TITLE: BUSINESS PLAN

SUBJECT CODE: 2813/307B

NAME: KENNEDY MUTUA AKUNGU

INDEX NUMBER: 5111010588

CENTRE NAME: RIFT VALLEY INSTITUTE OF SCIENCE AND

TECHNOLOGY

CENTRE CODE: 511101

PRESENTED: THE KENYA NATIONAL EXAMINATION COUNCIL

IN PARTIAL FULFILMENT FOR THE AWARD OF

DIPLOMA IN LIBRARY AND INFORMATION

SCIENCE

SUPERVISOR: MR. MARITIM

SERIES: OCTOBER/NOVEMBER 2018

TABLE OF CONTENTS
DECLARATION........................................................................................................................i

DEDICATION...........................................................................................................................ii

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

EXECUTIVE SUMMARY.......................................................................................................iv

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

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

i. BACKGROUND OF THE OWNER......................................................................................1

II. NATURE OF BUSSINESS...................................................................................................2

III. FORM OF OWNERSHIP....................................................................................................3

V. THE SERVICE.....................................................................................................................5

VI. JUSTIFICATION OF OPPORTUNITY..............................................................................6

VII. THE INDUSTRY...............................................................................................................7

VIII. BUSINESS GOALS..........................................................................................................8

IX. THE ENTRY AND GROWTH STRATEGY.....................................................................9

CHAPTER TWO.....................................................................................................................10

2. MARKETING PLAN..........................................................................................................10

I. CUSTOMERS.......................................................................................................................10

II. COMPETITION..................................................................................................................11

III. MARKET SHARE.............................................................................................................14

IV. ADVERTISING AND PROMOTION STRATEGY........................................................15

V. PRICE STRATEGY............................................................................................................16

VI. SALES TACTICS..............................................................................................................17

VII. DISTRIBUTION STRATEGY........................................................................................18

CHAPTER THREE..................................................................................................................19

3. ORGANISATION AND MANAGEMENT PLAN.............................................................19

I. ORGANISATION CHART.................................................................................................19

II. KEY MANAGEMENT PERSONNEL NUMBER

3 AND DUTIES....................................19
III. RECRUITMENT, TRAINING AND PROMOTION........................................................22

IV. RENUMERATION AN INCENTIVES............................................................................23

V. LICENSES, PERMITS AND BY-LAWS..........................................................................24

VI. SUPPORT SERVICES......................................................................................................25

CHAPTER FOUR....................................................................................................................26

4 OPERATIONAL/PRODUCTION PLAN............................................................................26

I. PRODUCT DESIGN AND DEVELOPMENT....................................................................26

II. PRODUCTS FACILITIES AND CAPACITY...................................................................27

III. PRODUCTION STRATEGY............................................................................................28

IV. OPERATIONAL/PRODUCTION PROCESS..................................................................29

V. GOVERNMENT REGULATIONS AFFECTING OPERATION.....................................30

CHAPTER FIVE......................................................................................................................31

5 FINANCIAL PLAN..............................................................................................................31

I. PRE-OPERATIONAL COSTS............................................................................................31

II. WORKING CAPITAL REQUIREMENTS........................................................................32

III. PRO-FORMA BALANCE SHEET...................................................................................33

IV. PROJECTED CASH FLOW STATEMENT FOR THE FIRST YEAR ENDING 31ST
DEC 2016.................................................................................................................................34

VI. PROFORMA INCOME STATEMENT............................................................................35

VI. BREAK EVEN LEVEL.....................................................................................................36

VII. EXPECTED PROFITABILITY RATIOS........................................................................37

VIII. DESIRED FINANCING.................................................................................................39

IX. PROPOSED CAPITALIZATION.....................................................................................40

DECLARATION
I declare that I personally carried out the project report as follows after declaration. I received
no unauthorized help from unauthorized person other than the normal guidance from my
supervisor.

NAME: KENNEDY MUTUA

AKUNGU INDEX NUMBER: 5111010588

Sign………………………. Date..............................................2018

SUPERVISOR

Mr. Maritim

Sign………………………. Date..............................................................2018

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DEDICATION
I dedicate this business to my family, for supporting me morally, spiritually and financially.
Also I dedicate this to my classmate and also my friend who assisted me morally during its
preparation.

Special thanks to all for the right advice towards my entire course.

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ACKNOWLEDGEMENT
I would like to pass my sincere thanks and appreciation to my supervisor for his meaningful
ideas and encouragement s towards my research and ensuring that i come up with the right
plan.

Not forgetting Rift Valley Institute of Science and Technology community for a good
conducive environment which led to my success writing my business plan.

I also pass my special thanks to the almighty for the health and physical protection through
the course.

My God bless all.

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EXECUTIVE SUMMARY
CHAPTER ONE

Business description

This is the first phase of the proposed business where the sponsors background is clearly
defined, the strategies to be used to venture into business, name of the proposed business,
business objectives, products that the business will be dealing with, services the business will
be dealing with, services the business will be offering, strategies of entry, business plans that
will lead to the growth of business opportunity; further the form of ownership of business is
also outlined in this section, the type of business, the industry that the business will be
classified in, finally but not least the location is classified in this chapter.

CHAPTER TWO

Marketing Plan

This is the second phase, when preparing for any business; this is so because it highly critical
and provided the basis for the various variable s in firm to be evaluated and monitored.

The owner of the business will conduct a market survey and an in depth analysis of the
intended market in order to develop market strategies, tactics, policies and techniques to
exploit the market opportunities.

This section provides the detailed report of the customers of the firm, the market share to be
taken in by the business as an opportunity, the competitors of the business, advertisement and
promotion strategies that will be taken in by the firm to withstand the competition provided
by other firm providing the same services and sales, the pricing strategies, sale and the
distribution strategies that will be employed by the business in its operation.

CHAPTER THREE

Organization and Management Plan

This chapter details the business key management team and their qualifications and the
organizational structures of the business showing the delegation of duties and responsibilities
of various personal within the firm, technique employed to the duties held in business.

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The chapter also provides a clear outline of the remunerations and incentives given to the
working staff as part motivated of the employees of the firm. The government regulation
affecting the operations of the business is also provided.

CHAPTER FOUR

Operational /Production plan

This chapter provides an overviews of the production facilities and capacity i.e. the
machinery and equipment required in the production of efficient services and goods to the
society, the plans for repairs and maintenance of these machinery and equipment, the features
of the proposed work shed (layout),the other fixed asserts required by the business.

It also describes in details the production strategies to be employed by the firm i.e. the
monthly material requirements, monthly lab our requirement, monthly production expenses
anticipated and finally the total cost of production of the firm.

The operational process is also given in this section, the government regulation affecting the
operations of the business is provided.

CHAPTER FIVE

Financial Plan

This is the final section when intending the venture into any business opportunity it provide \s
a detailed financial cash flow of expenditures and budgetary allocation to various activities at
the business i.e. the pre-operational costs, working capital requirements, pro-forma balance
sheet.

The section also goes ahead to describe in detail the costs and benefits analysis of the
business, using the break-even method to determine the returning into the business and
contemplating growth but not failure at the business.

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CHAPTER ONE
1. BUSINESS DESCRIPTIN
I. BACKGROUND OF THE OWNER
The manager will be Kennedy Mutua aged 22 years living in Njoro Town. The owner is a
student at Rift Valley Institute of Science Technology (RVIST) undertaking Diploma in
Library Information Science. The manager has an experience in computer technical work like
maintenance, networking and repair.

The manager has experience in IT field hence cyber cafe and computer repair management
which has reverence to course undertaken. This course undertaken in the idea that geared him
to starting a computer related business.

The manager being a student and with a less experience in the business field will be able to
employ a more experienced person to run the business in absence of the manager and enable
good profits.

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II. NATURE OF BUSSINESS
The name of the business will be the KENN FRYNKIN HOOD CYBER CAFE and will be in
the centre of Njoro town which is an urban area.

This will be at clean shelf plot 340B/O2 with land registration number 25c250. The building
of location is Njoro town and it is situated on Njoro Road near Sumkam supermarket .The
room number will be 1A ground floor MUUS BUILDING

After finishing college and have acquired enough capital and more skills for the business.
The business will deal with service

Provision alongside selling of some electronic/computer service/components .Service

provided will include internet surfing to customers at an affordable price ,photocopying
services, scanning, online application services for students consultation services , computer
maintenance and repair among others which are computer related including phone repair
services which will be provided through the business Kenya data networks.

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III. FORM OF OWNERSHIP
The business will operate on sole proprietorship. The manager who will also be the owner of
the business will provide managerial services to the company as the starting capital which
will be provided too. The manager will be able to meet and give employees direction at the
working hours.

Others like cyber cafe operators will provide services to the business customers, he will be
the one attending to customers and solving the issues related with computers and services.
The manager being the owner will provide 80 percent of the business capital while the
remaining 20 percent will come from friends and family contributions.

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IV. TYPE OF BUSINESS
The business is intended to begin operating in January 2019 and will be a service provision
business .It will major in providing internal service among others which are related to it
because it is a wholesale business.

The principle customers of the business will be students from Rift valley institute of hair
dressing, students from Kenya medical training college and other institutions. Others will
include business owners and their customers who are working around the business location.
Also other people will be visitors and travellers.

The business will be a start-up since it will be starting the year 2018 and introduced into the
market for better service provision .Being a telecommunication related company, it will be
running alongside technology and information growth in the market. It will also be associated
with enhancing communication and creating public awareness of the information technology
trade.

Other potential customers will be mainly students who will be doing academic research,
employers and employees in the surrounding business who will be using social site and doing
photocopies and documents typesetting in the company business. Potential employers who
will be marketing their goods in the internet will be doing job adverts. The adverts methods
will be faster, easier, and cheaper. Other advertisers will include: newspaper, posters
magazines and broadcasting. The pricing policies will go along other business providing
competition. The pricing will be as follows;

INTERNET BROWSING 1 shilling

PHOTOCOPY; BLACK 2 shillings per page

COLOUR 5 shillings per page

SCANNING 50 shillings

PRINTING; BLACK 10 shillings

COLOUR 20 shillings

TYPESETTING 25 shilling

PHONE REPAIR more than 200 shillings

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This will be affordable to customers hence will attract more customers since the competitors
will provide a bit higher price list.

V. THE SERVICE
The services provided will include; internet browsing, scanning, typesetting and
photocopying, movies burning, among other computer repair, phone repair services .There
will be computer and mobile phone accessories in the market for sale. This will ensure ready
products and services for customers to be able to acquire and enjoy them.

This products will include ; computer monitor , mouse, keyboard, hard disk, memory cards,
flash disks, computer cables, phone accessories like earphones, batteries, covers e. t. C.
These services and products will be made available to the market efficiently and affordably.
This products will come in different colours from the suppliers and will use the supplier
packing and will be of high quality.

Customers purchasing and using this product will enjoy convenience and cheaper prices. The
products will be durable and flexible and will come with warrant. The servicing will be down
by the business technical that will be free of charge hence customers will also save
maintenance costs.

Providing after sale services and other services like free maintenance and repair to the
products brought by customers from the business will gain advantage over other business
hence attracting more customers.

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VI. JUSTIFICATION OF OPPORTUNITY
The business will be able to satisfy need like; Telecommunication sharing information
acquisition and awareness networking, technology needs like availability of computer
software and hardware for the customers.

Things like communication access will be easy and research will be easily done both
educated and personal research on the website. Educational services will be catered for since
customers will be showed how to use the internet and other services like the operation of
computer which will be free of charge. Considering export and import markets the customers
will be able to do the business using the internet at low costs and even yet to learn about
online markets the customers will be able to do the business using the internet at low cost and
even yet to learn about online marketing from other customers.

Accessibility to important and most needed materials from the institutions like the military,
government, university and the Kenya Revenue Authority will be available downloadable
from the internet at the cyber. Also the allocation of forms from visa and helb loans which are
mostly needed by many people around the town and mostly students will be made available
at the cyber cafe.

The business will be able to generate revenue and employment to youth. This will include
highly qualified person to provide repairs and maintenance services to the customers at an
affordable price.

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VII. THE INDUSTRY
The industry will be based in the telecommunication industry and will provide information
and communication services to its customers. The business in the industry having maximum
of 15 customers at a time hence small business it will expand at time goes by so it can earn
more profit and be able to cater for more customers.

The technology used is this industry is capital intensive since most of the infrastructure used
will require more money to be invested in it. It will only need one employee to operate the
business hence no labour intensity associated. The level of technology used in this industry
will be modern technology whereby computers, mobile phones, scanners, printers and many
other modern devices will be used in the business.

There will only be two employees in the business firm. This will be the computer operator
assistant including manager. The capital required for entry into the industry will be Ksh30,
000 which will be provided by the owner who is the manager. This will consist of 80% of the
owner’s contribution and 20% from family members and friends. The general level of
sales/for firms operating in the industry is approximately 3000 per day and this constitutes a
monthly rate of 80,000 for the business working 5 days a week. But for these 7 days a week
gets a salary of 10, 000 a month. This is a good profile compared to a monthly payment
schedule for employed people hence the idea to start a business of this sort

Closure of school which affect customers turn up heavily

Some working days that are considered holiday reduce customer turn up.

The trends and prospect of sales industries will be expansion of the business indicating
growth of the business well and consistent payment of the bills like the electricity, water,
rent, and business permit will show stability in the business.

Competitive trends will be new products of high technology features in the business stoke
exchange and marketing as they are inverted and innovated.

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VIII. BUSINESS GOALS
By the end of the 2nd year the business aims to capture and maintain 10% of the market share.

By the end of the 1st year, the business aim is to earn a profit of 8% of the business capital
starts up.

By the end of the 4th year, the business aims to start and run branch in the middle of the town.

The business is expected to acquire sales of about 2000 at the end of every operating day of
the week.

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IX. THE ENTRY AND GROWTH STRATEGY
The business will be able to penetrate any gain acceptance into the market area because of the
strong competition techniques put in place.

The competitive advantage will include;

- Low products/services
- High quality services
- Fast and cheaper services
- Convenience and efficiency in the service provided
- Advertisement will be earlier because of internet
- Location of the business i.e. in the middle of the operation area of the customers(close
to customers)

Related to a market expansion strategy as well as the products diversification, a market

opportunity analysis can be used to flesh out potential ideas. The very notion suggests that
my company is more interested in a market perspective than its own often assumptive
perspective. The outcome should include; target market, current solutions, assessment
problems are being solved.

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CHAPTER TWO
2. MARKETING PLAN
I. CUSTOMERS
The potential customers for the will be the business institute and Rift valley institute of hair
design which is located in the same building with sic cyber cafe and computer repair. Other
customers will be the business owners who run their own business around together with their
employees and customers.

People visiting will be students and will range from 18 years age. Other customers who are
business owners and employees around the area will have a maximum of age of 50 years.
These will be both male and female customers who m most of them will be students while
others will be income earning ones .Other small scale business owners who earn a lower
income will also be incorporated in the business customer line.

Most of the customers are well educated i.e. at college level and even higher for others hence
most of them are self-employed.

The product and service offered the Kenn Frynkin Hood Cyber Cafe Cyber will be
economical and convenient hence more customers will be interested in them. The cheap and
reliable service will make the customers be interested. Customers will also be served at the
comfort of the business environment. There will be enough chairs and waiting benches where
customers will be sitting while waiting for their respective tasks to be completed. There will
also be televisions sets so that customers can watch as they wait to be served.

The product sold at Kenn Frynkin Hood Cyber Cafe cyber i.e. computers and other computer
accessories, mobile phones accessories and others will be of high quality and great
performance so as to win customers interest in the products and services offered.

Products will also be safe for one and will ensure smooth usage by the customers. This will
make sure that the customers are maintained and controlled from competitors. The customers
will be able to get product and services from 7:00 am to 9:00 pm seven days a week for the
whole month. This ensures consistency and faster growth of the business. The customers will
also be certain to get services and products they need without any problem.

The customers will be buying and acquiring goods and services monthly early in the morning
in the afternoon and later in the evening. They will be paying in terms of cash and will be

10
buying in small quantities i.e. most customers will be using the interest as well as the
photocopy services which are offered in small prices bundles.

II. COMPETITION
The business will have potential competitors who are already stable in the market. These
competitors are Flashdial cyber, Kagz cyber and Itec cyber. All the cyber are located in the
next building across the street.

The location of the competitors will be advantageous to the business because their customer
will get to know about Kenn Frynkin Hood Cyber Cafe cyber and will inform other
customers about the existence of Kenn Frynkin Hood Cyber Cafe cyber. They will also
provide price comparison and standardization. This will also enable product to be made
available that the competitors don’t have.

This will be a disadvantage because they are already stable in the market and will be hard to
beat. They also have experience in product and hence will be hard to beat them.

The competitors are medium sized and Kenn Frynkin Hood Cyber Cafe cyber will be
compared to them. Kenn Frynkin Hood Cyber Cafe will have to grow faster and acquire more
customers to get stability and entry into the market so as to catch-up with the competitors.

The Kenn Frynkin Hood Cyber Cafe cyber will be small with investment of Ksh30, 000. This
will enable an easy start of the business and management principle exploited as to gain
market entry easily.

11
ANALYSIS TABLE

COMPETITIRS MARKETING CUSTOMER CARE TECHNOLOGY

Kenn Frykin Hood 5 5 5
Enex 2 3 1
Hyperlink 1 3 3
Flashdial 3 1 1
Internex 1 2 2
Opportunities arising from the above include:

Poor customer care service provision by the competitors will make them come for the Kenn
Frynkin Hood Cyber Cafe cyber cafe services which are providing better customer service

Blaze cyber will be having high technology machines hence will be able to increase their
competition

Population growth and increased use of technology will create more customers and ensure
continuous flow of business enterprise activities

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Threat

The competitors having experience in the market strategies and ready customers will make it
difficult for the Kenn Frynkin Hood Cyber Cafe Cyber to enter the market and grow faster

Comparison table for overall strengths and weakness with that of the competitors
Competitive Competitors
areas
Enex Hyperlink Intex Commlink Flashdial
Customer care 5 3 3 2 4
Location 4 3 2 3 2
Distribution 3 4 3 1 3
Capital investment 4 2 2 3 1
Management skills 4 3 1 2 4
Products(quality) 5 4 3 2 1
Weakness:

- Poor location of their enterprises

- Offer goods without discount

- Don't offer after sale services

Through market survey and analysis the business manager will come up with ways that are
likely to win more customers in the areas e.g. offering of discount on products and employ
competent and more qualified personnel to initiate the smooth running of the business.

13
III. MARKET SHARE
Nakuru town residents/workers are approximately 300000 people of ages between 10-60
years old. Out of all these people about 10000 are youths hence will provide market while
others like 20000 who own their businesses and other employed will also provide part of the
market.

The people living around town are the ones who will provide market to the business. Kenn
Frynkin Hood Cyber Cafe cyber café customers are categorized as follows:

i. Individual customers: These purchase goods for their own benefit e.g. a family
may want to prepare a document for their own use.
ii. Institutional customers: These are institutions like primary schools, secondary
schools and colleges around the business location. Students and teachers will be
purchasing goods and browsing the internet for the research purposes and social
networking.
iii. Commercial customers: These are the customers e.g. wholesalers who buy goods
and then sell them to other consumers in areas away from the business location or
even around town.

Pie chart for market share

Market Share

10%

30%
Kenn Frykin Hood Cyber
15%
Kagz Cyber
Itec Cyber
Hyperlink Cyber Café
internex Cyber Café
20%

25%

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IV. ADVERTISING AND PROMOTION
STRATEGY Advertising strategy

The business will use posters, blogging, email and the internet. This will be cheaper and more
effective since the business is concerned with the internet and creating publications. Other
modes of advertising will include word of mouth and calendars offered to potential customers
when they buy goods.

Advertising will cost about Kshs5000 in total per month, but this will not be done every
month of the year.

Advertising will be very efficient to the business and will contribute to the business growth
for about 60%.

Promotion strategy

The business will offer discount on goods bought in large amounts and those that are of high
prices. It will also offer after sale services like packaging of goods bought by customers and
advise them on how to operate/use them.

The business will also have an IT assistant who will assist the customers on how to operate
and use the internet for free. After free consultation services will be offered to the customers
who wish to know about the business and other products that are not stocked by Kenn
Frynkin Hood Cyber Cafe cyber.

Kenn Frynkin Hood Cyber Cafe cyber café will use free introductory service like free
customer information awareness where the customers will be told about the products being
offered free of charge and services available.

Since promotional activities will be free this will be effective (55%) so it will attract more
customers to come to the business to know more about it i.e. products and services offered. It
will cost Kshs10000 every month.

15
V. PRICE STRATEGY
The business merchandise prices will be variable depending on other competitors, buying
price and the country's economic status. Thus the business will ensure low prices compared to
competitors to create/attract more customers taking into consideration the buying price and
expenses incurred during transportation to make sure for profitable returns. Selling price-
(buying price) - expenses.

The pricing will be influenced by the following factors:

a) Competition analysis: The business will have a fixed price tag depending on the
competitors' price. It will have to vary its price tag so as to lower than that of the
competitors' considering buying and expenses to ensure for profits,
b) Economic conditions: The country's economic status will contribute directly to the
price of goods at the Kenn Frynkin Hood Cyber Cafe cyber café. If the economy and
living standards of people is good the business will adjust its prices intelligently
otherwise it will have to operate at affordable prices.
c) Discount and profit margins: Discounts will be offered to wholesale and large scale
buyers but making sure that the basic output i.e. profit is realized per each single
commodity sold which is the main aim of starting the business.
d) After-sales services: After sale services will be free of charge to attract more
customers hence more profit.

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VI. SALES TACTICS
For the business that has competitors to survive and cope with entry and growth, it tends to
employ the following sale tactics;

a) Direct selling: The potential customers will come to the business enterprise, see
the goods, inquire about them if they are satisfied and want them, and then
transaction will be made.
b) Indirect selling: This will include the use of posters and calendars displaying the
business name i.e. Sic cyber café, the goods and services offered and their prices.

Selling directly to customers will be the best tactic since customers will be the ones coming
to the business premises and inquiring about the products and services. The sales force won't
be required so much in this case since it will just require one person who is the operator of
the business who will be selling to the customers. He will be recommended by getting a good
amount of safety in line with his experience and the kind of job done.

17
VII. DISTRIBUTION STRATEGY
The business intends to use distributions to distribute/deliver products to the customers. It
will have to buy a Motorcycle to distributor. The business will ensure persistent maintenance
of the car to avoid breakdowns and paying of the deliver/distributor so they can be motivated
well enough to continue with the business well. This will cost the business around Kshs15000
per month and will be problematic due to maintenance costs to the car and paying of the
distributor.

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CHAPTER THREE
3. ORGANISATION AND MANAGEMENT PLAN
I. ORGANISATION CHART

Managing director

Assistant manager

Sales representative Sales manager Marketing personnel

Subordinates

II. KEY MANAGEMENT PERSONNEL NUMBER AND DUTIES

Purpose

Kenn Frynkin Hood Cyber Cafe Cyber Café and Computer Repair will be managed by the
owner. He will be in control of the business resources and other staff like the assistant
manager 2 assistant, the sales representative and the marketing personnel, including other
subordinates.
a. Manager

Duties and responsibilities

- Supervise all business activities and other personnel.

- Research on business implementation to fit in competition.
- Setting business goals and ensuring they are achieved.
- Hiring and firing employees.
- Facilitate smith running of the business.
- Manage salaries remuneration of employees.
- Manage allocation of funds on business operation and expansion.

19
The manager will withdraw about Kshs40000 as his salary.

- Facilitate the smooth running of the business.

- Hiring and firing of new staff.
- Manage salaries and ruminations for employees.
- Supervise all the business and other personnel.

Qualification

- Enough working personnel

- Successful completion of Diploma in information communication technology.
b. Sales and marketing

personnel Duties and responsibilities

- Assist in sales and marketing.

- Organizing promotions of exhibitions.
- Research of development of new products.

Qualifications

- Diploma in sales and marketing.

- At least 25yearsto 30years of age.
- Should have two years working experience.
- Good networking skills business planning and analysis.
- Good communication skills.
c. Assistant manager

Duties and responsibilities

- Assist in the supervision of activities and other personnel.

- Assist in the research on business implementation to fit in competition.
- Assist the manager in setting of business goals and ensuring they are achieved.
- Help to facilitate smooth running of the business.
d. Other employees

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Receptionist

Duties and responsibilities

- Provide information especially marketing to the customer.

- Give direction to the customer.
- Assist in the basic computer operation in the absence of the IT assistant.
- Ensure order (good image of the enterprise.

Qualifications

- Certificate in grant office management and design.

- Good communication skills.
- Certificate of good conduct.
- At least 20-27years of age.

Personnel number, age and salaries

WORKER AGE(YRS) NUMBER SALARY(KSHS)
Manager 27 1 40000
Sales manager 28 1 25000
Sales personnel 25 1 20000
Reception 22 1 15000
Cleaners 23 1 8500
TOTAL 5 108500

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III. RECRUITMENT, TRAINING AND PROMOTION
The firm will invite for qualified workers through the local newspaper, posters and the
internet and also on institutions and public boards. The interested persons will send their
application letters and after a successful selection, they will be taking in for the job.

Training

The enterprise will not be providing training services to the selected candidates because only
the qualified and experienced staff will be recruited for the respective jobs as stated. The
management will only provide for workshops, seminars and attending exhibitions every year.

ICT Seminars

The Kenn Frynkin Hood Cyber Cafe cyber café will make sure that the members will attend
seminars that are associated with information communication technology. This will ensure
that the staff will in the field of technology and computers. This will initiate ideas and goals
implementation to upgrade the business.

Promotion

Promotion will be common in horizontal means, i.e. salaries and awards will be given to
employees but not one level to another.

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IV. RENUMERATION AN INCENTIVES
Remuneration

In order to boost and maintain employees' morale the business will offer the following
incentives;

The accountant or cashier to receive a daily transport allowance and lunch allowance of
Ksh.200, For the production manager, Kshs. 170 for the salesman, Kshs. 160 for the
technician and Kshs. 150 for the cyber attendant, and Kshs. 100 for the water man.

When the cafe in the course of its operation realizes a lot of profit, the workers' salaries may
be increased in accordance to their hard work. This will encourage them to sell goods in
higher quantities. A worker may be given an off of not more than three weeks in order to
break the monitory while working.

Incentives

- All employees will receive their salaries the 1st day every month.
- Workers will be rewarded on their merits at a jubilant party at the end of every
financial year.
- There will be a break off every employee every 7th day of the week.

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V. LICENSES, PERMITS AND BY-LAWS
The business will be licensed and given a business operation permit by the county council of
Nakuru at a cost of Kshs 50,000 yearly. The music industry will also provide permit to allow
playing of music at the business premises.

24
VI. SUPPORT SERVICES
Kenn Frynkin Hood Cyber Cafe cyber and computer repair will acquire banking services
from KCB bank

Service Provider Cost (fee)

Banking KCB Bank Free
Insurance Jubilee Insurance 20000
Security Securicor 10000
Electricity Kenyan power 30000
Mailing Gmail Free
Telephone service Safaricom variables

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CHAPTER FOUR
4 OPERATIONAL/PRODUCTION PLAN
I. PRODUCT DESIGN AND DEVELOPMENT
Most of the products offered by the enterprise will come from the manufacture and will have
a unique and attractive design. This will ensure that customers get the best of what the
business will be offering and so will appreciate the good job that will be therein. These will
be different design of computers machines and accessories it colors to suit customer's
interests and tastes.

The business will also provide different products from different companies with different
costs to enable customers to make choices in terms of price and quality of products and
services they offer. Design will be entirely left for the manufacturers apart from after services
which will be done by Kenn Frynkin Hood Cyber Cafe cyber café and Computer Repair.

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II. PRODUCTS FACILITIES AND CAPACITY
For the enterprise to run efficiently it needs amount of fifty one thousand and nine hundred
shillings for the facilities in the enterprise

MATERIAL QUALITY AMOUNT IN KSHS

Computer 1 15,000
Typewriter 1 500
Calculator 1 12,500
Telephone 1 5,500
Paper shredder 2 600
Stapling machine 1 6,500
Guillotines 1 6,000
Fire extinguisher 5 1,300
Chairs 5 4,000
Tables 3 17,500
Total 51,900

Since the business will not be participating in any production services, it will only be
concerned with selling of the readymade products hence no machinery and equipment will be
needed for production purposes.

These services will be done on the damaged products during transport or while in the
business premises to ensure that the products are sold to customers in good booking
conditions so as to avoid complaints that might bring the business down. Cleaning will be
done to these products so as to maintain hygiene.

This will be the customers receiving area. All incoming and outgoing customers will have to
pass through here either for payment for the services and products purchased or for enquiries.

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III. PRODUCTION
STRATEGY. Monthly material
requirement

The business will only be selling readily manufactured goods hence there will be no monthly
material requirements for production needed.

Table showing monthly labor requirements

Position Number Salary & Total monthly

allowance(KSH) payments
Manager 1 40,000 + 500 40,500
Ass. Manager 1 25,000 + 250 25,250
Sales person 1 20,000 + 200 20,200
Receptionist 1 15,000+ 150 15,150
Cleaner 2 8,500 + 100 8,600
Security guard 1 7,000 + 80 7,080
Total 109,780

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IV. OPERATIONAL/PRODUCTION PROCESS
The business will operate in six days in a week. This is due to huge number of customers who
need to be served.

Produced: Waki Cyber Limited

Wholesale: Kenn Frykin Hood

Production: Tertiary production

Consumers (potential customers)

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V. GOVERNMENT REGULATIONS AFFECTING OPERATION
The government regulations that will affect the business will include taxes, licensing,
copyright laws i.e. music piracy and software which will be protected by the copycat
company limited. The business name and others like the working condition of the workers
and their salaries and remunerations.
The business will fully abide by the laws and regulations by the government involve tax both
workers and customers to ensure its smooth running. The business will obtain a license at the
cost of Kshs5, 000. The Ministry of Health will provide a health certificate while the Kenya
Revenue Authority issues an income tax certificate. The business will also comply with the
business premises act or public health to ensure working conditions i.e. health conditions are
suitable for smooth running of the business.

Government ensures that product sold to ensure it's of right quantity and cannot include
health to the customers. The government ensures any product sold in the market should not
contradict trademarks which can bring conflict among the entrepreneurs. And as a result,
every enterprise must come up with their own trademarks.

The government issues trade license as approval that in a given authority for the enterprise to
operate in a given area. The proposed business should have a little license before starting the
business. Government urges the business organization to be insured for it will be
compensated by the insurance company and incase of any risk that may occur.

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CHAPTER FIVE
5 FINANCIAL PLAN
I. PRE-OPERATIONAL COSTS
Sic Cyber Café and Computer Repair pre-occupational cost schedule shall be as follows;

ITEMS Amount (Kshs)

Machinery and equipment 231,950
License 2,000
Advertisement 3,000
Water 4,000
Fare 5,000
Electricity and rent 4,000
Total 249,000

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 II. WORKING CAPITAL REQUIREMENTS
Items Year 2019 Year 2020 Year 2021
Stock of raw materials 100000 200000 300000
Work in progress 100000 200000 300000
Stock of finished goods 200000 300000 400000
Debtors 20000 50000 80000
Cash in hand 40000 90000 200000
Cash at Bank 20000 150000 50000
Total 480000 990000 1330000

Assumption

The business is earning profits that some are used to purchase more stock. Cash is somehow
increased as the business has become prosperous and working capital has increasing
considerably.

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 III. PRO-FORMA BALANCE SHEET
Kenn Frynkin Hood Cyber Cafe Cyber Café and Computer Repair
Pro-forma balance sheet
As at 1st JAN As at 31" DEC 2019
2019
FIXED ASSETS
Land and building 20,000
Less: Acc. Depreciation 22,000 48,000
Plant & machinery 70,000
Less: Acc. Depreciation 28,000 42,000
Motor vehicles 90,000
Less: Acc. Depreciation 28,000 62,000
Furniture and fillings 30,000
Less: Acc. Depreciation 21,000 14,000
TOTAL FIXED ASSETS 415,000 166,000
CURRENT ASSETS
Stock of raw materials 30,000 50,000
Stock of finished goods 5,000 32,000
Stock of work in progress 10,000 80,000
Debtors 5,000 22,000
Cash at bank 40,000 50,000
Cash in hand 20,000 100,000
TOTAL CURRENT ASSETS 110,000 334,000
TOTAL ASSETS 309,000 500,000
LESS: CURRENT LIABILITIES
Creditors 110,000 300,000
Bank overdraft 220,000 200,000
TOTAL CURRENT LIABILITIES 330,000 500,000
FINANCED BY
Owner's Equity 200,000 100,000
LONG TERM LIABILITIES
Loan from bank
KCB 220,000 120,000
TOTAL CURRENT LIABILITIES 330,000 500,000

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 IV. PROJECTED CASH FLOW STATEMENT FOR THE FIRST YEAR ENDING 31ST DEC 2019
Kenn Frynkin Hood Cyber Cafe Cyber Café and Computer Repair

ITEM Jan Feb March April May June July Aug. Sept. Oct. Nov. Dec. TOTAL
SH. SH. SH. SH. SH. SH. SH. SH. SH. SH. SH. SH. SH.
Cash sales 80000 90000 83000 87000 90000 80000 70000 100000 85000 70000 85000 920000 920000
Collection from 900 1000 12000 800 1000 700 800 1100 1100 12000 12000 59690 59690
debtors
Total cash in flow 80900 91000 83000 87800 91000 80700 78000 10100 96000 82000 97000 979690 979690
Cash out flow
Cash purchases 100000 100000 100000 100000 100000 100000 800000 800000
Payment to 5000 7000 7000 20000 35000 45000 70000 80000 90000 359000 359000
creditors
Rent 8500 8500 8500 8500 8500 8500 8500 8500 8500 8500 8500 93500 93500
Salaries and wages 109700 109780 108700 108650 109000 109350 109500 109320 107100 105000 106500 1192600 1192600
Telephone 200 100 1500 2000 2300 2400 2600 2700 2800 3000 3000 23500 23500
Electricity and 1000 2800 2600 100000 10000 20000 50000 10000 8000 10000 20000 279400 279400
water
Total cash outflow 411080 191080 249800 119650 364900 175150 229500 135420 148500 318400 324500 2667980 2667980
Net cash balance 594000 584100 591200 586800 583900 593900 594300 504200 574000 588900 60300
C/D
Cash balance B/F 263930 483920 425200 555350 310100 499850 445500 539580 526500 556600 350600 4757030 4757030
Accumulation 260920 747840 1173040 1728390 2038490 2538340 2983840 3523420 3523420 4049920 40406520 28207740 28207740

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VI. PROFORMA INCOME STATEMENT
KENN FRYNKIN HOOD CYBER CAFE

Year 2019 Year 2020

SALES 920000 100000
Less: cost of sales -25000 -300000
Opening stock 100000 130000
Add purchases 110000 120000
Less: closing stock -80000 -90000
Gross profit 1170000 400000
Less expenses
Salaries and wages 1192600 1500000
Rent 93500 93500
Water and electricity 279400 300000
Telephone 23500 30000
advertising 20000 20000
Stationery 15000 20000
Postage 10000 15000
Transport 20000 20000
Deprecation of fixed assets 2000 30000
Interest 6000 20000
Repair and maintenance 90000 50000
TOTAL EXPENSES 1170000 400000
NET PROFIT BEFORE TAX 500000 578500
Less: provision for tax (PERCENTAGE) 70000 90000
NET PROFIT AFTER TAX 530000 556000

Assumption

The business balance sheet is used here to prove that the business is progressing well and
acquiring stable profit which is healthy for the business

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VI. BREAK EVEN LEVEL
a. Total contribution margin = Sale - Total variable
Variable cost (item) Amount (Kshs)
Cash purchases 810000
Salaries and wages 920000
Telephone 70000
Electricity and water 640600
Total 2440600
b. Calculate the contribution margin
percentage Contribution margin/sales x 100
=3000000/ 920000 x 100
c. Fixed cost

Fixed cost (items) Amount in (Kshs)

Advertising 20000
Rent 93500
Transport 20000
d. Calculate break-even level of sales in shillings
=Total fixed assets/ Contribution margin X 100%
=133500X100%
3000000
= 4.45%

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VII. EXPECTED PROFITABILITY RATIOS
a. Gross profit percentage = Gross profit X 100%
Sales
=1170, 000 X 100%
9200,000
= 127.2%

b. Return of equity= Net profit after tax X 100%

Owner's equity
= 530000 X 100%
40,000
= 1325%

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c. Return on investment= Net profit after tax X 100%
Total investment

= 530000 X 100%
600,000
= 8.83%

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VIII. DESIRED FINANCING
ITEM Amount (Kshs)
Pre-operational cost 249000
Working capital 100000
Fixed assets 166000
Total desired financing 515000

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IX. PROPOSED CAPITALIZATION
Total investment = Kshs 9000000
Your own contribution = Kshs 6000000
Funds from borrowing sources = Kshs 3000000

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