DIGITAL HARDWARE

ADDRESS P.O BOX 36-40100, AWASI

EMAIL digitahardwar@gmail.com
WEBSITE www.digitalhardware.co.ke
TELEPHONE NUMBER +254741-847-431

TITTLE : BUSINESS PLAN

NAME OF CANDIDATE. : ONYUNA OTIENO GEORGE

INDEX NUMBER : 51210930010

CENTER CODE : 512109
CENTRE NAME : RIFT VALLEY INSTITUTE OF BUSINESS STUDIES
COURSE CODE : 1602
COURSE NAME : ELECTRICAL AND ELECTRONIC ENGINEERING
PAPER NUMBER : 208
PRESENTED TO : THE KENYA NATIONAL EXAMINATION COUNCIL
IN PARTIAL FULFILLMENT FOR THE
AWARD OF CERTIFICATE IN ELECTRICAL AND
ELECTRONIC ENGINEERING
SUPERVISOR : MR J OBWANA
EXAMINATION SERIES : JULY 2020
TABLE OF CONTENTS
DECLARATION.........................................................................................................................................v
ACKNOWEDGEMENT.............................................................................................................................vi
DEDICATION...........................................................................................................................................vii
EXECUTIVE SUMMARY.......................................................................................................................viii
1.0: BUSINESS DESCRIPTION.................................................................................................................viii
2.0. MARKETING PLAN............................................................................................................................ix
3.0. ORGANIZATIONAL STRUCTURE........................................................................................................ix
4.0 PRODUCTION PLAN...........................................................................................................................ix
5.0 FINANCIAL PLAN................................................................................................................................ix
CHAPTER ONE..........................................................................................................................................1
1.0 BUSINESS DESCRIPTION..................................................................................................................1
1.1 BACKGROUND INFORMATION...........................................................................................................1
1.2. BUSINESS NAME AND LOGO.............................................................................................................1
1.3. BUSINESS ADDRESS...........................................................................................................................1
1.4. OWNERSHIP OF THE BUSINESS.........................................................................................................2
1.4.1. Methods of raising capital..........................................................................................................2
1.5 BUSINESS LOCATION..........................................................................................................................2
1.6. TYPE OF BUSINESS............................................................................................................................3
1.6.1 Easy to start and manage............................................................................................................3
1.6.2 Requires few legal procedures to start........................................................................................3
1.6.3 The entrepreneur enjoys the profits alone...................................................................................3
1.6.4 Total business control.................................................................................................................3
1.6.5. Requires minimal initial capital to start.....................................................................................4
1.6.6 The entrepreneur is the boss of the business...............................................................................4
1.7 JUSTIFICATION OF OPPORTUNITY......................................................................................................4
1.7.1 Existence of a gap in the provision of goods...............................................................................4
1.7.2. Creation of job opportunities.....................................................................................................4
1.7.3 Favorable Location.....................................................................................................................5
1.7.4 Maximization of profit................................................................................................................5
1.7.5To promote growth of the community.........................................................................................5
1.7.6 Alignment to national goals........................................................................................................5

2
 1.8. PRODUCTS AND SERVICES................................................................................................................5
1.9 INDUSTRY..........................................................................................................................................6
CHAPTER TWO.........................................................................................................................................7
2. 0 MARKETING PLAN...........................................................................................................................7
2.1 THE CUSTOMER.................................................................................................................................7
2.1.1 Individual customers...................................................................................................................7
2.1.2 Institutional customers................................................................................................................7
2.1.3 Commercial Customers...............................................................................................................7
2.2 MARKET SHARE ANALYSIS.................................................................................................................8
2.3 PRICING STRATEGIES.........................................................................................................................9
2.3.1 Penetration Pricing......................................................................................................................9
2.3.2 Competitive Pricing....................................................................................................................9
2.3.3 Maximum Price Skimming.........................................................................................................9
2.3.4 Psychological pricing..................................................................................................................9
2.4 PRODUCT STRATEGY........................................................................................................................10
2.5 PROMOTION STRATEGY...................................................................................................................10
2.5.2 Salesmanship............................................................................................................................10
2.5.3 Advertisement...........................................................................................................................11
2.5.3.1 Television..............................................................................................................................11
2.5.2.2 Radio Advertisement.............................................................................................................11
2.6 SETTING SALES TARGET...................................................................................................................12
2.7 DISTRIBUTION STRATEGY.................................................................................................................12
2.8 CONSUMER SERVICES STRATERGY...................................................................................................12
2.8.1 Offering High Quality Products................................................................................................13
2.8.2 Establish Customer Care Unit...................................................................................................13
2.8.3 After Sales Services..................................................................................................................13
2.8.4 Giving Warranty to Customers.................................................................................................13
2.8.5 Giving Free Gifts and Promotions............................................................................................13
CHAPTER THREE...................................................................................................................................13
3.0 ORGANIZATION AND MANAGEMENT PLAN.............................................................................13
3.1 ORGANIZATIONAL STRUCTURE........................................................................................................13
3.2 MANAGEMENT TEAM......................................................................................................................14
3.3 OTHER BUSINESS PERSONEL............................................................................................................14

3
 3.3.1 Human Resource Manager........................................................................................................14
3.3.2 Finance Manager......................................................................................................................15
3.3.3 Sales Manager...........................................................................................................................16
3.4 RECRUITMENT, TRAINING AND PROMOTION OF PERSONEL...........................................................17
3.4.1 Recruitment..............................................................................................................................17
3.4.2 Training....................................................................................................................................17
3.4.3 Remuneration and Incentives....................................................................................................17
3.5 LIENSES AND PERMITS.....................................................................................................................18
3.5.1 Licenses....................................................................................................................................18
3.5.2 Permit.......................................................................................................................................18
3.6.1 SUPPORTING SERVICES......................................................................................................18
3.6.1 Banking Services......................................................................................................................18
b) Home banking..................................................................................................................................18
c) Online banking...................................................................................................................................18
3.6.3 Security Services......................................................................................................................20
b) Courier Services....................................................................................................................................21
c) Manned Security Services.....................................................................................................................21
d) Patrol Monitoring and Response...................................................................................................21
3.6.4 Postal and Telecommunication Services...................................................................................21
CHAPTER FOUR.....................................................................................................................................22
4.0 PRODUCTION PLAN........................................................................................................................22
4.1 PHYSICAL FACILITIES........................................................................................................................22
4.2 OTHER FACILITIES (MATERIAL FACILITIES).......................................................................................24
4.3 PRODUCTION PROCESS....................................................................................................................24
4.4 PRODUCTION SCHEDULE.................................................................................................................26
4.5 REGULATION GOVERNING PRODUCTION........................................................................................27
4.5.1 Public Health and Safety Regulations.......................................................................................27
4.5.2 Ministry of Trade and industry Regulations..............................................................................27
4.5.3 National Environment Regulations...........................................................................................28
4.5.4 Occupational Area Safety.........................................................................................................28
4.5.5 National Building Regulations..................................................................................................29
CHAPTER FIVE.......................................................................................................................................29
5.0 FINANCIAL PLAN............................................................................................................................29

4
 5.1 PRE OPERATIONAL COST..................................................................................................................29
5.1.1 Cost of manufactured materials................................................................................................29
5.1.2 Overheads.................................................................................................................................30
5.2 WORKING CAPITAL..........................................................................................................................31
5.2.1 Current assets............................................................................................................................31
5.2.2 Current liabilities......................................................................................................................31
5.3 BUSINESS CAPITAL...........................................................................................................................32
5.4 FINANCIAL STATEMENTS FOR THE BUSINESS..................................................................................32
5.4.1 Trading Account.......................................................................................................................32
5.4.2 Profit and loss account..............................................................................................................33
5.4.3 Balance sheet............................................................................................................................34
5.4.4 Projected cash flow statement for digital hardware 2021..........................................................36
5.4.5 Projected cash flow statement for digital hardware 2022..........................................................37
5.4.6 Projected cash flow statement for digital hardware 2023..........................................................39
5.4.5 Ratio analysis............................................................................................................................42
Appendices................................................................................................................................................44

5
DECLARATION
Declaration by student
I declare that this business plan is my own original work and has never been presented to the
Kenya National Examinations Council or any other examination body for an award of certificate
in Electrical and electronic engineering.
NAME OF THE CANDIDATE :
INDEX NUMBER : 51210930010
SIGNATURE :
DATE :

Declaration by supervisor
I declare that the business plan is the original work of the candidate and he did not receive any
due assistance from unauthorized person except from the supervisor.
NAME OF THE SUPERVISOR:
SIGNATURE:
DATE:

6
ACKNOWEDGEMENT
I acknowledge the event contribution of my supervisor Mr. J. Obwana for his support and
encouragement that enabled me to write this business plan. May God bless him abundantly. I
also acknowledge the support I received from my classmates, Raphael, Vincent and Japheth in
writing the business pan, may God bless them too.

7
DEDICATION
I dedicate this business plan to my family and especially Mum, Millicent Atieno and Dad,
Richard Ochieng for the support they have given to me on my entire academic journey. I also
acknowledge the advices concerning my career from my elder brother, Michael Omondi. May
God bless them all.

8
EXECUTIVE SUMMARY

1.0: BUSINESS DESCRIPTION

The business would be hardware, owned by George Otieno. The business would be located in
Kisumu County, along Kericho-kisumu highway. The business objectives would include;
creation of job opportunities, bringing materials nearer for ease of access by customers and
making profit. The business would likely be producing, strong and high quality materials.

2.0. MARKETING PLAN

The ways in which the entrepreneur would use to produce the products to the market would
include; radio stations, television, posters social media and newspapers and journals. The
entrepreneur would adopt various marketing strategies, which includes; advertisement and
salesmanship.

3.0. ORGANIZATIONAL STRUCTURE

The entrepreneur would employ management team to ensure that the management of the
business is done effectively. The entrepreneur would be the general manager of the business. The
management team would include; Director, Store manager, Finance manager, Sales manager and
their respective supervisors.

4.0 PRODUCTION PLAN

The business would have various physical facilities such as; store, packing zone, selling zone and
offices. The material facilities to be produced by the business include; cement bricks, door
frames and window frames. The entrepreneur would adopt a product system in carrying out
production process, as shown; Purchase of goods in bulk, storage and selling of the goods. The
business would have a quarterly schedule for budgeting of goods.

5.0 FINANCIAL PLAN

The entrepreneur would carry out financial analysis at the end of each financial year. This would
be done using financial documents such as; balance sheet and trading account.

9
CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BACKGROUND INFORMATION

The owner of the business is George Otieno; aged 21.He was born in 1999. He went to Rabango
primary school; he then joined Kibigori Mixed secondary School in the year 2014, where he
studied up to the year 2017. He joined Rift valley institute of business studies in September
2019; he is currently in the institution pursuing electrical and electronic Engineering. Before
joining college, the entrepreneur worked at Ngere hardware, where he gained the experience of
running hardware.

1.2. BUSINESS NAME AND LOGO

The name of the business is Digital hardware. The word 'digital' is a word that suits the current
information age. It came due to how the world is growing, whereby old things are left, therefore
people tend to get engage themselves into the current situation of the world. The entrepreneur
therefore chose the name because, the nature of products, the business would be producing
would be as per the information age, this would make customers to be eager to know the kind of
Digital materials being sold and hence improving sales. The logo of the business represents a
house, since the business would majorly deal with house building materials. The entrepreneur
therefore chose the logo, because the era we live in now, most people aim at building houses, this
would therefore provide access of materials by customers be easier.

1.3. BUSINESS ADDRESS

10
The address of Digital hardware would be;

P. O BOX 36- 40100

AWASI
E-MAIL. digitalhatdware@gmail.com
WEBSITE. www.digitalhatfware.co.ke
TELEPHONE. +254741847431

1.4. OWNERSHIP OF THE BUSINESS

The owner of the business would be George Otieno, because he is the main contributor of capital
to the business.

1.4.1. Methods of raising capital

The entrepreneur would raise capital as outlined below;

Source of capital Amount

Owner (George) 350,000

Contribution by from friends 200,000

Donations from family and relatives 150,000

Loan from bank 300,000

Total 1000,000

1.5 BUSINESS LOCATION

Digital hardware would be located in Kisumu County in Nyando constituency. The business
would be located along Kericho-kisumu highway, opposite Afta petrol station, next to Semo
resort.

AFTA
PETROL
STATION

11
AWASI MARKET
 From Kericho To Kisumu

SEMO DIGITAL
RESO HARDWAR
RT E

1.6. TYPE OF BUSINESS

The business would be a sole proprietorship type of business, because it would be formed,
owned and managed by one person (George Otieno).

The entrepreneur chose this type of business because of the following reasons.

1.6.1 Easy to start and manage

To start a sole proprietorship type of business, the entrepreneur do not have to consult from other
people, before opening it, as would be as of the case of partnership business. This therefore takes
less time in opening the business, since once, an entrepreneur has got a business idea, the only
thing that would be remaining is just to implement the idea and practice it.

1.6.2 Requires few legal procedures to start

Starting a sole proprietorship business, requires less legal requirements like, applying for the
name of the business and bank account, which only needs one signatory. Changing the business
structure is also less complicated.

1.6.3 The entrepreneur enjoys the profits alone

The profits that accrue from the sale of goods in the business, the entrepreneur keeps them to
himself, this is an advantage to the entrepreneur because if it were a partnership type of business,
the profits would have been shared among the partners and to some extent, this would have
brought grudges among the partners, since there would have been some corruption that come out.

1.6.4 Total business control.

The entrepreneur would have easy time in decision making. and the decision would be quick,
since the entrepreneur do not have to consult from anyone else before making final decision.

12
This would minimize time in decision making, since once the entrepreneur has made a decision,
it does not need to be discussed further.

1.6.5. Requires minimal initial capital to start.

Sole proprietorship ranges from having no employees to a number of employees which are easier
to deal with in terms of expenses, taxes and compensation. Cost of opening a business with this
type of structure does not require costly legal expenses and taxes.

Also provision of health care services would not be a problem to the entrepreneur to look into,
for a sole proprietorship type of business

1.6.6 The entrepreneur is the boss of the business

The entrepreneur does not have to be accountable to any other boss or supervisor, since he is the
owner of the business. This means that entrepreneur is at the helm of the business, and decisions
are made solely. Therefore, there is no need of the entrepreneur to wait for a go-signal to
implement new rules and regulations. This privilege is therefore useful during emergencies and
decision making that are needed right away.

1.7 JUSTIFICATION OF OPPORTUNITY

The entrepreneur chose to start hardware because of the following reasons

1.7.1 Existence of a gap in the provision of goods

The area in which the business would be located, there are no other business enterprises that
provide goods that would be sold by the business; this makes it difficult for people to them. The
entrepreneur therefore, chose to eliminate the gap that does exist in the area by starting a
hardware that would majorly deal with construction materials and electrical items.

1.7.2. Creation of job opportunities

Since the aim of each person is to get a way through to earn a living, by being employed or by
being self-employed. The entrepreneur therefore chose to start the business, because of lack of
job opportunities in the area in which the business would be located, especially to young people.
Most young people engage themselves in bad company that later ruin their live. Due to lack of
job opportunities, many youths lose hope in life and therefore the only option is themselves to
engage in bad company. The entrepreneur therefore chose to create jobs for young people and
remove the trend that has always been.

13
1.7.3 Favorable Location
This is a very important factor that the entrepreneur looked into. Since most customers who
would be buying from the business, are those who wish to build houses. Therefore the
entrepreneur chose to start the business because the area of its location, there are many buildings
that are to be built. This would therefore be a better opportunity to the entrepreneur to create
profit. The business is along the highway and also where there is high population to for ease of
access and recognition by customers.

1.7.4 Maximization of profit

Since the area in which the business would be located, there are buildings in plan to be
constructed. The entrepreneur chose to start the business, because this would create high chances
for the entrepreneur to create profit at maximum level. This would also be made within the
shortest time possible.

1.7.5To promote growth of the community

As a result of the business, this would ensure that the community grows businesswise. This is
because not only the business that would be started by the entrepreneur would be available, but
there are also some other businesses that would or had existed within the areas of location. This
would ensure that human, social and economic problems are also solved.

1.7.6 Alignment to national goals

The national goals of a business are categorized into economical, human and social. The
entrepreneur therefore chose to start the business to ensure that economic issues are solved. This
would ensure that poverty is eradicated hence helping people to be able to earn a living. This
business would also help to solve human issues such as; clothing, food, shelter and even
education hence ensuring growth of the community. The business would also ensure social
interaction of citizens due frequent buying of materials; this would promote peace and unity.

1.8. PRODUCTS AND SERVICES

Since most of the materials that will be produced by the business are tangible, therefore, the
entrepreneur would majorly deal with products. The products that would be sold by the business

14
would include all sizes, both small and large. Since each material can only be used based on
given sizes.

The products that would be produced by the business would be of high quality, strong and
durable. This is to ensure that the customers are not embarrassed as a result of the products being
ineffective. This is as such to aid in the development of more customers and hence creation of
profit to the business.

The products would be packed according to how related they. Products that share one specific
feature would be placed together, to help in reaching them easily when a customer needs any
product. This also creates uniformity and hence avoiding confusion.

Prices of products would be placed at a rate that fits the market and to the customer as well. The
prices would also favor the level of living standards of the people living around. This would help
the business to have more customers and hence creation of profit

1.9 INDUSTRY

The business belongs to construction industry. The entrepreneur chose to start the business due
to high demand of the industry in the market. Since the current information age, most people
have got a lot of plans of building and construction of houses, this creates the demand of
construction materials be high.

Since each and every person would like to have a strongly constructed house, also most
entrepreneurs in the market do cheat those who have intention of building that the kinds of
construction materials they produce are of good quality but in real since they are not. This
therefore makes customers to doubt any other entrepreneur, who wants to open the business;
hence this becomes a great barrier to entry in the industry.

Due to ineffective buildings that have been constructed by most construction architectures, this
has made it for the government to get involved into this matter.

15
CHAPTER TWO

2. 0 MARKETING PLAN

2.1 THE CUSTOMER

For successful marketing of products, the entrepreneur would target a group of customers
available in the market.

2.1.1 Individual customers

These customers would always be coming frequently to buy from the business. The entrepreneur
would always ensure that they are served to the best capacity, because they matter a lot than
those who buy in bulk once in a period. Individual customers would know more about the
workers who serve them. They can easily lead to lose of customers if not served effectively;
therefore the entrepreneur would always take much keen while serving them.

2.1.2 Institutional customers

To facilitate proper marketing of the products is done; the entrepreneur would target customers
who exist in identifiable groups consisting of many people. These customers would promote
profit maximization to the business, since they would buy goods in large quantities. The various
institutional customers that would be targeted by the entrepreneur would include schools,
hospitals and churches.

Since each and every institution aims at maximizing their level of production, they wish to
expand their buildings as a result of high population that does join them due to their proper
performance. This creates a better chance for the entrepreneur to sell to sign constructs with them
by supplying construction materials to them.

2.1.3 Commercial Customers

Marketing of products can be done using various ways. These ways would include through
individual customers, through institutional customers and also through commercial customers.
Product marketing through commercial customers being the most effective one, the entrepreneur
would therefore buy goods in bulk and store them effectively, to ensure that goods are always
available to be sold to wholesalers or retailers who act as intermediate between the entrepreneur
and the final consumers.

16
2.2 MARKET SHARE ANALYSIS

After carrying out a feasibility study of the entire market, the entrepreneur established that the
market has got a total of 1000 customers and are shared amongst the four main competitors as
outlined below.

Ngere hardware 400

400
×360=144 °
1000

Mama Susana hardware 300

300
×360=108 °
1000

Julan hardware 200

200
× 360 = 72˚
1000

Madison hardware 100

100
×360=36 °
1000

The above information is statistically represented in a pie chart as shown below

17
 Sales

36˚ Ngere hardware

Mama susana
hardware
72˚ 144˚
Julan hardware
108˚
Madison hardware

According to the pie chart, Ngere hardware commands 144˚of the market, which is 400
customers. Mama Susana hardware commands 108˚of the market, which is 300 customers. Julan
hardware commands 72˚of the market, which is 200 customers. Madison hardware commands
36˚of the market, which is 100 customers. However the entrepreneur would employ competitive
market strategy to increase his market share within a period of one year and eventually working
towards becoming the market leader.

2.3 PRICING STRATEGIES

Since profit maximization is the aim of every entrepreneur. The entrepreneur would charge
prices that would help to recover production cost and operational expenses. The price to be
charged by the entrepreneur would be inclusive of the profit as well.

2.3.1 Penetration Pricing

In order to fit in the market, the business should have many customers; this would not be
possible when the entrepreneur charges huge prices to products. The entrepreneur would
therefore place prices of the goods low to ensure ease of entry to the market.

18
2.3.2 Competitive Pricing
After bench marketing that has been carried out by the entrepreneur with the competitors, the
entrepreneur would set prices at a range that is closely charged by the competitors to ensure
equal sharing of the customers

2.3.3 Maximum Price Skimming

The entrepreneur would produce products with high quality the market. To ensure that profit is
gained, the entrepreneur would charge high price. Since quality is better than quantity, the
entrepreneur would always ensure that the products produced by Digital hardware are always of
high quality, so that the business would always in the forefront in the provision of goods hence
becoming the leader in the market.

2.3.4 Psychological pricing

To ensure goods are always sold at a better rate, the entrepreneur would always play with the
psychology of customers. This would be possible by taking those whose prices are too low to
generate profit to the business, and adding them to those commodities of high prices, then taking
the less priced goods as an offer when a customer has purchased. To ensure profit is maximized,
the profits of each commodity would be included in the price to be set.

2.4 PRODUCT STRATEGY

To ensure that customers ‘needs are always reached, the entrepreneur would always ensure
goods produced are of high quality and affordable. As long as the customer’s needs are reached,
there are high chances that the business would generate profit.

The entrepreneur would produce high quality products using state of the art technology ensure
that the products are tailor-made to meet the needs of customers in the market, hence profit
maximization.

The entrepreneur would also ensure that the products are of affordable prices to the customer by
introducing a variety of packages. The products would be packed in different sizes such as; 50kg
of cement, which would be from different companies like Simba cement, Bamburi cement, Rai
cement, Mombasa cement and Maasai cement the other product would be iron sheet, which
1
would be packaged in lengths of 3m, 2 m and 2m, the type of iron sheet to be sold by the
2

19
entrepreneur would be corrugated roofing sheet, sheet metal roofing sheet. The entrepreneur
would also be selling steel nails at weights of 250kg, 500g, 1kg, 2kg, 5kg, 10kg, 20kg and 30kg.

2.5 PROMOTION STRATEGY

To create awareness of the business and the products that it produces, the entrepreneur would use
promotion strategy. This is done to persuade customers to buy the product. The strategy also
helps the customers in making decisions about the products, since promotion would highlight
key features of the product.

Promotion strategy would be carried out through two broad ways like; salesmanship and
advertisement.

2.5.2 Salesmanship
To ensure that promotion strategy is effectively done through salesmanship, the entrepreneur
would employ a team of competent and aggressive salesmen who would move from one office to
another, streets and homes with an aim of targeting individual customers. To ensure that the
work of persuading customers becomes easier to the salesmen, the entrepreneur gives them
marketing tools and caps which indicates the name and logo of the business.

2.5.3 Advertisement
This is the most effective way of performing promotion strategy, since it would cover a lot of
areas that would be full enough to convince a customer to buy the product without any doubt in
him or her.

The would use the following advertising methods to target both close and distant customers;

2.5.3.1 Television
The entrepreneur would advertise the product in English, Swahili and vernacular languages in
order that the product awareness is created effectively and reaches both literate in illiterate. The
entrepreneur would use the following stations in conveyance of the awareness of the product;
Citizen Television and Lake Victoria Television.

20
2.5.2.2 Radio Advertisement
Radio advertisement just as television advertisement would also advertise the product using the
language that is understood by both literate and illiterate. The entrepreneur would advertise using
the following radio stations; Milele FM and Lolwe FM.

2.5.2.3 Use of Posters, Fliers and Burners

The entrepreneur would also create product awareness using posters and fliers. This would
highlight the product features, to ensure clear visibility hence help the customer to make a
decision to buy the product. For effective product advertisement is done using this strategy, the
entrepreneur would target strategic places like areas of high traffic such as junctions,
roundabouts, near markets and along highways.

2.5.2.4 Use of billboards

The entrepreneur would also use electronic billboards placed at strategic places to advertise the
product both day time and night time.

2.5.2.5 Use of newspapers and journals

The entrepreneur would also advertise the product using newspapers and journals. The
entrepreneur would use the three leading daily newspapers in Kenya. These would include; daily
nation, the standard and the star.

2.5.2.6 Social media

Since the information age that we are currently in, most people do not rely on television or radio
to receive information that is in for them, but rather are mostly found in social media. The
entrepreneur would use various social media platforms which would include; Face book, what
Sapp, twitter, telegram and instagram.

2.6 SETTING SALES TARGET

In the early weeks of operation, the entrepreneur would target to sell one thousand pieces of the
products every day and after one year; the entrepreneur would target to sell two thousand pieces
21
of the products every day. This would be achieved through an aggressive marketing campaign
and making quality products that satisfy the customer.

2.7 DISTRIBUTION STRATEGY

Digital hardware would adopt the following distribution channel;

Digital hardware consumer

The entrepreneur would produce the products in large scale and sell them directly to final
consumers. The entrepreneur would ensure that the distribution channel is always short, so that
the profit margin is not always undercut.

2.8 CONSUMER SERVICES STRATERGY

Digital hardware will adopt the following strategies in serving the customers.

2.8.1 Offering High Quality Products

The entrepreneur would produce goods of high quality and offer services that satisfy the needs of
the customer maximally hence maximizing profit.

2.8.2 Establish Customer Care Unit

Whenever a customer needs some assistance in any information about the products. The
entrepreneur would employ a group of persons who will always be available to help in the
assistance needed by customers.

2.8.3 After Sales Services

To ensure that that customer’s needs are always reached, the entrepreneur would always perform
after sales services. These would include offering free transport to customers who buy goods
worth a given amount and demonstrating on the use of a product.

2.8.4 Giving Warranty to Customers

The entrepreneur would offer a time guarantee to the customers once they have bought from the
business. The warranty services would include free repair or replacement of the product in case it
turns out to be faulty.

22
 2.8.5 Giving Free Gifts and Promotions
The entrepreneur would always offer gifts and promotion to customers who buy frequently from
digital hardware. This is to attract customers to always buy from the business.

CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

3.1 ORGANIZATIONAL STRUCTURE

The organizational structure of digital hardware would be as shown below

DIRECTOR

HUMAN FINANCE SALES

RESOURCE MANAGER MANAGER
MANAGER

HUMAN RESOURCE FINANCE SALES

SUPERVISOR SUPERVISOR SUPERVISOR

Digital hardware would employ a director in the top position. The business would also employ
the human resource manager, finance manager and the sales manager who would be answerable
o the director. Below every managerial position there would be corresponding supervisors.

23
3.2 MANAGEMENT TEAM

To ensure that digital hardware functions successfully, the entrepreneur would look for strong,
competent and skilled management team. The management team would comprise of the top
manager, that is, the director, midde level managers which would include, human resource
manager, finance manager and sales manager and lower level managers comprising of
supervisors. The management team would be responsible for formulating and implementing
strategies in digital hardware.

3.3 OTHER BUSINESS PERSONEL

3.3.1 Human Resource Manager

Responsibilities

a) To oversee recruiting, interviewing and hiring of new staff

b) Design a motivating structure for the employees
c) Consulting with the top executives on strategic planning
d) Maintaining employee data
e) Formulation of policies in the business
f) To maintain work culture in the business
g) Mediating employee conflict
h) Assist the director in discipline and termination of employees

Qualifications

a) Must possess bachelors degree in business with specialization in human resource

management
b) Must be thirty years of age and above
c) Must have three years of experience
d) Must have good communication skills
e) Must be a Kenyan citizen
f) Must be responsible

Remuneration

The expected salary would be ksh. 50,000

24
3.3.2 Finance Manager
Responsibilities

a) Assisting in the preparation of budgets

b) Managing records and receipts
c) Reconciling daily, monthly and yearly transactions
d) Preparing balance sheets
e) Processing invoices
f) Developing an in-depth knowledge of organizational products and process
g) Providing customer service to clients
h) Resolve financial disputes raised by the customer service and sales teams

Qualifications

a) Must possess bachelors degree in finance, accounting and economics

b) Must have five year job experience
c) Must possess relevant computer knowledge
d) Must possess qualification in certified public accounting
e) Must be neat and presentable

Remuneration

The expected salary would be ksh. 30,000

3.3.3 Sales Manager

Responsibilities

a) Setting sales target

b) Recruit ,build and nurture a team of workers and customers
c) Steering of the business
d) Responsible for motivating and advertising his representatives to improve their
performance.
e) Hiring and training new sales representatives

25
 f) Ensure that the sales department works cross functionally with executives from other
departments.
g) Strategically foster on customer engagement
h) Help in achieving the goals of the business by effective planning, analyzing data on
past performance and projecting future performance.

Qualifications

a) Must possess bachelor's degree in business or related field.

b) Experience in planning and implementing sales strategies.
c) Experience in customer relationship management.
d) Experience managing and directing a sales team.
e) Excellent written and verbal communication skills.
Remuneration

The expected salary would be ksh. 40,000

3.4 RECRUITMENT, TRAINING AND PROMOTION OF PERSONEL

For successful operation, digital hardware would recruit a team of competent, qualified and
skilled personnel to help in carrying out the business’ functions.

3.4.1 Recruitment
The entrepreneur would carry out a competitive recruitment exercise for all job opportunities.
The recruitment process would be done to attract qualified candidates through advertising which
would be made possible in newspapers, radio, television, posters and social media platforms.

The entrepreneur would also source qu8alified candidates from universities and colleges.

3.4.2 Training
The entrepreneur would ensure that the recruited candidates and equipped with the relevant skills
and expertise to do their function this would be achieved through organizing training sessions for
the employees.

26
The entrepreneur would perform training by sending the employees to seminars, trade fairs and
exhibitions to acquire relevant skills. The entrepreneur would also organize refresher courses for
the employees in order to update their skills.

3.4.3 Remuneration and Incentives

The entrepreneur would design a competent and attractive structure for every employee in the
organization. This would motivate the employees to work harder and reduce the cases of
employees resigning from the organization.

Apart from salaries that the employees would be paid, the entrepreneur would also offer a
number of financial and non-financial incentives to the employees as a way of motivating them.
The incentives would include; house allowance, medical allowance and transport allowance.

3.5 LIENSES AND PERMITS

In order to comply with statutory regulations governing business, the entrepreneur would obtain
the following legal requirements from the required office.

3.5.1 Licenses
Digital hardware would obtain a trading license from Kisumu County Municipality office after
paying a stipulated license fee with the government regulations.

3.5.2 Permit
Digital hardware would obtain a security permit from sub-county public security offices in
Kisumu as a proof of compliance to the security regulations governing the business.

3.6.1 SUPPORTING SERVICES

For successful operation of the business, digital hardware would seek business supporting
service from different services. The entrepreneur would contact the following service providers
to provide relevant business service.

3.6.1 Banking Services

Digital hardware would liaise with Kenya Commercial Bank for provision of a number of
services of financial services which include;

27
a) Remittance of Funds

Banks help their customers in transferring funds from one place to another through cheques,
drafts, etc.

b) Home banking

Home banking is the process of completing the financial transaction from one’s own home as
opposed to utilizing a branch of a bank. It includes actions such as making account inquiries,
transferring money, paying bills, applying for loans, directing deposits.

c) Online banking

Online banking through traditional banks enable customers to perform all routine transactions,
such as account transfers, balance inquiries, bill payments, and stop-payment requests, and some
even offer online loan and credit card applications.

d) Credit Cards

A credit card is cards that allow their holders to make purchases of goods and services in
exchange for the credit card’s provider immediately paying for the goods or service, and the
cardholder promising to pay back the amount of the purchase to the card provider over a period
of time, and with interest.

The address of the service provider would be

Kenya Commercial Bank

Kisumu branch

P. O Box 17-40100, Kisumu

Telephone number +2547-57-202330

3.6.2 Insurance

28
The entrepreneur would liaise with Madison Insurance Company for the provision of various
insurance services. The insurance service would provide the following policy for the business

a) Fidelity

Losses occasioned by fraudulent acts by own staff is insured under this policy. Losses include
theft of stocks and equipment and frauds of cash or books thefts.

b) Employee Accident Policy

In case one or more body parts are lost due to accident, employee gets lump sum cash. if
employee gets totally and permanently disabled due to accident, monthly cash benefit will be
given.

c) Personal Insurance Service Of Employee

I) Motor Vehicle Policy

Vehicle insurance may additionally offer financial protection against theft of the vehicle, and
against damage to the vehicle sustained from events other than traffic collisions, such as keying,
weather or natural disasters, and damage sustained by colliding with stationary objects.

II) Fire Policy

Fire insurance is a property coverage that pays for damages to property and other losses
employees may suffer from a fire. The business would pay for the cost of repairing or replacing
damaged property in your home. Fire coverage is included in most homeowner’s insurance
policies. However, there are certain exclusions to coverage. There are set limits to the amount of
fire damage that will be covered in a homeowner’s insurance policy.

The address of the service provider would be as follows

Madison Insurance Company

Kisumu branch

P. O Box 2576-40100, Kisumu

29
Telephone number 0709 922 000

3.6.3 Security Services

The business would partner with G4S Security Company to provide security services for the
business. The security firm would provide the following services to the business

a) Security Systems

By choosing an integrated building security system, the entrepreneur has peace of mind that his
expectations will be met and we will continue to understand and react to his needs throughout the
lifetime of the system.

b) Courier Services
Each entrepreneur needs a partner who understands of his needs and provides him with efficient,
reliable end to end logistical solutions that would help him expand his business. For all these
services the entrepreneur chose to partner with G4S

c) Manned Security Services

Combining innovation and quality guarding, G4S provide their customers with a full end-to-end
solution combining cutting edge technology with high class manpower services.

d) Patrol Monitoring and Response

G4S provides random or scheduled patrols of the business sites at specified intervals during the
day and/or night. G4S patrol, monitoring and response services are designed into packages to
bring you efficient tailored protection against the risk of theft and damage.

The address of the service provider would be

G4S Company Limited

30
Kisumu branch

Mega city, Kisumu

Telephone number 0722 200561

3.6.4 Postal and Telecommunication Services

The business would liaise with Kenya postal and telecommunication to provide the following
services.

a) Postal services

Telecommunications (MPT) is responsible for Postal services such as mail, post office saving
accounts, money order by mail, postal Life Insurance services.

b) Transport Of Mail Services

Postal services transport mail and small packages to destinations around the world, and they are
mostly public corporations. Postal authorities are often also involved in telecommunications,
logistics, financial services and other business areas.

c) Help In Sending And Receiving Messages

Wherever the entrepreneur needs to make enquiry of goods, postal and telecommunication would
the best sight to perform this task.

The address of the service provider would be

Kenya Postal and Telecommunication Service

Kisumu Branch

P.O Box 2738-40100, Kisumu

Telephone number 0727499679

31
CHAPTER FOUR

4.0 PRODUCTION PLAN

4.1 PHYSICAL FACILITIES

To ensure that operation of the business is carried out with success, the entrepreneur would need
the following physical facilities

i) Store
ii) Office
iii) Packing zone
iv) Selling zone
v) Abolition block\

STORE

GATE
SELLING ZONE

PACKING
ZONE
OFFICE ABOLUTION
BLOCK

32
The entrepreneur would acquire these physical facilities by hiring them, since the financial
constraints that do exist, that would hinder the entrepreneur to buy the facilities immediately.
Apart from hiring of the facilities, the entrepreneur would acquire them through leasing as it is
advantageous because the cost is evenly over different periods of time. The entrepreneur would
also be able to avoid depletion cost and repair and maintenance charges, since the entrepreneur
would be owner of the facilities.

However, in the long run as the business continues to grow, the entrepreneur would acquire his
own permanent premise which would give him the advantage of less charge than as would be
witnessed in both hiring and leasing.

4.2 OTHER FACILITIES (MATERIAL FACILITIES)

The entrepreneur would also acquire the following assets to aid in the production process

i) Cements which would be acquire from different companies like Simba Cement,
Bamburi Cement, Mombasa Cement and Rai Cement.
ii) Iron sheets which would be of different types and from different companies as well, the
companies would include Chandaria Brothers’ Limited, Royal Mabati Factory Limited
and Super Mabati.
iii) Door frames and window frames whose raw materials are metals which would be
acquired from

The entrepreneur would ensure that the facilities acquired are of best quality and that they match
state of the art technology to ensure efficiency in production. The entrepreneur would the service
of a skilled and experienced electrician to hel0p in installation, servicing and maintenance of the
above facilities.

33
4.3 PRODUCTION PROCESS

Ordering of materials

Receiving the materials

Packing and storage

Distribution

Step i Ordering Of Goods

The entrepreneur would order high quality, durable and strong materials from large scale
companies and stocks of a competitive prize. The entrepreneur would ensure that the prize at
which the materials would be purchased is low so as to promote profit maximization when
selling them to final consumers.

Step ii Receiving the Materials

After ordering of the materials have been made and the required payments have been done with,
the entrepreneur would receive the products and store them effectively. The entrepreneur would
employ a group of strong and competent men who would help in loading and offloading of these

34
materials after ordering have been made. The entrepreneur would ensure that there are trucks that
would help in the transportation of these goods, and drivers who would be driving these trucks.
This is to help escape the charges that would be made by the suppliers due to lack of transport
means by the entrepreneur.

Step iii Packing and Storage

The materials purchased would be of different kinds like cement would be packed in bags of
50kgs, iron sheets would be packed in measurements of 2m and steel nails would be packed in
measurements of 4inches, 2inches. All these materials would be stored in dust-free and dump-
free place so that no rust attacks them which would reduce profit gain by the entrepreneur, since
customers would not prefer materials which have been attacked by rust.

The entrepreneur would always ensure that the store is kept clean before storage of materials is
made. Workers who are meant for the task would be made available.

Step iv Distribution

The goods would be sold directly to final consumers. The customers to whom the goods would
be sold would be of different types like individual customers, institutional customers and
commercial customers. The entrepreneur would ensure that they are served to the best quality.
This is to ensure that profit is made. Since goods might be purchased and stored but if the
customers are not served well, it would be a loss to the entrepreneur.

4.4 PRODUCTION SCHEDULE

The entrepreneur would ensure that the production schedule of digital hardware is one that favors
the fatigueless of the employees. This is to ensure maximum production by the employees

35
The production schedule of digital hardware would be as shown below.

DAY MORNING AFTERNOON

MONDAY 6:00 AM -12:00 NOON 2:00 PM – 6:00 PM

TESDAY 6:00 AM -12:00 NOON 2:00 PM – 6:00 PM

WEDNESDAY 6:00 AM -12:00 NOON 2:00 PM – 6:00 PM

THURSDAY 6:00 AM -12:00 NOON 2:00 PM – 6:00 PM

FRIDAY 6:00 AM -12:00 NOON 2:00 PM – 6:00 PM

SATURDAY 6:00 AM -12:00 NOON CLEANING

SUNDAY CHURCH BIBLE STUDY

Digital hardware would engage in production in two main sessions namely;

i) Morning session
ii) Afternoon session

The morning production session will start at 6:00 am and end at 12:00 noon to allow for lunch
break, which would be between 12:00 noon to 2:00 pm.

The afternoon session would production session would start at 2:00 pm and end at 6:00 pm for
all days except Saturday and Sunday.

On Saturday, the afternoon session would be used for cleaning of all the blocks in digital
hardware premises.

On Sunday, there would be no production to allow employees to rest.

36
4.5 REGULATION GOVERNING PRODUCTION

Digital hardware would be governed by the following regulations;

4.5.1 Public Health and Safety Regulations

The management of digital hardware would seek authority from the sub-county public health and
safety office before engaging in production of construction materials. To ensure that this is valid,
the entrepreneur would obtain a valid certificate for the regulation.

4.5.2 Ministry of Trade and industry Regulations

The entrepreneur would seek to comply with the Ministry of Trade and Industry (MTI), which
encourages economic growth and creates employment so that the business can lead better lives to
people living around the location of the business. Its strategies are based on a free-market system
and outward-oriented economic policies, making it fit for the entrepreneur to do business in the
premise.

4.5.3 National Environment Regulations

The entrepreneur would seek to comply with environment regulations as outlined by the National
Environment and Management Authorities (NEMA). The environmental regulations include;

i) Preservation, protection, restoration and improvement of the quality of the environment;

ii) Protection of human life and health
iii) Protection of biological diversity
iv) Rational and sustainable utilization of natural resources
v) Implementation and improvement of measures aimed at addressing regional and global
environmental problems.

4.5.4 Occupational Area Safety

The entrepreneur would invite the occupational area officer to inspect the premises and give a
certificate of compliance. The area that the entrepreneur would be keen on to ensure safety of the
area, workers and materials include;

37
 Free Protection

In accordance with the Occupational Safety, it would be the responsibility of the entrepreneur to
provide free protective equipment including clothing and appliances, and where necessary,
suitable gloves, footwear, goggles and head coverings to the workers involved in hazardous
work. The type of protection needed would vary depending on the nature of work being
performed. The right use of protection equipments would reduces risk of accident and illness
and helps in creation of safer working environment.

Training

Employment of worker in any process that may cause ill health or bodily injury is prohibited
unless worker has been fully instructed about the hazards involved and precautions that must be
observed. The entrepreneur would ensure that the workers are properly trained or work under
supervision of experienced persons.

The training would be carried out on recruitment; transfer or change of job; introduction of new
work equipment or materials or change in equipment or materials; and introduction of new
technology. The training would be arranged regularly at workplace during working hours and
adapted accordingly with the new and changed risks.

4.5.5 National Building Regulations

Since the government of Kenya is striving to put in place appropriate legislation, policies and
strategies to increase the resilience and safety of the built environment. Well-designed and
locally specific building regulations are central to this effort: building regulations translate safe
practices for design and construction into a set of rules and laws which govern and specify
minimum agreed levels of safety and resilience for buildings. The entrepreneur would therefore
seek to comply with the National constructions authority (NCA), to promote proper and well-
built houses in the environment. The entrepreneur would obtain a valid certificate for this
authority.

38
CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE OPERATIONAL COST

Digital hardware would incur the following pre-operational costs; rent, water, labor, license fee,
insurance, cost of manufactured materials, transport and electricity.

5.1.1 Cost of manufactured materials

Item Quantity Amount

cement 200kg Ksh.120,000

Steel nails 30kg Ksh.6,000

Iron sheets 200metres Ksh.120,000

Door frames 20pieces Ksh.25,000

Window frames 20pieces Ksh.10,000

Total Ksh.281,000

39
5.1.2 Overheads
The enterprise will incur the following overheads

Item Amount

Rent Ksh.10,000

Water Ksh.2,000

Insurance Ksh.4,000

Transport Ksh.1,500

Salaries and wages Ksh.5,000

Legal fee Ksh.10,000

Advertising Ksh.2,000

Total Ksh.34,500

5.2 WORKING CAPITAL

5.2.1 Current assets

Item Amount

Stock Ksh.300,000

cash at hand Ksh.200,000

Cash in bank Ksh.250,000

Debtors Ksh.150,000

Total Ksh.900,000

5.2.2 Current liabilities

Item Amount

Creditors Ksh.20,000

40
 Long term loan Ksh.60,000

Short term loan Ksh.10,000

Bank overdraft Ksh.30,000

Total Ksh.120,000

Working capital = current assets ˗ current liabilities

Working capital= 900,000 ˗ 120,000 =780,000

5.3 BUSINESS CAPITAL

Source of capital Amount

Owner (George) 350,000

Contribution by from friends 200,000

Donations from family and relatives 150,000

Loan from bank 300,000

Total 1000,000

5.4 FINANCIAL STATEMENTS FOR THE BUSINESS

For successful financial management of Digital hardware, the business will prepare the following
financial statement

41
5.4.1 Trading Account
Digital hardware

Trading account

For the period ended 31st December 2020

Sh. Sh.

Opening stock 300,000 sales 780,000

Add purchase 271,000 less return inwards 20,000

Add carriage inwards 10,000 net sales 760,000

581,000

Less return outwards 20,000

Less closing stock 30,000

Cost of sales 531,000

Gross profit c/d 229,000

760,000 760,000

Gross profit b/d 229,000

5.4.2 Profit and loss account

Digital hardware

Profit and loss account

42
 For the year ended December 31st 2020

Sh. sh.

Rent 10,000 gross profit 229,000

Water 2,000 discount received 10,000

Salaries and wages 5,000 239,000

Transport 1,500

Insurance 4,000

Legal fee 10,000

Advertising 2,000

34, 5000

Net profit c/d 204,500

239,000 239,000

Net profit c/d 204,000

5.4.3 Balance sheet

Digital hardware

Balance sheet

43
 As at 31st December

Sh. Sh. Sh Sh

Fixed assets Capital

Furniture and fittings 20,000 owner 350,000

Machinery ad equipments 20,000 contributions from friends 200,000

Land 100,000 family and relatives 150,000

Building premises 80,000 220,000 Loan from bank 300,000 1,000,000

Current assets current liabilities

Stock 300,000 creditors 20,000

Debtors 150,000 Long term loan 60,000

Cash in bank 250,000 short term loan 10,000

Cash at bank 200,000 900,000 bank overdraft 30,000 120,000

1,120,000 1,120,000

44
5.4.4 Projected cash flow statement for digital hardware 2021
Cash Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct Nov. Dec.
inflow

Bal. 0 524,0 834, 1,20 1,57 1,23 1,69 2,13 2,57 2,95 3,36 3,77
b/f 00 000 5,00 0,00 6,22 0,72 4,72 9,22 9,22 3,72 7,72
0 0 0 0 0 0 0 0 0

Sales 580 600,0 650, 670, 700, 800, 800, 780, 700, 700, 700, 600,
,00 0000 000 000 000 000 000 000 000 000 000 000
0

Dis. 50, 20,00 30,0 20,0 20,0 30,0 30,0 20,0 15,0 20,0 20,0 20,0
receiv 000 0 00 00 00 00 00 00 00 00 00 00
ed

Total 630 1,144 1,51 1,89 1,57 2,06 2,52 2,93 3,29 3,69 4,08 4,39
,00 ,500 4,50 5,00 1,22 6,22 0,72 4,72 4,22 9,22 3,72 7,72
0 0 0 0 0 0 0 0 0 0 0

Cash
outflo
w

Purch 271 275,0 275, 280, 300, 350, 350, 320, 300, 280, 270, 270,
ases ,00 00 000 000 000 000 000 000 000 000 000 000

45
 0

Salari 5,0 5,000 5,00 5,00 5,00 5,00 5,00 5,00 5,00 5,00 5,00 5,00
es 00 0 0 0 0 0 0 0 0 0 0

Insura 4,0 4,000 4,00 4,00 4,00 4,00 4,00 4,00 4,00 4,00 4,00 4,00
nce 00 0 0 0 0 0 0 0 0 0 0

Rent 10, 10,00 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0
000 0 00 00 00 00 00 00 00 00 00 00

Water 2,0 2,000 2,00 2,00 2,00 2,00 2,00 2,00 2,00 2,00 2,00 2,00
00 0 0 0 0 0 0 0 0 0 0

Trans 1,5 2,000 1,50 1,50 1,50 2,00 2,00 2,00 2,00 2,50 3,00 3,00
port 00 0 0 0 0 0 0 0 0 0 0

Legal 10, 10,00 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0
fee 000 0 00 00 00 00 00 00 00 00 00 00

Adver 2,0 2,000 2,00 2,00 2,50 3,00 3,00 2,50 2,00 2,00 2,00 2,00
tising 00 0 0 0 0 0 0 0 0 0 0

total 305 310,0 309, 324, 335, 375, 386, 355, 335, 315, 306, 306,
,00 00 000 000 000 000 000 000 000 000 000 000
0

Bal. 524 834,0 1,20 1,57 1,23 1,69 2,13 2,57 2,95 3,36 3,77 4,09
c/d ,00 5,00 0,00 6,22 0,72 4,72 9,22 9,22 3,72 7,72 1,72

46
 0 00 0 0 0 0 0 0 0 0 0 0

5.4.5 Projected cash flow statement for digital hardware 2022

Cash in- Jan. Feb. Marc Apr. May June July Augu Sep. October Nov. Decem
flow h st ber

Bal. b/f 4,091 4,517, 4,922 5,293 5,669 6,053, 6,497 6,841 7,126, 7,406,7 7,706 8,105,
,720 720 ,720 ,220 ,220 720 ,720 ,720 720 20 ,720 720

Sales 700,0 680,00 650,0 670,0 700,0 700,00 600,0 600,0 600,00 600,00 700,0 600,00
00 000 00 00 00 0 00 00 0 0 00 0

Dis. 30,00 30,000 30,00 20,00 20,00 30,000 30,00 15,00 15,000 15,000 15,00 15,000
Received 0 0 0 0 0 0 0

Total 4,821 5,227, 5,602 5,983 6,389 6,783, 7,127 7,456 7,741, 8,021,7 8,421 8,720,
,720 720 ,720 ,220 ,220 720 ,720 ,720 720 20 ,720 720

Cash
outflow

Purchase 270,0 270,00 275,0 280,0 300,0 250,00 250,0 300,0 300,00 280,00 280,0 300,00
s 00 0 00 00 00 0 00 00 0 0 00 0

Salaries 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000

47
Insurance 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000

Rent 10,00 10,000 10,00 10,00 10,00 10,000 10,00 10,00 10,000 10,000 10,00 10,000
0 0 0 0 0 0 0

Water 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Transport 1,500 2,000 1,500 1,500 2,000 2,000 2,000 2,000 2,000 2,500 3,000 3,000

Legal fee 10,00 10,000 10,00 10,00 10,00 10,000 10,00 10,00 10,000 10,000 10,00 10,000
0 0 0 0 0 0 0

Advertise 2,000 2,000 2,000 2,000 2,500 3,000 3,000 2,500 2,000 2,000 2,000 2,000
ment

Total 304,0 305,00 309,5 314,5 335,5 286,00 286,0 330,5 335,00 315,50 316,0 336,00
00 0 00 00 00 0 00 00 0 0 00 0

Bal. c/d 4,517 4,922, 5,293 5,669 6,053 6,497, 6,841 7,126 7,406, 7,706,7 8,105 8,384,
,720 720 ,220 ,220 ,720 720 ,720 ,720 720 20 ,720 720

5.4.6 Projected cash flow statement for digital hardware 2023

Cash Jan. Feb. Mar Apr. May June July Augu Sep. Octo Nov. Dece
48
in- ch st ber mber
flow

Balan 8,38 8,56 8,84 9,10 9,377 9,660 10,10 10,59 10,98 11,26 11,54 11,54
ce b/f 4,72 9,22 3,22 2,72 ,220 ,720 3,720 6,720 0,220 4,220 5,720 5,720
0 0 0 0

Sales 600, 680, 650, 670, 700,0 800,0 800,0 700,0 600,0 600,0 700,0 600,0
000 0000 000 000 00 00 00 00 00 00 00 00
0

Disco 20,0 30,0 20,0 20,0 20,00 30,00 30,00 20,00 20,00 20,00 15,00 15,00
unt 00 00 00 00 0 0 0 0 0 0 0 0
receiv
ed

Total 9,00 9,27 9,51 9,79 10,09 10,49 10,93 11,31 11,60 11,88 12,26 12,53
4,72 9,22 3,22 2,72 7,220 0,720 3,720 6,720 0,220 4,220 0,720 8,720
0 0 0 0

Cash
out-
flow

Purch 400, 400, 375, 380, 400,0 350,0 300,0 300,0 300,0 300,0 300,0 280,0
ases 000 000 000 000 00 00 00 00 00 00 00 00

49
Salari 5,00 5,00 5,00 5,00 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
es 0 0 0 0
and
wage
s

Insur 4,50 4,50 4,50 4,50 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500
ance 0 0 0 0

Rent 10,0 10,0 10,0 10,0 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00
00 00 00 00 0 0 0 0 0 0 0 0

Water 2,50 2,50 2,50 2,50 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
00 00 0 0

Trans 1,50 2,00 1,50 1,50 2,000 2,000 2,000 2,000 2,000 2,500 3,000 3,000
port 0 0 0 0

Legal 10,0 10,0 10,0 10,0 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00
fee 00 00 00 00 0 0 0 0 0 0 0 0

Adve 2,00 2,00 2,00 2,00 2,500 3,000 3,000 2,500 2,000 2,000 2,000 2,000
rtisin 0 0 0 0
g

Total 435, 436, 410, 415, 436,5 387,0 337,0 336,5 336,0 338,5 337,0 316,0
500 000 500 500 00 00 00 00 00 00 00 00

50
Balan 8,56 8,84 9,10 9,37 9,660 10,10 10,59 10,98 11,26 11,54 11,92 12,22
ce c/d 9,22 3,22 2,72 7,22 ,720 3,720 6,720 0,220 4,220 5,720 3,720 2,720
0 0 0 0

51
5.4.5 Ratio analysis
5.4.5.1 Mark up
gross profit
Mark up¿ ×100 %
cost of sales
229,000
= ×100 %
531,000

=43.13%

5.4.5.2 Margin percentage

gross profit
Margin percentage = × 100 %
net sales
229,000
= ×100 %
760,000
= 30.13%
5.4.5.3 Rate of return on investment
net profit
Rate of return on investment = ×100 %
capital investment

204,000
= ×100 %
1,000,000

= 20.4%

5.4.5.4 Liquidity ratio

current assets
Liquidity ratio =
current liabilities

900,000
=
120,000

= 7.5

52
5.4.5.5 Break even analysis chart

Total revenue

Revenue Total cost

Variable cost

Fixed cost

Break even unit Unit of production

53
Appendices
a) Logo

b) Map location of
business AFTA PETROL
STATION

FROM KERICHO TO KISUMU

SEMO DIGITAL
RESORT HARDWARE

54
 c) Map of physical structure

GATE STORE

SELLING ZONE

PACKING
ZONE
OFFICE ABOLUTION
BLOCK

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 d) Pie chart

Sales

36˚ Ngere hardware

Mama susana
hardware
72˚ 144˚
Julan hardware
108˚
Madison hardware

e) Organizational structure

DIRECTOR

HUMAN FINANCE SALES

RESOURCE MANAGER MANAGER
MANAGER

HUMAN RESOURCE FINANCE SALES

SUPERVISOR SUPERVISOR SUPERVISOR

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