TITTLE PRESENTER INDEX NUMBER CENTRE NAME COURSE DEPARTMENT. COURSE CODE SUPERVISOR PRESENTED TO FULFILLMI SERIES : KENYA NATIONAL EXAMINATIONCOUNCIL IN PARTIAI T FOR THE AWARD OF DIPLOMA IN CIVIL ENGINEER! BUSINESS PLAN : FECHE ELECTRONIC’S AND COMPONENTS SHOP : CHERONO FELISTER 15341010812 : RIFT VALLEY TECHNICAL TRAINING INSTITUTE : DIPLOMA IN ELECTRICAL ENGINEERING : ELECTRICAL ENGINERING DEPARTMENT 2 2601/3, : MR NICHOLAS CHERUIYOT : NOVEMBER 2022DECLARATION This business plan is my personal and original work and has not been presented for the award of certificate in other college. No part of this may be reproduced without prior permission of the author and was approved by my supervisor. Name: CHERONO FELISTER Signature: Date: Supervisor: MR NICHOLAS CHERUIYOT, Signature: Date:DEDICATION Thereby dedicate my business plan to my beloved Family by supporting me financially during the writing up of the business plan and thus ensuring that materials to be used were readily available during the writing of the business plan,ACKNOWLEDGEMENT I would like to acknowledge my supervisor for guidance during writing of this business plan also acknowledge my classmates for their contributions and moral support during this business plan write up, lastly to my parents and entire family for assistance financially and endurance. Thanks so much and may the almighty God bless you all.Contents DECLARATION DEDICATION sien sve se | ACKNOWLEDGEMENT... EXECUTIVE SUMMARY BUSINESS DESCRIPTION... MARKETING PLAN... ORGANIZATION AND MANAGEMENT PLAN cscs senna OPERATIONAL AND PRODUCTION PLAN vss isnannisnananinnnnnninmnnnsnsnse FINANCIAL PLAN. vi CHAPTER ONE... al 1 _ BUSINESS DESCRIPTION 1 1d BUSINESS NAME. connie 1.1.1 BUSINESSLOGO. 1.1.2 BUSINESS SIGN POST. 1 1.2 BUSINESS LOCATION 1.3. FORM OF OWNERSHIP 1.4 TYPE OF BUSINESS.... 1.5 PRODUCTS AND SERVICES. 3 1.6 SATISFACTION OF OPPORTUNITY 3 1.7 INDUSTRY... 4 1.8 — GOALS AND OBJECTIVES OF THE BUSINESS 4 1.8.1 SHORTTERM GOALS... 4 18.2 LONG TERMGOALS.... 4 1.9 ENTRY AND GROWTH STRATEGY. 4 1.9.1 ENTRYPLAN 4 1.9.2 GROWTH PLAN. 5 CHAPTER TWO sone 2 MARKETING PLAN 2.4 OBJECTIVES. 2.4.1 SHORTTERM GOALS2.1.2 LONG TERM GOALS. 2.2 CUSTOMERS..... 2.2.1 Institutional customers... 2.2.2 Commercial institution. 2.23 Individual customers 2.3 MARKET SHARE.... 2.4 COMPETITORS... 2.5 LOCATION AND DEVELOPMENT OF PREMISES 2.6 PRODUCTION STRATEGY.. 2.7 PRICING STRATEGY... 2.8 — PROMOTION/ ADVERTISEMENT STRATEGY. 281 — Posters. & ob me PRY a aaa ae 2.8.2 — Radios. 10 2.8.3 Sign post. 2.9 PLACE/DISTRIBUTION STRATEGY... 2.10 SALES TACTICS OF STRATEGY ...ssssnnnnntnnnn er) 2.10.1 Sales team.. 2.10.2 Selling methods. 2.11 Measures of marketing performance..... CHAPTER THREE, 3. ORGANIZATIONAL PLAN..... 3.1 OBJECTIVES OF THE ORGANIZATIONAL PLAN.....snne soninnnnnseeeeeennine 12 3.2 ORGANIZATIONAL STRUCTURE... 3.3 KEY MANAGEMENT PERSONNEL .....:sinnnnnsnesnnnnnnnnninnnnnnennnnnnnnne V2 3.3.1 Duties and responsibilities of the manage? -....smnnenennnnnneinnnnnnnnnsnnsee 3.3.2 Senior technician... 3.3.3 Accountant... 3.34 Drivers.. BBS Cleaners .nnnnninnnnnnnnnnnnnnnnnnnnnsinnnnnnnnnsnnnnnnn soon D4 3.4 RECRUITMENT, TRAINING AND PROMOTIONS OF PERSONNEL .....ssneieinenninnnnnie 1 3.5 RENUMERATION AND INCENTIVES FOR PERSONNEL. 3.6 LICENSES, PERMIT AND BYLAWS. 16B61 LICENSES ar nsninnnnninnnnnnnnninnnininiinnnnnnsniniinnnnsnnnnsnsee 16 3.6.2 Permits... 16 36.3 BYLAWS oon v 3.7 OTHER SUPPORT SERVICES. ow lT 3.7.1 Banking services. 7 BI2 —IMSUPANCE nsnnnnninnnnnnnnnnnnnnninnnnnnnnnnnnnnnnnnnnnnnneen LT CHAPTER FOUR 18 4 PRODUCTION/ OPERATIONAL PLAN 18 41 OBJECTIVES.. 18 4.2 FACILITIES AND CAPACITIES... 18 43. PRODUCTION STRATEGY. ee 4.4 PRODUCTION PROCESS... 2d 45 REGULATIONS AFFECTING OPERATIONS a 45.1 Business regulations... ou 22 45.2 Safety regulations... 22 45.3 Health regulations ..nmnnnnnnnnnnnnininninnnnnnnnnnnnnnnnnnnnnen DD 45.4 Insurance... 2 455 — Value added tax..... 22 FACILITY LAYOUT... 23 CHAPTER FIVE 24 5 FINANCIAL PLAN... 24 5.1 PRE- OPERATIONAL COSTS, 24 5.2 WORKING CAPITAL... 25 5.3 PROJECT CASH FLOW STATEMENT FOR YEAR 1. sosssnnnnnnnnnnnnnnnnennnnnnnen 26 5.4 PROJECT CASH FLOW STATEMENT FOR YEAR 2... sesesnnnnnnnnnnnnnnnnennnnnnnn 2D 5.5 PROJECT CASH FLOW STATEMENT FOR YEAR 3., 28 5.6 PROFORMA INCOME STATEMENT OF FECHE ELECTRONIC’S AND COMPONENTS SHOP SALES AND SERVICES. 29 5.6.1 Profitability ratio 30 5.7 FECHE ELECTRONIC’S AND COMPONENTS SHOP SALES AND SERVICES BALANCE SHEET... 5.8 BREAK EVEN ANALYSIS. 34 5.9 DESIRED FINANCING .....s:nnnnnnnininnnnnnnniinnninininsnininnnnnnnsese5.10 PROPOSED CAPITALIZATION .oncnnssnsninnnnninnnsnnnnnnnnnninininnnnnnnnnnne 3S APPENDICES... 36 APPENDIX 1... LOCATION OF FECHE ELECTRONIC’S AND COMPONENTS SHOP SALES AND SERVICES. APPENDIX 2 38 BUSINESS LOGO vrs oiniinninntiininnnnnnnnnninnnnnennninnnnsnsn 8EXECUTIVE SUMMARY BUSINESS DESCRIPTION ‘The proposed business will be named Feche electronic’s and components shop it will be located in kisumu. The business will be dealing in buying and selling of electrical accessories.it will also offer services like repair for elecricals and installation, The business will be strategically located so as to make it easy for the esteemed to access it. The proposed business aims at acquitance development as a service opportunity. MARKETING PLAN Feche electronie’s and components shop plans to market her services and products by way of aggressive advertising and capitalizing in the existing poor service of her competitors. It will, mainly target on the three categories of target customers. These includes institutional customers which comprised of schools, colleges, they are deposited to buy occasions due to every days activities constructed in these institutions, there is also industrial customers , these may be the people who want to purchase appliances for their homes. ORGANIZATION AND MANAGEMENT PLAN The business will be run by a sole proprietor who will keep on eyes supervision and manages all other departments. The manager will assign the duties to the employees and will control of all cash inflow and outflow as well as purchase of various goods, The firm will employ one senior technician, one accountant, two representatives in both sell and marketing section, two drivers, one messenger, two cleaners and two watchmen. An accountant will be keeping records of all business putting them into ledgers, preparing balance sheet and he will be held responsible for the books of the account in the firm. The cleaner will be responsible for maintaining cleanliness within the premises. The drivers should have a valid driving license and working experience of more than three years and they will be responsible for and policing transporting other firms goods and employees only.OPERATIONAL AND PRODUCTION PLAN The operation will be starting daily from 7.30am and closing at 6.30 pm from Monday to Friday and in all public holidays except on Saturday and Sundays when the business closes. The premises will be rented for any operation to start. The premise will comprise of a workshop, reception, store, a shop, manager room, and kitchen and accountant room, The rooms shall be in single building and each employee shall have dust coats and industrial boots for safety at work The firm will get its products from wholesalers and manufacturers based in Nairobi and suppliers based in japan. FINANCIAL PLAN Amount required for the start of the business will be Kshs 1,350,000. Expenses will be incurred in the pre operational cost, working capital and the fixed assets. Finance plan is as summarised below Source ‘Amount [ kshs] Personal savings 500,000 ‘Contribution from family and friends 200,000 Loans from bank 650,000 Total 1,350,000 viCHAPTER ONE 1 BUSINESS DESCRIPTION 1.1 BUSINESS NAME ‘The business name is Feche electronic’s and components shop sales and services. The preferred name of the business has been formulated to assert the extent the users of the product and services are likely to get high quality product that guarantees their needs, 1.1.1 BUSINESS LOGO 1.1.2 BUSINESS SIGN POST ELECTRICAL 10km1.2 BUSINESS LOCATION The intended business is to be located in kisumu town, 50m from the main stage along kisumu kaka mega highway just opposite Kisumu boy’s high school. The reasons for the above locations is the high market demand, good infrastructure egg roads, telephone networks and also adequate water and power supply KISUMU GIRLS. HIGH SCHOOL KISUMU BOYS, HIGH SCHOOL MARKET TO HOMABAY <—__ MAIN STAGE FECHE ELECTRONIC’S AND COMPONENTS SHOP 10 KAKAMEG1.3. FORM OF OWNERSHIP ‘The business will be sole proprietorship with cherono felister as the overall manager of the business. The owner will enjoy the following as a sole proprietor ‘* Profit made are not shared ‘+ Easy decision making ‘© Registration process being mple ‘+ The owner enjoys being the boss 1.4 TYPE OF BUSINESS ‘The business offer a wide range of products and services to its customers, some of these will be the sale of electrical and electronic devices and repairs, 1.5 PRODUCTS AND SERVICES The firm will provide a wide range of services ee.g.sales and repair of all electrical and electronic goods, the business will be involved in repair of all kinds of electrical and electronic appliances like the iron box, car stereo, and many others. The business will also be involved in the sales of all sorts of spare parts for both electrical and electronic equipments like distribution board, cables,circuit breakers and others. The sale service will include new electrical and electronic goods egg radio, television sets, video players and laptops. These goods will be imported from suppliers based in japan since the goods are the original and more durable ones. 1.6 SATISFACTION OF OPPORTUNITY Since many people in kisumu and the nearby places are installing their houses with electricity, the business will be targeting them since few firms in the area runs the same business. The business will offer other services like training to the residence on how to manage electricity so as to reduce and avoid cases of accidents caused by electric shock and fires. The training will be offered after every three months and also while installing the houses. A strategic position will be chosen where as many people as possible can reach easily for the training without any difficulty1.7 INDUSTRY The business will be categ: od into electronic industry that is dynamically growing ant takes a large portion in the economy sector. Since the customers will require accurate excellent repairs of their electronic gadgets, skills of the workers will be applied in repairing and installing and wiring the premises, Since there are other players in the industry, the firm will carry out a strength and weakness analysis to know more about other players. 1.8 GOALS AND OBJECTIVES OF THE BUSINESS The business has both the long and short term goals, 1.8.1 SHORT TERM GOALS > The main of the objectives of the busin 3 is to make profit so that it will be self reliant. > To provide efficient and reliable products and services to customers so as to win the markets v To establish a stable and ready enterprise to compete with other competitors v Create employment opportunities too many people and utilize the available resources and to have a working society 1.8.2. LONG TERM GOALS These are the goals that the business intends to achieve after a period of more than five years > To expand the business operations and cover awide range of operations > To increase the number of vehicles to assist in transporting the goods to customers who buy in bulk > To capture at least 20% so as to make the business grow further 1.9 ENTRY AND GROWTH STRATEGY 1.9.1 ENTRY PLAN ‘The business plans to have all the legal documents to avoid confrontations with the authorities that may lead to business interruptions or shut down, It also intends to bring to the attention of, potential customers the existence of new firm i.e. by use of bill boards, posters, radio and many other means available1.9.2. GROWTH PLAN After certain periods of time in operation, the business will offer di ‘ounts on bulk purchases and also credit services. For the business to grow effectively, good relationship between the manager and employees is maintained so that the customers’ needs may be met. All these strategies are targeted in order to illustrate to the customers how the business is committed to its work and the welfare of the society at large and it will also a good public image. CHAPTER TWO 2) MARKETING PLAN Marketing promotes by trade by satisfying the customer needs and also it creates awareness of existing product and services in the potential and prospective customer. Marketing is a system of business activity designed to plan, price, promote and wants satisfying goods and services to excited and potential customers at price. 2.1. OBJECTIVES The marketing objectives will be To consider the needs of the customers and continuously products that satisfies the nee To use the competitions as a tool to enable birdie electrical sales and services get better equipped and set to emerge as the best farm in the entire region To manufacture and distribute at a cost and price that is reasonable an acceptable so as to be able to make good profits 2.1.1. SHORT TERM GOALS The business will emphasize on quality goods and services of the highest standard within the town. The business will enable its customers to have an access to all services at all times as soon as new equipments have come to the market. The manager will ensure a good relationship is, created between the customers and shop attendants in the business.2.1.2 LONG TERM GOALS Marketing will provide the match between the farm, financial and physical resources and also the wants of the customers. The marketing function will be responsible for bringing the right goods and services to the customers in the most efficient and profitable w Ye 2.2 CUSTOMERS Customers are the people who run the business and they are also the will users of the product and services produced and provided. There will be three categories of targeted customers. > Institutional customers > Commercial and industrial customers > Individual customers 2.2.1 Institutional customers ‘They play a major role in promoting the business since they are the most lasting customers .This category comprises of Schools Colleges, Hospitals, Supermarkets. The customers to the firm will be Kisumu Polytechnic, Nakumatt Supermarket,Russia Hospital e.te. 2.2.2 Commercial institution This is a group of customer who buy goods ion bulk so that they may sell them at a retail price and earn a profit. This includes other technicians who own small retail shops and electrical workshops. The firm will be giving a reasonable discount to the customers purchasing goods in large quantities for attraction and retention, 2.2.3 Individual customers ‘This group of customers place their order in small quantities and they are expected to provide regular market.They include school children that buy and use electronic gadgets such as wrist watches, calculators and radios. 2.3 MARKET SHARE, The business will operate in a place where there are other markets already in operation. At the start of the business, it has to capture an estimated number of customers of 2,000. The remaining are tyo be served by the already existing business as shown.Super electrical sales and services. | 500 139) ‘Sky limit electrical sales and services | 500 139) Pails electrical sales 300 82 Total 1300 360 2.4 COMPETITORS Competition will be stiff since there are already existing two firms of such type within the area. Competitors are financially stable and have established their customers too, hence the firm will be required to offer competitive price, quality goods and services to catch up with the system of competition. The business will carry out a strength and weakness analysis to evaluate the business. Strength in the business will be maximized to offer stiff competition to the competitors. The potential competitors will be; Sky limit enterprise > Super electrical sales > Pails enterprise> COMPETITOR | STRENGTH | WEAKNESSES | OPPORTUNITY | TREND 1 ‘The firm |The business |The firm will | The acquires more | does not offer | advertise its goods | advertisement customers who | services like | to reach to people | will be done on are near to it. | repairs. at far distances. | Saturdays every week, They close on Saturdays and Sundays. 2 They close their | They don’t have | The business will |The business business vey | good customer | try to create more | will operate for late. relation, time for its |long——_ hours operation. during the week day 2.5 LOCATION AND DEVELOPMENT OF PREMISES. Before the operation, the premise will be rented. The business will have premises for rent within Kisumu town where all the business transaction will take place. The premise will comprise of sales rooms, workshop and warehouse for storing bulky equipments, It’s also to have social amenities like water, telephone, electricity to facilitate the operation. The rent will be 6,000 per month payable before the start of the business and two months deposit of 12,000. A strategie plan has to formulate by the manager to ensure that the business meets the objectives. 2.6 PRODUCTION STRATEGY The firm will have well qualified and experienced staff under the proprietor who is qualified and experienced engineer himself.The production will adhere to KEBS requirements as well as any additional controls established by the government, The materials will be acquired from the reputable suppliers and frequently checked for wholesomeness _. The success of the firm will be in great extent depending on the quality and variety of services to be offered.2.7. PRICING STRATEGY Means and ways which will be used to calculate the selling price of product and services will depend on a number of things such as the competition, cost of the component, transportation charges and the amount used on serving an electron device. The methods that will be used by the business in pricing strategy include the following; Psychological pricing which includes pricing the product Forces of demand and supply of the product will also determine the price or the product in the firm The higher the demand, the slight increase in price while the lower the demand, the lesser the price Ttem ‘Amount [kshs] Electrical driller 18,000 Motherboard 1,000 Tester 1,000 Prose meter 3,000 Junetion box 1,400 Circuit bracer 1,300 Pave pipe 180 2.8 PROMOTION/ ADVERTISEMENT STRATEGY The manager will ensure that he advertise his goods as far as possible to ensure that his business is populay convenient and durability. Advertisement will be made on radios, posters, signposts, and outreach - Certain factors should be considered before choosing means of advertising such as cost, using vehicles 2.8.1 Posters: The manager will ensure that posters have been printed with full details about the business and posted through pout the catchment areas specifically to convey main goods sold and place of situation, These copies will cost around 1500 to hire people to stick them all over the catchment areas and giving them to people within,28.2 Radios Advertisement will be done on radio stations with greater number of people in use. The manager will ensure the advertisement is as clear and with relevant information but short to the point. 283. Sign post This will be placed at the main entrance to the firm and a white material written on it with full detail about the business location and items sold shall be hanged across the main highway. Percentage discount offered to purchase made will also be included and this will attract many people. 2.9 PLACE/DISTRIBUTION STRATEGY This is the route that the business intends to supply the product like goods and services to the customer for example by using retailers to sell product to customers. The business will be a two evel distribution channel in that it will be selling to retailers and at the same time to customers directly. ¥ ¥ Retailer Customer Wholesaler ||» L__,| customer 2.10 SALES TACTICS OF STRATEGY ‘These are means of ensuring that customers largely demand goods and services of the business. 2.10.1 Sales team The firm anticipates selling to the intended customer's wholesome and high quality product. In addition, modem equipments will be used as well as well trained staff. The proprietor is aware of the impact quality product. The proprietor will not be afraid to create an express warranty to the about the conditions, quality and performance of the goods to be sold. The warranty will be implied through statement uttered as well as written on adverts 102.10.2 Selling methods Personal selling where customers will be coming to the firm and buy the product and to be offered their services Selling indirectly through salesman who will be moving from one place to another informing the customers and persuading then to buy goods and to be offered a given discount Applying for tender where the customer will apply for them and as selling agent. 2.11 Measures of marketing performance ‘The firm will be engaged in sales promotions a tactic to attract more customers, the enterprise will participate in shows and exhibitions will be used where customers win certain items like bicycles or school fees. During these occasions, certain produets will be displayed and sold, CHAPTER THREE 3) ORGANIZATIONAL PLAN Organization in any business creates an environment in which each participant will be aware of the part to be played within the firm. The business will be based on a line organizational structure in hierarchical form in which the manager at the top to the field operator. ret3.1 OBJECTIVES OF THE ORGANIZATIONAL PLAN This will provide a unified mechanism in which authority is centralized. This will in turn make it make it possible for the firm to implement its policies through effective planning, staffing, directing and controlling the business activities, the business will therefore have the following objectives; To maintain the functions of the enterprise by effectively coordinating the human sides of the enterprise To recruit and utilize human resource efficiently as well as effectively to realize success 3.2 ORGANIZATIONAL STRUCTURE Managing director Senior Sales manager ‘Accountant technician Technician | Drivers Sales and marketing | representatives Messenger Receptionist ‘5. KEY MANAGEMENT PERSONNEL The business manager will be the entrepreneur and therefore the sole proprietor of the business who supervise and manage all other departments, during the course persument, he managed to obtain knowledge in maintaining and serving most of the electrical and electronics 3.3.1. Duties and responsibilities of the manager Be in charge of all decision making and policies that govern the business Be the overall administrator and coordinator of all the business activities, Set duties on when and how to conduct the annual general meetings 2Motivate, mobilize and reward hardworking employees 3.3.2. Senior technician To train and to develop skilled, efficient and innovative trainee Ensure that that the sale of goods and service are well done To establish procedures for effective performance of the servicing duties and to supervise the staff in the proper execution of these procedures Assigning time for collection of all finished goods and dictating price for all repair jobs Provide reports of fieldwork to the manager. 3.3.3. Accountant Keeping records of all business transactions putting them into ledger, preparing balance sheet and final account Receives and makes payments Paying salaries and wedges to the firms employees Outling the debtors and creditors Sales and marketing representatives ‘The firm intends to employ two representatives both in sales and marketing sections Selling and distribution of goods Perform the marketing strategies Look for contracts 3.3.4. Drivers ‘The business intends to employ two drivers Picking the firms goods from the manufacture ‘Transporting of purchased goods to the required destination Driving the field technicians to customers places if need be 13Qualifications Must have atleast one year experience Must be an holder of KCSE certified of D+ and a valid driving license of class BCE Must be able to work with a minimum supervision and honest person Must be 23 years old and above 33.5 Cleaners The firm intends to employ 2 cleaners To maintain hygiene Prepare and serve tea for both the employees in the premises 3.4 RECRUITMENT, TRAINING AND PROMOTIONS OF PERSONNEL The firm will carry out its recruitment exercise by advertising the various post and the applicants will be required to apply with their own handwriting direct to the firm through the contact address. The selected candidates shall be interviewed and the successful ones will be posted to their relevant posts as per their qualifications. The firm requires very competitive employees who perform their duties to maximum to beat the other competitors. The recruitment exercise shall be conducted out in the field and the best experienced candidate shall be selected out of others Promotion will be based on the employee's effort and duties to make the firm more competitive. in the execution of the duties, this will be This depends on their dedication, perfect and efficiency given to the employees who have worked effectively and served in the firm for atleast 2 years without any quarrel and accusation against himy her from the customers and fellow workmate: 43.5. RENUMERATION AND INCENTIVES FOR PERSONNEL, Rewarding of the employees will depend on their effectiveness in the firm and it will be categorized to the basic salary, allowance and benefits they get from the firm as shown below; Job tittle N Basic salary [allowances _ | benefits Total Manager 1 10000 House and | Annual leave | 12000 medical for 12 days allowance Kshs 1200 and 1000 per ‘month Senior 1 6500 House ‘Annual leave | 8400 technician allowance | for 21 days and medical allowance 1000 and 900 Technicians [2 24500 House ‘Annual leave | 12400 allowance | for 21 days and medical allowance 900 and 800 ‘ecountant | 7 5000 House and | Leave 6700 medical allowance allowance 800 and 900 Drivers 2 22800 House and | Annual Teave | 8700 medical for 12 days 1sallowance 750 and 800 Sales and [2 773800 House and | Annual Teave | 10000 marketing medical for 21 days allowance 600 and 600 Messenger | 1 2500 House and | Leave for 21 | 3500 medical days. allowance 400 and 600 Cleaner 2 22200 House and | Annual Teave | 6600 medical for 21 days allowance 500 and 600 Watchmen [2 F200 House and | Annual Teave | 7400 medical for 21 days allowance 500 and 600 3.6 LICENSES, PERMIT AND BYLAWS 3.6.1 Licenses Before the business operates, a trade license will be required under the trade licensing act. The license will be obtained from Kisumu town council issued by the local authority and it will cost 2000 every year. 3.6.2 Permits The firm will be having a conducive environment for working since it has good ventilation, sanitation, first aid kit and the fire extinguishers. Permit will be obtained from the ministry of health in Kisumu town at a cost of 1300 yearly to give smooth running and conducive working place for the premise. 163.6.3 Bylaws For the business to able to provide its services efficiently, it will have to abide by the laws that govern the running and operation of the firm. Under the laws act cap216 as bylaws that sets out the rules that will safeguard exploitation or terminate their duties without a valid reason and it’s punishable by law. The business will be registered with the Kenya revenue authority for register of business act chapter 940, the firm will be issued with a certificate of registration after paying a fee of kshs 1000 and it will be issued by the attorney general office and prepared by the register of society as Feche electronic’s and components shop PO BOX 4003-87 Kisumu, 3.7 OTHER SUPPORT SERVICES 3.7.1 Banking services The firm intends to get financial ass tance from banks hence it will open an account with the branch of KCB in kisumu town. 3.7.2. Insurance Insurance for any foreseen circumstances will be offered by rhino insurance who will cover any kind of danger to be protected. Company advocate will contact and stand for the firm count cases, it will also advise the firm on legal matters. wvCHAPTER FOUR 4 PRODUCTION/ OPERATIONAL PLAN For the operation of a business to start, the premise will be rented, Production planning is a vital aspect in many business and it require to be planned properly. Feche electronie’s and components shop sales will heavily anchor its operations on_ its capability to produce and market high quality product and offer clean services, since proprietor intends to hire qualified and experienced employee, He will couple with the right employees, equipment and materials in order to get the desired profit. 4.1 OBJECTIVES The business will base its production and operations section on the following To acquire high quality raw materials at the fairest market rates and converts the same into usefull and high quality products To uphold high standard of hygiene and safety at all stages of production ‘To use the modern technology and skills to improve on the quality of the product and services Modern equipments will be used for production to produce high quality goods to the customers 4.2 FACILITIES AND CAPACITIES The firm will deal in the sale of electrical and electronic goods and offering services like repair of electronic goods. Hence the operation will depend on how frequent the customers will be visiting the premise. For the business to prosper, various facilities will be utilized by the firm to accomplish its tasks, Capital The finance will be required to start up and ran the business at its initial stage. This will enable the firm to purchase enough stock, tools, equipments and machinery, 18Labour It’s the manpower that will be required to carry out the business operations. Skilled manpower will be employed so as to offer efficient and quality service to customers. Product ‘Cost [Kshs] Quality Total Cost [Kshs] Chairs 1200 20 24000 (Computers 35000 2 70000 Generator 15000 1 15000 Vehicle 600000 2 1200000 Wardrobe 400 3 1200 Drills 750 2 1500 Oscilloscope 850 1 850 Cash Box 900 2 1800 Counter Box 450 2 900 Shelves 300 1500 Benches 250 4 1000 Total 1317750 4.3 PRODUCTION STRATEGY The firm will buy its equipments from suppliers based in japan and Kenya. The friendly terms with the suppliers and the business due to bulk buying of goods has led to lowering of their rate hence 19increasing the returns. The business is timely in its operation hours therefore winning the customers. Production strategy involves display of stock, sales will be done on either retail, wholesale in consideration of the product demand in the market. Material requited | Quantity per Unit cost Total cost Supplier month Grippers 2 200 800 | Liston furnitures Drilis 2 1500 3000 | Bett centre Oscilloscope 1 22000 22000 | Hekima electronics Stationery 3 2000 10000 | Lister better Blower 1 450 450 | Indiana motors Tester H 200 200 | Japan electronics Soldering iron 1 6500 6500 | Belt centres Total 41350 ‘The monthly production estimate is equivalent to the sum of labour cost and materials. The monthly production expenses are as follows. 20Item Total cost Electricity 2000 Telephone 2000 Maintenance 3000 Security 3000 Postage 1000 Transport 2000 Miscellaneous 3000 17000 44 PRODUCTION PROCESS The success of the firm will in a great extent depend on the quality and variety of products to be manufactured. At commencement of operation, the proprietor has a number of products to be put in the market, He anticipates that all the products that the firm will release into the market will become instant favorite to the customers. The business through the reception will receive all customers since the introduction of electricity in kisumu town and its surrounding, many people have bought and used electrical and electronic goods in which they also require services of installation and repair of their electrical equipments from the firm. Products and services will be cheap and affordable so as to meet customers demand. I 's the firm to ensure that they purchase high quality goods at a cheaper price from the suppliers and manufactures. 4.5 REGULATIONS AFFECTING OPERATIONS These are regulations the business his to follow to be approved legal, the business must have a trade license, health regulations, safety and environmental regulations, compliances and patents. 214.5.1 Business regulations Opening and closing hours of the business will be from7:30 am to 6:30 pm. Lunch and tea breaks will be internal among the employees in order to reduce pilings of work, no disappearance of the workers during the normal business operations hours without a valid reason. 4.5.2 Safety regulations All workers should be in overalls and industrial boots during working hours in the workshop and in the field. No loose clothing while operating running machines All live cables should be properly installed and any electrical source should be switched off when not in use, There will be provision of fire extinguishers at every entrance to the rooms. 4.5.3 Health regulations Before starting of operation, the enterprise will ensure that it has enough supply of water and good ventilation and drainage systems. Toilets will be cleaned daily using disinfectants and the employce need to be clean and have test for good health, 4.5.4 Insurance The attraction of insurance to the business enterprise is clear, it’s a means of protection against losses arising from certain kinds of risk and thus provides a degree of security to the business. 4.5.5 Value added tax This would be deducted on goods delivered and sold in the firm as well as service offered by the firm. The tax payment will be paid after the firm has been audited at the end of each financial year. 22FACILITY LAYOUT ENTRANCE 23 ‘ACCOUNTS: WASH ROOM STORE FOR, DEPARTMENT MATERIALS PRODUCTION SALES DEPARTMENT DEPARTMENT RECEPTION FIRE ASSEMBLY POINT, RESIDENCE PACKING AREA SECURITY CUSTOMER PACKING AREA.CHAPTER FIVE, 5 FINANCIAL PLAN Finance is the backbone of all business activities and in order for the business to achieve its goal, the finance should be well managed and planned carefully. The firm needs a total of 1,350,000 as a starting capital, the sources of the capital are as shown below; Sources ‘Amount [ kshs] Personal savings 500,000 Contribution from family and friends 200,000 Loans from bank 650,000 Total 1,330,000 5.1 PRE- OPERATIONAL COSTS These are the cost needed for starting up the business Tem ‘Amount kshs Stock 200,000 Office furniture and fittings 220,000 Stationery 36,000 Electrical driller 18,000 Tester 1,000 Pros meter 3,000 Overall and boots 12,200 Calculator 2,500 Registration fee 1,000 Trade business 1400 Advertisement 7,000 Rental deposits 15,500 Lawyer 10,000 Insurance covers and telephone installation 38,000 Miscellaneous 3,300 Total 384,000 245.2. WORKING CAPITAL The firm estimates working capital at the end of each year Ttem Year! (kshs) Year? (kshs) Year (kshs) Current assets Stock 1,274,000 1,300,000 1,450,000 Debtors 68,000 70.000 90,000 Cash at hand 100,000 170,000 200,000 Cash in bank 545,860 628,000 750,000 Total 1,987,860 2,168,000 2,490,000 Current li Creditors 260,400 290,000 330,000 Salaries 510,000 340,000 600,000 ‘Actual 576,000 684,000 744,000 Miscellaneous 18,000 28,000 35,000 Total 1,361,000 1,539,000 1,709,000 Working capital 626,460 629,000 781,000 25,5.3 PROJECT CASH FLOW STATEMENT FOR YEAR 1 Details JAN FEB MAR [APRIL [MAY | JUNE JULY | AUG SEP ocr Nov DEC Cash inflow Opening cash | 300000 | 265300 | 328100 | 395180 | 438450 | 476350 | 498750 | 493160 | 486720 | 498480 | 509940 | 527500 Cash sales| 170000 | 200000 | 220000 | 220000 | 238000 | 240000 | 240000 | 260000 | 280000 | 290000 | 300000 | 310000 Debtors 5000 [6000 | 18000 | 10000 | 10000 | 10000 10000 | 10000 10000 Services 30000 [32000 [34000 [40000 | 44000 [47000 | 50000 | 55000 | 65000 68000 | 77000 87000 Total cash inflow | 500000 | 497300 | 582100 | 665180 | 722480 | 769380 | 811750 | 818160 | 841720 | 817480 | 901480 | 934600 Cash outflow Cash purchases | 100000 | 110000 | 120000 | 131000 | 140000 | 145000 [165000 | 180000 | 190000 | 210000 | 220000 | 222000 Creditors 30000 [40000 | 60000 [60000 | 60000 | 60000 | 60000 60000 | 60000 60000 Rent 15500 [5000 [5000 [5000 | 5000 | 5000 5000/5000 | 5000 5000 | 5000 5000 Salary ‘48000 [48000 | 48000 [48000 [48000 | 48000 | 48000 [48000 | 48000 48000 | 48000 48000 Telephone 1500 [1300 | 2100 [2700 | 3200 | 3500 4000 | 4200/4500 4800 | 4800 4800 Electricity 1200 [1400 [1700 [2200 [3000 | 3500 4000 | 4500 ——-| 5000 5000 | 5000 5000 ‘Stationary 8000 [2000 [3500 [4000 | 4500 | 5000 5000 | 5000 | 5000 5000 | 5000 ‘5000 ‘Advertisement | 7000 3000 3000 2500 2500 Transport 8000 | 2000/3500 [4000 | 4500 | S000 5000 | 5000 | S000 5000 | S000 5000 Water 500 700 | 750 x00 | 750 850 900 980) 1100 1100 | 1100 1200 Insurance 48000 | 48000 | 48000 | 48000 | 48000 | 48000 | 48000 | 48000 | 48000 48000 | 48000 48000 Loan repayment 22640 [22640 | 22640 22640 | 22640 22640 Total cash 234700 | 169200 | 186950 [226700 | 246100 [270600 | 318590 | 391940 [343240 [361540 [374440 | 374840 Retoah fora | 265300 | 328100 | 398130 | 438450 | 476050 | 498750 | 493160 | 486720 [498480 | 509940 [527500 | 559660 month 265.4 PROJECT CASH FLOW STATEMENT FOR YEAR 2 Details JAN FEB MAR APRIL | MAY [JUNE [JULY | AUG SEP ocr NOV | DEC Cash inflow Opening east 505960 | 508960} 529010] 542130} 522080 | 563730 | 621840] 668700 | 687760} 702920) 716380 | 720420 Cash sales T6000 | 168000 172000 | 178000 | 183000 295000 | 315000 | 320000 | 300000 | 300000 | 305000 | 300000 Debiors ‘5000 4500 4900 | 5000 6250 6550 | 7550 7600 7800 7500 | 6000 | 6500 Services 30000 | 29500 30200 | 30500; 33000 | 45000| 48000] 49000 | s0000 | S1000 | 52000 | 52500, Total cash inflow To0960 | 721840 | 6902R0 | 8540 | 731481 | 700000, 729940] 740270 | 800431 | 810349) 811430 | 820119 Cash outflow Cash purchases To0000 | 110000, 120000 | 131000 | 140000 | 145000 | 143000 | ~ 180000 | 190000 | 210000 | 220000 | 222000 Rent T5500 5000 3000 | _5000 5000 3000 | S000 5000 5000 3000 | 5000 | 5000 Salary 48000 | 48000 48000 | 48000 48000 | 48000 | 48000 | 48000 | 48000 48000 | 48000 | 48000 Telephone 1500 1300 2100] 2700 3200 3500 | 4000 #200 500 800 | 4800 | 4800 Electricity 1200 1400 T7090 | 2300 3000 3500 | 4000 4500 5000 000 | 5000 | $0007 Siationary 5000) 9000 1200 1750 1500 1500 1000 ‘Advertisement ‘3000 3600) 3500 3500 2500 | 2800 Transport ‘8000 2000 3500 | 4000 4500 5000 | 5000 3000 5000 5000 | 5000 | 5000) Water 300) 700 70 3007 750 350) 300 980 1100 Ti00 | __1100 [1200 Tnsurance 5000 Loan repayment ei | 22640 | 22640 | 22640 | 22040 | 22640 Total cash outflow | 246400 | 181250 | 193080 | 233500 | 274500 | 3122440 | 320740 | 338740 | 343340 | 351230 | 354190 | 371840 Net eash fora month | 454560 | 456500 | 460180 | 463140 | 460300 | 464200 | 469200 | 470131 | 471120 | 470190 | 480130 | 482230 275.5__ PROJECT CASH FLOW STATEMENT FOR YEAR 3 Details JAN FEB MAR [APRIL [MAY [JUNE [JULY [AUG | SEP oct [Nov | DEC Cash inflow ‘Opening cash 7oss40 [522540 | 710640 | 637740 | 598890 GOSI90 | 623480 | GIORDD | 734344 | BO4SGS | 100775 | 109475 Cash sales 170000 | 200000 [220000 | 220000 | 238000 | 240000 | 240000 | 260000 | 280000 | 290000 | 300000 | 310000 Debtors 7000 7500 8000 ‘9000—-[ 9600 [ 10500 | 11000 | 13000 | 13800 | 14000 | 13500 | 14000 Services 30000 [32000 | 34000 | 40000 | 44000 [47000 | 50000 33000 | 65000 | 68000 | 77000 | 87000 Total eashinflow | 794540 [903540 | 80S140__| 745740 | 753490 | 764900 | 804490 | 868660 | 105460 | 123150 | 132900 | 144950 Cash outflow Cash purchases 190000 | 110000 [120000 | 131000 | 140000 | 7145000 | 165000 | 180000 | 190000 | 210000 | 220000 | 223000 Creditors 30000 | 40000 | 60000 | 60000 | 60000 | 60000 | 60000 | 60000 | 60000 | 60000 Rent 5000 5000 3000 3000/3000 [5000 | 3000 [S000 | 5000 | S000 | 5000 | S000, Salary 48000 [48000 | 48000 | 48000 [48000 [48000 | 48000 [48000 | 48000 | 48000 | 48000 | 48000 Telephone 1500 1300 2100 2700 | 3200 | 3500 | 4000—«| 4200-~—=4500—«| 4800~=—«| 4800 «4800 Electricity 1200 1400 1700 2200/3000 [3500 | 4000 [4300 | 5000 ‘| S000 | 5000 | S000, Stationary 8000 2000 3300 4000 | 4500 | 5000 [ 5000“ 5000——*| S000-——«f S000——~| 5000——*| 5000 Advertisement 8000 1800 1400 1200 1500 1000 Transport 3000 2000 3500 4000 [ 4500—[ S000—-| 5000 | So00. ~~ S000.-—~| S000~—~| S000 ~~ «S000 Water 500 700 750 800 750 850 900 980 1100/1100 11001200 Insurance 6000 oan repayment Total eash outflow — | 272000 | 192900 | 167400 | 147850 | 146500 | 136000 | 163800 | 145300 | 159700 [220435 | 234700 | 254317 Net cash fora month | 522540 [710640 | 637740 | S9RB90 | 606990 | 623490 | 64690 | TO099R | RD1345 | 100990 | 10976 | 116432 285.6 PROFORMA INCOME STATEMENT OF FECHE ELECTRONIC’S AND COMPONENTS SHOP SALES AND SERVICES Item Year 1 Year 2 Year 3 Sales 3942600 4491400 4906400 Cost of sales 2449590 2750600 2900750 Gross profit 1513010 1740800 2005600 Expenses Salary and wages 510000 540000 600000 Electricity bill 96000 105000 60000 Insurance 6000 6000 6000 Water bill 2400 2400 2400 Transport 33170 32000 35000 Rent 60000 60000 60000 Telephone bill 20000 22000 21000 Tivenses 2000 2000 2000 Stationery 16050 16300 17000 ‘Advertisement 20000 20000 Repair and 5000 4000 4000 maintenance Depreciation 20000 20000 20000 Other expenses 35400 34000 28000 Total expenses 384020 393700 974400 Net profit tax 28990, 847100 1031250 Profession fortax | 81769 T0123 134063 Net profitafier tax | S47221 736077 897187 29Total contril Sales-variable =3942600-2669560 =1273400 Contribution margin percentage = contribution *100% sales =1273400*100% = 32.29% 3942600 Total fixed cost = 1,384,260 Breakeven point 1384260 32.29 = 42869.60 5.6.1 Profitability ratio These are ratio that deals with results of trend of a firm to make profit of on relation to some elements representing that amount. Gross profit percentage Year 1 = Gross profit100 sales = 1513010%100% 3942600 = 38.30% 30Year 2 17408000*100% 4491400 =38.67% Year 3 2005650%100% 4906400 40.88% Return on equity = 547221%100 650000 = 84.19% Return on investment fer tax «100% ‘Total investment = 157221%100% 1350000 = 54.59% Year 3 = 97187%100% 1350000 = 66.46% 315.7 FECHE ELECTRONIC’S AND COMPO! BALANCE SHEET ‘TS SHOP SALES AND SERVICES “Assets Year 1 Year 2 Year 3 Current assets ‘Cash at hand 100000 170000 200000 Cash in bank 545860 628000 750000 Debtors 8000 700000 90000 Stock of furniture 40000 655000 750000 Stock of materials 634000 645000 700000 Total current assets 1987860 2168000 2490000 Fixed assets Premises 600000 515000. 520000 Machinery and 490000 510000 530000 equipments Accumulated 30000 31000 32000 appreciation Wholesalers 250000 220000. 240000 Fumiture and fittings | $8000 38000 60000 “Assets (cost) 1289800 130300 1350500, Accumulated 48480 47460 50000 depreciation Total fixed assets 134648 1350680 1400500, Total assets 3334340 3518680 3890500 Li ies ‘Current liabilities Creditors 260400 290000 330000 Tax 6000, 6000, 6000 Salary and wages 310000 340000 60000 Electricity bills 96000 105000 109000 Telephony 20000, 22000, 21000 Water 2400 72400 2400 32Rent 6000 6000 6000 Transport 83170 82000 85000 License 2000 2000 2000 Total current 1039970 1109400 1215400 Ton term liabilities Directors Toan 00000 310000 F500 ‘Owners equity (650000 ‘650000 785000 Bank Toans 750000 750000 745000 “Total long term liabilities — | 1900000 1910000 1950000, Total liabilities 72930970, 3019300 3165400 335.8 BREAK EVEN ANALYSIS Variable cost Amount Purchase 2429590 Electricity bill 96000 Telephone bill 20000 Transport 83170 Water bill 2400 Others 38400 Total 2669560 Fixed cost Insurance 6000 Licenses 2000 Rent ‘60000 Creditors 260400 Salaries and wages 310000 Loan repayment 548860 Total 1384260 5.9 DESIRED FINANCING This shows the total amount of money required to start up this business, it includes pre- operational cost, fixed assets and the working capital required for the first year.Item Amount Pre-operational 591140 Working capital (626460 Fixed assets 496000 Total 1,713,600 5.10 PROPOSED CAPITALIZATION The proposed capital for the business will have the following as its source of capital amounting to 1,350,000, Tem Amount Personal saving 500000 Bank loans 650000 Contribution from friends and relatives 200000 Total 1,350,000 35,To HOMA BAY APPENDICES, APPENDIX 1 LOCATION OF FECHE ELECTRONIC’S AND COMPONENTS SHOP SALES. AND SERVICES KISUMU GIRLS KISUMU BOYS. MARKET HIGH SCHOOL, HIGH SCHOOL, ——— TARISIREE FECHE ELECTRONIC’S AND COMPONENTS 36 To KAKAMEGA To ELDORET37APPENDIX 2 BUSINESS LOGO ectric smijing