Mustafa COMPONENTS SHOP

P.O BOX 190-30201,

ENDEBESS
Telephone number 0743210953
email:chelagatselec@gmail.com

TITLE: BUSINESS PLAN

NAME OF PRESENTER mustafaisa

INDEX NUMBER: 5721010063

DEPARTMENT: ELECTRICAL AND ELECTRONIC

ENGINEERING

COURSE CODE: 1602

CENTRE NAME : ENDEBESS TECHNICAL TRAINING

INSTITUTE

SUPERVISOR: MR. KENETH OIGARA

PRESENTED TO: THE KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULLFILLMENT

FOR THE AWARD FOR CRAFT

ELECTRICAL AND ELECTRONIC

ENGINEERING

SERIES : JULY 2020

 DECLARATION
I declare that this work is my original work and it has not been presented to the Kenya
National Examination Councilor any other Examination body.

NAME OF STUDENT: MILKA CHELANG'AT MWANJA

SINGNATURE: -----------------------------------------
DATE: --------------------------------------------------

NAME OF SUPERVISOR: MR. KENETH OIGARA

SINGNATURE: ----------------------------------------
DATE: ---------------------------------------------------
 ACKNOWLEDGEMENT
I would like to acknowledge with sincere thanks my project supervisor Mr. Keneth Oigara
whose suggestions and technical assistance rendered me invaluable series. Also my sincere
thanks go to my parents mum and dad who helped me financially to complete my project
work. I also pass my regards to my course mates for the cooperation we had together,
throughout the project.
 DEDICATION
I dedicate this to my sponsors, my parents, my brothers and sisters and finally my friends for
their moral support.

TABLE OF CONTENTS

Contents Page
DECLARATION........................................................................................................................ii

ACKNOWLEDGEMENT.........................................................................................................iii

DEDICATION...........................................................................................................................iv

TABLE OF CONTENTS............................................................................................................v

EXECUTIVE SUMMARY.......................................................................................................vii

CHAPTER ONE..........................................................................................................................1

1.0 BUSINESS DESCRIPTION.........................................................................................1

1.1 BACKGROUND OF THE OWNER............................................................................1
1.2 BUSINESS NAME SHOP.........................................................................................1
1.3 BUSINESS LOCATION AND ADDRESS...............................................................1
1.4 FORMS OF OWNERSHIP...........................................................................................1
1.5 TYPES OF BUSINESS.................................................................................................2
1.6 PRODUCTS/ SERVICES............................................................................................2
1.7 JUSTIFICATION OF THE BUSINESS OPPORTUNITY.........................................2
1.8 THE INDUSTRY..........................................................................................................2
1.9 GOALS OF THE BUSINESS.......................................................................................3
1.10 ENTRY AND GROWTH STRATEGY....................................................................3

CHAPTER TWO.........................................................................................................................5

2. 0 MARKETING PLAN.....................................................................................................5
2.1 CUSTOMERS...............................................................................................................5
2.2 MARKET SHARE.......................................................................................................5
2.3 COMPETITION............................................................................................................6
2.4 METHODS OF PROMOTION AND ADVERTISEMENT........................................8
2.5 PRICING STRATEGY..................................................................................................8
2.6 SALES TACTICS..........................................................................................................9
2.7 DISTRIBUTION STRATEGY....................................................................................9

CHAPTER THREE...................................................................................................................11

3.0 ORGANIZATION AND MANAGEMENT PLAN.....................................................11

3.1 KEY MANAGEMENT PERSONNEL........................................................................11
3.3 RECRUITMENT, TRAINING AND PROMOTION..................................................14
3.4 RENUMERATION AND INCENTIVES..............................................................15
 3.5 LICENSES, PERMIRS AND BY-LAW.........................................................................16
3.6 SUPPORT SERVICES............................................................................................16

CHAPTER FOUR.....................................................................................................................18

4.0 OPERATIONAL /PRODUCTION PLAN...................................................................18

4.2 PRODUCTION STRATEGY.......................................................................................19
4.3 PRODUCTION PROCESS.........................................................................................22
4.4 REGULATION AFFECTING OPERATIONS..........................................................22

CHAPTER FIVE.......................................................................................................................24

5.0.0 PROPOSED CAPITALIZATION................................................................................24

5.1.0 PRE-OPERATIONAL COSTS....................................................................................24
5.2.0 WORKING CAPITAL REQUIREMENT...................................................................24
5.3.0 INCOME STATEMENT..............................................................................................24
5.4.0 PRO-FORMA BALANCE SHEET..............................................................................25
5.5.0 CASH FLOW PROJECTION STATEMENTS...........................................................26
5.5.1 CASH FLOW PROJECTION FOR THE YEAR 2021................................................26
5.5.2 CASH FLOW PROJECTION FOR THE YEAR 2022................................................27
5.5.3 CASH FLOW PROJECTION FOR THE YEAR 2023................................................28
5.6 PRO-FORMA BALANCE SHEET FOR THE YEAR 2021-2023.................................29
5.7 BREAK-EVEN LEVEL..................................................................................................29
5.8.0 DESIRED FINANCING...........................................................................................30
5.9.0 PROPOSED CAPITALISATION.............................................................................30
5.10.0 EXPECTED PROFITABILITY RATIO.................................................................30

EXECUTIVE SUMMARY
1.0.0 BUSINESS DESCRIPITION

Under the business description, we have the name of the business which is
Chelang’at’s Electronics Components Shop. It’s located at Endebess market opposite the
ST. Bridgit girl’s high school. And the address of the business is P.O
BOX 728 Endebess .It’s also includes forms of ownerships of the business which is sole
proprietorship, type of business products and services. Justification of opportunities, goals of
the business, entry growth strategy. The goals of the business are:
a] SHORT TERM GOALS
I. Provide employment opportunities to the community by employing qualified
youths.
II. To make sure that they provide good quality product by sourcing and
marketing
III. To give the industry a new look by pro viding sufficient wants to customers.
IV. To recognize how important the development of employees is to success of
business by educating them through seminars and workshops.
V. To improve on marketing mix.
VI. Help customers in how to use the opportunities by providing after sales
services.
b] LONG TERM GOALS
I. To maximize profit
II. To expand and open business branches countrywide.
III. To b become the market leader.

2.0.0 MARKETING PLAN

This chapter includes who are the three categories:

I Institute customers i.e. college and schools
ii Domestic customers: people around the marker centers.
iii Commercial customers i.e. retailers buying in bulky.
It also shows the market shares where Chelang'at's Electronics Components Shop holds
50% which is approximately 1200 people. The business also has a large competition
whereby its strength outweighs the weakness. The business strategy has been distributed as
follows.

Manufacture Distributer Wholesaler Retailer Consumer

r RR
3.0 ORGANISATION AND MANAGEMENT PLAN
The various aspects of organization and management are discussed. This includes:
i] Key management personnel which compose of owner his qualification duties
and responsibilities.
ii] The marketing and resources manager whose duties are to carry out market
research and create new market for business goods services, keep record etc.
other personnel discussed in the chapter one secretary technician and security
officers.
iii] Remunerations and incentives which is the salary and allowances given to staffs.
Total salary is 54800 per months.
4.0 PRODUCTION PLAN
In this chapter production facilities and capacity have been discussed, such as soldering ,bits
pliers screws drivers muleteers solder wire and others equipments . Their total cost was found
to be 15000 per month. These are also enterprise layout which has section outlined below.
Counter secretary office manager, hence repairers & maintenance room store and security
material was calculated and found to be 2000/=
5.0 FINANCIAL PLAN
It shows how capital is to be used in the business under these chapter pre-operational costs
was calculated and found to be Kshs 46500. The working capital was found to be 200000.
Total cash flows were to be 989200. Profitability ratio was calculated and
found as shown.
a. % contribution margins =98.82%
b. Break even level of sales =920242.91%
c. Gross profit margins =373.8%
 CHAPTER ONE
1.0 BUSINESS DESCRIPTION

1.1 BACKGROUND OF THE OWNER

I am Chelang'at's age 23 years old, I am single, I am perusing a craft certificate in electrical
components . My occupation I am a student at Endebess Technical Training Institute.

1.2 BUSINESS NAME SHOP.

The suggested name of the business is “Chelang’at’s Electronics Components shop
The name is firmed from one of the owner’s names which mean a breakthrough or success.
It is well known by the members of the community and easy to read and pronounce.

1.3 BUSINESS LOCATION AND ADDRESS

The business is to be situated in Trans Nzoia County, Transnzoia district at Endebess market
on sikhendu – Endebess road. It will be on Endebess market opposite the staff quarters of St.
Bridgit Girls High School.
The location of the business is fine, safe and visible as it’s just along Sikhendu – Endebess
road
The name and address to be portrayed on the front block is as shown below:-
CHELANG’AT’S ELECTRONICS COMPONENTS SHOP

P.O BOX 190-30201,

ENDEBESS

Telephone number 0743210953

1.4 FORMS OF OWNERSHIP

This business is to be established under sole proprietorship .Owned and managed by the
owner. The starting capital will be raised by the owner.
The business is established so as to utilize the owner skills in the field of electrical
components , so that people who came from the locality could benefit from the goods and
services from the business.
1.5 TYPES OF BUSINESS
The core business of Chelang’at’s Electronics Components shop is to sell newly
purchased electrical appliances. Also to involved in the selling of electrical spare parts and
other related products from the market.
The business will also involve in the offering of after sales services i.e. installation of
purchased electrical devices like motor, generators, aerials etc. Also advising the customers
on the use of the electrical appliances and devices.

1.6 PRODUCTS/ SERVICES

Chelang’at’s Electronics Components shop will deal with the selling of electronics and
electrical appliances and devices like sockets, switches, cables, circuit breakers, motors,
electrical heaters, television sets and radio sets.
It will also deal with the repair of some electrical devices e.g. radio sets, television sets,
Microwaves, fridges, computers and other related products.
The products will reflects on current technology that we are having, quality products to meet
the demand of the customers.

1.7 JUSTIFICATION OF THE BUSINESS OPPORTUNITY

The demand of electronics devices among the people in the local vicinity and the near by
town I.e. Endebess, Thus it offer no doubt about its market.
The business is targeting the house holds where people are evolving fast into use of electronic
devices, this case will therefore be of much importance to this households.
The firm is to make one that there is full satisfaction of customers needs by supplying the
with the spare parts for their appliances, repairing and even selling news ones to them.
Another main opportunity is the presences of ST. Bridgit Girls high school, Deko
Boarding primary school, Endebess mixed and secondary school, Endebess cotartage
Hospital.

1.8 THE INDUSTRY

The proposed business will be both commercial and services oriented. The choice of the
industry is based on the facts that most of caking resident’s demands services very much .it’s
also preferred to production industry because the capital required here is low.
In addition to this, the skills of the concerned owner will help in sufficient and effective
operation of the industry.
The businesses will posses products which are of the current technology to feet the demand
of the customers. The concerned owner will weigh according to the rate of the expansion and
determine the kind of labour and the number of employees.

1.9 GOALS OF THE BUSINESS

For every successful enterprise, there should be laid down visions and missions which will
work hand in hand to fulfill and enable the business to succeed. The owner therefore has a
vision to become the best in the entire electronic sector and give quality services to her
customers.

She also has a mission of satisfying every customer that comes to her premise. Due to this the
owner has the following goals, both long and short term.
SHORT TERM GOALS
I. To earn a living and thus improve on the living standards
II. To provide quality goods and services to satisfy the community by sourcing
and marketing
III. To create employment opportunity to the community by employing qualified
youths
IV. To recognize how important the development of employees is to the success of
the business by educating them through seminars and workshops.
V. To offer better, quality up to the standard services and products.
VI. To promote the countries economy by paying tax.
VII. To help customers on how to use the appliances by providing after sales
services.
LONG TERM GOALS
I. To maximizes profit.
II. To expands and opens other branches countrywide.
III. To becomes the market leader.

1.10 ENTRY AND GROWTH STRATEGY

2.10.1 ENTRY PLAN
Chelang’at’s Electronics And Electroncs Shop is a firm that looks forward to capture the
best fraction of the market as fast as possible and to ensure that this it need to adverse and
this will be done by use of logo’s and posters.
Discount and free services will offered especially for bulk sales, credit facilities will be
available for regular customers in order to attract and maintain them.
Distribution of the products will be done by use of pick-ups, motor bikes, and efforts will be
made to ensure that this product gets to the door steps of the customers as quickly as
possible.
2.10.2 GROWTH STRATEGY
Since the owner has done enough survey of the market and found out the availability of
potential market of Chelang’at’s Electronics And Electronic Shop.
Stands a great chance of prospering since the business expects more customers especially
from households, churches, hospitals and other small scale industries this is because the
owner is a skilled personnel in that field.
Through patience, hard work, honesty and punctuality, the business is to stand a better chance
of growth from the profits attained from the sales and the services also from the time to time
savings.
 CHAPTER TWO
2. 0 MARKETING PLAN

2.1 CUSTOMERS
The potential customers in relation to the business are those people who effectively utilize
the goods and offered at Chelang’at’s Electronics Components shop supporting the
growth of the firm in daily basis.
The estimated customer in relation to enterprise is yet to be set to serve each and every
individually maximally and the area is to serve the population of approximately 44,000
where part of the population is within the market and adjacent town.
The growth of the business is to be based on market segmentation and competition reaction.
The adults are the key role players among others and the potential market
is densely located within the area of operation.
I Domestic customers
Are mainly targeted group that buys the products at a small quantity for personal use and
also bring small/little electronics devices for repair and purchases, things like bulbs, stators
and fuses,
Ii Commercial customers
These are potential customers who normally order specifically large quantity of electrical
components a device e.g. motors, cables, fridges, stators and generators to their respective
centers and places.
The customers normally order goods on monthly basis this period were introduced to have a
chance of producing more products.

2.2 MARKET SHARE

In the established site the Chelang’at’s Electronics Components shop; competitors are a bit
scatted at various points where they can meet most of the clients. This competition manages
to scoop 50% of the total people whose require the services. But the remaining percentage of
outside to purchase the products is to be gained by Chelang’at’s Electronics Components
shop.
Therefore the centre have 50% market share of the total potentiality that are capable of
purchase the products and services effectively.
 %

10
40
SANYA ELECTRONICS

CHELANG'AT'S ELECTRONICS

50
ENDEBESS ELECTRICALS

2.3 COMPETITION
The sole enterprise has got a number of customers venture in more or less the same business,
through staged at distance places. However the rate of what they provide compared to what is
demanded by the market is low and of low quantity and that is why most of the market
demands go outside the location looking forte what they need for their use.
The competitors of the business includes SANYA ELECTRONICS SHOP and
ENDEBESS ELECTRICAL APPLIANCES SHOP.

2.3.1 STRENGTH AND WEAKNESS ANALYSIS

BUSINESS STRENGTH WEAKNESS
SANYA  High quality services provided  Few workers that serve
ELECTRONICS to customers. Customers.
SHOP  Excellent display of products  Products are not
and appliances. Scheduled to
 Availability of assets like land. customers.
 Prices of products/
Equipments are
high.
ENDEBESS  Have appliances of high  Products are of low
ELECTRICAL Quality. Quality.
APPLIANCES  Availability of servicing  High prices for their
SHOP Facilities. Services and
appliances/
  Quick reaction to customers Equipments.
Requisitions.
 Standard pricing list.
CHELANG'AT'  Availability of after sale  Few workers serving
S Services. the
ELECTRICAL  Availability of modern Customers.
COMPONENTS Technology equipments.  Inadequate
SHOP  Quick services in terms of cleanliness.
Repair.
 Prices are not fixed.
 Availability of modern
Communication technology.
 Good display of products.

2.3.2 COMPETITIVE ANALYSIS

STRENGTH ANALYSIS
Business Products/ Personnel Promotion Pricing Location Siz Total
Services e
Chelang'at's 6 7 5 6 2 2 28
Elctricals

Sanya
Electricals 4 6 2 5 3 1 21
Endebess
Electricals 3 5 7 6 4 2 27
Scores 10 10 10 10 10 10 60

WEAKNESS ANALYSIS
Business Products/ Personnel Advertising Pricing Location Siz Total
Services e
Chelang'at's
Electrical 3 5 4 7 6 8 33
Sanya
Electricals 7 6 6 5 3 5 32

Endebess
Electricals 6 5 5 5 2 4
27
Total 10 10 10 10 10 10 60

2.4 METHODS OF PROMOTION AND ADVERTISEMENT

Promotions are to be done regularly basing on the growth and expansion of the business. This
promotion would mainly on products and for sensation of the
Chelang’at’s Electronics Components shop on the market.
The methods to be used for promotion would include offering after sales services e.g.
transportation of bulky purchase goods and equipments to customers premise, Discounts on
goods.
Advertisement is to be done periodically by the use of logo, display of equipments
customers’ relation with the enterprises, management and workers.
The media e.g. local newspapers, local radios, poster and logo’s on products are the methods
of advertisement to be concerned.
The cost of advertisement and periods is to increase on the level of the growth and expansion
of the business.

2.5 PRICING STRATEGY

The following factors are to be taken into consideration by the management of
Chelang’at’s Electronics Components shop when setting up it’s pricing strategy.
 The price of products and services.
 The prevailing market price of the equipments
 The transportation cost of the products.
These methods are to include:-
i. Competitive
The business is to be set its prices to be as low as possible in order to attract many
customers.
It is to be done through buying goods directly from the manufacturer at least lower prices.
ii Psychological pricing
It involves pricing of the products and equipments depending with seasons. The business is
located at the prices where farmers are many thus the pricing is to be adjusted as per the
seasons.
iii Customers pricing
The pricing is done depending on the customers buying habits and their habits and their
level of income.

2.6 SALES TACTICS

Chelang’at’s Electronics Components shop is to employ agencies as the methods of
running its business whereby the business products and services is to be popularized by the
agents who are to be in every area for promotion and making sales.
The large number of customers has to be informed on the days agents are to be in their places
with the quality products for selling at affordable prices. The discounts have to be provided
those days.
Agents are to benefit from the discount given the business oh the sales made per day.

2.7 DISTRIBUTION STRATEGY

The business operation starts from the manufacturer to Chelang’at’s Electronics
components shop
in both wholesale and retail sales.

DISTRIBUTION STRATEGY CHART

MANUFACTURER/PRODUCER

LINET ELECTRICAL AND

ELECTRONICS AGENCY

RETAILER CONSUMERS

CONSUMERS
Products from producers to the business are to be distributed by use of van that is the
property of this business of enterprise. Consumers who buy goods/equipments in bulky are
to be transported by the enterprise van.
Moving of the goods from the store to the shelves is to be done manual by the shop attendant
but as the enterprise expands more manpower is to be employed.
All in all there are challenges that face chelang'at's i.e. there is limited mode of distribution
as only one van is to be used for both enterprises and to the customers. The estimated cost is
about kshs 20,000 to be invested.
 CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT PLAN

3.1 KEY MANAGEMENT PERSONNEL

The business is to compose of six personnel, which is the workforce that is to assist in the
growth and expansion of the business. The main are of concern of these employees is the
matter of public relation and the sensation of the business .It’s to consist of.
1. MANAGER
It will be managed by Chelang'at's , who is the sole owner of the business stated above.
QUALIFICATIONS
 Must have diploma in Business Management from recognized institution.
 Must have an experience of two years of working in a similar position.
 Skills in entrepreneurship and business management are an added advantage.
 Must be fluent in English and Kiswahili languages.
DUTIES AND RESPONSIBILITIES
 Staffing and recruitment of staff.
 Supervises and planning transactions and signing the entire documents.
 Drawing and planning business organizational activities.
 Coordinating to integrate and harmonize the employees to achieve the desire
objectives.
 Control and decision making to maintain the actual performance of enterprise.
2. ASSISTANT MANAGER
He/ she works with the command given to him/ her by the manager.
QUALIFICATION
 Must be holder of at least certificate in electrical components engineering.
 Must have a working experience of at least 3 years in the position of supervisor.
 Be fluent in both English and Kiswahili
 Should be at least 19 years and above.
 Should be sober enough to supervise other employees and be ready to attend seminar
and workshops for the business.
DUTIES AND RESPONSIBILITIES
 Supervise all the activities in the enterprises
  He is to act as the manager and take on although a responsibility of the manager is his
absence except signing of the documents or transaction of the business.
 Ensure daily allocation of duties to employees under him.
 To coordinate other staff members and public relation promotion.
 Offering advices to the juniors and the entire business.
3. ACCOUNTANT / CASHIER
The enterprise is to have one accountant who is to carry on the activities of the cashier for the
enterprise.
QUALIFICATIONS
 Must be a holder of certificate in accounts or public relation accountant certificate [C
P A 1] from a reputable institution.
 Should be 18 years and above having identity card.
 Must b a 3 years working experience in the same position.
 Should have a certificate of good conduct.
 Must have skills in public and entrepreneurship skills which are an added advantage.
DUTIES AND RESPONSIBILITIES
 Keeping financial records.
 Liaising with an assistant manager on matter of purchasing gods that are out of stocks
and recording all the transaction.
 Handling all the banking on behalf of the business.
 Receiving each from customers and issuing cash for the purchases of goods that are
required by the customers.
 Organizing display, monitoring changes in prices of all the commodities and services
and keeping up to date records of the prices changes.
3.2 OTHER PERSONNEL
3.2.1 SHOP ATTENDANT
The business will employ one shop attendant who will also act as an assistant accountant
to the accounts.
QUALIFICATION
 Should be holder of K.C.S.E certificate with minimum qualification of C-[minus]
 Should be 18 years and above
 Must have an experience in the same field of at least 6 months
  Should be good in public relation and fluent in English and Kiswahili languages.

DUTIES AND RESPONSIBILITIES

 Be able to carry out all the duties of the account in his/her absence except signing
on behave of him /her.
 Attending to the customers.
 Dealing with the customers complaining before forwarding to the manager.
 Assisting customers in packing and carrying of their luggage for the short distances.
 He/she should be in charge of cleanliness of the shop and the display arrangement.
3.2.2 SECURITY OFFICER
QUALIFICATIONS
 Must be from well known security firm e.g. G4S.
 Must have a certificate of good conduct
 Must be 25-35 years of age.
DUTIES AND RESPONSIBILITIES
 Ensuring the security measures are in place at all times
 Watching over the shop lifters
 Assisting customers in carrying of their luggage over short distances.
3.2.3 DRIVERS
The enterprise is to employ two drivers for the transportation of goods on behalf of the
business and also for the customers. This is at the start but with the growth of the business is
to employ one of them.
QUALIFICATIONS
 Must have a driving licensee from a reputable institution.
 Must have a certificate of good conduct.
 Should be 25 years and above and be ready to work odd times.
DUTIES AND RESPONSIBILITIES
 Transportation of goods and services from and to the business.
 Transportation goods and services for the customers to their respective destinations.
 ORGANIZATION STRUCTURE

MANAGER

ASSISTANT
MANAGER

ACCOUNTANT

DRIVERS SHOP ATTENDANT SECURITY

OFFICER

3.3 RECRUITMENT, TRAINING AND PROMOTION

The recruitment will be for selecting of competent persons for the started post who is to be
trained for effective production and attainment of the business objectives.
The promotion is the reward of hard working and self sacrifices of once effort for the
attainment of the aims of the business.
3.3.1 ADVERTISEMENT
The vacant post will be advertised mainly through local radios, posters placed at strategic
points and the sample is to be as follows.
The newly established electrical components shop is looking for the interested candidates to
fill the following vacancies:
1. Assistance manager 1 post
2. Accountant 1 post
3. Shop assistant 1 post
4. Driver 1 post
5. Security officer 2 post
Qualifications are as shown in clause 3.2 above.
The applicants should send their applications with their detailed C V to reach the manager
before 22nd February 2014.
Address to:-
THE MANAGER,
CHELANG’AT’S ELECTRONICS COMPONENTS SHOP
P, O. BOX 728
ENDEBESS KENYA.
3.3.2 SHORT LISTING
The manager is to shortlist the candidates as regards to the contents of each application and
the C V of the applicants.
3.3.3 INTERVIEWS AND JOB ALLOCATIONS
The interview is to be done and successful applicants which are to be carried out by the
manager. After the interview the successful candidates should be given their job allocations
by the manager.
3.3.4 TRAINING
It’s to be offered to the absorbed applicants on the basis of customers relation such as
honesty, politeness, kindness and courtesy.
The manager is to organize for seminars and workshops for the employees this is to improve
their knowledge in public relations, business organizations.
3.3.5 PROMOTIONS
It’s to be base on performance of the business and employees. They are to be promoted
basing on the hard work and self sacrifices for the business. It’s to be through increase in
salary, allowances, and sponsorships. All this are the form of promotions to be used by the
manager.

3.4 RENUMERATION AND INCENTIVES

All employees of the stated enterprise are to be paid basing on their qualifications and job
title and the position they hold in the business. At the start of the eEnterprise the following
allowances will be offered:-
- Breakfast
- Lunch
- Transport
But as the firm expands the following allowances will be included, medical, house and
travelling allowances.
 Job Tittle No. Of Salary/Month Breakfast/Lunch Transport Total
Employees Allowances Allowances
Manager 1 10,000/= 900/= 1,200/= 12,100/=
Assistant 1 5,000/= 800/= 1,000/= 6,800/=
Manager
Accountat 1 4,000/= 700/= 500/= 5,200/=
Shop 1 3,800/= 600/= 400/= 4,800/=
Attentant
Drivers 2 @3,500 @ 500 @ 400 8,800/=
Security 2 @2,000 @ 500/= @ 200 5,400/=
Officers
Total 8 33,800/= 5,000/= 4,300/= 43,100/=

3.5 LICENSES, PERMIRS AND BY-LAW

This is to enable the business to transact legally in the stated environment. This is also to
make customers to have confidence in goods and services they receive from the business
hence making them feel free to buy at any given time.
The trade license is to be obtained at TRANSNZOIA county council together with the permit.
The license is to be worth Kshs 5,000 and is to last for a period of one year of which it will be
renewed at the cost of Kshs 5,000 only per year.
This business is to ensure that it certifies all the legal procedures of the government by
permission and clearance from various government ministries and agencies.

3.6 SUPPORT SERVICES

3.6.1 BANKING
The business requires to have a bank account since it’s profit generating enterprises.
The business is to open an account with the Equity Bank Endebess or Endebess branch.
The bank is preferable because it offers low taxes on loans. Apart from giving loans to its
members, it’s also friendly and can offer advices to new entrepreneurs. The proffered account
is credit and saving account.
3.6.2 COMMUNICATION SERVICES
Since this enterprise will be dealing with people [customers and manufacturers] from all over
the country, there is need to have communication services to cut on cost of traveling around.
The business is to have a postal address, telephone number and email address as follows.
 Postal address: P.O. BOX 728 Endebess
Telephone number 0718350353
3.6.3 INSURANCE SERVICES
An insurance policy against theft and fire will be into consideration as the enterprise is to deal
with selling and servicing electrical gadgets which are easily destroyed by fire.
With the growth and expansion of enterprise employees will be also assured with the
Blue Shield Insurance Company. It’s this company that is to offer advice where matters are of
great concern.
 CHAPTER FOUR
4.0 OPERATIONAL /PRODUCTION PLAN
Chelang’at’s Electronics Components shop is to deal mostly with the selling of new
products and also the repair of electrical components equipments.
4.1 PRODUCTION AND FACILITIES AND CAPACITY
The table below indicates items, quality and the cost per unit. All this items are to enable the
business enterprise to operate and run smoothly.
ITEM COST PER UNIT TOTAL
QUANTITY
Workshop bench 2 @1.500/= 3,000/=
Shelves and drawer 10 800/= 8,000/=
Table 3 600/= 1,800/=
Chairs 4 600/= 2,400/=
Benches 2 150/= 300/=
Cabinets 3 2,000/= 6,000/=
Padlocks 12 pieces 100/= 1,200/=
First aid kit 1 700/= 700/=
Engineering kit 3 800/= 2,400/=
Multimeter 2 500= 1,000/=
Mega meter 1 1,200/= 1,200/=
Phase tester 4 60/= 240/=
Pliers 5 100/= 500/=
Side cutter 2 90/= 180/=
Stripping knife 3 20/= 60/=
Screw drivers 1 set 180/= 180/=
computer 2 sets 20,000/= 40,000/=
TOTAL 69,160/=
4.1.2 THE LAYOUT OF THE ENTERPRISE
Chelang'at's Electronics components Shop located on the land size
300 by 200M. The land is in the market centre.

COUNTER MANAGER
S OFFICE
ENTRANC
E
Shop technicians
Display

CASHIER

TOILETS
entrance

4.1.3 REPAIR AND MAINTAINANCE

Repairing and maintaining of tools and equipments i.e. electrical appliances used for
production and servicing is an activity that is highly considered in the enterprise.
Repairing is the day to day activities. The major repair and maintenance in the enterprise is
electronic appliances i.e. Radios, television sets, microwaves also motors rewinding and
generators.
Motor and generators are repaired and maintained frequently due to the presence of major
customers that is pan paper heavy chemical company in Endebess that utilizes the use of
motors and generator.
This maintenance prevents the people or the uses in purchasing the new equipments thus
reducing the expenses.

4.2 PRODUCTION STRATEGY

The production strategy of Chelang’at’s Electronics Components shop is of its own style in
the area. The business is to be divided in departments. The shop is to deal with the selling of
electrical equipments and materials. The owner of the business manager is to operate the shop
departments and is to be assisted by the cashier.
The workshop department is to be operated by the supervisor who is assistant manager and is
to be assisted by two technicians one specialized in repair and maintenance of electrical
equipments while the other I s specialized in installation work.
The workshop is to include modern equipments for fault diagnosis in electrical devices thus
saving time and increasing of the goods the device to be computer oriented
Production cost is to be minimized so as to allow the business to make reasonable profit.

4.2.1 PRODUCTION DESIGN AND DEVELOPMENT

The following are the products that Chelang’at’s Electronics Components shop is to be
involve in the selling
 Fuses
 Socket outlet
 Switches
 Bulbs
 P.V.C cables
 Conducts
 Fluorescent tubes
 Fluorescent fittings
 Clips

4.2.2 MONTHLY MATERIALS REQUIREMENTS

The material is to be purchased on monthly basis .Below is the table showing items quantity
and cost per unit.
ITEMS QUANTITY COST PER TOTAL COST
UNIT PERMONTH[Kshs]
PVC cable 2 roll[100m] 6,000/= 12,000/=
Switches 2 dozens 40/= 960/=
Fuses 4 dozen 35/= 140/=
Sockets outlets 2 dozen 60/= 120/=
Circuit breakers 2 dozen 200/= 4,000/=
Conduits[plastic] 1 dozen 80/= 960/=
Hack saw 1 dozen 70/= 840/=
Fluorescent tubes 2 dozen 250/= 6,000/=
 Bulbs 3 dozen 50/= 1,800/=
clips 4 dozen 50/= 2,400/=
Screw sets 4 dozen 150/= 7,200/=
Pen and pencils 4 dozen 64= 64/=
Full scups 1 ream 300= 300/=
Grease 2 kg @30/= 60/=
Spring files 2 pieces @25/= 50/=
TOTAL 37,694/=

4.2.3 MONTHLY LABOUR REQUIREMENTS

Job Tittle No. Of Salary Per Medical & House Net
Employees Month Allowances Salary
Manager 1 8,000/= 4,500/= 12,500/=
Assistant manager 1 6,000/= 3,000/= 9,000/=
Accountant 1 5,500/= 2,500/= 8,000/=
Clerk 1 4,500/= 1,500/= 6,000/=
Security officer 2 @4,000/= @1,000/= 10,000/=
Cleaner 1 3,000/= 1,000/= 4,000/=
Driver 1 4,000/= 1,500/= 5,500/=
Technicians 2 5,000/= @2,000/= 14,000/=
TOTAL 10 44,000/= 20,000/= 69,000/=

4.2.4 MONTHLY PRODUCTION COSTS

The material and labour that the enterprise is to operate on is as follow
PARTICULARS AMOUNTS IN [ KSHS]
Salaries and allowances 69,000/=
Insurance 2,500/=
Telephone bills 2,000/=
Electricity bills 1,500/=
Repair and maintenance 3,000/=
Materials 4,000/=
TOTAL 82,000/=
4.3 PRODUCTION PROCESS
The process is to be considered highly when dealing with installation and any repair work.
For technician dealing with repair, the work is to be done in steps as follows
A. REPAIRS
Step I – Defining the nature of problem.
Step ii - Test the equipment.
Step iii – Put off the power
Step IV - Trouble shoots the equipment.
Step v – Carry out the actual repair
Step vi - Test the equipment or circuit to see the final results
Step vii – Collection off the equipment.
B. BUILDING INSTALLATION
Step I – Carry out the inspection of the site.
Step ii –Estimate the cost of the material to be used.
Step iii – Doing the piping o f the building.
Step IV – Drawing o f the cables in the conducts
Step v – Joining to complete the circuit
Step VI – Testing of the circuit
Step vii – Switching on the power.

4.4 REGULATION AFFECTING OPERATIONS

Chelang’at’s Electronics Components shop is to obtain its trade license from Transnzoia
county council at a fee of kshs 3,000 and also to pay a services charge of Kshs 500 annually.
To benefits its employees, the enterprise is to submit Kshs 400 to national social security
funds [NSSF] fund per month
All the employees are to be covered by insurance against any risk thus Kshs 100 is to submit
to insurance firm every month.
The business is to be liable in case any accidents occurrence, in the conclusion the business
is to spell out all the rules and the regulations to be followed while in the workplace.
The business is to ensure that the construction of any structure will bear the requirement of
the building and construction act. This is to ensure that this is safety and avoid accidents.
Being an electrical firm fire fighting equipments will be necessary. The enterprise is to
ensure that all the employees know how to handle and operate the equipment.
 To avoid electrical shocks the management is to ensure that circuits’ breakers and switches
gears are connected in various places of the electrical circuits.
As per Kenya law cab 254 requires all forms of organization in Kenya should observe high
standards of cleanliness within their environment. This enterprise is too strictly adhere to this
law by ensuring that workshop is always clean and well organized.
General cleanliness program me will be done once in a week.
 CHAPTER FIVE
5.0.0 PROPOSED CAPITALIZATION
This is a plan on how cash will be flowing into the proposed business during its period of
operation. This plan will enable the business owner to try and evaluate and be able to know
whether the business will be operating towards the goals set.

5.1.0 PRE-OPERATIONAL COSTS

These are expenses that will be incurred prior to operation of the business.
ITEM AMOUNT
Land and Building 1,269,000
Business registration 13,000
Furniture and Fitting 154,000
Electricity 25,000
License 48,000
Water 13,000
Machine and Equipment 60,000
Transport 37,000
TOTAL KSH. 2,628,000

5.2.0 WORKING CAPITAL REQUIREMENT

This is the ready cash at hand to run the business on a daily basis. Genuine Auto Spares shop
will use the amount shown in the table during its first three years of operation.
ITEM YEAR 2021 YEAR 2022 YEAR 2023
CURRENT ASSETS
Cash at hand 1 000 000 1 030 000 1 400 000
Cash at bank 300 000 350 000 400 000
Debtors
Stock 600 000 650 000 700 000
TOTAL CURRENT ASSETS 1 900 000 2 030 000 2 500 000
CURRENT LIABILITIES
Creditors 305 000 338 000 350 000
Overdrafts 330 900 371 900 400 000
TOTAL CURRENT LIABILITIES 635 900/= 709 900/= 750 000/=
Working capital = Current Assets – Current Liabilities
1st Year 2021 = 1 900 000 – 635 900 = 1 264 100/=
2 year 2022
nd
= 2 030 000 – 709 900 = 1 320 100/=
3 year 2023 = 2 500 000 – 750 000 = 1 750 000/=
rd

5.3.0 INCOME STATEMENT

ITEM YEAR 2021 YEAR 2022 YEAR 2023
Sales 1 800 000 2 000 000 2 500 000
Cost of goods sold 400 000 500 000 600 000
 Gross profit 1 400 000 1500 000 1 900 000
EXPENSES
Insurance 10 000 10 000 10 000
Wages & salaries 574 000 574 000 574 000
Water 13 000 13 000 13 000
Electricity 25 000 25 000 25 000
Advertisement 8 400 8 400 8 400
Creditors 305 000 338 000 350 000
Transport 37 000 37 000 37 000
Licenses 48 000 48 000 48 000
Repair & maintenance 5 000 8,000 10 000
Postage 1 500 2,000 3 000
TOTAL EXPENSES 1 027 700 1064 400 1082 400
NET PROFIT BEFORE TAX 372 300 435 600 817 600
LESS 10% TAX 37 230 43 560 817 60
NET PROFIT AFTER TAX 335 070/= 392 040/= 735 840/=

5.4.0 PRO-FORMA BALANCE SHEET

ITEM YEAR 2021 YEAR 2022 YEAR 2023
CURRENT ASSETS
Cash at hand 1 000 000 1 030 000 1 400 000
Cash at bank 300 000 350 000 400 00
Debtors
Stock 600 000 650 000 700 000
TOTAL CURRENT ASSETS 1 900 000 2 030 000 2 500 000
FIXED ASSETS
Machine & Equipment 60 000 80 000 100 000
10% depreciation 6 000 8 000 10 000
Land & building 1 269 000 2 030 000 1 350 000
10% depreciation 126 900 130 000 135 000
TOTAL FIXED ASSETS 1 464 900 1 518 000 1 595 000
TOTAL ASSETS 3 364 000 3 548 000 4 095 000
CURRENT LIABILITIES
Overdraft 330 900 340 000 350 00
Creditors 305 000 310 000 320 000
TOTAL CURENT LIABILITIES 635 900 650 000 670 000
LONG TERM LIABILITIES
Owners Equity 226 000 258 000 260 000
Bank loan 200 000 205 000 215 000
Friends & Relatives 400 000 405 000 450 000
TOTAL LONG TERM LIABILITIES 826 000 868 000 925 000
TOTAL LIABILITIES 1 464 900/= 1 518 000/= 1 595 000/=
5.5.0 CASH FLOW PROJECTION STATEMENTS

5.5.1 CASH FLOW PROJECTION FOR THE YEAR 2021

Description Jan Feb Mar April May June July Aug Sep Oct Nov Dec Total
Beginning 86220 90540 90630 92530 94580 99070 10232 10371 10305 10417 10505 107187
Cash Sales
Balance 73000 0 0 0 0 0 0 00 00 00 00 00 730000
00
Debtors 80000
0 30000 30000 15000 16700 15000 18000 10000 11000 11000 9000 9500 255200
Capital 24000 23500 25000 25500 25800 26000 26300 26500 26500 26500 26700 26850 309150
Total inflows 010500 011272 011854 011763 012000 012208 012717 012982 013131 013065 013177 013285 0147954
CASH 00 00 00 00 00 00 00 00 00 00 00 00 00
License
PAYMENTS 2800 2800 5600
Furniture 11000 41000 3800 55800
Transport 20000 18000 22000 20000 21000 18800 19000 23000 22500 22000 21000 20000 247300
Electricity 9000 10700 11100 10800 11000 11000 10600 10800 11200 10600 10200 11300 128300
Water 3000 3300 2900 3200 2600 3000 3400 3200 2800 3000 2800 2700 35900
Telephone 12000 10400 12000 10500 10500 9800 11200 11000 12000 12000 11000 11500 133900
Salaries and 85000 85000 85000 85000 85000 85000 85000 85000 85000 85000 85000 85000 102000
Advisements
wages 8400 6000 12000 16000 15000 4000 5000 5000 5000 4500 4500 4500 89900
0
Creditors 14000 36000 42000 41000 42000 45000 49000 48000 48000 49500 49000 463500
maintenance 20100 20100 20100 20100 80400
Miscellaneous 18000 17000 40000 36000 40600 4600 45500 45500 47000 52000 49500 50000 445700
Rent 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000
Stationery 2000 7000 11000 11000 9000 7000 12000 12000 11000 17000 14000 113000
Postage 1600 1400 16000 1500 1500 1200 1800 1600 2000 1700 1700 1500 33500
Total Cash 18780 22180 27910 25100 25420 23010 24850 26110 28260 26480 26720 28460 303280
Cash Balance
payment 86220
0 90540
0 90630
0 92530
0 94580
0 99070
0 10232
0 10371
0 10305
0 10417
0 10505
0 10439
0 117626
0
0 0 0 0 0 0 00 00 00 00 00 00 00
5.5.2 CASH FLOW PROJECTION FOR THE YEAR 2022
Description Jan Feb Mar April May June July Aug Sep Oct Nov Dec Total
Beginning 10439 108 7021 77390 82130 88180 93370 34110 34660 34971 35110 35433 225585
Cash sales
Balance   00  1700   00   0   0   0   0   00   00   00   00   00 000
Debtors 10000 12000 1600 12000 10000 5000 9500 15000 9000 13000 10000 8500 130000
Capital 27000 27050 27050 27150 27200 27250 27250 27300 27300 27300 27350 27350 571800
Cash receipts 129730 282500 9886
00 105740 110330 115930 36682
00 369900 374800 378310 379450 382530 2840650
Cash payments 00 0 00 00 00 00 00 00 00 00 00 00 00
Furniture 4200                       4200
Salaries and 86500 86500 8650 86500 86500 86500 86500 86500 86500 86500 86500 86500 103800
Postage
wages fee 2000 10000 30000 2000 1000 1500 2000 2500 3000 2500 1500 3000 250000
Telephone 10000 11000 9000 11000 12000 11500 10000 9500 10000 9500 11500 12000 127000
Advertisement 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Legal fees 2800           2800           5600
Electricity 10500 10400 9700 10500 11100 10300 9700 10500 10300 11100 10700 10500 125300
Water 3500 3200 3000 3000 2900 3300 3100 2500 2600 2900 3000 3000 36000
Rent 15000 15000 1500 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000
Transport 26000 23000 22000 21500 22000 21000 21500 22000 21500 22000 21500 20000 264000
Stationery 2000 1000 30000 2000 1000 1500 2000 2500 3000 2500 1500   22000
Creditors   26000 1650 17000 19000 26000 39500 41000 53000 53000 54000 53000 398000
maintenance 20100     0 20100     20100     20100     80400
Miscellaneous 28000 24000 4200 42500 46000 44000 40000 36000 41000 42000 41000 41000 467500
Total Cash 21560 98460 21470 23610 22150 22560 25720 23300 25090 27210 25120 24900 283300
Cash Balance
payment 108170 702100 7739
00 821300 881800 933700 341100 346600 349710 351100 354330 357630 2619920
00 0 00 0 0 0 00 00 00 00 00 00 00

5.5.3 CASH FLOW PROJECTION FOR THE YEAR 2023

Description Jan Feb Mar April May June July Aug Sep Oct Nov Dec Total
Beginning 35763 15500 15687 15847 15967 16084 16232 16431 16563 16763 17099 17377 194706
Debtors
Balance 1000
00   00   00   00   00   00 500
00   00 1000
00 2500
00 2500
00 10000
00 17500
00
Cash Sales 27400 27410 27430 27440 27450 27460 27460 28000 28200 28500 28500 29000 334250
Cash 360470 182410 184300 185910 187120 188300 189830 19231
0 193930 196380 199740 203770 2283060
CASH
receipts  00   00   00   00   00   00   00   00   00   00   00   00   00
License
PAYMENT 2800           2800           5600
Furniture 5600           4800           10400
Transport 23000 20000 24000 22000 23000 22000 21000 22000 23000 20000 21000 24000 265000
Electricity 11000 10600 11600 11000 11800 10500 10400 11100 10900 11000 10200 11000 131100
Water 3000 3000 2500 2700 2800 3100 3100 3000 2900 3200 3300 3200 35800
Telephone 11500 11500 10800 10700 11000 10650 10700 11500 11700 10700 11900 11300 133950
Postage 1500 1700 1200 1800 2000 1350 1800 2000 1300 1800 1100 1400 18950
Advertisem 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Creditors
ent 44000 53400 53000 50000 51000 52000 48000 54000 50000 47000 51000 54000 607400
Rent 17000 17000 17000 17000 17000 17000 17000 17000 17000 17000 17000 17000 204000
Stationery 1000 4000 3000 6000 6000 6000 5000 6000 7000 6000 3000 6000 59000
Maintenanc 6700 6700 6700 6700 6700 6700 6700 6700 6700 6700 6700 6700 80400
Salaries
e4e 86500 86500 86500 86500 86500 86500 86500 86500 86500 86500 86500 86500 103800
Miscellaneo 22000 36000 37000 43000 40000 39000 40000 42000 41000 39000 43000 41000 4630000
Total
uSs cash 24060 25540 25830 26240 26280 25980 25520 26680 26300 25390 25970 26710 310500
Cash
payment 155000 156870 158470 159670 160840 162320 164310 16563
0 167630 170990 173770 177060 1972560
Balance 00 00 00 00 00 00 00 00 00 00 00 00 00
5.6 PRO-FORMA BALANCE SHEET FOR THE YEAR 2021-2023
ITEM YEAR 2015 YEAR 2016 YEAR 2017
FIXED
Salaries 574 000 574 000 574 000
Licence 48 000 48 000 48 000
Insurance 10 000 10 000 10 000
Water 13 000 13 000 13 000
Electricity 25 000 25 000 25 000
Transport 37 000 37 000 37 000
Advertisement 8 400 8 400 8 400
TOTAL FIXED 715 400 715 400 715 400
VARIABLES
Postage 1 500 2 000 3 000
Repair & maintenance 5 000 8 000 10 000
Creditors 305 000 338 000 350 000
TOTAL VARIABLES 311 500/= 348 000/= 363 000/=

5.7 BREAK-EVEN LEVEL

PROFIT VOLUME RATIO (P.V.R) = {1-(VARIABLE COST/SALES)}
Break Even Point (B.E.P) = (FIXED COST/P.V.R)
FIXED COST YEAR 1 YEAR 2 YEAR3
Salaries and wages 1,020,000 1,038,000 1,038,000
Rent 180,000 180,000 204,000
License 5,600 5,600 5,600
furniture 55,800 4,200 10,400
Total fixed cost 1261400 1227800 1,258,000
Total expenditure 3032800 2833000 3105000
Variable cost 1,771,400 1,605,200 1847000
1 Year
st

P.V.R={1-(1,771,400/3,091,500)}

Breakeven point (B.E.P)

= 1,261,400/0.427
=2,954,032

2nd YEAR
P.V.R
. = {1-(1,605,200/3265500)}
=0.508
B.E.P
. = 1,227,800/0.5O8
=2414853

3RD YEAR
P.V.R.
= {1-(1847000/3,342,500)}
=-0.447
B.E.P.
=1,258,000/-0.447
=-2811678

5.8.0 DESIRED FINANCING

This is the money required to start and the business
Desired financing = pre-operational cost + working capital

1st Year
WORKING CAPITAL=current assets-current liabilities
= 2225700-636500=1,589,200
Desired financing = 1,443,600+1,589,200
=3,032,800
2nd year
Working capital=2,253,500-780,400=1,473,100
Desired financing= 1,359,900+ 1,473,100
=2,833,000
3rd year
Working capital=2123700-57100=1552700
Desired financing= 1,552,300+1552700

5.9.0 PROPOSED CAPITALISATION

Total investment =ksh.3, 000,000
Owner’s equity =ksh.600, 000
Other contributions = 2,400,000

5.10.0 EXPECTED PROFITABILITY RATIO

Gross profit percentage = (gross profit X 100)/Sales
1sr Year
 (2580100*100)/3091500
=83.46
2nd YEAR
(2512700*100)/3265500
=76.95
3RD Year
(2356300*100)/3342500
=70.49
Return on equity = (net profit after tax)/ owners equity
1 Year
st

765200/550000=1.39
2 Year
nd

617800/600000=1.03
3 Year
rd

Return on investment= (net profit after tax)/total investment

1 Year
st

765200/2581500=0.3
2 Year
nd

617800/2688200=0.2
 APPENDIX
BUSINESSLOCATION MAP