wholesaler through the retailers to be sold

to customers.

The annual distribution cost is Ksh. 30,000.

13
CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT

The organization structure to form the administrative chair of command breakdown should serve

the interest of all the workers geared towards collection working. This will enhance the

achievement of both the long term and short – term organizational goals. The organizational

structure should make it easier for both upward and downward communication to bring about

harmonious relationship.

The mode of leadership will be participative since it will,

(a) Help the management have trust on the workers

(b) Creative initiatives among workers

(c) Reduces strikes within the organization

3.1 KEY MANAGEMENT PERSONNEL

They are;-

(i) The manager

(ii) The assistant manager

3.1.1 THE MANAGER

He will be the top most man in the management team. He will run the business through the

assistance of other personnel.

QUALIFICATIONS
 KCSE certificate holder

 Be a holder of a diploma in General Agriculture, or veterinary.

 Be between 25 – 40 years of age

 Fluent in both written and spoken English and Kiswahili

14
  Be a Kenyan citizen

 Should have one year experience in agricultural products and inputs and have

business ideas.

 He should have good interpersonal skills

DUTIES AND RESPONSIBILITIES

 To formulate the policy to guide the enterprise

 He will be the overall business controller

 He will act as a public relation officer

 He will be in position to enclose payments and purchases

 He will be planning and forecasting all manpower requirements for future business

prospering.

 He will be making long term and short term planning.

 Keep the records of the business

3.1.2 ASSISTANT MANAGER

QUALIFICATIONS
 Must poses a certificate in Agri-business.

 Have a minimum age of 24 years

 Must have a two year working experience in business – oriented enterprise especially

in Agriculture

 Should have good communication skills

DUTIES
 To invent promotion strategies

 To ensure proper service provision to customers

 To ensure proper recording of business transactions within and outside the enterprise.

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3.2.0 OTHER PERSONNEL
3.2.1 SUPERVISOR
QUALIFICATIONS
 Must have good communication skills

 Must be a K.C.S.E certificate holder with a minimum of a C+

 At least certificate course in business administration

 Prior experience will be an added advantage

DUTIES
PUBLIC RELATION OFFICERS
 Answerable to the assistant manager

 Responsible for supervision of business activities

 Make quotations of products to the assistant manager

 Report the weaknesses and strength of workers to assistant manager

3.2.2 ACCOUNTS CLERK

QUALIFICATIONS
 Be a KCSE certificate holder a minimum of C+

 Have a CPA ii certificate

 Be prepared to work without supervision

DUTIES
 Head finance department

 Keep all financial records

 Payment and receipt of the enterprise

16
  Do any other duties assigned to him by the manager

3.2.3 PURCHASE CLERK

QUALIFICATIONS
 Be a holder of a certificate in supplies management

DUTIES

 Making of purchase orders

 Balancing purchase ledgers

 Ascertaining whether it complies with the actual stock in the store.

3.2.4 DRIVER
QUALIFICATIONS
 Should have a driving license with five years driving experience

DUTIES
 Responsibilities with the collection and dispatching of products

3.2.5 WATCHMAN / SECURITY OFFICER

The owner will employ one watchman to ensure the business is secure

QUALIFICATIONS
 Should be a KCSE certificate holder.

 Aged between 25 – 40 years

 Have record of good conduct

3.2.6 COMPUTER OPERATOR

QUALIFICATIONS
 Should be computer literate

 Have a certificate on IT (information technology)

 Have modern computer skills

17
  Be aged between 22 – 30 years

3.3 RECRUITMENT TRAINING AND PROMOTIONS

RECRUITMENTS
An advertisement will be published in the local dailies like the standard, Kenya times and nation

newspapers to find personnel to fill the job openings.

Job specifications, description and evaluation will be clearly spelled out. Responses will be

received and treated basing on the merits by the manager.

This will lead to the next stage of short listed candidates will be invited for an interview to assess

their psychological theoretical and physical response to nature of work those who qualify will be

selected for the job.

3.3.1 TRAINING
The business will carry out training to the newly recruited personnel, they will have to undergo

training done informs of seminars and consultancy.

After training, the personnel will have to be oriented and inducted so as to be well conversant

with the working conditions and what the job requires.

This will involve briefing workers about the business objectives their responsible and

expectations in the business.

3.3.2 PROMOTIONS
This shall be totally based on merits of performance and qualifications i.e. academic and

professional qualifications.

Experience on field will act as an added advantage in consideration with the personnel conduct

and performance ability of an individual.

18
 3.4 REMUNERATION AND INCENTIVES
Employees will be remunerated on the basis of their working experience, previous salary,

quantity and quality of work output and merit.

Employees will have salaries in the following scale.

Post No. of workers Allowances Basic salary Total

Manager 1 3,500 4,000 7,500

Assistant manager 1 2,500 3,000 5,500

Supervisor 1 1,940 2,560 4,500

Account clerk 1 1,800 3,000 4,800

Computer operator 1 2,500 2,000 3,500

Driver 1 2,000 1,250 3,250

Watchman 1 1,000 1,200 2,200

Total salary 1 31,250

INCENTIVES
The business will pay the casuals a wage salary agreed upon with the management.

Employees will be served with tea at 10.00 a.m. and being given lunch.

Loans will be given to employees and payments made through installments deducted from their

salaries.

19
Formation of informal groups will be allowed like the burial and befouling fund among

employees. This will be established to provide a charity fund for the widows and widowers who

are diseased during their employment period.

3.5 LICENSES AND PERMITS

The entrepreneur shall need to have legal documents for effective performance of the business.

The business will venture by obtaining a trading license from the Machakos Municipal council –

this will be;-

County council sh. 800

Service license sh. 2,200

Public health license sh. 1,500

Total sh. 5,500

3.6 SUPPORT AND ADVISORY SERVICE

3.6.1 BANKING SERVICE
The enterprise will have to open a fixed account with the standard banking of Kenya Makindu

branch to safeguard against theft.

This will also make it easy to keep check the deposit and withdrawals of the enterprise

3.6.2 INSURANCE SERVICES

Insuring the business will safeguard it from the risks tantamount to the collapse of the insurance

cover against risks like theft, fire, burglary and accident cover for employees.

3.6.3 TRANSPORT SERVICES

The business will party rely on hired transport products to the business and other places according

to the instructions of the manager.

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3.6.4 SECURITY SERVICES
The business will hire security services from modern security companies like Bravo and

Securicor to ensure maximum security of the business.

3.6.5 AUDITING SERVICES

A financial editor will be hired annually to check books of account to identify if a business is

operating at a loss or profit.

This will help in provision of vital information that will give room to either addition of products

and services or vice versa and employment of more employees or retrenchment of some.

3.6.6 POSTAL SERVICES

The enterprise will need a postage box to enhance easy exchange of information. The box will be

at machakos Town and it will be

PIONEER AGROVET

P O BOX 247,

MACHAKOS,

KENYA.

21
 CHAPTER FOUR
4.0 PRODUCTION PLAN
4.1 PRODUCTION FACILITIES AND CAPACITY
DESCRIPTION OF QUANTITY TOTAL COST
ITEM
Counter tables 2 2,400

Display counter 2 1,800

Chairs 5 250

Food stuffs 400 3,000

Detergents 350 2,500

Make ups 500 4,000

Sanitary towels 400 3,500

Cutlery 400 2,000

Computer 1 20,000

Form implements 300 4,000

Air conditioners 4 2,500

Refrigerators 1 10,000

Total 55,950

22
4.2 REPAIRS AND MAINTENANCE
In maintaining the enterprise, the business building will be repaired broken furniture will have to

be replaced or repaired .Leakages on the roof will be done by Georges housing and Construction

Company, while repair of furniture will be by Ngeeta Furniture limited through checking and

repair of the car will be done by reputable Citizen garage in Grogon. Any employee who will

cause breakages in any way due to negligence or carelessness will incur the loss. Generally,

repairs and maintenance cost will total to 20,000 annually.

4.2.1 PREMISE LAYOUT

OFFICE
SHELVES

COUNTER
SHELVES

OFFICE
SHELVES

SHELVES COUNTER

SHELVES

SHELVES
COUNTER

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4.3 PRODUCTION STRATEGY
The enterprise will ensure that the order of goods and services are made at the end of every month

to ensure constant supply and satisfaction to customers. Emergency purchases shall be made in

case the goods are in high demand and the stock can last up to the end of the month.

At periodic interval, maintenance shall be carried out on the floor, shelves and cash machines.

Proper and well understood work scheduled shall be divided by the management to avoid

confusion among the workers and also ensures efficiency.

The quality and quantity of goods and services to be provided will be strictly based on the

information carried on the market trends.

4.3.1 PRODUCTION DESIGN AND DEVELOPMENT

The quality and quantity of products will depend on the capacity of the enterprise. The product

will be arranged and displayed in a way to attract and meet the requirement of the customers.

Any purchase of1000 shillings or more by the customers will qualify him for a gift as a reward

5% discount will be given to constant customers who buy in bulk; especially big retail shops.

There will be workers who will be gathering information directly from the customers or indirectly

from the suggestion box. Sales promotions will be carried out twice in a year to inform more

people about the services will be the motto of the business.

24
Price tags will be stuck on various products to avoid confusion, time wasting on bargaining and

pilferages by both the workers and the prospective customers.

4.3.2 PRODUCTS REQUIREMENTS

The goods to be purchased will be determined by the quality of purchases that would have been

made by the customers.

The goods will be bought from one of the biggest and reputable manufacturers and big whole

sellers in Nairobi wholesale shops.

They will be transported to the business by the enterprise lorry.

4.3.3 COSTS OF PRODUCTION

Transport costs 3,000

Salaries 32,150

Electricity 3,000

Water 1,500

Rent 2,000

Miscellaneous expenses 3,000

Total 44,650

4.4 PRODUCTION PROCESS

As stated initially, the business will be dealing with buying and selling of products. The following

stages will therefore be followed and adhered to in the production process.

STEP 1

After arriving at the place of work at 7.00 am every worker will attend to the duties and

responsibility inclusive of cleanliness especially the floor, cash machines and shelves.

25
STEP 2

After cleanliness, the premise will be arranged accordingly following the supervisor directives to

ensure that everything is at the right place.

STEP 3

Workers should be at their respective places ready for the day’s work. E.g. cashiers, packers,

assistant manager and manager to ensure good service to customers.

STEP 4

As customers repute coming in the business premise, either to view or purchase goods and

services, the workers should be ready to receive and attend to them without delays. After serving

themselves the customers will present their goods to the counter for payment and packing and if

need causes for transportation.

4.5 REGULATIONS AFFECTING THE ORGANIZATION

The rules and regulations that will govern the contact of affairs of the business are –

Environmental protection act cop 430

All sorts of environmental pollution will be avoided through garbage disposal at the right place

around and within the business premise.

The toilets within the premise will be thoroughly cleared and disinfected smoking inside the

premise will be totally prohibited.

THE N.S.S.F ACT CAP 506

Requires employers to submit workers contributions to the N.S.S.F if they have more than three

employees.

26
The local government act cap 265 requires the business to have all the permits and licenses before

repucating the business.

The employment act cap 226 Requires that the casual worker be confirmed permanent after 3

months of continuous services.

The trade license act cap 497 Defines the nature of services and area of operations of a particular

business.

CHAPTER FIVE
5.0 FINANCIAL PLAN
5.1 PRE – OPERATIONAL COST
The following are the costs the business will incur before its commencement.

ITEM COST (KSHS)

Production facilities 55,950

Licenses and permits 5,500

Initial rent deposits 2,000

Water and electricity 5,000

Installation 2,500

Total 70,950

27
 5.2 WORKING CAPITAL REQUIREMENT
YEAR 1 YEAR 2 YEAR 3

Stock of raw materials 174,050 220,000 215,000

Cash at bank 150,000 160,000 180,000

Work in progress - 100,000 120,000

Debtors - 20,000 25,000

Total 324,050 500,000 540,000

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PROJECTED CASHFLOW STATEMENT
DESCRIPTION JAN FEB MAR APR MAY JIN JUL AUG SEPT OCT NOV DEC TOTAL
Cash inflows
Cash sales 250,000 250,000 250,000 280,000 290,000 295,000 310,000 300,000 320,000 315,000 330,000 320,000 3,230,000
Debtors - - - 15,000- 25,000 14,000 18,000 20,000 16,000 25,000 20,000 10,000 163,000
Total inflows 250,000 250,000 250,000 295,000 315,000 309,000 328,000 320,000 336,000 340,000 350,000 330,000 4,718,000
Cash outflow
Purchases 120,000 100,000 110,000 105,000 120,000 100,000 95,000 95,000 105,000 110,000 100,000 108,000 1,268,000
Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Wages and 32,150 32,150 32,150 32,150 32,150 32,150 32,150 32,150 32,150 32,150 32,150 32,150 32,150
salaries
Advertisement 5,000 4,400 4,800 4,800 5,200 6,000 5,000 5,700 6,500 6,200 4,000 5,000 62,600
Water and 2,500 2,200 2,350 2,400 2,000 2,400 3,000 2,500 2,500 23,500 2,380 2,420 29,100
electricity
License and 5,500 - - - - - - - - - - - 5,500
permits
Loan 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 144,000
Postage 600 400 500 400 500 300 500 500 600 550 550 600 5,850
Telephone 2,000 800 1,500 1,100 2,000 2,000 2,200 2,400 2,400 2,000 2,000 1,500 22,500
Total cash 181,000 154,050 165,300 159,850 175,850 156,850 151,850 152,250 163,150` 167,250 155,080 155,080 1,947,350
outflow
Net profit 68,250 95,950 84,700 135,150 139,150 152,150 116,150 176,750 172,750 172,750 194,470 166,330 1,725,650
Accumulated 68,250 164,200 248,900 384,050 523,200 675,350 851,500 1,019,250 1,364,850 1,364,850 1,559,320 1,725,250
cash

29
 5.4 PROFORMA INCOME STATEMENT
ITEMS YEAR 1 YEAR 2 (10%) YEAR 3(15%)

Cash sales 3,230,000 3,553,000 4,085,950

Less cost of goods sales 850,000 935,000 1,075,250

Gross profit 2,380,000 2,618,000 3,010,700

Less operating expenses

Rent 24,000 24,000 24,000

Water and electricity 2,910 29,100 33,465

Salaries and wages 325,800 385,800 385,800

Licenses and permits 5,500 5,500 5,500

Repair and maintenance 20,000 15,000 23,000

Loan repayment 144,000 158,400 182,160

Advertisement 62,600 56,340 53,210

Total expenses 671,000 674,140 707,135

Net profit before tax 1,709,000 1,943,860 2,303,565

Less provisioning for tax 170,900 194,386 230,565

Net profit after tax 1,538,100 1,749,474 2,073,209

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 5.5 PROFORMA BALANCE SHEET
EARLYRISE RETAIL SHOP BALANCE 1,2 AND 3 AS AT THE END OF
YEARS
DESCRIPTION FIRST YEAR SECOND YEAR THIRD YEAR
FIXED ASSETS

Furniture and equipment 22,000 20,000 18,000

Less depreciation 100% (22,000) 19,800 (2000) 18,000 (18,000) 16,200

Machine 28,000 22,000 15,000

Less accumulated depreciation (28,000) 25,200 (22,000) 198,000 (15,000) 13,500

TOTAL FIXED ASSETS 45,000 37,800 29,700

CURRENT ASSETS

Stock 200,000 220,000 215,000

Cash at bank 150,000 160,000 180,000

Debtors - 20,000 25,000

Work in progress 350,000 100,000 120,000

Total assets 395,000 500,000 540,000

Current liabilities

Bank overdraft - 50,500 -

LONG TERM LIABILITIES

Bank loan 144,000 158,400 182,160

Owner’s equity 251,000 291,000 357,840

Total liabilities 395,000 500,000 540,000

31
5.6 BREAK EVEN LEVEL
VARIABLE COST
DESCRIPTION KSHS
Purchases 1,268,000

Maintenance and repair 20,000

Advertisement 62,600

Electricity 15,100

Water 14,000

Postage 225,000

Total 1,408,050

ii. Contribution margin

= total sales – variable cost

3,230,000 – 1,408,050

= 1,821,950

iii. Contribution margin percentage

= contribution margin x 100

sales

= 1,821,950 x 100

3,230,000

= 56%

32
FIXED COSTS
DESCRIPTION KSHS
Salaries 385,800

Rent 24,000

Loan repayment 144,000

Licenses and permits 5,500

Total fixed cost 559,300

Breakeven level

= fixed cost x 100

contribution margin

= 559,300 x 100

56

= 998,750

5.7 PROFITABILITY RATIO

i. Gross profit ratio = gross profit x 100

sales

year I = 2,380,000 x 100

3,230,000

= 73.68

= 74%

year 2 = 2,618,000 x 100

33
 3,553,000

= 73.68

= 74%

year 3 = 3,010,700 x 100

4,085,950

= 73.68

= 74%

ii. INVESTMENT RATIO = Net profit after tax x 100

total investment

year 1 = 1,538,100 x 100

395,000

= 389%

year 2 =1,749,474 x 100

500,000

= 350%

Year 3 = 2,073,209 x 100

540,000

= 383.9

= 384%

34
5.8 DESIRED FINANCING
Pre – operational cost 70,950

Working capital 324,050

Desired financing 395,000

5.9 PROPOSED CAPITALIZATION

Owner’s equity 251,000

Loan 144,000

Proposed capitalization 395,000

35
 APPENDICES

BUSINESS PLAN MACHAKOS TOWN.

PIONEER MWAILU
R.B

KITUI HIGHWAY
MACHAKOS
WOTE ROADBUS STATION SHAS
AGROVET
H

THWAKE
AGROVET

SHELL PETROL
STATION

PETER MULEI

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