Business Plan

MOI UNIVERSITY
SCHOOL OF BUSINESS & ECONOMICS
COURSE: BUSINESS MANAGEMENT

UNIT NAME: ENTREPRENEURSHIP
UNIT CODE: BBM 221
CAT/ASSIGNMENT: BUSINESS PLAN
STUDENT NAME: POLYCARP SIFUNA NAMITI
STUDENT REGISTRATION NO: BBM 6053/22
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BUSINESS PLAN
THE PROPOSED PERFECT FITNESS GYM AND SPA
Perfect Fitness Gym & Spa

P.O. Box 611 – 00200
Nairobi
Polycarp.namiti@gmail.com
Tel: 0716621869
PRESENTED BY: POLYCARP SIFUNA NAMITI
Registration: BBM 60/53/22
30TH AUGUST 2023
TABLE OF CONTENTS
1 CHAPTER ONE ............................................................................................................................... 7

1.0 THE BUSINESS DESCRIPTION ....................................................................................................... 7
1.1 The Sponsor ................................................................................................................................ 7
1.1.1 Background of the Sponsor .............................................................................................. 7
1.1.2 Description of the Proposed Ownership Structure ........................................................ 7
1.2 The Business................................................................................................................................ 9
1.2.1 Description ......................................................................................................................... 9
1.2.2 Choice of Business Location ........................................................................................... 10
1.2.3 Justifying the need for the Proposed Business Venture .............................................. 12
1.3 The Product ............................................................................................................................... 12
1.4 The Industry .............................................................................................................................. 13
1.4.1 Size of the Industry ......................................................................................................... 13
1.4.2 Key Characteristics of the Industry .............................................................................. 14
1.4.3 The Industrial Trends and Prospects ............................................................................ 14
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1.5 The Entry and Growth Strategy ................................................................................................ 15
1.5.1 The Entry Strategy ......................................................................................................... 15
1.5.2 Growth Strategy .............................................................................................................. 16
1.6 Business Goals........................................................................................................................... 16
1.6.1 Short Term Goals .............................................................................................................. 16
1.6.2 Long Term Goals ............................................................................................................ 17
2 CHAPTER TWO ............................................................................................................................ 18
2.0 THE MARKETING PLAN .............................................................................................................. 18
2.1 Customers ................................................................................................................................. 18
3.1.1 Description of Potential Customers ............................................................................... 18
3.1.2 The Market Size .............................................................................................................. 19
2.2 The Competition ....................................................................................................................... 22
2.2.1 Description of the Potential Competitors...................................................................... 22
2.2.2 The Size of Your Competitors in Relation to the Proposed Business......................... 24
2.2.3 Comparison of the Proposed Product with those of Potential Competitors .............. 26
2.2.4 Description of the Overall Strengths and Weaknesses of Your Potential Competitors
27
2.3 The Pricing Strategy .................................................................................................................. 29
2.4 Sales Tactics .............................................................................................................................. 33
2.5 Advertising and Promotion Strategy ......................................................................................... 33
2.5.1 Advertising Strategy ......................................................................................................... 34
2.5.2 Promotion Strategy ......................................................................................................... 35
2.6 Distribution Strategy ................................................................................................................. 37
3 CHAPTER THREE ........................................................................................................................ 38
3.0 THE ORGANIZATIONAL PLAN .................................................................................................... 38
3.1 The Organizational Structure .................................................................................................... 38
3.2 The Management Team ............................................................................................................ 39
3.2.1 The Manager..................................................................................................................... 39
3.2.2 The Floor Manager ......................................................................................................... 39
3.2.3 Accountant ....................................................................................................................... 40
3.3 Other Personnel ........................................................................................................................ 41
3.3.1 Cashier .............................................................................................................................. 41
3.3.2 Gym Instructor................................................................................................................ 42
3.3.3 Receptionist ..................................................................................................................... 42
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3.4 Evaluation and Development of Employees ............................................................................. 44
3.4.1 Evaluation of Employees .................................................................................................. 44
3.4.2 Employee Development .................................................................................................. 45
4 CHAPTER FOUR ........................................................................................................................... 45
4.0 OPERATIONAL PLAN .................................................................................................................. 45
4.1 Product/Service Design and Development ............................................................................... 46
4.1.1 Description of the Proposed Design and Development ................................................ 46
4.2 Production Facilities and Capacity ............................................................................................ 46
4.2.1 Description of facilities needed for operation ............................................................... 46
4.2.2 Repairs and Maintenance of Facilities for Operation ................................................. 49
4.2.3 Features of the Proposed Premises ................................................................................ 49
4.3 Operation Strategy.................................................................................................................... 50
4.3.1 Description of Monthly Operation Expenses................................................................ 50
4.3.2 Monthly Labor Requirements ....................................................................................... 51
4.3.3 Monthly Operation Expenses......................................................................................... 52
4.3.4 The Cost of Operation .................................................................................................... 53
4.4 Service Delivery Process............................................................................................................ 54
4.4.1 Name Search .................................................................................................................... 55
4.4.2 Business Name Registration ........................................................................................... 55
4.4.3 Business Licensing .......................................................................................................... 55
4.4.4 PIN Certificate ................................................................................................................ 55
4.4.5 Taxation ........................................................................................................................... 55
4.4.6 Tax Compliance Certificate ........................................................................................... 55
5 CHAPTER FIVE ............................................................................................................................ 57
5.0 THE FINANCIAL PLAN ................................................................................................................ 57
5.2 Working Capital......................................................................................................................... 58
5.3 The Pro-forma Profit and Loss Accounts .................................................................................. 59
Table 5.4 The Pro-forma Balance Sheets .................................................. Error! Bookmark not defined.
5.6 Financial Requirements............................................................................................................. 62
5.7 Proposed Capitalization ............................................................................................................ 63
5.8 The Expected Profitability Rations ............................................................................................ 64
5.9 The Implementation Schedule .................................................................................................. 66
5.10 Critical Risks and Problems ....................................................................................................... 67
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5.10.1 Theft .................................................................................................................................. 67
5.10.2 Poaching of Employees ................................................................................................... 67
6 REFERENCE .................................................................................................................................. 68
7 APPENDICES .................................................................................................................................. 68
THE EXECUTIVE SUMMARY
1.0 The Business Description
The proposed business will be called Perfect Fitness Gym and Spa. The name reinforces the key
elements of the business and it does not limit the business to Fitness only, by being too specific,
it leaves the door open for possibilities of expanding the product offerings in the future. The
business will be registered as a sole proprietorship which is the simplest form of operating a
business and will be located along Kiambu Riuru, Kamakis. The main focus of the business will
be on Fitness and Wellness. The business will offer a variety of services as well as products that
goes hand in hand with Health and Wellness such as supplements and healthy meals recipes.
2.0 The Marketing Plan
The business will focus mainly on three distinct customer groups, the residences of the area, the
corporate organizations around the area and the walk in clients since they are the most prevalent
and steady customers. The business will establish a large regular customer base, and will therefore
use a number for marketing strategies that will enable it to reach its customers. Prints and
electronic media will be used to advertise the products, with business cards, fliers and leaflets,
information about the business will be distributed to potential customers. A website will also be
developed which will give the business greater exposure to people looking to buy cakes on the
internet.
3.0 The Management and Organizational Plan
A management team consisting of the Proprietor, the Floor Manager and the Accountant will lead
the business. The manager will oversee all the operations; he will be the final decision maker for
all the business activities. The floor manager will be the link between the clients and the business;
he will run promotional activities as well as manager the Gym activities. The Accountant will
ensure that the finances of the business are handled correctly; the business stays afloat with its
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expenditure and ensure compliance of all the government regulations. Jointly, they will make the
many decisions necessary in running the day-to-day operations of the business. The other
members of the team will include the receptionists, Gym and yoga instructors, cashiers, cleaners
and masseuse. The Floor Manager apart from the cashier who will report directly to the
Accountant will supervise all the other team members.
4.0 The Production Plan
The day-to-day operations of the proposed business will be focused on delivering exceptional
group training and personal training services, health talks, healthy supplements as well as recipes
for healthy meals, within a positive and inviting atmosphere. The proposed business will be
approximately 3000 square feet and will include adequate workout rooms, office and
administrative areas as well as washrooms/ showers. The business will be open for operations
every day from 6.00am in the morning to 9.00pm in the evening.
5.0 The Financial Plan
The business will be financed by a combination of sources that together will provide Kes.
2,000,000 of investment funds. These funds will be used for capital investment in the equipment
and working capital to fund operating expenses in the business initial operations. Funding for the
business will come from three sources, which includes owners’ equity, financial institutions and
donations from friends and family. Over the first year, the business expects a net profit of Kes.
3,921,660. Over the next year, it expects to see a more substantial profit level of Kes. 5,294,160
as sales increases, and eventually Kes. 6,657,660 in the third year. This will be achievable
primarily because of the business ability to meet the unmet demand for quality products and
services, which are affordable.
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1 CHAPTER ONE
1.0 THE BUSINESS DESCRIPTION
This chapter presents an overview of the business owner’s background, the nature of the business,
the products and services to be offered, the industry in which the business belongs and lastly the
goals that the business will use to achieve its objectives.
1.1 The Sponsor
The sponsor will be validating the goals and objectives of the business, will keep up to date the
activities of the business and will be the ultimate decision maker for the business.
1.1.1 Background of the Sponsor

The proposed business owner’s name is Polycarp Sifuna Namiti. He is 33 years old. He lives in
BUNGOMA, BUKEMBE Constituency. His present occupation is Customer Support and Credit
Manager at Fresh Life. He sat for his Kenya Certificate of Primary Education (KCPE) in the year
2008 and later joined Bukembe Boys High School, where he got his Kenya Certificate of
Secondary Education (KCSE). He later started working at Fresh Life as field officer and joined
University Of Eldoret, where he got his Diploma in Business Management. He is currently
studying degree in business management. He acquired Business Skills by undertaking a unit in
Entrepreneurship, which made his understand how he can venture into a business with the readily
available resources. He also plans to undertake a Fitness and Spa Business Ownership Course
which will take his Three months only so that he compensates for the skills he lacks for his
proposed business.
1.1.2 Description of the Proposed Ownership Structure.
In his proposed business, he plans to invest a total amount of Two Million Kenya shillings, of
which One Million will be from personal savings, seven hundred and fifty thousand Kenya
shillings from the bank loan and two hundred and fifty thousand Kenya Shillings is from relatives
and friend’s contributions.
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Workings to show the sources of business capital
Money from personal savings = Kshs 1,000,000
Bank loans = Kshs 750,000
Funds from friends and relatives = Kshs 250,000
TOTAL CAPITAL = Kshs 2,000,000
Representation of the sources of business capital in a pie chart (%)

Personal savings (1,000,000*100/2,000,000) = 50%
Bank loans (750,000*100/2,000,000) = 35%
Friends and relatives (250,000*100/2,000,000) = 15%
Figure1.1: Sources of the Business capital
Sources of Business Capital
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50
35
Personal Savings Bank Loan Contribution from Friends and Family
Figure 1.1 Source of Capital
Terms and conditions of the lending institution
The proposed business will acquire a long term loan from Equity Bank of Kenya that will be paid
for a period of three years at an interest rate of 12% per annum.
Below is a detailed breakdown of the principal amount plus the interest payable on the loan.
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Total amount to be borrowed = Kes. 750,000
Repayment period = 36 months
Principal amount to be paid = 750,000 / 36
= Kes. 20,833 per month
Interest to be paid per annum = Kes 750,000*12 / 100
= Kes. 90,000 per annum
Interest per month = Kes. 90,000 / 12 months
= Kes. 7,500
Monthly principal plus interest = Kes. 20,833 + 7,500
= Kes. 28,333
The proposed business will be remitting Kes. 28,333 per month towards loan repayment.
1.2 The Business
The detailed account of the aspects characteristics of the proposed business is presented below
1.2.1 Description
The proposed business name will be PERFECT FITNESS GYM & SPA. The name itself is likely
to attract many residents of the area it will be located, be it area residents, business owners,
students and individuals of the working class who desire for nothing but the best when it comes
to fitness and recreational activities. The reasons for the choice of that name is because it will
help to differentiate the business from other competitors; by giving a hint on the quality of services
offered to its potential customers and also use it as its domain name for the business website.
He intends to start the proposed business on 1st June 2021. He will operate as a sole proprietor
because it is simpler, requiring no legal filings to start the business, he will only need to report
his proposed business income on his personal income taxes and follow the rules for making
periodic estimated tax payments. Also sole proprietorship will work best for his because his
business is mostly self-financed, i.e the highest percentage of his investment comes from his own
savings.
The benefits that will accompany the form of business ownership are;
 The owner of the business will enjoy the business profits alone.
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 The decisions to be made by the owner will be easy to make.
 The owner of the business will be his own boss.
 The owner will have the advantage of avoiding too many procedures involved in
starting a business; as it is in the case of partnership business.
Apart from the above benefit, there are some limitations, which include;
 There will be limited life of the business.
 Inability to raise sufficient capital.
 Limited skills and knowledge since ideas will only come from the owner alone.
 The owner is likely to be overworked.
The proposed business’s major activity will include the following;

 Health and Fitness Coaches
 Virtual Reality fitness classes
 Personal Trainers
 One stop shop wellness center
 Health and wellness retreats
 Yoga teachers
 Massage therapists
 Healthy meal kit delivery service
 Dance studios
 Fitness courses, tutorials and podcasts
 Personal Chefs
The principal customers for the proposed business will be the residents of the area, the corporate
organizations established in the area and also tourists who visit the area during the holidays
1.2.2 Choice of Business Location

The proposed business will be located at Kamakis, along Eastern Bypass, Ruiru. The
neighborhood around Kamakis has recently been well occupied by individuals who have build
their own houses and many rental houses also. This is due to the development of the well-
constructed Eastern Bypass road which connects Kiambu, Ruiru, Ruai, Kitengela to airport. It has
gained over 85% occupation and is increasingly attracting more residents and business owners.
The proposed business will therefore be a strategic point for the residents of the area, and those
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who would be working around the Kamakis area. The area is also well infrastructure with newly
constructed road and well accessible street roads, the availability of water; borehole and city
council water, and electricity. The area is also very proximate to accessing the Jomo Kenyatta
International Airport which is only 30 minutes’ drive from the area.
The raw material for the proposed business will be shipped from China through the airport and
therefore it will be ensuring to transport them to the proposed location. The items that will not be
imported will be purchased in Nairobi CBD or along Mombasa road. Both places are easily
accessible. The proposed area also has affordable rental houses where employees will be
comfortable to rent.
Below is the sketch map illustrating the location of the business.
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Figure 1.2 Map illustrating the location of the business
1.2.3 Justifying the need for the Proposed Business Venture

In recent years, healthy living and keeping fit has become a goal to almost everyone, especially
to who live in cities. This has led to many Health and Fitness Centers open and customers visiting
within their preferred hours of the day. Due to many such businesses operating in towns,
competition has been on the rise and therefore this has forced many fitness centers operating in
the industry concentrate on products innovation in order to meet the increasing needs of the
customers.
Perfect Fitness Gym and Spa will specialize in offering quality products and services with its
unique features and originality.
Perfect Fitness Gym and Spa plans to higher full time Gym instructors and Personal Trainers to
who will be in charge of the day-to-day activities of the business. It also hopes to create new
employment opportunities in the future, as the business continues to grow and expand.
Perfect Fitness Gym and Spa will not only import its products, it will also make use of the local
technology and equipment in the production process and will source them from local vendors
within the locality.
1.3 The Product
The business will provide a broad range of unique services which will include Health and Fitness
Coaches, Virtual Reality fitness classes, Personal Trainers, One stop shop wellness center, Health
and wellness retreats, Yoga teachers, Massage therapists, Healthy meal kit delivery service,
Dance studios, Fitness courses, tutorials and podcasts and Personal Chefs. The services will be
custom-made for daily clients as well as those who will prefer monthly, quarterly, by-annual and
annual membership.
The customer will benefit from the consistency in the quality of services they will receive, from
qualified and experienced employees and with the well vetted programmes. The business shall
incorporate personal training and groups training, to enable companies enroll their employees at
a fair price. The convenience of the business premise will also facilitate ease of access to the
business services. The business will also offer virtual and home calls services in order to include
the clients who are not able to visit the premises.
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The business competition edge will be the variety and quality of services that will be provided as
well as personalized services. The business will be committed to ensure that every client is
satisfied with all the services other choose out of the available services. The business will also
operate in two shifts in order to cover both early risers and those that prefer working out in the
evening hours.
1.4 The Industry
Industries can be classified based on raw materials and finished products, on the strength of the
labor, the source of raw materials and so on.
This section of the business plan will focus on the size of the industry, industry trends and the
prospects within the fitness and wellness industry.
1.4.1 Size of the Industry

Perfect Fitness Gym and Spa falls under the Health and Wellness industry. In developed markets
like North America and Europe, the fitness industry rakes in over $30 billion yearly. It is an
industry that is widely regarded as recession-proof and popular in countries with a large middle-
class population.
The industry is broadly classified into two main sectors. First are fitness centers or health clubs,
popularly known as the ‘gym’. The second, and fast-growing sector, is weight loss.
In Kenya, the Fitness and Wellness industry hit Sh5 billion in 2019 according to Spa and Wellness
Association of Africa (SWAA) Kenya Chapter.
A market research and analytics firm, Euro monitor International reveals that the Health and
Wellness Tourism in Kenya recorded value growth of 9 per cent in 2018 to reach sales of Sh2.5
billion.
Currently there are twenty-five (25) Health and Fitness centers in Ruiru and its surroundings. In
the city and the surroundings we have a total of 60 fitness centers comprising of Small, medium
and large sizes.
Setting up of Perfect Fitness Gym and Spa will make significant contribution to the local
community in various ways which includes job creation as we shall have ten (10) employees
working permanently and therefore they will have a constant source income. This will in return
help them take care of their families and improve their standards of living. We shall also have
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suppliers from the local community who shall be supplying the business with the daily or
periodically needed supplies. This will as well improve their business and therefore improve their
standards of living.
1.4.2 Key Characteristics of the Industry
The industry is characterized by a wide variety in terms of the sizes of the business, either small,
medium or large depending on their assets, annual sales volume and the number of employees.
The kind of technology used in this industry is both capital and labor intensive. It involves
employees operating both manual and electrical machines, heavy equipment as well as office
equipment such as computers. The level of technology applied is simple and modern. Some gym
equipment that will be used will be modern in order to bring a fresh experience in the industry.
The average number of permanent employees for the business will be ten (10) while other
employees will be acquired either on consultative basis or day to day basis. The basic capital
requirement for entry into the industry will be Kshs. 1 Million and below.
The degree of competition in the industry is high as there as many businesses such as online work
out classes and other health clubs spread across the city and its surroundimgs offering the same
services and products. This calls for such a business to distinguish its products and services either
by offering competitive quality, offering a variety of experiences or introducing new and unique
services and products to its customers.
The general level of sales for firm operating in this industry varies depending on the size of the
business as small size businesses are able to make Kshs. 2,500,000 millions per year while large
size companies are able to make Ksh, 10,000,000 Million per year.
The fitness and wellness industry experiences high and low seasons i.e; during the holidays; April,
August and December, the number of clients reduces while with the new year and post holidays
solutions, the clients increases. Also, the climatic or weather conditions will as well affect the
business as people tend to shy off from visiting the gym during rainy seasons. However, business
will still make sales during the off seasons through virtual sessions and one on one consultation
with the clients at the comfort of their home.
1.4.3 The Industrial Trends and Prospects

The fitness and wellness industry has experienced significant growth in recent years in Kenya.
This has resulted due to the impressive economic growth, rapid urbanization and the growing
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influence of western culture in diets and increased number of people who wants to look fit and
live better healthier lives. Physical fitness has been associated with the wealthy class, the people
suffering from lifestyle diseases like diabetes, high blood pressure, obesity. Statistics has recently
shown an increase in number of people suffering from obesity, and most of them being women
between the age of 25 years and 40 years.
The rising number of people affected by lifestyle diseases and those interested in health and
wellness has grown significantly, creating a working out culture, especially among the city
dwellers. Kenyans have also been open minded to trying other things that would contribute to
their wellness which includes Yoga, Sauna and steam birth, Massage, dieting and eating healthy
meals.
The age bracket for the individuals interested in improving their fitness and wellness is between
25 years to 40 years with increasing number of old people now joining such clubs. It is now
common for families to budget for gym and wellness club subscriptions.
Entrepreneurs keen on cashing in on the urban trend have invested in facilities. Gym and work
out studios have become a common feature of many buildings fitted with the state of art
equipment.
The wellness sector has as well been boosted by incorporating special wellness programmes and
well-equipped training institutions to attract more international tourists.
1.5 The Entry and Growth Strategy

1.5.1 The Entry Strategy
The business will penetrate the market through advertising via electronic media i.e social media
promotions which will include Facebook, Instagram, twitter, electronic advertising in digital
newspapers and features in health and wellness websites. Through our networks of family and
friends, we shall begin a campaign where we shall offer gifts and discounted services for clients
gained from referrals.
The business shall also participate in health and wellness fairs where we shall be able to interact
closely with potential clients, which will enable us to position ourselves in the market and give
our clients an opportunity to be given more information about our products and services. Our
estimated entry strategy budget is as shown in the table below;
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Table 1.1 Estimated Entry Strategy budget
STRATEGY NATURE NUMBER COST PER TOTAL COST

UNIT (Kes) (Kes)
Advertising Electronic media 10 2,500 25,000
Affiliate Commission 5 5,000 25,000
relationships
with other Gym
and Spa owners
Word of mouth Gifts and 20 1,000 20,000
referrals discounted
services
Trade show Exhibition booth 2 15,000 30,000
exhibitions
TOTALS 100,000
1.5.2 Growth Strategy

Perfect Fitness Gym and Spa aims to expand the range of products and services provided to clients
by customizing them to fit individual’s needs. Therefore, whether if they require a complete
package or simply consulting on a product or a service, this can always be discussed and agreed
upon. By coming up with a range of products and services under one roof, the business will offer
its clients the ease of one stop shopping.
The business will leverage its owner’s expertise in planning such events to competitively position
itself as a premier provider of Health and wellness services. The owner has very strong
interpersonal and communication skills, which will help buzz about the high quality of the
services offered by Perfect Fitness Gym and Spa.
1.6 Business Goals

1.6.1 Short Term Goals
i. Creation of employment
ii. Profit Maximization
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iii. Satisfying unmet demand in Health and Wellness field
iv. Build and nurture a strong brand with excellent customer service
v. Capture 18% of market share at entry
vi. Increase overall business awareness to the community
1.6.2 Long Term Goals
i. To be the market leader in both client service and quality products in the region by 2021
ii. To participate in corporate social responsibilities in 2021
iii. Ito be the most profitable Gym and Spa in the region by 2022
iv. To set up a training school for students who would wish to take Fitness, Health and
Wellness as their Career
v. To open two more branches in the CBD and Muthaiga area by 2022
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2 CHAPTER TWO
2.0 THE MARKETING PLAN
This chapter describes the customers to the business, the competition in the industry, the pricing
of products, the sales tactics, advertising and promotion strategies required to exploit the market
opportunities and the distribution strategies that will be used in getting the products and services
to the customers.
2.1 Customers
The customers are crucial to the success of any business or organization. They are the source by
which the success of the business depends on since they represent its fundamental source of
revenue. Below is a description on the customers the business hopes to capture.
3.1.1 Description of Potential Customers

The business will target progressive and generally well-educated and affluent consumers who are
interested in trying new products, services and experiences and are dissatisfied with the limited
selection and lack of personal services found in existing Gyms and Spas in the area.
The main focus for the business will be getting clients from the corporate organizations around
the area which are increasingly being establish in the recent past due to the rapid growth and
development of the infrastructure in the area such as roads and office spaces. Other potential
clients will be residents of the area who have settled down and build their homes in the area. This
may be classified as walk in clients who get to know the business and its products and visit
regularly to consume the products and services either on schedules or upon their availability.
Since the business will be starting small, it will be expecting customers from either walk in clients,
gym membership with corporates or individual memberships.
The potential customers will represent a wide range of ethnic, racial and cultural backgrounds.
Business average customers will be young to middle aged individuals, educated, traditional,
health and wellness oriented men and women.
The business shall also attract tourists who will be visiting the country and residing in hotels and
residentials around the location of the business. Such customers will be looking for quality
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efficient services, good health and also the wellness of their family and friends hence they will be
interested with our products and services.
The sales for the business is expected to be uniform throughout the year apart from the holidays
seasons where the business may experience a rise due to availability of more people who will be
home for the holidays and also families that will have toured the area.
With so many options available to the clients, the business will offer high quality and personalized
products and services, a wide range of custom-made products and services, which will ensure all
different clients’ needs, are met and expectations exceeded.
Customers attraction will not only be based on the products and services offered by the business,
but also the experience the customers will gain when they visit the business or when a service is
offered to them from the business. This will happen by ensuring there is good customer service
at all times which will eventually increase clients satisfaction.
Perfect Fitness Gym and Spa will remain open from Monday to Sunday, 6.00 am to 9.00 pm.
The number of clients that the business will host per shift will depend entirely on the factors that
play big role in the Health and wellness industry such as individuals or corporate organizations
willing to join the gym, products and services offered, planned events etc. The presentation of
the products will also matter, clients’ engagement and satisfaction. The business will also offer
personalized services, which will include home calls, virtual trainings, healthy food recipes and
advices on health supplements and all other issues regarding health and wellness. Charges will be
customized to fit in each clients’ need and request.
The payments for business will be cash or cheques on delivery since the business is starting up
and no client will be trusted with credit arrangements until there is a build of trust between the
loyal clients and the business.
3.1.2 The Market Size

The immediate market area of the business is highly populated and with a great affluent levels
hence making it a suitable region for Perfect Fitness Gym and Spa. It also attract high traffic
largely from residents and corporate organizations around the area, tourists and students. The
target market for the business caters for a variety of ages and genders and therefore, the extent of
the target market allows for a greater expectance of revenue.
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According to the Spa and Wellness Association of Africa report (2020), the total population of
the target market is about 10,000 individuals. Out of this, only 5,000 people are willing to
purchase the business’ products and services and this represents 30% of the market share. The
report further illustrates the market share for the major players in percentages as follows;
Table 2.1 Market share for the major players in the market
BUSINESS POPULATION PERCENTAGE (%)

ShapeFit Fitness Center Ruiru 2000 40
Kings Fitness and recreational Center 1250 25
Golday’s Gym Fitness 1000 20
Kenyatta University Gymnasium 750 15
TOTALS 5000 100
The total population is 10,000, 5000 will require the products and services, 5000 will not.
The above information is summarized in the figure below;
Chart Title
15%
40%
20%
25%
ShapeFit Fitness Center Ruiru Kings Fitness and recreational Center

Golday’s Gym Fitness Kenyatta University Gymnasium
Figure 2.1 Market Scene before entry
However as the proposed business moves into the market the shares will change as shown in the
table below;
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Table 2.2 Market share for the major players in the market after entry
BUSINESS POPULATION PERCENTAGE (%)

ShapeFit Fitness Center Ruiru 1500 30
Kings Fitness and recreational Center 1100 22
Golday’s Gym Fitness 800 16
Kenyatta University Gymnasium 600 12
Perfect Fitness Gym and Spa 1000 20
TOTALS 5000 100
From the figure above, there is a loss in the percentage of the market share for each competitor.
The business will capture 20% of the target market upon entry; the market share for Shape Fit
Fitness Center Ruiru will drop by 10%, Kings Fitness and recreational Center by 3%, Golday’s
Gym Fitness by 4% and Kenyatta University Gymnasium by 3%. The loss of market share will
be due to lack of personalized customer service and lack of variety of products and services,
which will be found at the proposed business. The proprietor plans to have a customer service
manager who will ensure all customers are attended well and are all satisfied.
Although ShapeFit Fitness Ruiru is very common and has a huge following, it lacks a variety of
services and products, which will be found at the proposed business hence we shall attract a
portion of its client. Kings Fitness and recreational Center will lose several clients because of its
location in comparison to the business. The proposed business location will be convenient, easily
accessed by customers and in a high traffic area that will encourage impulse subscription of
membership.
The customer service that Kenyatta University Gymnasium offers is not satisfactory, also their
space is limited compared to the number of members willing to train at the Gym, this has been as
a result of discounted rate issued to the students and hence encourages as many students to join
at a given shift hence other members feel they are not offered services worth their investment.
The proposed business intends to invest in adequate space and quality customer service to attract
more clients.
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The above information is summarized in the figure below;
Chart Title
20%
30%
12%
16% 22%
ShapeFit Fitness Center Ruiru Kings Fitness and recreational Center

Golday’s Gym Fitness Kenyatta University Gymnasium
Perfect Fitness Gym and Spa
Figure 2.2 Market Scene after entry
Source: Author (2020)
2.2 The Competition
Competition is essential for the success operation of a market economy. It helps provide the best
products and services at the best price. The Fitness, Health and Wellness market has very many
businesses operating in it, making it very competitive. Below is a description of the potential
competitor of the business.
2.2.1 Description of the Potential Competitors

The business will be in competition with all the Gyms and Spa businesses in the area. However,
the top for competitors will be ShapeFit Fitness Center Ruiru, Kings Fitness and recreational
Center, Golday’s Gym Fitness and Kenyatta University Gymnasium. These establishments have
been in operation for 5 years, some even longer. They not only have member’s subscription, but
they have started involving the community by organizing boot camps for those willing to have
occasionally outdoor exercises. The above establishments will be the biggest competitors.
22
Figure 2.3: Location of Potential competitors in Relation to Perfect Fitness Gym and Spa
Source: Google maps (2020)
All the four competitors are located around Ruiru area. ShapeFit Fitness is situated in Ruiru Town
1km from the Eastern Bypass 1000 meters from the location of the proposed business. Kings
Fitness and recreational Center is located 500 meters north from the proposed business location.
Golday’s Gym Fitness is situated 300 meters south from the location of the proposed business
and Kenyatta University Gymnasium is located at the Kenyatta University Main Campus which
is 700 meters east of the porposed business location.
The business will be close to uts main competitors in the area, which will enable it benefit from
the marketing efforts that draw customers into the area. The closer proximity will also be an
advantage for the business as it will cause it to continuously improve on product offerings that
23
will sharpen its competitive edge. On the other hand, the business would rather fill an unmet need
in the market by locating far away from its competitors.
The expenses associated with operating out of the proposed location will be lower for the business
in comparison to some of its competitors, Many of these costs such as rent, utilities and
maintenance will be higher in the location of the competitors. Location with ample parking
spaces, good infrastructure, and accessibility typically have high rents than the locations with less
of the above considerations. For instance, ShapeFit Fitness is located in Ruiru Town and this may
lead to paying more for renting in the town compared to those that are located away from town.
The presence of more recreation centers in the area will attract customers similar to the Fitness
clients. The proposed business location also has a tenant nix of companies and businesses such as
swimming pools, supermarkets with available healthy choices of food and gym wears, learning
institutions, residences and offices that will help rather than hinder sales for the proposed
business. The anchor businesses will typically pull in customers to the business. In addition, the
operating hours for the proposed business will attract clients from different hours of the day.
Those who are able to join early morning hours, others may join during the day and others are
available in the evening as they are headed home for the day.
2.2.2 The Size of Your Competitors in Relation to the Proposed Business

The businesses in competition are categorized as either small, medium or large as shown in the
table below:
Table 2.2: Sizes of the Forms in the Fitness, Health and Wellness industry
SIZE SMALL MEDIUM LARGE

DETERMINATION
Annual Sales Volume 750,000 – 1,500,000 1,500,000 – 3,000,000 Above 3,000,000
Value of Assets 500,000 – 650,000 650,000 – 2,050,000 Above 2,050,000
Number of Employees 1 - 12 13 - 25 Above 25
From the table above the four main competitors will fall into the following categories;
ShapeFit Fitness Ruiru is considered large in size since they have an annual sales volume of above
Kes. 3,000,000, assets worth more than Kes. 2,050, 000 and engages over 25 employees.
24
Kings Fitness and recreational Center and Golday’s Gym Fitness are considered medium in size
as their annual sales volume is between Kes. 1,500,000 and Kes. 3,000,000, assets value range
from Kes. 650,000 to Kes. 2,050,000 and employs between 13 to 25 employees.
Kenyatta University Gymnasium is considered to be s,all in size with an annual sales volume of
between Kes. 750,000.00 and Kes. 1,500,000.00. It also has an asset value of Kes. 500,000.00 to
Kes. 650,000.00 and employs between 1 and 12 employees.
Perfect Fitness Gym and Spa will start at medium level with an estimated annual sales volume of
between Kes. 1,000,000.00 and Kes. 1,500,000.00 assets value of around Kes. 1,500,000.00 to
Kes 2,000,000.00. it will have 13 employees.
Some of the advantages of starting at the medium level includes lower startup costs. The cost of
running a medium business are much lower than creating and running a large business. The
business will have access to affordable business loans and grants to help cover startup costs
whereas large businesses usually relies on investors. Opening a medium business also has the
distinct advantage of lowering the development costs.
A medium business owner can develop the company incrementally, without having to commit a
large amount of money for startup costs. As the business grows, you can increase or improve your
supplies and equipment. The proprietor will also be in control of all the aspects of the business
including the location, what the operation is to look like, the products and services the business
will provide and their amounts.
However, starting at this level may have some disadvantages such as financial risks. Small
businesses must incur financial risk, whether the owner used his own savings or borrowed money
for startup costs, the money invested in the business is at risk. Some enterprises go out of business
and cause business owners to lose their initial investments or default on business loans. Even with
a very elaborate business plan, economic volatility can cause the business to lose money and
eventually close for good.
The entrepreneur will also have a demanding work schedule. Work schedules are the most
grueling for new business owners, because they usually handle time consuming administrative
duties. The responsibilities of running a new business ultimately rests upon the proprietors
shoulders. He may experience days when he needs to stay in the office until the tasks are complete.
25
Lastly, small or medium business owners are solely responsible for the business, its success and
its failure, and therefore bear all liabilities, as they will as well enjoy the profits. The entrepreneur
will be liable for any debt that the business may have during the course of operations. Is the
business is in financial risks then it may be unable to repay the money borrowed from various
sources.
2.2.3 Comparison of the Proposed Product with those of Potential Competitors

To determine whether the business products or services will be at per or have more, different, or
better features than its competitor’s products, a product comparison is made of the products that
will compete directly with the business products and services in the target market. The table below
gives an overview of the business and its competitors’ products and services and their key
capabilities:
Table 2.3: Comparison of Fitness products and services with those of potential competitors
AREAS OF ShapeFit Kings Fitness Golday’s Kenyatta Perfect

COMPARISON Fitness and Gym Fitness University Fitness Gym
Center recreational Gymnasium and Spa
Ruiru Center
Quality 5 5 4 4 5
Reputation 5 4 3 4 1
Pricing 4 4 3 3 3
Performance 4 4 4 4 5
Total 18 17 14 15 15
Key: Frequency 1. Very Low 2. Low 3. Moderate 4. High 5. Very High
Fitness and Wellness businesses are characterized by three main traits: Price, Quality and Service.
From the above table, ShapeFit Fitness and Kings Fitness Recreational Centers are highly rated
in reputation, quality and pricing of products. The business will however gauge itself to the quality
of Golday’s Gym Fitness in order to capture some of its customers although it offers a variety of
advanced equipment and personalized training, their focus is bodywork outs. Furthermore, they
lack outdoors activities, home calls, and virtual trainings on fitness, health and wellness.
26
The business will have a total of 15 points with its strong hold being quality of products and
services as well as performance. However, the major shortfall when stacked against there four
establishments is its reputation which is moderate because the business is still in its initial stage
of its familiarization and clients have not yet fully identified themselves with it.
Fortunately, the strengths of these four other establishments are all the same and typical of
commercial fitness centers, thus allowing the business to be more easily stand out. ShapeFit
Fitness and Kings Fitness Recreational Center are highly priced. Golday’s Gym Fitness falls
between the mid to high price range while Kenyatta University Gymnasium prices range from
mid to low prices. In contract, the business would value higher quality products and services. The
prices and products would be from better quality of services and would still be very reasonably
priced in the industry.
The main competitive advantage of the business is its location and the personalized services as
well as the variety of products and services that will be available for all clients. This would include
home calls and virtual training, which will only be available at Perfect Fitness Gym and Spa.
Although the competitors have an established position in the market place, the business will focus
on offering a completely new experience to its customers to enhance customer satisfaction. It will
focus on good quality services, products, and will offer its clients a friendly and pleasant
environment with a fresh atmosphere. These two selling points will help the business achieve its
overall goals of a steady customer base with repeat sales. The focus of personalized attention to
potential customers and the uniqueness of the products and services will set the business apart
from competitors.
2.2.4 Description of the Overall Strengths and Weaknesses of Your Potential Competitors
To determine the strengths and weaknesses of the main competitors, the business will consider
factors such as technology, location, management style and marketing strategies. This is
summarized in the table below;
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Table 2.4: Description of the Overall Strengths and Weaknesses of the Potential
Competitors
Areas Of ShapeFit Kings Fitness Golday’s Kenyatta Perfect

Comparison Fitness and Gym Fitness University Fitness Gym
Center Ruiru recreational Gymnasium and Spa
Center
Technology 5 4 3 4 4
Location 5 4 2 2 4
Management 4 4 3 3 3
Style
Marketing 5 2 3 4 2
Strategies
Total 19 14 11 13 13
Key: Frequency 1. Very Low 2. Low 3. Moderate 4. High 5. Very High
It will be difficult to compete with ShapeFit Fitness Center Ruiru since it’s a well-established
gym in Ruiru, with a good location and years of experience in the Fitness Industry. Both ShapeFit
Fitness Center Ruiru and Kings Fitness and recreational Center have high scores in location and
technology. The companies have a well-established list of either repeat clients who are on
membership or those who prefer walking in upon availability of time. This makes them the big
competitors of the business.
Marketing strategies are the strengths for Kenyatta University Gymnasium. It will be easier to
compete with the company because it has a challenge with its space and customer service as well.
The Gym organizes many outdoor activities as well as swimming classes for its clients and those
around its location. The scores in the comparison factors of Kenyatta University Gymnasium
closely parallel the business scores in almost all factors. Golday’s Gym Fitness has a lower score
in Technology and location making it easier for the business to compete with.
ShapeFit Fitness Center Ruiru and Kings Fitness and recreational Center has a big advantage in
the market because of its management style. With good management, the company is able to
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effectively manage inventory, offer high quality services and maintain desired talents and
employees. This has overall increased the competitive advantage of the company making it
difficult for the business to compete with them.
2.3 The Pricing Strategy
The business will operate in the Fitness, Health and Wellness industry. To determine the selling
prices of the products and services, the business will consider some factors such as cost incurred
per product or a service, which would include direct and indirect costs. It will also consider the
profit margins and competitors’ prices to ensire that the business offers affordable and
competitive prices. The formula is shown below;
Selling price = total cost of production + mark up
Where the total costs are the direct and indirect costs associated with the production of the services
and the products, a markup percentage is then added to create a profit margin in order to derive
at the price of the products. The business will tract its production costs to the products and depend
on the quality, complexity, and means of delivering the services or products. The following
pricing guidelines will give an idea of base prices for the various cake types;
The selling pricing will be calculated as illustrated below;
Assumptions
 Employees will work for 9 hours a day

 Five and a half days will make a week
 Four weeks will make a month
 There will be 47 weeks in a year
Monthly remuneration = Monthly remuneration * Number of employees
Total = Kes. 30,000 * 1 = 30,000
Annual remuneration = Monthly Salary * 12 months = 30,000 * 12
Total = Kes. 360,000
Annual labour hours = weeks worked per year * hours worked per week * no. of employees
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Total = 47 weeks * 48 hours per week * 1 employee = 2,256 hours
Hourly wage bill = yearly remuneration / no. of hours worked per year
= 360,000 / 2,256
= Kes. 160
Each class will take one hour either for an individual of for a group, either for physical exercise
of learning about wellness, either spa visits or massages. The business aims at having 10 classes
per day. In total, the weekly classes with be 55. The direct costs involved will be as follows;
Table 2.5: Direct Costs
NOTE: The items below have been costed as per usage and daily consumptions and not their
original costs of purchase.

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Material/Equipment required Amount (Kes)

Treadmill 500
Dumbbell set 200
Training Bench 100
Resistance Bands 50
Stationary Bicycle 50
Shampoo 70
Shower essentials 150
Cleaning wipes 20
Wide toothed comb 10
Microfiber towels 60
Sanitizers 30
Labour cost per client 300
Direct Expenses per product or service 1,440
30
The indirect costs of production will be as shown below;
Table 2.6: The indirect costs of production

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Expenses Amount (Kes)

Salaries of indirect employees 90,000
Rent 20,000
Support Services 4,000
Advertisement and promotion 10,000
Electricity Bill 10,000
Water Bill 5,000
Telephone and Postage Bill 4,000
Licenses and Permits 1,325
Stationary 833
Interest on loan 850
Miscellaneous expenses 4,000
Depreciation on Fixed Assets 6,250
Total Monthly Production Expenses 156,258
The business’ indirect costs will be affected by the inflations costs in the country and to cater for
this, the business will add a 3% margin to cater for the inflation. Thus, the indirect costs include:
Total indirect costs = Indirect costs + 3% of the indirect cost
Total indirect cost = Kes. 156,258 + (3*156,258) / 100
Total indirect cost = Kes. 160, 946
At least 220 products or services are expected to be consumed or sold per month hence the indirect
cost per product/service will be;
31
Indirect cost per product/service = Total indirect cost per month / Number of product/service
= 160, 946 / 220
= Kes.732
Total cost per product/Service = Total Direct Cost + Total Indirect cost
Total cost per product/Service = Kes 1,440 + Kes. 732 = Kes. 2,172
In order to make a profit, a profit margin of 19% will be added and the selling price of the services
and products will be;
Selling price = Price per item + (Price per item * 19% profit margin)
Selling price = Kes. 2,172 + (Kes. 2,172 * 19%)
= Kes. 2,585 per item
The selling price per item will be Kes. 2, 585 which is very justifiable since the competitor’s price
range from Kes. 2,200 to Kes. 2,700 per item. The price will enable the business to attract more
customers because its slightly lower than that of the competitors.
The price will vary depending on the seasons; peak and off peak. They might be higher on
holidays and immediately after the festive seasons due to the large number of clients willing to
track back their health and fitness journey.
During the first three years of operating the business, the products and services will be purchased
on cash basis only and no credit will be allowed because the business will still be new. After three
years, the business will start offering its services and products on credit to the loyal clients and
repeat customers in order to keep up with the competition in the market.
The maximum amount that will be given on credit for any product or service offered will be Kes.
30,000. The repayment period for the credit sales will be within 45 days after which will attract
5% interest from the day of each transaction until payment is made. Discounts will also be given
to the repeat clients and groups that will enroll for longer period of membership. A 10% discount
will be given to the annual membership subscription while 5% discount will apply to the by annual
memnership subscription. Groups and corporate that join the gym and spa in a number not less
32
than 20 members for a period not less than three months will be entitled for 5 free products and
services of their choice.
Allowances for uncollectible accounts or bad debts will be measured against the credit sales. If
5% of the total sales default beyond 90 days, the bad debt allowance should reflect 5% of the total
sales for the fiscal year. The accounts will be reviewed periodically to determine if the percentage
is still correct and adjust if necessary.
2.4 Sales Tactics
The business will make use of personal selling methods. A floor manager will be employed to
supervise the different activities that takes place in the business; He or he will double up as the
sales representative so as to handle all sales activities as the business begins. The floor manager
will promote the business through his or her attitude, appearance and product knowledge. The
business will have a policy and structure in place on how employees resourcing will be done so
as to acquire and retain the best talents for the business. The proprietor plans to hire the floor
manager through a recruitment firm in order to ensure he gets the best in the market. The floor
manager’s main task will be to increase sales by creating awareness of the existence of the
business and the products and services the business will be offering.
Upon joining the business, the floor manager will go through a thorough training and be educated
on all the products and services the business intends to offer. All the processes involved in every
item or service. This will enable him or her to respond to all enquiries that will be made by the
potential clients. In addition, the manager will be provided with business cards and promotional
materials on products and services as well as their prices which he or he will distribute to the
potential clients. This will help increase the sales as well as well as the employee’s enthusiasm.
Through personal selling, the proprietor will get feedback and build trust with the customers as
the customers will feel free to give their suggestions complaints through their interactions with
the floor manager. This will be good for the business because the customers will be satisfied with
the products and serviced offered and they will feel valued and appreciated. The clients will also
be allowed to visit the Gym and Spa to see the equipment, products, structures and services
available so that they can be confident while joining the Gym.
2.5 Advertising and Promotion Strategy
33
The main aim of the advertising strategies is to support the marketing plan of any business, which
in turn supports the company’s business plan. Through advertising, the business is able to reach
and persuade customers to consume its products and services. Promotional activities will help the
business position itself in a favorable light with the customers. Below are the advertising
campaigns and promotional activities that the business intends to carry out.
2.5.1 Advertising Strategy
The business will make use of both print and electronic media to advertise its products and
services. Attractive designs will be made of fliers and leaflets to distribute among busy areas such
as shopping malls, supermarkets and bus terminals. To get the attention of the clients the fliers
and leaflets will have catchy headlines, attractive images of the gym and spa and easy to read
texts telling the potential clients where the business is located. They will also be issued to every
customer who comes to the business premises for enquiries about the products and services
offered.
Every customer who visits the business premises for enquiries will be issued with both the
business card and the leaflet. The business card will bear the contacts for the floor manager so
that if a client wants to enquire more or book for an appointment they will be able to do so easily.
The leaflet will bear all information pertaining the products and services offered, timings, prices
as well as the options available. Also, the floor manager will maintain a list of the contacts of all
the clients who come in for the first time to enquire about the products, so that they can always
be informed about the business progress, available offers ect.
A website will be developed which will give the business a great exposure to people looking to
join the gym and spa on the internet. The website will have information about the business, all
the available products and services, a price list and contact information. Attractive photos of the
Gym and Spa will be displayed on the website. The web address will be placed on all the
marketing materials to increase awareness, such as business cards, posters and fliers.
The product will be displayed as being of high quality and conveniently located along Eastaern
Bypass where customers can easily have access to the business products and services. The fliers
and leaflets will be used for two weeks from the commencement of business operations and
34
thereafter they will be used to advertise upcoming promotional activities or events such as boot
camps, hikes and health talks, also when introducing new products.
Fliers and leaflets will cost Kes. 30,000 annually while business cards will be printed on a monthly
basis and the annual cost will be Kes. 36,000. The initial cost for designing and hosting a website
will be Kes. 29,000. The annual fee for hosting or maintaining the website will be Kes. 5,000.
The total cost of advertising will be Kes. 100,000 per year.
The proprietor will be able to examine the effectiveness of the advertisements through customer
enquiries and the number of website visits. An increase in customer engagement on the website
is a sign of positive response to the advertisement. The adverts would have captured the interests
of the potential clients. An increase in traffic on the website is a good indication of positive
feedback. This can be checked on the web host logs and hits on the site and should be able to
provide daily, weekly and monthly reports.
2.5.2 Promotion Strategy

Presenting an attractive display is one way to gain that visual appeal from customers and
neighbors. The business will use a well-designed but affordable billboard to create awareness on
the neighborhood and also those who will be passing through that route where the business will
be located to encourage them to check in and see the products and services offered.
The business will participate in yearly trade fairs at Ruiru Stadium in Ruiru town as well as
periodic exhibitions that will take place in the course of the year. Through the trade fairs and
exhibitions, the business will have an opportunity to create awareness on its unique products and
services. Potential customers will be given the business cards and the leaflets so that they can
learn more on the business. We shall also have a company of several clients giving their
testimonies on how their life has changed and how their health has improved since they joined
the Gym and Spa, so that they can encourage others to join. This platform will also enable the
proprietor to build network with potential suppliers and customers.
To encourage customers to visit the business premises, the business will hold a monthly free
health talk to its clients and other who would wish to join. Word of mouth will be as well at the
beginning a strong promotion channel since the enterprise will be small in its very beginning. The
opinion of the customers and the information that will be passed on from friends and
35
acquaintances is rather valuable for the business; this can be done by giving them fliers and
business cards to pass out to their friends and family.
The billboard and the monthly health talks will be used to promote the business on a monthly
basis. If done properly, the health talks can attract more customers than the television
advertisements. Moreover, it is during such talks that a new product or service will be promoted
by talking about it during the talks to the present clients. It will also be less expensive compared
to other promotional methods. These talks will give the proprietor an opportunity to launch new
products and services and get the reviews and feedback from the customers regarding the new
products.
Trade shows will cost Kes. 15,000, the cost of exhibit space will be Kes. 5,000 bringing the total
to Kes. 20,000 per year. The health talks will cost the business Kes.3,000 per month and therefore
the annual cost for hosting the health talks will be Ksh. Kes. 36,000. The effectiveness of the
promotional methods will be measured through sales and members subscription. An increase in
the number of clients shows a success of the method employed. Increase traffic or number of
customers to the business means these numbers are an indication of raised awareness of the
business and what it has to offer. The above information is summarized in the table below;
Table 2.7: Advertising and promotion strategy

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Advertisement Nature Unit cost Number Frequency Total (Kes)

and promotion
Print Fliers 5 3000 2 15,000
Leaflets 5 3000 2 15,000
Business Cards 10 3600 1 36,000
Internet Website 34000 1 1 34,000
Total cost of 100,000
Advertising and
36
promotion
strategy
2.6 Distribution Strategy
All the products and services for the business will be sold at the business premises owing that not
many products and services of this kind of the business would be transferrable. Those products
that are transferrable, such as health supplements, healthy diet menus will be delivered to
customers as per their request. Such will be delivered directly to the clients, and no intermediary
will be involved.
The products will be delivered by use of public transportation such as motorbikes, buses, mini
buses and taxis.
Such distributions are expected to be less and therefore the business anticipates to use an estimate
cost of Kes. 5,000 per month on such deliveries, which will translate to Kes. 60,000 per year.
However, the business anticipates some difficulties in distribution such as road traffic congestion
which causes heavy delays and can be frustrating especially working with a tight schedule. Poor
weather conditions such as heavy rains can also cause disruptions in road transportation, making
it difficult for the customers to access the products. Such challenges can be resolved by making
deliveries during good weather, properly planning for the deliveries time to avoid traffic jams on
the road especially during peak hours. In addition, the placed orders can be completed in good
time to ensure the speedy delivery of the products and to avoid delays.
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3 CHAPTER THREE
3.0 THE ORGANIZATIONAL PLAN
This shows the plan of the business in developing policies for staff development and human
resource management. The plan will enable the firm to achieve effective performance of service.
It shows a detailed job description, employee’s evaluation, training and staff compensation plans
3.1 The Organizational Structure
The following is the organizational structure of Perfect Fitness Gym and Spa
Figure 3.1 Organizational Structure
OWNER/PROPRIET
OR
ACCOUNTA
NT
CASHIERS
FLOOR MANAGER
RECEPTION GYM YOGA

CLEANERS MASSEUSE BEAUTICIAN
STS INSTRUCTO INSTRUCTO
RS RS
The above structure is a reasonable one that a business can easily coordinate its functions with
ease. The business has only 13 employees but as the firm expands. Then it will also increase the
number of employees and the organization structure will change to fit its needs and size. The
following personnel are to be in the management of the business and the following are their duties,
responsibilities and qualifications.
38
3.2 The Management Team
The management team will consist of the Manager who is the owner, the Floor Manager, and the
Accountant.
3.2.1 The Manager

The owner of the firm who will manage all the operations of the business will manage the firm.
In his absence, the floor manager will be in charge of the operations.
3.2.1.1. Duties and Responsibilities
 Setting goals and objectives for the business

 Managing financial plans for the business
 Preparing policies and procedures
 Ensuring training and development of employees takes place
 Final decision maker of the business
 Authorizing all payments on behalf of the business
 Will be participating in the final staged of employees resourcing
 Seeking new information about customer’s needs and competitors analysis
 He will be paid a basic salary of Kes. 50,000 per month, airtime allowance of kes. 3.000
and lunch of Kes. 6,000 per month
3.2.2 The Floor Manager

3.2.2.1 Duties and Responsibilities
 Recruiting, training and supervising staff

 Managing budgets
 Enhancing profitability by organizing and delivering an appropriate range of fitness
activities and programmes
 Keeping statistical and financial records
 Maintaining fitness equipment
 Ensuring compliance with health and safety legislation
 Maintaining customer service standards
 Undertaking administrative tasks
 Promoting and marketing the business
39
 Dealing with enquiries, complaints and emergencies.
3.2.2.2 Qualifications
 Bachelor's degree or diploma in sports science, business administration or management

 Two years’ experience in Gym and Spa supervision
 Excellent communication skills
 Leadership and organization skills
 Adaptability and creativity skills
 Excellent computer skills
 He or he will be paid a basic salary of Kes. 40,000 per month, airtime allowance of kes.
2,000 and lunch of Kes. 3,000 per month
3.2.3 Accountant
 CPA part III

 Diploma in Business Administration
 Two years’ experience in Business enterprise
 Have knowledge of auditing
 Good skills in public relations and a good team player
 Excellent computer skills
 He or he will be paid a basic salary of Kes. 30,000 per month, airtime allowance of kes.
2,000 and lunch of Kes. 3,000 per month
Table 3.1: Remuneration of the management team
FUNCTION REMUNERATION (KES)

The Manager 59,000
Floor Manager 45,000
Accountant 35,000
Total remuneration of the management team 139,000
40
3.3 Other Personnel
Other personnel required includes the Cashiers, Gym Instructors, Beauticians, Cleaners,
Receptionists and Yoga instructors
3.3.1 Cashier
Reports directly to the Accountant
 Handle payments (cash, debit, credit cards, checks)

 Scan items
 Price checks
 Ensure there is enough cash in the till before shift (as well as the correct amount)
 Give back correct change, receipts, refunds (refunds will sometimes be issued at a
customer service desk instead of at the register)
 Handle discount cards
 Check for ID on certain items
 Maintain a record of transactions
 Help customers sign up for rewards points programs/cards
 Certificate or Diploma in Accounting
 One year experience as a Cashier in a Gym or Spa establichment
 Point of Sales System
 Price Scanners
 Time management
 Knowledge of products
 Attention to details
The Cashier will be paid a basic salary of Ksh. 25,000 per month and commuter allowance of
Kes. 3,000 per month
41
3.3.2 Gym Instructor
Reports directly to the Floor Manager
 Demonstrate the correct way to use exercise equipment

 Monitor the misuse of equipment
 Ensure the gym is clean and free of health and safety hazards
 Deliver exercise classes and workshops
 Develop personal exercise and diet plans
 Diploma or Certificate in Sports Science or related course

 One year experience in the Gym Instructor position
 Personal motivation to keep fit and the ability to motivate others to do the same
 Patience and the ability to explain things clearly
 Understanding of lifestyle, diet and the human body
 Awareness of safety and good working practices
The Gym Instructors will be paid a basic salary of Kes. 20,000 and a commuter allowance of
Kes. 3,000 per month
3.3.3 Receptionist
The receptionist will be reporting directly to the Floor Manager
3.3.3.1 Duties and responsibilities
 Provide exceptional customer service experience to all members, non-members and users
of the facility
 Enrolling new members and assisting current members with their queries
 Greeting members and users of the gym as they come through reception
 Checking in members and verifying memberships
 Registering prospective members and guiding them to the correct person
 Providing information on classes and availability
42
 Handling questions about cancellation of membership
 Ensuring that adequate stocks of information, packs and leaflets are available at reception
for interested parties
 Ensuring the safety and security of visitors, members and staff at all times and taking a
responsible attitude towards maintaining the premises and facilities of the Fitness Centre
 Serving customers, taking money for activities and accurately accounting or
transactions at the end of each shift
 Creating an excellent first impression of the gym by providing a warm welcome, tidy
appearance and pleasant manner at all times
 Handling telephone enquiries, recording messages from incoming calls and
transferring calls
 Maintaining a clean and tidy environment, both behind and in front of the counter
 Recording and keeping clear and accurate records of all queries, complaints, lost property
and repairs and ensuring the information is delegated to, and resolved by, the relevant
department
 Undertake other duties, of a similar professional nature and commensurate with the role,
at the request of the Floor Manager
 Certificate in customer care

 Friendly and approachable with an outgoing personality
 Cooperative, positive and optimistic
 Excellent customer service skills
 Basic numeracy skills
 Ability to enjoy working with a diverse range of people
 Able to project self confidence in own abilities
 Able to prioritize work, handle pressure and take confident day-to-day decisions
 Ability to maintain a professional appearance and behaviour
 Ability to communicate effectively in person, in writing and over the telephone
43
 Willingness and ability to occasionally work outside normal office hours
 Willingness to work flexibly in response to changing organizational requirements
The receptionist will be paid a basic salary of Kes. 25,000 and a commuter allowance of Kes.
3,000 per month.
Table 3.2: Remuneration of other Personnel

FUNCTION NUMBER OF REMUNERATION TOTAL (KES)
EMPLOYEES (KES)
Cashier 1 25,000 25,000
Gym Instructor 2 20,000 40,000
Receptionist 2 25,000 50,000
Masseuse 2 20,000 40,000
Cleaner 2 15,000 30,000
Yoga Instructor 2 18,000 36,000
Totals 221,000
The business will as well employ sales incentives by awarding its employees for every increase
in sales. This strategy helps the firm to be competitive hence recording high sales.
3.4 Evaluation and Development of Employees

3.4.1 Evaluation of Employees
Evaluation of the employees will be done after every three months to determine the training needs
and salary reviews.
Employees will be evaluated on time keeping, customer’s reviews on individual employees and
their ability to handle clients’ complaints and concerns.
The Accountant will be evaluated by looking at the speed and timely delivery of accounting
related issues like payment of the statutory deductions and employees’ salaries. Balancing of the
books will also determine his or her effectiveness.
The Floor Manager will be evaluated based on the business sales. In addition, the type of
promotional activities he or he has done and what return the business has realized from those
44
activities. In addition, a positive review from the guest will add him or her a point and vice versa
for a negative review from the guests. He will be evaluated on the overall performance of the
establishment.
The Gym Instructor, Yoga Instructors, Masseuse will be evaluated on time keeping, ability to
relate well with the clients, comments from the clients they have attended and also the upselling
skills while attending to clients.
The receptionists will be evaluated based on zero customer complaints at the reception, how
professional they are while handling guests call or complaints as well as their cleanliness and
confidence.
Cleaners will be evaluated on the basis on which they are able to keep all places clean and all
guests facilities available for example towels and shower gels etc.
The firm will embrace the concept of performance appraisal so that employees do their best to
meet the set goals of the business. It will be used to rank employees performance. This will enable
the manager to know the strengths and weaknesses of the employees and do the necessary changes
to improve it; this also motivates employees to work hard on increasing their output.
3.4.2 Employee Development

Training is important to the firm as skills and knowledge gained will be translated to improve
productivity. Training also helps the employees to learn their jobs and attain the desired levels of
performance. The firm will strive to train its employees through both on the job and off the job
training. This will include coaching and monitoring on the job and off the job will be through
seminars and workshops tailored for their specific job requirements.
The trainings will be offered on a quarterly bass when a training need analysis has been carried
out. It can also be done when need arises like if the process of doing tasks in the industry changes,
then, a training can be organized so as to equip employees with the new technology.
4 CHAPTER FOUR
4.0 OPERATIONAL PLAN

45
This chapter details facilities needed for the operation of the business, operation strategies and
associated costs, service delivery process and finally government regulations together with
associated costs. Summarily, it details the facilities, labor and expenses that the proposed business
will incur towards operation.
4.1 Product/Service Design and Development
4.1.1 Description of the Proposed Design and Development
The products and services for the proposed business will entail Gym equipment, Spa Equipment,
Sauna and Steam Bath, Healthy Recipe Booklets, Healthy Suppliments, Yoga Studio, Zumba and
Aerobics Studio. All equipment needed for the above products and services will mainly be of high
quality, imported and locally manufactured. The equipment will be purchased ready made for use
by our clients and therefore the business will only offer the space and platform for usage as well
as the distribution and storage of the products for consumers’ utilities. Therefore, the proposed
business will not incur any costs in designing the proposed products. It will acquire the products
from selected wholesalers within or outside the country, and then make them ready for selling to
customers.
4.2 Production Facilities and Capacity
4.2.1 Description of facilities needed for operation

The facilities required by the proposed business include a business premise with enough space to
accommodate appropriate merchandize. Other equipment needed will include the following;
treadmill, training bench, dumbbell sets, stationary bicycle, barbell set, rawing machine,
resistance bands, shampoos, shower essentials, cleaning wipes, sanitizers, combs, towels
weighing machine. The business also requires office equipment such as holding shelves. Other
requirements include information technology software, office table, dressing parlor, dressing
mirror, kitchen, toilet and washing area, computer systems among other office stationary items.
Table 4.1: Overleaf captures the facilities needed for operation

P.O. Box 611 – 00200
Nairobi
46
Tel: 0716621869
Item Source Cost Per Units Installation Date Total Cost

Unit Required Cost Required
Treadmill Imported 250,000 2 0 Before Start 500,000
Dumb Bells Imported 4,000 4 0 Before Start 16,000
Training Imported 50,000 2 0 Before Start 100,000
Bench
Barbell Imported 10,000 2 0 Before Start 20,000
Rowing Imported 70,000 2 0 Before Start 140,000
Machine
Resistance Sports 1,000 10 0 Before Start 10,000
Bands House
Kenya
Shampoo True 250 5 0 Before Start 1,250
Cosmetics
Shower True 100 5 0 Before Start 500
essentials Cosmetics
Cleaning True 250 10 0 Before Start 2,500
Wipes Cosmetics
Combs Best Lady 50 4 0 Before Start 200
shop
Oils True 500 5 0 Before Start 2,500
Cosmetics
Sanitizers Good Life 100 10 0 Before Start 1,000
Chemist
Computers Computer 20,000 5 0 Before Start 100,000
Solutions
Kenya
47
Furniture Blessed 50,000 4 0 Before Start 200,000
Hands
Furniture
Shelves Shekina 25,000 3 0 Before Start 75,000
Hardware
Software Computer 65,000 1 5,000 Before Start 195,000
Solutions
Kenya
Rent By Faith 30,000 0 0 Before Start 50,000
Letting
Agency
Stationaries Text Book 10,000 0 0 Before Start 10,000
Center
Scanner Text Book 5,000 1 0 Before Start 5,000
Center
Staff Uniform Manchester 20,000 10 0 Before Start 200,000
Outfitters
Printer ABC 7,500 1 0 Before Start 7,500
Stationaries
Dressing Homer 2,000 1 0 Before Start 2,000
Mirrors Décor
Kenya
Miscellaneous
Total 1,617,450
Assumptions
 All prices are inclusive of value added tax
48
 The prices of all items are inclusive of transport cost
 Rent will appreciate by 3% yearly as from the third year
 The business owner will be directly involved in procurement of all the facilities hence will
negotiate for good discounts on indicated prices
 The electronics and equipment will have provisions for after sales services
 Furniture includes tables and chairs
4.2.2 Repairs and Maintenance of Facilities for Operation

New Ruiru Engineering Services will be tasked with repair and maintenance of the facility,
equipment and all other items that would need maintenance at a cost of Kes. 60,000 per year. All
materials for repair and maintenance will be sourced locally.
4.2.3 Features of the Proposed Premises

The proposed business will operate from a rented premise. The terms and conditions of renting
the business will be a lease of five years on a renewable contract. This will give the proposed
business some form of certainty. The proposed business will pay a monthly rent of Kes. 30,000.
Any equipment and machinery that shall be required for the operations of the business shall be
installed at the business premise before the commencement of the business operations.
Figure 4.1: Ground Plan for the Proposed Business
Reception and 49
other offices
Gym and Aerobics Studio
Bathrooms
Sauna and steam

bath space
Yoga, Massage and Beauty
space
The proposed business premise is spacious and has room for future expansion.
4.3 Operation Strategy
This part highlights the operations strategy that the proposed business will pursue.
4.3.1 Description of Monthly Operation Expenses
The main item of the business is the Gym equipment and Spa facilities. The main source of these
items includes local suppliers as well as importing from international markets starting with Dubai.
The costs for the initial stock will be Kes. 1,000,000 and every month stock will be replenished
at the cost of Kes. 50,000.
Table 4.2 Description of Monthly Operation Expenses
50
P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Material Source Frequency Quantity Cost per Units Total

Unit Required Cost
(Kes) (Kes)
Stock Local Monthly Assorted 20,000 Assorted 20,000
replenishment dealers Subscription
Stationaries Text Book Monthly Assorted 10,000 Assorted 10,000
Center
Receipt Book Text Book Monthly 1 100 1 100
Center
Electricity Kenya Monthly 1 2,500 1 2,500
Power and
Lighting
Company
Water Nairobi Monthly 1 1,500 1 1,500
Water
Company
Miscellaneous Owner Monthly - - - 500
Total 39,600
The suppliers will be contracted to supply the above named materials throughout the year. The
materials will therefore be readily available throughout the year to ensure efficiency of services.
The accompanying cost of each time is inclusive of transport cost.
4.3.2 Monthly Labor Requirements

The initial number of the employees for the business will be as follows; the proprietor, Floor
Manager, Accountant, Cashiers, receptionists, Gym Instructors, Yoga instructors, Cleaner and
Masseuse. The table below summarizes the monthly cost of labor for the proposed business.
51
Table 4.3: Monthly Cost of Labor

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Job Number Salary per Month Total Amount (Kes)

(Kes)
Manager 1 50,000 50,000
Floor Manager 1 40,000 40,000
Accountant 1 35,000 35,000
Receptionists 2 25,000 50,000
Cashiers 2 25,000 50,000
Gym Instructor 2 20,000 40,000
Yoga Instructor 2 20,000 40,000
Masseuse 2 18,000 36,000
Cleaner 2 15,000 30,000
Total 371,000
The total monthly cost of labor will be Kes. 371,000
4.3.3 Monthly Operation Expenses

The following ites listed on the table overleaf will be incurred as monthly operation expenses.
The total monthly operation expenses will be a total of Kes as broken down in table
Table 4.4: Monthly Operation Expenses

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
52
Item Cost (Kes)
Rent 30,000
Internet 5,000
Salaries 371,000
Stock Replenishment 20,000
Telephone 5,000
Water 5,000
Electricity 6,000
Miscellaneous 2,000
Total 440,000
4.3.4 The Cost of Operation

The proposed business will be operation from 6.00 am in the morning to 9.00pm in the evening.
The initial items will be sourced from Dubai at a cost of Kes. 1,000,000, which will include
associated transport cost and port charges.
The first set of equipment will be bought whose buying price will be Kes. 50,000 and is expected
to yield a return on investment of Kes. 70,000. Therefore the owner projects earning a profit of
Kes. 20,000 for each item cosumed. On daily basis, the proprietor projects around 5 customers
using one item.
Below is the daily and monthly estimation of sales
Initial set of equipment = Kes. 50,000
Selling Prices = Kes. 1,000
Estimated number of used items = 7
Amount of sales per day = (7*1,000)
= Kes. 70,000
Average monthly sales = Kes. 70,000*30
= Kes. 2,100,000
Since the business will not incur any cost of production, the monthly cost of operation would be
the same as month operation expenses, which will be Kes. 440,000.
53
4.4 Service Delivery Process
Clients will be received well in the business premises where they will be taken to the reception
for registration and guidance. They will then be taken to the respective services they will be
willing to consume for the day or they will be shown the products available for purchase. Once
through, they will be allowed to leave the premise and give room for other customers who may
be joining later.
The proposed business will put in place effective and transparent service delivery process
entailing receiving services and products that is worth the clients investment.
The external factors that may affect the process include economic conditions, currency exchange
challenges and adverse change in business environment. The business intends to mitigate against
such occurrences by ensuring that it secures a sustainable source of items.
The figure below illustrates the service delivery process
Figure 4.2: Service delivery process
Entry and Exit
Customers are directed to the

Gym and Aerobics Studio
Customers are
Customers are directed to the
directed to the
yoga studio and massage
Steam bath and
Sauna, then room
Government Regulations
bathrooms
The proposed business will comply with the following government regulations:
54
4.4.1 Name Search
The name search and reservation for the proposed business will cost Kes. 300. Since each name
is charged Kes. 100, a total of three names will be searched with special consideration given to
Perfect Fitness Gym and Spa. The name search will be done at Huduma Center, located along
Kenyatta Avenue in Town, Nairobi.
4.4.2 Business Name Registration
The business name would be registered at Sheria House, Kenyatta Avenue in Nairobi. Being
under Sole proprietorship, a total of Kes. 1,000 will be used for the business registration
4.4.3 Business Licensing
The proposed business will seek a business license with the Nairobi City Council. According to
the business activities carried out on the business, the license will cost Kes. 5,000. A license
would allow business to legally operate within the designated place and time.
4.4.4 PIN Certificate
Once registered by the registrar of companies, the proposed business will seek a pin certificate
from Kenya Revenue Authority. This does not require any charges.
4.4.5 Taxation
The proposed business will commit to meeting the requisite tax obligations. It projects remitting
all the value added taxes applicable to all its business activities. The proposed business projects
paying taxes of 10% of its total monthly income.
4.4.6 Tax Compliance Certificate
The proposed business will seek a tax compliance certificate from the Kenya Revenue Authority
and display it in its premises. The Kenya Revenue Authority issues the certificate free.
All the above information is summarized in the table below
Table 4.5: Cost of Government Regulations and Compliances
55
P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Regulation/Compliance Source Location Total Cost (Kes)

Name Search Huduma Center Nairobi 300
Business Registration & Sheria House Nairobi 1,000
Certificate of
incorporation
License City Hall Nairobi 5,000
Pin Certificate Kenya Revenue Nairobi Free
Authority
Tax Compliance Kenya Revenue Nairobi Free
Certificate Authority
Total 6,300
56
5 CHAPTER FIVE
5.0 THE FINANCIAL PLAN
This chapter describes the financial aspects of the proposed business. Pre-operational costs,
working capital, the pro-forma profit and loss accounts, pro-forma balance sheet, and projected
cash flow statement and presented herein. This chapter also captures the break-even analysis,
financial requirements, proposed capitalization, expected profitability ratios, implementation
schedule and finally the critical risks and problems.
5.1 The Pre-operational Costs
This will include all the expenses that will be incurred by the business before opening its doors
for operation.
Table 5.1: Pre-Operational Plan

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Item Costs (Kes)

Facilities 700,000
Deposits (Water and Electricity) 10,000
Advertisement and Promotion 20,000
Support Services 150,000
Government Fees 6,300
Repair and Maintenance 60,000
Miscellaneous 10,000
Totals 956,000
Assumptions:
57
 Government fees include trading licenses, registration fees and cost of certificate of
incorporation
 All prices indicated are inclusive of value added tax
 Miscellaneous expenses include transport costs
 Facilities included computers, furniture, initial stock, stationaries, scanner, printer, rent,
repairs and maintenance.
 Support service will be paid once every year, at the beginning of each year.
5.2 Working Capital
The table below shows the projected working capital;
Table 5.2: Working Capital

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Working capital as at start-up January 2022-31st December 2022, 31st December 2023 and 31st
December 2024
Item As at Start up 31st December 31st December 31st December
January 2022 2022 2023 2024
(Kes)
Debtors - - - -
Cash 1,000,000 1,000,000 1,150,000 1,322,500
Deposits - - - -
Total Current 1,000,000 1,000,000 1,150,000 1,322,500
Assets
Liabilities
Creditors - - - -
Tax - 100,000 115,000 132,250
Total Current 0 100,000 115,000 132,250
Liabilities
58
Working 1,000,000 900,000 1,035,000 1,190,250
Capital
Assumptions:
 Credit sales will be considered after the 3rd year of operation

 Cash at start-up = (Capital less pre-operational costs)
 Cash will increase by 15% annually
 Deposit will be considered after the 3rd year of operation
 Credit purchases to be considered after the 3rd year of operation
 The Provision of tax will be 10% of the net profit before tax
 Working Capital = Current Assets – Current liabilities
5.3 The Pro-forma Profit and Loss Accounts
Below is table showing the pro-forma profit and loss accounts
Table 5.3: The Pro-forma Profit and Loss Accounts

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Profit and Loss Statements

For the Years Ended 31st December 2022; 31st December 2023 and 31st December 2024
Item 31st December 2022 31st December 31st December
Kshs 2023 2024
Kshs Kshs
Sales 10,000,000 11,500,000 13,000,000
Less Production Cost - - -
Gross Profit 10,000,000 11,500,000 13,000,000
Less Expenses
59
Salaries 4,452,000 4,452,000 4,452,000
Rent 360,000 360,000 360,000
Water 60,000 60,000 60,000
Transport 60,000 60,000 60,000
Telephone 60,000 60,000 60,000
Internet 60,000 60,000 60,000
Electricity 72,000 72,000 72,000
Stock Replenishment 240,000 240,000 240,000
Postage 3,600 3,600 3,600
Advertisements and Promotions 60,000 60,000 60,000
License 5,000 5,000 5,000
Support Services 100,000 100,000 100,000
Repair & Maintenance 60,000 40,000 30,000
Depreciation 50,000 45,000 40,000
TOTAL EXPENSES 5,642,600 5,617,600 5,602,600
NET PROFIT BEFORE TAX 4,357,400 5,882,400 7,397,400
PROVISION FOR TAX 10% 435,740 588,240 739,740
NET PROFIT AFTER TAX 3,921,660 5,294,160 6,657,660
Assumptions;
 Salaries will remain constant for the first 3 years of operation

 Electricity will remain constant, will increase by 3% after the 3rd year
 Cost of repair and maintenance will be decrease after the 1st year
 Rent will increase by 2% after 3rd year of operation
 Depreciation of the facilities projected at 2% per annum
60
Debtors - - - -
Cash 1,500,000 1,500,000 1,550,000 1,159,650
Deposits - - - -
Total Current Assets 2,550,000 2,449,000 2,440,000 2,390,900
(c)
LIABILITIES
Current Liabilities
Creditors - - - -
Tax 10% -
Total Current -
Liabilities (d)
Working Capital 1,500,000 1,450,000 1,500,500 1,600,100
Financed By:
Owners’ Equity 1,000,000 1,000,000 1,000,000 1,000,000
Donation 350,000 350,000 350,000 350,000
Bank Loan 750,000 750,000 750,000 750,000
Profit/Loss - 3,921,660 5,294,160 6,657,660
Total Financed By 2,000,000 5,921,660 7,294,160 8,657,660
Assumptions;
 Furniture will depreciate by 2%

 Machine and equipment will depreciate by 2% annually
 Credit sales to be considered after the 3rd year of operation
 Cash at the start up = Capital less pre-operational costs
 No deposits for the first 3 years of operation
 Credit purchases to be considered after the 3rd year of operation
 The provision of tax will be 10% of the net profit before tax
61
5.4 Financial Requirements
At start up, the proposed business will require Ksh, 2,000,000
Table 5.5: The Financial Requirements

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Item Amount
Kshs.
Preoperational Costs 1,500,000
Facilities Required for Operation 400,000
Miscellaneous 100,000
Total Financial Requirements 2,000,000
Source: Author(2023)
Assumptions:
 Miscellaneous expenses are included in the preoperational cost

 Preoperational costs include cost of equipment and installation
 Salaries for the first month will be factored in working capital
 Government licenses are included in preoperational costs
 Rent is included in preoperational costs
 Purchase are included in preoperational costs
62
5.5 Proposed Capitalization
The proposed business will be financed by the owner as the sole proprietor, who will also source
a loan from the bank and get donations from friends and family as well. he will contribute Kes.
1,000,000 from his savings, borrow loan of Kes. 750,000 and hope to gather Kes. 250,000 from
family and friends as donation for his proposed business.
The proposed business will acquire a long term loan from Equity Bank of Kenya that will be paid
for a period of three years at an interest rate of 12% per annum.
Below is a detailed breakdown of the principal amount plus the interest payable on the loan.
Total amount to be borrowed = Kes. 750,000
Repayment period = 36 months
Principal amount to be paid = 750,000 / 36
= Kes. 20,833 per month
Interest to be paid per annum = Kes 750,000*12 / 100
= Kes. 90,000 per annum
Interest per month = Kes. 90,000 / 12 months
= Kes. 7,500
Monthly principal plus interest = Kes. 20,833 + 7,500
= Kes. 28,333
The proposed business will be remitting Kes. 28,333 per month towards loan repayment.
Table 5.6 below summarizes the proposed capitalization
63
Table 5.6 The Proposed Capitalization
P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Item Amount
Kshs
Total Investment 2,000,000
Owner’s Equity 1,000,000
Donation from Family and Friends 250,000
Bank Loan 750,000
Source: Author(2023)
The capital for the proposed business will be Kes. 2,000,000
5.6 The Expected Profitability Rations
Gross profit margin

Gross profit margin for 2022 = Gross Profit*100 / sales
= Kes. 10,000,000 * 100 / 10,000,000
= 100%
The gross profit margin for the year 2022 will be 100% since there will no cost related to
production.
Gross profit margin for 2023 = Gross Profit*100 / Sales
= 11,500,000*100 / 11,500,000
= 100%
64
The gross profit margin for the year 2023 will also be 100% since there will no cost related to
production.
Gross profit margin for 2024 = Gross Profit*100 / Sales

= 13,000,000*100 / 13,000,000
= 100%
The gross profit margin for the year 2024 will also be 100% since there will no cost related to
production.
Return on equity for 2022 = Net profit after tax*100 / (owners’ equity + donations)
= 3,921,660*100 / (1,000,000 + 250,000)
= 313.73%
The return on equity for the year 2022 will be 313.73% since there will be no production cost
= 5,294,160*100 / (1,000,000 + 250,000)
= 423.53%
= 6,657,660*100 / (1,000,000 + 250,000)
= 532.61%
Return on investment
Return on investment for 2022 = Net profit after tax*100 / total Investment
= 3,921,660*100 / 5,921,660
= 66.23%
The return on investment for 2022 will be 66.23%
65
= 5,294,160*100 / 7,294,160
= 72.58%
= 6,657,660*100 / 8,657,660
= 76.90%
The return on investment growing from 66.23% to 72.58% and then to 76.90% affirms the steady
growth in profitability of the business, thus qualifying it as a valuable venture
5.7 The Implementation Schedule
Involves detailed listing of activities, costs, expected difficulties and schedules that are required
to achieve business objectives. It also involves the act of implementing or inputting into effect
Table 5.7 The Implementation Schedule

P.O. Box 611 – 00200
Nairobi
Tel: 0716621869
Event Expected Start date Expected date of Completion
Business Idea Generation January 2024 February 2023
Feasibility Studies March 2024 April 2024
Business Planning April 2024 May 2024
Complying with Government May 2024 December 2024
Regulations
Acquisition of Facilities for August 2024 December 2024
Operation
Partitioning of Premises November 2024 December 2024
66
Advertisement and January 2025 December 2024
Promotion at Entry
Launching the Business Feb 2023
5.8 Critical Risks and Problems
When starting a business, there are risks and problems that must be encountered. A Geneva
consulting firm expects firms to anticipate theft and poaching of employees as key critical risks
and problems that may affect the operations of any business.
5.8.1 Theft
Security and surveillance strategies have improved tremendously in recent years because of
advances in technology. Multi-use surveillance equipment and less conspicuous trend-tracking
apps are more effective at identifying possible loopholes in the security system.
To stop theft of company’s properties, the proposed business will put in place effective control
measures including; insuring company’s properties and assets against theft, putting employees on
competitive remuneration packages, making the employees aware of the importance of
safeguarding company’s properties.
5.8.2 Poaching of Employees
Recruiting is a difficult task for many businesses today. Recruiting mistakes are easy to make,
and competition for talents is fierce. The competition is not only making it harder for companies
to find and recruit the employees they need to grow their business, it is also increasing one of the
things that keeps many manager and business owners awake at night; employees poaching. While
there is no perfect way to keep your most valuable employees from being lured to greener
pastures, the good news for companies is that they can increase the odds that their employees will
resist poaching attempts.
To contain employees from poaching, the proposed business will embrace the following
measures; competitive remuneration to employees, providing employees with growth
opportunities within the organization, respecting all employees, sharing relevant feedback
amongst employees and guarding the rights of employees and challenging them to live up to their
potential
67
6 REFERENCE
Barney, J. B. (1997). Gaining and sustaining competitive advantage. Reading, MA: Addison-
Wesley.
Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61-78.
Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to
create radically successful businesses. New York: Crown Business.
Vesper, K. H. (1996). New venture experience (revised ed.). Seattle, WA: Vector Books.
http/:www.google.com
7 APPENDICES
7.1 : Business Flier
WELCOME TO
PERFECT FITNESS GYM AND SPA
LOVE LIFE, LIVE LONG
TIME: 6AM – 9:00PM
68
FROM MONDAY TO SUNDAY
WE ARE LOCATED AT RUIRU EASTERN BYPASS. KAMAKIS

P.O. Box 611 – 00200
69

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MOI UNIVERSITY

SCHOOL OF BUSINESS & ECONOMICS

COURSE: BUSINESS MANAGEMENT

Perfect Fitness Gym & Spa

Registration: BBM 60/53/22

30TH AUGUST 2023

1 CHAPTER ONE ............................................................................................................................... 7

THE EXECUTIVE SUMMARY

1.0 The Business Description

2.0 The Marketing Plan

3.0 The Management and Organizational Plan

4.0 The Production Plan

5.0 The Financial Plan

1.0 THE BUSINESS DESCRIPTION

1.1 The Sponsor

1.1.1 Background of the Sponsor

1.1.2 Description of the Proposed Ownership Structure.

Representation of the sources of business capital in a pie chart (%)

Sources of Business Capital

Personal Savings Bank Loan Contribution from Friends and Family

Figure 1.1 Source of Capital

Terms and conditions of the lending institution

1.2 The Business

The proposed business’s major activity will include the following;

1.2.2 Choice of Business Location

Below is the sketch map illustrating the location of the business.

1.2.3 Justifying the need for the Proposed Business Venture

1.3 The Product

1.4 The Industry

1.4.1 Size of the Industry

1.4.3 The Industrial Trends and Prospects

1.5 The Entry and Growth Strategy

STRATEGY NATURE NUMBER COST PER TOTAL COST

1.5.2 Growth Strategy

1.6 Business Goals

2.0 THE MARKETING PLAN

3.1.1 Description of Potential Customers

3.1.2 The Market Size

BUSINESS POPULATION PERCENTAGE (%)

The above information is summarized in the figure below;

ShapeFit Fitness Center Ruiru Kings Fitness and recreational Center

Figure 2.1 Market Scene before entry

BUSINESS POPULATION PERCENTAGE (%)

ShapeFit Fitness Center Ruiru Kings Fitness and recreational Center

Figure 2.2 Market Scene after entry

Source: Author (2020)

2.2 The Competition

2.2.1 Description of the Potential Competitors

Source: Google maps (2020)

2.2.2 The Size of Your Competitors in Relation to the Proposed Business

SIZE SMALL MEDIUM LARGE

2.2.3 Comparison of the Proposed Product with those of Potential Competitors

AREAS OF ShapeFit Kings Fitness Golday’s Kenyatta Perfect

Key: Frequency 1. Very Low 2. Low 3. Moderate 4. High 5. Very High

Areas Of ShapeFit Kings Fitness Golday’s Kenyatta Perfect

Key: Frequency 1. Very Low 2. Low 3. Moderate 4. High 5. Very High

2.3 The Pricing Strategy

Selling price = total cost of production + mark up

The selling pricing will be calculated as illustrated below;

 Employees will work for 9 hours a day

Monthly remuneration = Monthly remuneration * Number of employees

Total = Kes. 30,000 * 1 = 30,000

Annual remuneration = Monthly Salary * 12 months = 30,000 * 12

Total = Kes. 360,000