BUSINESS PLAN

SHEILA'S BABY SHOP

P.O BOX : 5064-10500, Bungoma

EMAIL : sheilajerono@gmail.com

PHONE NO +254 741 157904

ADM 43283

PRESENTOR: SHEILA JERONO

PRESENTED TO : KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULLFILMENT OF THE
REQUIREMENT FOR THE AWARD OF CERTIFICATE IN
FASHION AND DESIGN

SERIES : NOVEMBER 2023

DECLARATION
I declare that this business plan is my original work and has not been submitted
to Kenya National Examination Council or any other institution.

Name: SHEILA JERONO

Supervisor: Mrs. Beth

Date: 08/10/2023

ii
DEDICATION
I dedicate this work to my beloved family members especially my parents and
my siblings. You gave me the reason to study hard.

iii
ACKNOWLEDGEMENT
I am very grateful to the almighty God for giving me good health, guidance and
strength to do my business plan. My sincere thanks to my parents for their
social, moral and financial support during writing of the business plan. I also
appreciate my friends especially mg best friend Phyllis for helping, correcting
and supporting me while writing the business plan. Thanks to my business plan
supervisor, for guidance and support during the business plan.

iv
 Table of Contents

Contents
P.O BOX : 5064-10500, Bungoma....................................................................................................................i
PHONE NO +254 741 157904.........................................................................................................................i
ADM 43283......................................................................................................................................................i
PRESENTOR: SHEILA JERONO.....................................................................................................................i
DECLARATION............................................................................................................................................................ii
DEDICATION............................................................................................................................................................iii
ACKNOWLEDGEMENT.......................................................................................................................................iv
Table of Contents.........................................................................................................................................................v
MARKETING PLAN...............................................................................................................................................vi
ORGANIZATION AND MANAGEMENT PLAN...........................................................................................vi
OPERATIONAL AND PRODUCTION PLAN.................................................................................................vii
FINANCIAL PLAN..................................................................................................................................................vii
1.0 BUSINESS DESCRIPTION................................................................................................................................1
CHAPTER ONE.........................................................................................................................................................1
1.1 BACKGROUND OF THE OWNER..................................................................................................1
1.2 BUSINESS NAME............................................................................................................................................1
1.3 LOCATION AND ADRESS.............................................................................................................................1
1.4 FORM OF OWNERSHIP..................................................................................................................................2
1.5 TYPE OF BUSINESS.........................................................................................................................................2
1.6 PRODUCTS AND SERVICES........................................................................................................................3
1.8 INDUSTRY..........................................................................................................................................................3
1.8.1 BUSINESS GOALS......................................................................................................................................4
1.9 ENTRY AND GROWING STRATEGY........................................................................................................4
Entry plan........................................................................................................................................................4
GROWTH PLAN.......................................................................................................................................................4
CHAPTER TWO........................................................................................................................................................5
2.0 MARKETING PLAN.........................................................................................................................................5
2.0.1POTENTIAL CUSTOMERS..........................................................................................................................5
TABLE 2:SWOT ANALYSIS............................................................................................................................7

v
CHAPTER THREE......................................................................................................................................11
3.0 ORGANIZATION AND MANAGEMENT PLAN...................................................................................11
3.1 KEY PERSONEL..............................................................................................................................................11
Responsibilities of the manager.......................................................................................................................11
salary structure table 3....................................................................................................................................14
Insuarance Services..................................................................................................................................................16
CHAPTER FOUR.........................................................................................................................................17
TABLE 4 PRODUCTION FACILITIES.........................................................................................................17
4.2 PROPOSE STRUCTURE PLAN..................................................................................................18
4.3 OPERATION AND PRODUCTION STRATEGY....................................................................................18
PRODUCT/SERVICES DESIGN DEVELOPMENT........................................................................18
4.4 MONTHLY PRODUCTION OPERATION COST...................................................................................19
PRODUCTION PROCESS....................................................................................................................................19
REGULATION AFFECTING THE OPERATION............................................................................................20
GOVERNMENT REGULATION........................................................................................................................20
INSURANCE ACT..................................................................................................................................................20
ENVIRONMENT REGULATION...................................................................................................................21
HEALTH REGULATION.....................................................................................................................................21
CHAPTER FIVE....................................................................................................................................................22
5.0 FINANCIAL PLAN...........................................................................................................................................22
5.1 PRE-OPERATIONAL COST...........................................................................................................................22
APENDIX.................................................................................................................................................................. 28

vi
 EXECUTIVE SUMMARY
BUSINESS
DESCRIPTION
The business will operate under the name Sheila's baby Shop and will be
situated in Bungoma town, Kenyatta Street, it is situated next to co-operative
bank, opposite Manyatta plazza.Sheila jerono is the owner of the shop. The
proposed business address will be P.O Box 5064-1050, Bungoma and the phone
number is 0710751351 for easy communication. The business will start on 10th
May 2022.The main activity of the business will be selling of various types of
babies' assecories.

MARKETING PLAN
The business potential customers will include the pregnant women and mothers
of Bungoma County. The business intends to use various marketing techniques
including employment qualification. The business is also going to face two
competitors namely; Mummy kids baby shop and Cliff baby shop.

ORGANIZATION AND MANAGEMENT PLAN.

The business will be managed by various personnel in their various sections.
The owner who is the manager of the shop will be assisted by a deputy manager
who will be in charge and attend to challenges of the business and give solutions
in absence of the owner. All accounts will be under the cashier who will be in
charge of all information in terms of finance on behalf of the business. The flow
will start from the manager to the deputy manager to the assistant then the
employees

vii
OPERATIONAL AND PRODUCTION PLAN
The business will need shelves, mirrors, drawers, Closed circuit television
(CCTV), office seats. It will also require stock from clothing company which
also provides transport services. The company store will be rented at a cost of
10,000 Kenya shillings per month. The opening time will be 8am to 9pm.

FINANCIAL PLAN
The business requires a capital of Five hundred thousand Kenya shillings. The
entrepreneur will raise two hundred thousand Kenya shillings in form of
owners’ equity. The remaining three hundred thousand Kenya shillings will be
borrowed from cooperative Bank of Kenya and it will be paid at a monthly
installment rate of 10%.

viii
 CHAPTER ONE
1.0 BUSINESS
DESCRIPTION

1.1 BACKGROUND OF THE OWNER

The business will be operated and managed by Sheila jerono who is currently
taking certificate course in fashion and design. The business will commerce on
10th December 2023

1.2 BUSINESS NAME

The name of the proposed business will be Sheila’s baby shop; this name is
name after the owner of the shop who is Sheila jerono. The name ensures no
other business portrays the same name. At the start up stage it shall only be one
branch

1.3 LOCATION AND ADRESS

The business will be located within Bungoma town at Kenyatta Street; it is
situated next to co-operative bank opposite manyatta plaza.
The business address will be:
SHEILA’S BABY
SHOP
PO.BOX 7078-800,
BUNGOMA. PHONE
NUMBER: +254 741 157904
EMAIL;Sheilaletting@gmail.com
The map of the shop is as shown below

1
 MAYONI TOWN

KENYATTA STREET
MANYATTA PLAZZA
SHIP SHEILA’S

BABY SHOP
CLIFF’S BABYS SHOP

COOPEEATIVE BANK

MAYONI – BUSIA ROUTE ST MARKS ROUTE

KAKAMENGA HIGHWAY
MUMIAS ROUTE
BUNGOMA MARKET

NAIVA
S
SUPERMARK
ET
BUNGOMA
MAIN STAGE

1.4 FORM OF OWNERSHIP

Sheila’s baby shop will be solely owned business by Sheila jerono letting,
therefore take the form sole proprietorship form of business. There are many
factors for choosing of a sole propriation due, due to the business being easy to
form and dissolving, it does not require many people to start and maintaining is
easy. The business owner also enjoys all the benefits alone since is the person
who integrates and coordinate the business.
The disadvantage to this business are the owner bares all the loses and also had
long working hours.

1.5 TYPE OF BUSINESS

The business is at a startup stage and will operate on 10th may 2023.The
objective of the business is selling of baby accessories in retail.

2
1.6 PRODUCTS AND SERVICES
Sheila’s baby shop will offer all types of baby’s clothes and accessories like
baby walker, baby bottles, new born baby suits, baby blankets, socks, baby
bottles, baby diaper, diaper bags, baby basins and towels. This will be of best
quality. The target of the business will be new Born’s mothers, expectant
mothers and all mothers who have babies. The business will provide transport to
the customer’s premises when they make orders for the product. The clothes and
accessories will be the best in that they are made in good quality materials. The
business will ensure good interpersonal relationship with the customers. The
products will be charged at a reasonable price. The business staff will be
offering individual attention to customers.

1.7 JUSTIFICATION OF OPPORTUNITY

• Few competitors: this is one of the reasons that favor my choice of
business that is Sheila’s baby shop business. This is because the
market
Have few baby shops.
• Population: being an urban center, the population is high and
Thereforeuts possible to put up a new business which might create high
demand of the products
• Infrastructure: availability of roads which enable the business to
Transport products without any problem

1.8 INDUSTRY
Sheila’s baby shop falls under clothing industries which is rapidly growing due
to high population, the business sales will be high throughout the year. The
industry will employ some workers that will help the growth by working hand
in hand to ensure the company is running well.

3
1.8.1 BUSINESS GOALS
The vital business goals of Sheila’s baby shop will be both long term and short
term goals.
The long term goals will include
(i) To create self-employment
(ii) To empower the country with self-employed entrepreneurs
(iii) To satisfy the consumers, tastes and preferences
(iv) To be the most profit making venture within its locality
(v) To be the best paying business saved employees.
In addition the short term goals are:-
(i) Participate in National building through tax paying system
(ii) To expand the business purchases and its stores
Thereafter I believe that the above started goals will empower my business to be
launched in the market

1.9 ENTRY AND GROWING STRATEGY

Entry plan
The business will enter the market through the following strategies:
i. Collecting all legal documents like licenses.
ii. Paying initial rent and furnishing the rooms.
iii. Creating awareness by putting posters in some strategic areas indicating
the location and products offered.
iv. The business shall lower prices than its competitors to attract more
customers.

GROWTH PLAN
v. Panctuality; opening at the right time.
vi. Self-organization of the work place.
vii. Cooperation and team work spirit.
viii. Personal hygiene and that of the working areas.

4
 CHAPTER TWO
2.0 MARKETING PLAN
2.0.1POTENTIAL CUSTOMERS
Sheila’s baby shop will be serving one main categories of customers in the
market and therefore a possibility to adjust in case of the change of every other
category of users.
Individual customers
The category individual customers will exist in this business whereby customers
will buy products for individual use.Producfs such as baby clothes, toys, utensils
and basins, rockers, baby walkers, children’s utensils such as baby bottles and
dishes.
This category includes;
• Expectant mothers
• Mothers with children.
2.1 MARKET SHARE
As far as the survey was carried out in the location of the business to determine
the market share of which Sheila’s baby shop would take amongst other many
research has provided many encouraging information which portrays that there
is potential market share. The table below gives an appropriate market share.

5
TABLE 1 market share
Competitors Percentage
MUMMY KID’S BABY SHOP 20%

CLIFF’S BABY SHOP 30%

EVERLINE BABY SHOP 15%

Market share

MUMMY KID'S BABY SHOPCLIFF'S BABY SHOPEVERLINE BABY SHOP

6
2.2 COMPETITION

There are three main competitors located in bungoma town. They include
mummy kids’ baby shop, cliffs baby shop and Everlyne Baby shop. They have
been in the industry for quite some time. The business will only promote or self
itself through proper management policies and high level or personal
relationship.

TABLE 2: SWOT ANALYSIS

Competi Strengt Weakne Opportu Threats
tor h ss nities
Mummy Properl Opens It has a Poor
Kids y late tender infrastru
baby located Poor Can cture
shop Offer manage improve Lazy
quality ment of manage employe
services finance ment es
Large Improve
capital commun
ication
CLIFF’S Sales at Poor It is Poor
baby afforda quality located manage
shop ble of in a rural ment of
price goods area the

7
 Proper No Charge business
adminis constan fairly
tration t supply prices
Everlyne Offers Sales at Sales in Lazy
baby after a higher bulk employe
shop sales price Quick es
services Poor delivery
Long delivery
working
hours

2.3 STATEGIES TO OVERCOME COMPETITION

Sheila’s baby shop will employ the following techniques to cope and
overcome the competition by other related businesses.
i. Extending closing hours
ii. Employing highly skilled staffs
iii. Strategic location where all customers can access business services
iv. Good management
v. Offering deliveries to customers

2.4 METHODS OF PROMOTIONS AND ADVERTISEMENTS

ADVERTISEMENT

8
The owner shall advertise the products and services mainly through posters
which the owner will put at the strategic points within and outside the center
also through the local radio stations so that people will get to know the
existence of the business. It shall be cheap and effective method to be used.
PROMOTION

The major promotion technique used will be through advertisements because

currently advertisements is major method that reaches a large number of people
in the market. Lowering of prices to attract customers and offering promotion of
goods by when buying or sshooing for products at certain amount gifts will be
offered.
2.5 PRICING STRATEGY
I shall carry out a thorough market research so as to know what price my
competitors are selling their products which are similar to mine and hence work
out expenses of purchase of stock and other expenses and hence decide whether
I shall be able to e.g. reduce the prices to make them competitive but still make
Some profits.
2.6 SALE TACTICS
Sheila’s Baby shop will have competitive workers. The owner shall employ
different sales tactics so as to survive a fairly competitive environment as far as
my business is concerned. E.g. through advertisement. The owner intend to
inform my customers on how to purchase their products from the business
premises and some value for their money like when somebody purchases in
bulk, more discounts is offered than one buys in smaller quantities. The owner
shall ensure that maximum and almost all types of products and services are
available in the market for customers during peak period when they are almost
in need of them e.g. during the beginning and in the end of each school term.

9
2.7 DISTRIBUTION STRATEGY
Sheila’s baby shop will be distributing products by use of sale representatives to
ensure products orders online are delivered successfully. The business will
facilitate transportation of the products, taking them to where they are easily
accessed by the customers. The mode of transport that is reliable around the
business location is motorbikes and at times the taxi mode of transport
depending on the client. This costs 50 Kenyan shillings around town using
bodaboda and 150kenyan shillings by use of taxi.
2.8 DISTRIBUTION CHALLANGES
The following are challenges expected as a result of distribution of products to
customers;
1) Failure of customers to respond on time to the distributed
products, they may end up being absolute
2) Mishandling of products during transportation which caused damages
and loses to the customers.

To overcome the challenges the following strategies are made;

a. Distribution of products to the market only when they are required and
are in demand to avoid absolute
b. Packaging of products well so as to avoid damages during transportation.

10
 CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

The intended business will be operated by the owner of Sheila’s baby shop.
Business shall define some major objectives it will strive to accomplish in the
Due course i.e. to provide supporting staff and services, this will be required by
the business.
The objective of the business will be achieved by qualified
workers.Managament of the baby shop will compromise of the manager who is
the owner, supervisor, salesperson, cashier and Watchman.
The management will ensure proper policies and procedures which help all
employees to carry out the business operation for greater efficiency and high
productivity.
The management will be managed and run by the owner of the business who
will be able to run the business effectively because she has more experience and
adequate management skills. The manager is the top this ensures smooth flow d
duties and responsibilities. Formulate and implement policies and procedures
relating to the business and the adducer her workers and customers on technical
issues as they arise.

3.1 KEY PERSONEL

The business will he headed by the manager entitled operations manager who
is the sole proprietor of this business currently holding diploma in fashion and
design.
Responsibilities of the manager
1. Offering supervisory responsibility to all other stuff
2. Acting as a link between the business and other related business of the
same type in the area
3. Ensuring quality services are rendered to all customers as well as the
11
 staff.
3.2 OTHER PERSONEL
Title Qualifications
Sales man -Should have good public
relations
-Should have one year
experience
in relating field
-Computer literate
-Be able to speak English and
Kiswahili
-Should be of aged 25 - 30
years
Superviso -Should be aged 22 - 25 year
r -Should have Certificate in
Business Administration or any -Reporting to the manager day to
related course
—Should have at least two
years’ experience in a
similar field -Should be
computer
literate
Duties and Responsibilities Numbe
r
r
-Keep the books and records of 1
sales -Receive and pay cash from
customers and suppliers
-Report daily sales to the
supervisor -Participate in sales
promotion -Accessing the
customers' needs and the response
of products.
-Supervision of workers to ensure 1
they execute their duties.
day activities or status of the
business -Legal advisor of the
manager
12
Accountan -Computer literate -Should -Entering all financial transactions 1
t have Certificate in Banking into
and Finance -Should be 20 financial books
years and above -Must be -Preparing pay roll
honest, trustworthy -Preparing financial statement at
the
End of the year.
-Making payment as advices by the
manager
Watchma -Should be between 30 - 40 -Reports any crime within the 1
n years -Must speak English and business to the supervisor
Kiswahili -Should be form four -Maintain peace and order within
leaver -Should have a good the
conduct business premises
-Protection of stock against fraud.

3.3 RECRUITMENT, TRAINING AND PROMITION

Recruitment
The business will advertise through the study nation newspaper, job opportunity
column hereby the applicants will send their applications to the manager of the
business. The manager will determine which applicant qualify for the various
posts which will have been advertised and the successful applicants will be
invited for preparatory interviews after which they will be remitted into the
business. The recruitment will depend on the job specification specialization
and qualification of the applicants.
Training
The management will like to have competitive and orienteer for all workers to
make them feel at ease. Training of workers will be achieved by issuing guide
books. There will also be seminars attended by workers on the hints and tactics
involved in selling of the books and communicating well with the customers.
13
The manager and supervisor who are also qualified in this field will be
supporting workers in form of training during the working period.
Promotion
To motivate workers they ought to be promoted. This will depend on devotion
and skills applied at the place of work. The promotion of the members of staff
will be done according to their hard work and expedience they show in item
Prizes. Also after successful training most efficient people will be determined
by the appraisal.

3.4 REMUNERATION AND INCENTIVES

Incentives
Employees of the firm will be compensated for their hard work and services
they offer to the firm by offering them monthly salary, wages and allowance.
Therefore payments will be made based on their qualifications and job status in
the firm. Payments are suggested to be adjusted depending on the profit out of
sales made in the business. To motivate employees, their efforts towards the
work will be recognized by giving them time off.
To improve their standard of work, their salaries will be compared to those of
the members of staff in other business related to this type of business.
Remuneration
It is concerned with the employee compensation action methods and welfare.
The whole organization or employees will be receiving remuneration because
they work for extra-hours at times.
The table below shows monthly salaries and wages for the remunerated
employees of the proposed business.
Salary structure table 3
Title No. Salary Allowance Total
(kshs) (kshs)
Supervisor 1 20,000 5500 25,500
Accountant 1 15,000 5000 20,000

14
 Sales 1 15,000 5000 20,000
person 1 8,000 2000 10,000
Watchman
Total (kshs) 75,500

3.5 LICENCES, PERMITS AND BY-LAWS

These include all those requirements which the authority intends the business to
abide by before its established and after.
They are laws and by laws which have been passed by the acts of parliament
and other authorities e.g. municipal council under local authority and hence
must be adhered to. These are:
The ministries under which the business falls i.e. ministry of commerce and
industry will issue the business a trade license to enable it operate legally.
Issuance of the license will cost around 10,000 and will have to be renewed
yearly according to the law.
According to by-laws of local authority act under the ministry of local
government a trade permit will be issued to the business. In this case, the
municipal council of Bungoma will provide it.
Other regulations
The business intends to abide with all other regulations issued by the rule of law
under different acts of parliament of this country concerning the operations of
this kind of business to enable its smooth running any external interference in
one way or other e.g. selling of illegal or substandard products or smuggled
products to customers.
3.6 SUPPORT SEVICES
Sheila’s baby shop will seek to rely services from other organizations to
enhance its services and operations. The following are the service providers and
the nature of the services that they will be providing to the business;
Banking services
Sheila’s baby shop will be using cooperative Bank which is located near the
shop, the business will rely on the bank to bank cash, cheques, forward ccas to
15
other accounts if needed, payment of salaries and goods via bank and saving
cash for future developments
Insurance Services
Dinah’s Hardware shop will have to be insured against any risk that might
occur. The proposed insurance company is CIC INSUARANCE COMPANY.
The address is as:
CIC INSUARANCE COMPANY
P.O BOX 245, BUNGOMA.
All employees will be registered by National Insurance Hospital Funds (NHIF)
which will cover their medical bills in case of emergencies.

16
 CHAPTER FOUR
4.0 OPERATIONAL AND PRODUCTION PLAN
4.1PRODUCTION FACILITIES AND CAPACITY
These are necessary requirement that helps the proposed business to facilitate
the provision of products to its esteem customers. These include:-Capital
finance-this enable the business its operations. Premise-the business will
acquire its premise by hiring. The table below shows the equipment by the
proposed business for it to start for the delivery of products to its customers.
TABLE 4 PRODUCTION FACILITIES
ITEM QUANTITY COST(KSH)
New born clothes 20 26,000
Diapers 5 packs 5,000
Diaper bags 5 6,000
Baby wipes 10 1,500
Baby wash clothes 20 1,000
Baby soaps 10 1,500
Bottles 20 6000
Burp cloths 20 2000
Breast pump 5 2,500
Milk storage bags 10 5000
Baby crib 5 5000

17
Baby walker 5 15,000
Baby basins 10 12,000
Breast pads 5 3,000
Nursing pillow 5 7,500
Baby blankets 10 12,000
Baby clothes 40 4,0000
104,200

4.2 PROPOSE STRUCTURE PLAN

The following will be the plan for the proposed business:

BABY ACCESOERIES SHELVE 2 BABY TOYS AND UTENSILS SHELVE 1

OTHER ACCESOERIES
SUPERVISOR’S OFFCJCE
STAFF ROOM

RECEPTION/A ACOUNT’S SESK

STORE ROOM MANAGER’S OFFICE
TOILETS

4.3 OPERATION AND PRODUCTION STRATEGY

PRODUCT/SERVICES DESIGN DEVELOPMENT
The source of production shall be selected from numerous and suppliers within
Bungoma town will insure that there is use of modern computers and equipment
in it premises so as to enhance accuracy and faster in production of its services.
At the start of the operation, the owner intends to carry out training of its
employees and held seminars on good customer relation so as to ensure control
and motivation
The business w of its employees.

18
4.4 MONTHLY PRODUCTION OPERATION COST
The enterprise will inquire the monthly production and operation cost.
The monthly production overheads for the intended businesses are as shown in
the table below:
Expense Amount Ksh
Electricity bill 800
Water bill 250
Rent 10,000
Postage 500
Advertisement 6000
Telephone 1000
Transport 2000

Total 20,550
The business will ensure that good quality is maintained in the delivery of
Products. The business will maintain good customer relation so as to attract
more customers. The business will also ensure that there is quality control in the
following. The business will ensure that materials for the business are available
in good time and that stock is well maintained as per the consumption rate.
The materials will be of high quality and obtained at a reasonable price.
The equipment especially computers will be installed carefully so as to ensure
proper working order.

PRODUCTION PROCESS
The business intends to open at eight o’clock in the morning and close at six
o’clock in the evening.
The products shall be sorted out and defective ones retuned to the supplier so
that customers are not turned off due to poor or substandard products offered.
Products will be arranged in shelves and price stickers placed under each
product.

19
There will be lunch break from 1:00 pm to 2:00 pm when the business re-opens
again.
When customers enter the business premises, the sales attendant who shall show
them where each product is located so those customers don’t spend much time
searching for such products will assist them.
The estimated cost of serving will be around kshs 20,500 per month out of the
total; projected to be around kshs 40,000 per month in the initial stages of the
business after operation begin.
i.e. {20,500/40,000} x100 =51.25%
Therefore the percentage cost of serving shall be around 51.25% per month.
REGULATION AFFECTING THE OPERATION

GOVERNMENT REGULATION
Every business operation operates through the local government authority, the
government offers licenses to business before they undertake any operation and
they are renewed yearly. The business will acquire trading license from
Bungoma county council. The business will follow good health regulation so
that the business can operate in a good enabling environment.

INSURANCE ACT
This is ensuring that the Sheila’s baby shop for both safety employees. This is
where the business will undertake to be indemnified by the insurance company.
The insurance company which is favored by the company is the CIC insurance
company. The business will insure against Fire which is a common risk which
can befall the business at any time. The business will do single insurance
because of its financial position in that the business is not stable financially.
Later the business will do double insurance after it has performed well. Single
insurance is where a business insures with only one insurance company while
double insurance is where it insurer with two companies.

20
ENVIRONMENT REGULATION
The business will ensure that the pollution of environment thus worker should maintain
good health regulation. These are the measures taken to avoid any careless accidents
from happening. All electrical wires must be insulated to avoid shocks and any danger
from happening. Life wires do cause a lot of danger to anybody around the premises; it
may cause dead when it strikes anybody. For safety reasons, the hostel gates must be
always locked to avoid any trespass by unwanted persons.

HEALTH REGULATION
The business will put consideration on health requirement on its working staff. This
includes check-ups for diseases e.g. Tuberculosis and Human Immune virus which are
common disease which weaken the immunity system of workers making them
unproductive workers.
TRADE MARK
The business will ensure there is no other business operation under same
name to avoid copyright completion and business criminals.

CHAPTER FIVE
5.0 FINANCIAL PLAN.
It helps the investor in maintaining the business and hence he can gauge whether the business
is making profit or not.

21
5.1 PRE-OPERATIONAL COST.
Before the business goes into operation it will have to incur certain cost and these are shown.

ITEMS AMOUNT

Tools and equipment 12000

Licenses and permit 12,000

Electricity 12000

Furniture and fittings 15,000

Advertisement 6,000

Total 57,000

WORKING CAPITAL
ITEM YEAR 1 YEAR 2 YEAR 3

Stock 100,000 200,000 400,000

Debtors 40,000 59,000 50,000

Cash in hand 200,000 250,000 350,000

Cash at bank 300,000 370,000 400000

Total 640,000 Ksh 879,000 ksh 1,200,000 ksh

PROJECTED CASH FLOW PROJECTION FOR YEAR 2023

22
Details 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th Total
Mon Mont Mont Mon Mon Mon Mont mon Mont Mon Mont Mont
th h h th th th h th h th h h
Cash - 3,000 5,000 4,00 6,00 7,00 5,000 6,00 7,000 8,00 8,000 5,000
Brough 0 0 0 0 0
t
Forwar
d
Equity 250, 250,0
000 00
Sales 190, 196,66 196,66 180, 196, 150, 196,66 175, 196,66 500, 71,16 71,166 2,143,
000 6.67 6.67 000 000 000 6.67 000 6.67 000 6.16 .16 000
TOTAL 440, 199,66 201,66 184, 202, 157, 201,66 181, 203,66 508, 79,16 76,166 2,393,
INFLO 000 6.67 7.67 000 000 000 7.67 000 6.67 000 6.16 .16 000
W
CASH
INFLO
WS
1 1,00 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12,00
Station 0 0
ary
License 50 50
and
Permits
Insuran 2,00 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24,00
ce 0 0
Electric 6 6 6 6 6 6 6 6 6 6 6 6 72
ity
Water 5 5 5 5 5 5 5 5 5 5 5 5 60
Adverti 800 800 800 800 500 500 500 500 500 500 500 500 7,200
sing
Telepho 50 50 50 50 50 40 40 40 40 40 40 40 530
ne

23
Repair 1,25 1,250 1,250 1,25 1,25 1,25 1,250 1,25 1,250 1,25 1,250 1,250 15,00
& 0 0 0 0 0 0 0
Mainte
nance
Tax - - - - - - - - - - - - 120,5
00
Rent 83 83 83 83 83 83 83 83 83 83 83 83 996
Total 5,24 5194 5194 5194 4,83 4384 4884 4884 4884 4884 4884 125,38 180,4
Out 4 4 4 08
Flows
Bal cld 434, 194,47 196,47 178, 257, 152, 196,78 176, 198,78 503, 74,28 636,28 2,112,
756 2.67 3.67 806 106 616 3.67 116 2.67 116 2.16 2.16 592
Table 5.6: Income Cash flow Statement

5.4 PROFORMA INCOME STATEMENT FOR FIRST YEAR 2023

DESCRIPTION AMOUNT (KSHS)
Cash sales 868,00
0
Total sales 868,00
0
Cost of sales 453,00
0
Total 1,321,0000

Gross profit = Total sales – cost of

sales Gross profit = 868,000 – 453,000
= 415,000
EXPENSES AMOUNT IN SHILLINGS
Salaries 56,000
Electricity and water bill 10,000
Insurance 12,000
Rent 10,000
advertisements 6,000
Transport 6500
License 6,000
Operation cost facilities 20,000
Contribution payment 50,000
Totals 126,500

24
 ASSETS KSHS LIABILITIES KSH
S
Fixed assets - Long term liabilities
Production facilities 100,000 Net profit 131,800
Salaries 56,000 Capital 200,000
Current assets Current liabilities
Stock 100,000 Friends consideration 50,000
Cash at bank 300,000
Cash at hand 20,000 Bal C/D 261,500
Totals 756,000 643,300

Net profit = Gross profit – Expenses = 415,000 – 126,000

= 289,000

5.5 BREAK EVEN ANALYSIS

FIXED COST KSHS
Salaries 56,000
Operation cost 20,000
License 6,000
Rent 10,000
Insurance 6,500
Totals 98,500
Variable costs
Electricity water bill 12,000
Contribution payment 50,000
Transport 6,000
Advertisement 6,000
Stock 100,000
Totals 174,000

PROFITABILITY RATIO

1. Gross profit margin = G.P x 100

Sales

Year 1 = G.P x 100

Sales
25
 = 868,000 x 100
415, 00

= 88 %

Year II = G.P x 100

Sales

= 1,500,000 x 100
415,000

= 89 %

Year III = G.P x

100
Sales

1,800,000x100
415,000

= 90 %
2. Return on Equity = N.P before tax x 100
Equity

Year 1= N.P. B.T x 100

Equity

= 1,186,900 x 100
981,900

= 20 %

26
 Year II = N.P.B.T x 100
Equity

= 1,378,720 x 100
981,900

= 40 %

Year III = N.P.B.T x 100

Equity

= 1,674,220 x 100
981,900

= 70 %
3. Return on Investment

= Net profit before Tax + Interest x 100

Total

Investment Total Investment = Owners = Equity + Total

loan

Year I = 1,186,900 x 100

981,900

= 20 %

Year II = 1,378,720 x 100

981,900

= 43 %

27
 Year III = 1,671,220 x 100
963,900
= 73 %
5.6 DESIRED FINANCING
PARTICULARS AMOUNT
Pre-operational cost 100,000
Working capital 500,0000
Total 600,000ksh
PROPOSED CAPITALIZATION
SOURCE AMOUNT
Equity 30,000
Bank loan 300,00
Friends contribution 50,000
Total capital 380,000ksh

APENDIX

MAYONI TOWN
KENYATTA STREET

MANYATTA PLAZZA
SHIP SHEILA’S

BABY SHOP CLIFF’S BABY SHOP

COOPEEATIVE
BANK OF KENYA

MAYONI – BUSIA ROUTE ST MARKS ROUTE

KAKAMENGA HIGHWAY
MUMIAS ROUTE

BUNGOMA

MARKET

NAIVAS
SUPERMARKET
BUNGOMA
MAIN STAGE

28