ARC CRUDE OIL DISTILLATION COMPANY

PRESENTED BY: FAITH MWIKALI MWENDWA

INDEX NUMBER: 5521054385

COURSE: DIPLOMA IN PETROLEUM

GEOSCIENCE

CENTER CODE: 552105

PAPER NUMBER: 307

PRESENTED TO: KENYA NATIONAL

EXAMINATION COUNCIL (KNEC) IN PARTIAL

FULFILMENT FOR THE AWARD OF DIPLOMA IN

PETROLEUM GEOSCIENCES

SUPERVISOR: MR. DENNIS RONO

EXAM SERIES: JUNE/JULY

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DECLARATION
This is my original copy and has been reserved with all my rights. It has never been submitted to
Kenya National Examination Council by any other person.

NAME:

SIGNATURE DATE

SUPERVISOR:

SIGNATUFRE DATE

i
DEDICATION
My special dedication goes to my parents, friends and teachers who have been of support and
guidance throughout the process. May almighty shower is blessings to you.

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ACKNOWLEDGEMENT
I would like to express my sincere thanks to my supervisor who undertake the task of working
through the whole of the business plan correcting and advising where necessary. Also, I would
like to thank my parents who provided financial and moral support, my friends for providing
conducive environment for learning. I also wish to express my sincere gratitude’s to all my
classmates especially the committee members who have always been my inspiration.

May almighty God be with you.

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EXECUTIVE SUMMARY
Business description
This chapter describe the type of the business owners and the name. It gives background
information of the owner. It also shows the location of the business, address and finally
justification of opportunities of the business goals.

Marketing plan
This chapter entails the customers, the markets share and the competitors of the business,
methods of promotion and advertising of business. It also contains the pricing strategies, sales
statistics and distribution strategy.

Organization and management plan

This chapter has a duty of the employees of the business and responsibilities. It also has the
means and methods of recruitment, training and promotion of employees. Information regarding
remuneration and incentives, licenses, permits and by laws of the business are outlined, support
and advisory services are also given.

Production plan
This chapter describes the products facilities and operations of the business and how it will be
conducted. These include material required. Labor required and production expenses. It also
contains the government regulations.

Financial plan
This chapter is the final chapter which contain the financial plan of the organization, pre-
operational plan, working capital and cash flow for one year, the balance sheet.

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Contents
DECLARATION....................................................................................................................................i
DEDICATION.......................................................................................................................................ii
ACKNOWLEDGEMENT....................................................................................................................iii
EXECUTIVE SUMMARY...................................................................................................................iv
Business description..............................................................................................................................iv
Marketing plan......................................................................................................................................iv
Organization and management plan...................................................................................................iv
Production plan.....................................................................................................................................iv
Financial plan........................................................................................................................................iv
CHAPTER ONE....................................................................................................................................1
1.0 BUSINESS DESCRIPTION.....................................................................................................1
1.1 BACKGROUND INFORMATION................................................................................................1
1.2 NATURE OF THE BUSINESS......................................................................................................2
1.3 BUSINESS LOCATION AND INDUSTRY..................................................................................2
1.4 MISSION AND VISION OF THE BUSINESS.............................................................................3
1.4.1Vision..............................................................................................................................................3
1.4.2 Mission...........................................................................................................................................3
1.5 FORMS OF OWNERSHIP.............................................................................................................3
1.6 TYPE OF THE BUSINESS............................................................................................................3
1.7 THE PRODUCTS AND SERVICES..............................................................................................4
1.7.1 Products Description....................................................................................................................4
1.7.2 Services Offered............................................................................................................................4
1.8 JUSTIFICATION OF THE OPPORTUNITIES...........................................................................5
1.9 INDUSTRY......................................................................................................................................5
1.9.1 Industry Character.......................................................................................................................5
1.9.2 Industry Future.............................................................................................................................6
1.9.3 Industry Size.................................................................................................................................6
1.10 GOALS OF THE BUSINESS.......................................................................................................6
1.10.1 Short Term Goals.......................................................................................................................7
1.10.2 Long Term Goals........................................................................................................................7
1.11 ENRTY AND GROWTH STRATEGY.......................................................................................7

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1.11.1 Entry Strategy.............................................................................................................................7
1.11.2 Growth Strategy.........................................................................................................................8
CHAPTER TWO...................................................................................................................................8
2.0 MARKETING PLAN......................................................................................................................8
2.1 CUSTOMERS..................................................................................................................................8
2.2 MARKET SHARES........................................................................................................................9
2.2.1 Market before Penetration...........................................................................................................9
2.2.2 Market Shares after Penetration...............................................................................................10
2.3 COMPETITION............................................................................................................................11
2.4 PROMOTIONS AND ADVERTISEMENT................................................................................12
2.4.1 Promotion....................................................................................................................................12
2.4.2 Advertisement.............................................................................................................................12
2.5 PRICING STRATEGIES..............................................................................................................13
2.6 SALES TACTICS..........................................................................................................................14
2.7 DISTRIBUTION STRATEGY.....................................................................................................14
CHAPTER THREE.............................................................................................................................15
3.0 ORGANIZATION AND MANAGEMENT.................................................................................15
3.1 ORGANIZATION STRUCTURE................................................................................................19
3.2 KEY MANAGEMENT PERSONNEL.........................................................................................20
3.3 OTHER PERSONNEL.................................................................................................................21
3.4 RECRUITMENT, TRAINING AND PROMOTION.................................................................23
3.4.1 Recruitment.................................................................................................................................23
3.4.2 Training.......................................................................................................................................24
3.4.3 Promotion....................................................................................................................................24
3.5 RENUMERATION AND INCENTIVES.....................................................................................24
3.5.1 Remuneration.............................................................................................................................24
3.5.2 Incentives.....................................................................................................................................25
3.6 LICENCE, PERMIT AND LEGAL REQUIREMENT..............................................................26
3.6.1 License.........................................................................................................................................26
3.6.2 Permit..........................................................................................................................................26
3.6.3 By-laws........................................................................................................................................26
3.7 SUPPORT SERVICES..................................................................................................................27
3.7.1 Banking services.........................................................................................................................27

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3.7.2 Legal services..............................................................................................................................27
3.7.3 Insurance services.......................................................................................................................27
3.7.4 Courier services..........................................................................................................................28
3.7.5 Consultancy services...................................................................................................................28
CHAPTER FOUR...............................................................................................................................29
4.0 OPERATIONAL PLAN................................................................................................................29
4.1 PRODUCTION DESIGN AND DEVELOPMENT.....................................................................29
4.2 PRODUCTION FACILITIES AND CAPACITIES...................................................................29
4.3 PRODUCTION STRATEGY.......................................................................................................30
4.3.1 MONTHLY MATERIAL COST...............................................................................................30
4.3.2 MONTHLY LABOUR COST....................................................................................................31
4.3.3 MONTHLY PRODUCTION OVERHEADS...........................................................................31
4.4 PRODUCTION PROCESS...........................................................................................................32
4.5 REGULATIONS AFFECTING OPERATIONS.........................................................................32
4.6 EQUIPMENTS OR MATERIALS...............................................................................................33
CHAPTER FIVE.................................................................................................................................34
5.0 FINANCIAL PLAN.......................................................................................................................34
5.1 PRE-OPERATIONAL COSTS....................................................................................................34
5.2 ESTIMATION OF WORKING CAPITAL REQUIREMENT..................................................34
5.3 PREPARATION OF CASHFLOW..............................................................................................35
5.4 PREPARATION OF PROFOMA INCOME AND BALANCE SHEET...................................38
5.5 CALCULATION OF BREAKFAST............................................................................................41
5.6 CALCULATION OF PROFITABILITY RATIO......................................................................42
5.7 PROPOSED CAPITALISATION................................................................................................42
5.8 DESIRED FINANCING................................................................................................................42
References............................................................................................................................................44
APPENDIX I: BUSINESS LAYOUT.................................................................................................46
APPENDIX II: LOCATION OF THE BUSINESS...........................................................................47

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 CHAPTER ONE
1.0 BUSINESS DESCIPTION
The owner of the business is Kirui Renny Kibet. The name of the business will be known as
FABLE OIL DISTILATION COMPANY. The quality services and product offered will be of
favorable cost within consumer’s demands.

Address of the business will be

FABLE OIL DISTILLATION COMPANY

P.O BOX 7457

Kabarak

TEL: 0110974704

Email: fableoil@gmail.com

The business will be operated under one management that is the sole proprietorship for business
ownership. It would be both machine intensive and manual intensive because power and human
force or labor would be required to operate the work that will take place in the company. The
business would need maximum of 10 employees.

1.1 BUSINESS NAME

The name *FABLE* came from silly discussion with my friend. I could not decide the
name myself, so I asked for assistance. I took close friends to discuss on how the business
would help the community and if it would be profitable by the end of 2-5 years. Suddenly
they asked on the name of the business. That is when they came up with *FABLE OIL
DISTILLATION COMPANY*.

Vision

We will be forward thinking, profitable and customer focused business in the fuel and
convenience retail sector. We will always remain true to our family oriented principles.

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Mission

We will provide our customers with fuel and convenience products they want at appropriate time
they need them delivered with a level of services that proves our best in class competence.

We will be efficient, flexible and welcome changes so as to grow our existing business to the
next level and acquire new ones in the fuel and convenience retail sector.

We will challenge and support our employees to be better than yesterday, trusted and more active
partner to the people.

The company logo will contain large distillation machine, drillers and large trucks and machines
of different kind. The drillers will show that drilling of oil done in the area.

1.2 BUSINESS LOCATION AND ADDRESS

The business will be located at Kabarak town near the market opposite to the police station
offices. The police station is called Kabarak Police station. The nearest county headquarters is
Nakuru county.

The address will be;

ARC CRUDE OIL DISTILLATION COMPANY

P.O BOX 7330

Kabarak

TEL: 0110974704

Email: fableoil@gmail.com.

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The business will cover the whole of Nakuru town and its neighbouring communities. The
business will be conducted in national language. No person is discouraged from participating in
the business.

1.3 FORMS OF OWNERSHIP

The company will be operated under one management that is sole proprietorship and the sources
of finance of her own project will be personal savings and donations as initial capital. The
amount will cater for payment of legal expenses and purchase of stock assets. The operations of
the business will run from 8:00 am in the morning and closed 5:00pm in the evening.

Advantages of sole proprietorship

-Making own decision.

-Easy management

-Easy to establish

-Encourage self-employment

-Presence of close personal relation

Disadvantages of sole proprietorship

-Incase of any risk the owner will suffer alone

-Difficult in raising money

1.4 TYPE OF THE BUSINESS

The business will be a company type of business because it is easier to make decisions on the
decision made as the owner is the one to decide. It is established as a limited company form of
business. It is easy to start, no complexity when it comes to decision making and easy to meet
customers demand and profits made will be used for expanding purpose of the business.

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 Advantage of the business

-The company can provide large amount of energy.

-Its technology and infrastructures (roads, telecommunication etc.) are already in place.

-Petroleum is dense fuel source.

-Crude oil or petroleum is used in major ways; transportation, electricity generation and
material production.

1.5 THE PRODUCTS AND SERVICES

Products Description

The business will be dealing with selling of products to its customers which they include
gasoline, gas oil, diesel and many others. Also the company will produce services such as
distributing products to the clients.

The company will offer products such as petrol and gas oil. Therefore, the products will be
sealed and packed in special containers to avoid contamination and the company will set its
prices as per the demand of the market (Mallouli & Sassi, 2022).

Services Offered

The company will be offering services such as opportunities like cleaning of the enterprise,
distribution of goods and offering quality services to its customers, the company will need
machinery to minimize human labor to make sure the services offered within the company are

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done faster. The company will also as well need computerized equipment’s or tools to make the
work easier within the company.

Contribution to the community.

The business will create job opportunities for them. This may come from providing transport to
workers and even customers. This will also improve living standard for those close to the area.
This will come from earning through labour work in the area.

Local resources will be fully used. Oil which is a raw material is found in large portion in the
area. This will help community get good and services required by them.

1.6 JUSTIFICATION OF THE OPPORTUNITIES

The location of the business will be centrally located near raw materials and where most of the
people stay and also where there is infrastructure such as roads, health center and also where
there is security to enhance more operations taking place. A research done around shows that the
business will be making a lot of earnings due to the plenty of customers around and even existing
competition are offering poor quality services to their customers hence the company is aiming to
bring change in the area through the following ways;

-Improve the country foreign exchanges through exports and imports.

-Creating of employment opportunity within the community at the market thus reducing
insecurity through reduction of high crime rate.

-Improving their living standards by creation of employment to citizens.

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1.7 INDUSTRY

The ARC CRUIDE OIL DISTILLATION COMPANY offers high quality, safe and low cost
crude oil distillation solution with easy and fast installation. Fuels like gas line, gas oil and diesel
will be containerized as an alternative to fix the crude oil distillation company. For customer’s
satisfaction in product and services delivery, systems will be highly equipped with different
types of pumps, taps and additional features to ensure excellence (Bae, Jo & Lee, 2021).

Characterestics of the indusry

-This industry require high capital.

-It requires modern technology

-At the moment the industry is currently stable but the government has assured that it will be
growing un the near future.

-The industry requires large firm. This firms will accommodate large capacity of employees,
implements needed and many more items

1.8.0 GOALS OF THE BUSINESS

The business deals with the petroleum products sales like gasoline, jet fuel, diesel and heating
oils. The business is large size and is under energy industry.

The modern technology will be employed as machines will be operated by the attendants and
also energy will be utilized in running the business operation. To ensure maximum profits the
business will target around 50,000 to 1,000,000 potential customers. Then the profits achieved
will be around 65% to 85% if all this will be achieved.

Short Term Goals

- Creating job opportunities to the people hence improving their standards of living.
- Improving productivity by more sales and high profits through advertisement.
- By focusing growth which will cater maintaining the premises in the business.
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 - The progression of the business is checked by doing financial accounting by the end of
the month.

- The maintenance of the current account for each partner separation.

Long Term Goals

-Expand of personnel and facilities

-There is use of modern technology for example use of electronic payments.

-There is broadening of products and services in the company.

-Expansion of graphic market which may attract many of the customers due to high
quality products hence improving the income.

-Management duties and restriction in the business market.

1.9.0 ENRTY AND GROWTH STRATEGY

Through sales promotion and advancing would be important as it would be important as it

creates weakness and information about the product. One is expected to get from the company.
Advertisement through putting posters, management newspaper which will be designed and
located on a busy area and entrance to the sales promotion, fair pricing and the premises.

1.9.1 Entry Strategy

The maximum number of the employees will be ten in number.

Advertisement would be displayed through social media, billboards, e-mails, videos and on radio
stations.

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1.9.2 Growth Strategy

The proprietor intends to provide offer sales services like discount in order to promote and attract
more customers.

Owners have expectations to the business growth by laying down ways of creating demand to his
products for example reducing the premarket ices of goods so long as he enjoys profits and meet
required goals.

CHAPTER TWO
2.0 MARKETING PLAN

The ARC CRUDE OIL DISTILLATION COMPANY will make sure that all commercial and
domestic people that their needs are fully achieved. The marketing plan strategic of the business
covers all essential activities that the business will undertake to penetrate the marketing establish
a market presence, compete on are local level and capture the market target. Hence the marketing
will be on important function as will drive to achievement of financial objective of the business
hence leading o creation of reliable source of income for the business.

There are several ways of creating awareness;

1) Pursue the local partnership

2) By developing your unique personality.
3) Publish impressive guest content.
4) Use remarketing campaigns.

2.1 CUSTOMERS

There are two types of prospective customers which I deal with them in ARC CRUDE OIL
DISTILLATION COMPANY. They include;

1) Bulk/ wholesalers customers- these are type of customers which their business are located
far away from the premises and the goods are delivered as bulk or as wholesalers packed in

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containers .since the company deals with crude oil distillation the mostly means of transport is
air transport or water transport .

2) Retail customers from within the premises -the type of customers will be located near the
raw materials so as it can be easy distributed to them. Also you can locate your business near the
market where many people are and this will create a lot of income and you will find your
products/ services which are of high demand because of the quality of the product.

2.2 MARKET SHARES

According to market survey that has been carried out by the proprietor the population data in that
is 30,000 according to the previous census. The product to serve the retailers are inadequate
available or enough competitor’s shop or business. The proposed business target about 50,000
potential customer has 3 competitors.

2.2.1 Market before Penetration

Company Population Percentage No. of customers No. in degrees

Green clean 30,000 33.3% 10,000 119.88°

Nakuru 30,000 16.7% 15,000 59.76°

chemicals

Nakuru south 30,000 50% 51,000 180°

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 Market before Penetration

33.30%

50.00%

Green clean Nakuru Chemical Nakuru South

2.2.2 Market Shares after Penetration

company Population Percentage No. of No. in degree

customers

Daniel’s 30,000 33.3% 10,000 119.88°

chemical and
reagent company

Green clean 30,000 23.3% 7,000 83.88°

Nakuru 30,000 30% 9,000 108°

chemicals

Nakuru south 30,000 13.4% 4,000 47.88°

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 Market Shares after Penetration

13.40%

33.30%

30.00%

23.30%

Daniel's chemical and reagent company Green Clean

Nakuru Chemicals Nakuru South

2.3 COMPETITION

-The competitors who already exist in the market are small scale business.

COMPANIES WEAKNESS STRENGTHS

X - The company operates as a - The company should be

small scale business. operated as a large scale
business.
- There is poor
communication with your - There should be good
customers. communication with your
customers so as to enhance
easy or smoothly floor of
your business.

Y - Provision of poor products -The products should be of

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 in the company. high quality.

- Shortage of financing or -There should be enough

capital. capital so as to enhance the
business to operate it well.

Z -The time management is -The company must be able

poor. to manage time well when
carrying out the company’s
operations or activities.

-The person carrying out the

business is not well trained
and so disqualifies with the
service offer.
2.4 PROMOTIONS AND ADVERTISEMENT
2.4.1 Promotion
-There should be a trained
personnel to operate the
business in the company.

There are variety of ways to promoting your business or product.

1) Advertising – includes all non-personal paid communication.

2) Personal selling.
3) Sales promotion.

2.4.2 Advertisement

The method of advertising to be used will be through radios, television, newspapers, posters and
road shows.

The following shows the advertising methods to be used;

1) Print media

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 - Billboard – is to be erected along the road show the direction of the business and the
business sales.
- Magazine and newspapers- it will be placed on magazine indicating the items and offer
sale services and discount.
- Since advertisement through radio might become expensive so as it may prefer the use of
posters and the cost of photocopying is Ksh. 1000 per month and through feasibility it
must be reaching the intended group.

2) Electronic media
- Radio – may be done weekly 5.00pm to 6.00pm at “Radio Taifa FM” station. Talking
part in trade exhibition show so as to promote products.
- Television – a way of communication that is both visual and audio and literature or
illiterate can understand the message.

2.5 PRICING STRATEGIES

The product of the product will be based on the following factors:

1) Service costs

-The company tries to minimize the expenses and increase the income and other affordable
services.

2) Discount

-Potential customers will be given are quantity discount.

-Advice for small businesses on how to manage pricing strategies by calculating costs,
considering different pricing strategies by calculating costs, considering different pricing models
and evaluating customers and competitor behavior.

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2.6 SALES TACTICS

The business will use both direct and indirect selling to the customers by using agents and
retailers by doing so discount will be given depending on the quality of the products purchased
on credit facilities and also direct selling is performed where customers are paying at the counter.
The customer will be informed on any other new product in the stock and also their prices, the
sales will be directly to that customers.

2.7 DISTRIBUTION STRATEGY

The business will make sure that all products get to the customer through personal selling
method, the main transport will be through roads using motorbikes and pickups to transport the
products to the desired destination but with are limit distance and product business. The business
will offer free deliveries to the customers who acquire bulky goods at a distance 20KM squire.

Producer Customer.

Producer Retailers Customer.

Producer Wholesaler Retailer

Customer.

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 CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT

In every business there must be organization and the people who manage the business on how
different duties must be carried out.

POSITION, NUMBERS OF WORKERS, DUTIES AND QUALIFICATIONS

POSITION NO. OF DUTIES QUALIFICATIONS

WORKERS

General 1 *Coordinate employees /works *Previous working experience as a

manager and supervise and lead lower –
level manager.
*Attend meetings, trainings,
seminars and conferences.
*Suggest ideas for increasing
revenue.
*Create, review and implement
effective business plans.
general manager for 3 years.
*Outstanding communication,
interpersonal and leadership skills.
*Excellent organizational and time
management skills.
*Should be an average of the age 20-
35 years.

*Suggest improvement for

employee engagement.

*A high school diploma and at least 4

*Maintain confidentiality and
1 years of look keeping or related
security of bank account.
Accountant experience.
clerks *Assist in procurements payroll
*Records maintenance skills.
and budget preparation activities.

*Ability to analyze and solve

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 *Prepare financial reports problems.
expense reports, revenue reports
*Knowledge of cash management
and trial balance reports for
principles and procedures.
management.

*Analyze, organize and manage

customer invoices. *High school Diploma or GED
required.

Supervisor
*Ability to solve disputes between
*Mentoring and training of
workers.
employee.

2 *Ability to organize a work schedule.

*Managing conflict among team
members. *Should have 4 years of experience in
the construction industry.
*Set goals and measure
outcomes.

*Disseminating information *Three years’ experience in a

within the organization. production working laboratory is
preferred.
Attendants

*Ability to interpreted variety of

*Maintaining cleanliness and
instruction as may be furnished in
orderliness of operational areas.
3 oral, written, diagram, electronic and
*Conducting maintenance schedule form.
services.
*Able to work well under pressure and
*monitoring product inventories in a term environment.
and requesting necessary stocks
*Must be able to work with chemicals,
and equipment.
petrochemicals and petroleum
*For preparing chemical product.

16
 solutions and standards
procedures as required.

*Performing quality assurance

and quality control testing as
required for each instrumental/
test method as are applicable in
accordance with quality *Must be 18 years old.

management services (Hawash,

*Ability to pass a background check.
Mokhtar & Yusof, 2019).
*Working knowledge of basic security
techniques.
Security guard/
*controlling access via a gate
watchman *previous security work experience
and protecting vital equipment
preferred.
and machinery.
2
*Keeping oil fields and oil rigs
secure.

*Working to guard the entrance *High school degree.

and checking worker credentials
*Ability to handle Heavy equipment’s
or patrolling the area.
and machinery.

*Knowledge of cleaning chemicals

Cleaners *Carry out heavy cleansing tasks and supplies.

and special projects.
*proven working experience as a
*follow all health and safety cleaner.

4 regulations.

*clean, stock and supply

designated facility areas

17
 (mobbing, dusting, vacuuming).

POSITION, REMUNERATION AND INCENTIVES

POSITION REMUNERATION INCENTIVES

General manager 40,000 - Free medical cover

- Free vacations
- Work from home
- Pay raises
- Gain sharing
- Days off

Accountant 28,000 - Free medical cover

- Free transport
- Free insurance cover
- Served tea

Supervisor 12,000 - free medical cover

- free transport
- served tea

Attendants 10,000 - Free medical cover

- Free transport

Security guard 6,000 - Free helmet and touch

to use at night
- Free medical cover

Cleaners 8,000 - Free transport

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 - Free white dust coat
using when cleaning
the offices
- Free medical cover

3.1 ORGANIZATION STRUCTURE

The following is the organization flow style of the management and organization of a business in
the company;

The General Manager

Accountant foreman/ supervisor Attendants

Security cleaners

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3.2 KEY MANAGEMENT PERSONNEL

1) Manager

Qualifications

- Should be an average of the age of 20-35 years.

- Outstanding communication, interpersonal and leadership skills.
- Previous working experience as a general manager for 3 years.
- Excellent organizational and time manager skills (Guo, Yang & Wang, 2021).

Duties

- Create, review and implement effective business plans.

- Recruiting the employees in the company.

- Planning and coordinating the business remuneration.

- Suggests the improvements for employee engagement.

Qualities

- Have power to motivate members of the staff.

- Ability to plan and control the business.

- Ability to coordinate and direct the personal towards the achievements of the business.

2) Assistant manager

Duties

- To motivate the workers.

- Plan the work of any selection and to it that it is done on time.

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- Support and implement the policies or top management by allocating responsibilities to self-
equitability.

- Assist the manager.

Qualifications

- Should be able to cooperate with any kind of staff.

- Should have knowledge in technical areas in the company.

- Should be literate for easy communication and mind for the customers.

3.3 OTHER PERSONNEL

1. Accountant clerk

Duties

-Prepare financial reports, expense reports, revenue reports and trial balance reports for
management.

-Analyze, organize and manage customer services.

-Assist procurements payroll and budget preparations activities.

-Maintain confidentiality and security of bank accounts.

Qualifications

-A high school diploma and at least 1 year of bookkeeping or related experience.

- Have the records maintenance skills.

- Have ability to analyze and solve problems.

- Knowledge of cash management principles and / or procedures.

21
2. SUPERVISOR

Duties

- Managing conflict among team members.

-Disseminating information within the organization.

-Set goals and measure outcomes.

-Monitoring and training of employees.

Qualifications

-High school Diploma or GED required.

-Has ability to solve disputes between workers.

-Has ability to organize a work schedule.

-Should have 4 years of experience in the construction industry.

3. ATTENDANTS

Duties

-Maintaining cleanliness and orderliness of operational areas.

-Monitoring products inventories and requesting necessary stocks and equipment’s.

-For preparing chemical solutions and standards procedures as required.

Qualifications

-Must have 3 years’ experience in a production working laboratory is preferred.

22
-Must be able to work with chemicals, petrochemicals and petroleum products.

-Ability to interpret a variety of instructions as may be furnished in orals written, diagram,

electronic or schedule form.

4. SECURITY QUARD

Duties

-Controlling access via a gate and protecting vital equipment and machinery.

-Keeping oilfields and oilrigs secure.

-Working to guard the entrance and checking worker credentials or patrolling the area.

Qualifications

-Must be 18 years old.

-Previous security related work experience preferred.

-Working knowledge of basic security techniques.

3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1 Recruitment

The company will advertise to their staff through posters through a local media like citizen, KCB
and also can advertise in the radio. All the available or vacant position qualification should be
given so that all that are capable can be able for the position. The chosen condition will be
probation of 6 months the performance can be determined whether promoting will be done or
not. This is the tasks of manager in conjunction with the rest of the staff to decide on time and
the exact dates when the recruitment will be conducted (Hawash, Mokhtar & Yusof, 2019).

23
3.4.2 Training

The company will sponsor the willing employees who will pursue in the academic through
attending seminars, conferences, workshops and work-on experience to enable them acquire
more skills.

3.4.3 Promotion

This will be done on individual performance more competent. These will also enhance
motivations among the employees hence will encourage the employees putting more efforts in
their work.

3.5 RENUMERATION AND INCENTIVES

3.5.1 Remuneration

The company will pay the workers by rewarding according to the following standards;

-The amount of work done will be considered.

- The position held in the company.

-Academic qualification of each personnel and the performance will determine their basic pay.

-Reward to employees will be for more than the market rate in the company. Also the
commissions will be given to each personnel in working in the company and also advance
issuance will be given to each personnel working in the company (Mousavi et al, 2019).

Also the commissions will be given to each personnel in working in the company and also
advance issuance will be given to each personnel working in the company.

24
3.5.2 Incentives

Position Number Basic House Medical Transport Net salary

of staff salaries allowances allowances allowances

Manager 1 20000 1500 1000 1200 23700

Assistant 1 8000 1500 600 1200 11300

manager

Accountant 1 15000 1500 800 1200 18200

Supervisor 1 7500 1500 600 9600

Security 1 4000 400 4400

guard

Cleaners 4 8000 1500 500 1200 11200

Total 9 62500 7500 3900 4800 78400

3.6 LICENCE, PERMIT AND LEGAL REQUIREMENT

3.6.1 License

The company is regard to the forms of the business operation in the country. The company will
require license documents to legalize the operation to be acquired, trade license from:

25
Kitui Municipal Council

The following are the break-down cost of document;

Transport license; Ksh. 20,000

Transport license; Ksh. 16,000

3.6.2 Permit

The company will obtain permit from the local government Act law of Kenya.

The authority will be granted after filling a form showing the name location nature and form of
the business.

The proposed business will be registered under its official name and address in order to
commence its operation.

The permit will be obtained from the ministers of trade and industry. The permit will cost around
Ksh. 6000.

3.6.3 By-laws

The proposed business will be governed by the provision of various by-laws from Kitui
Municipal Council. This include:

1) Public health.
2) Regulation of wages land conditions of employees.
3) Land and the property.
4) Registration of business name and where the business is located.

3.7 SUPPORT SERVICES

The Crude Oil Distillation Company will be offering the following goods and services produced;

1) Transportation of fuels.
2) Fuel oil for heating and electricity generation.

26
 3) Asphalt and road oil.
4) Feedstock’s for making the chemicals, plastics and synthetic materials.

3.7.1 Banking services

The following are the services offered by the bank to the Crude Oil Distillation Company;

1) Offer financial services for the business owners – for example business loans in buying
company equipment’s materials like chemical reactants.
2) Checking and saving accounts.
3) Wealth management.

3.7.2 Legal services

- Advising on all legal issues concerning employees and consultants, from recruitment to
termination.
- Preparing employment and consultant contracts that are compliant in the company.
- Preparing and advising on second mend agreements and intercompany agreements
relating to the staff.

3.7.3 Insurance services

The company can be provided insurance services in different types of insurance;

Health insurance – whereby person injured in the company is fully insured can easily have
access of medical care.

Home insurance – the properties in the company are fully protected from been stolen.

27
3.7.4 Courier services

Help the company to deliver the goods which the company wants to be taken in a certain place.
For example; a crude oil distillation company would like gas oil products, diesel, petroleum to be
delivered in a certain location and the couriers does that work. A good example of courier is
Fargo courier.

3.7.5 Consultancy services

The consulting industry consist of main functional areas; strategy consulting management
consulting, operations consulting, financial advisory and IT consulting.

The following are services offered by consultants.

1) Provide expertise in are specific market.

2) Identifying problems in the company.
3) Teaching and training employees.
4) Initiating change.
5) Supplementing existing staff.

28
 CHAPTER FOUR
4.0 OPERATIONAL PLAN

As an entrepreneur having products in the firm should be well designed so as to attract the
customers and will be willing to purchase the products hence initiating the high purchasing
power of the three business progress. The products will be designed to complicate the quality for
the sale and hence being very successful (Mallick, Parhi, & Das, 2020). The services offered will be
of good quality and fair prices to the customers hence leading them to purchase the products
produced in the company.

4.1 PRODUCTION DESIGN AND DEVELOPMENT

The products will be highly packed in clean containers whereby the hygiene will be highly
observed and the package designers will design them according to the customers taste or their
demands of the products. The management will observe the orderly by which the packing will be
done to make sure is done carefully. Since the products are bulky and heavy the mostly common
means of transporting goods and services is air transport, water transport and railway transport to
deliver the products to their destinations. The business will be mostly done near to the natural
resources where most of the customers will be able to reach them.

4.2 PRODUCTION FACILITIES AND CAPACITIES

i) For operation of the business to take place facilities and raw materials are needed. Machinery
required for operation include computer, generators and vehicles.

ii) Business layout will occupy a maximum of half and are for better space and conductive place
enough ventilation will be ensured.

29
4.3 PRODUCTION STRATEGY
4.3.1 MONTHLY MATERIAL COST

ARC CRUDE OIL DISTILLATION COMPANY MONTHLY MATERIALS

REQUIREMENTS

MATERIALS AMOUNT

Electricity 1000

Transport 10000

Salaries 2000

Advertisement 5000

Stock 500

Insurance 50000

Repair and Maintenance 5000

TOTAL 87000

30
4.3.2 MONTHLY LABOUR COST

The business lab compliance will base on the number of permanent workers so as to support the
product and also operative employees.

EMPLOYEE NUMBER AMOUNT

Manager 1 10000

Supervisor 2 8000

Cleaners 2 4000

Security guard 1 1500

Accountant clerk 1 7000

TOTAL 7 30500

4.3.3 MONTHLY PRODUCTION OVERHEADS

EXPENDITURE COST

Power / Electricity 3000

Repair and Maintenance 2500

Advertisement 5000

Insurance 1500

Transport 3000

TOTAL 15000

31
Cost of production

Monthly labour costs Kshs 30500

Monthly Materials requirements Kshs 87000

Total Ksh 117500

4.4 PRODUCTION PROCESS

The business will develop and be marketable in order to meet the goals of the customers. The
products needed by the customers should be ordered earlier before the stock goes empty. The
opening hours from 7:30am to 5:00pm. The tea break will be served for one hour at 10:00am and
the lunch will be from 12:30pm to 2:00pm. All employees will be requested to keep time and be
punctual so as the work can be runed smoothly. The business should provide a very high quality
of products and services to their customers.

4.5 REGULATIONS AFFECTING OPERATIONS

The business will require the following cost documents in its operation so as to enhance a good
progress business;

1) Health conditions: The employees should have license from the health office so as in case
of any sickness can be handled very fast and in the better way.
2) Environmental regulations or laws: This deals with how the environment is protected
against exploitation or pollution. This is a regulation from the ministry of Healthy and
Natural Environmental Conservation.
3) Safety regulations: This deals with risk assessment and control of the hazards.
4) Trademark Act, the business will avoid trademarks which are already taken. This will
protect the business in running well and if any other business will be found using the
same name it will be easier for it to be judged.
5) Labour laws: The employees should be treated very well and considered so as not be
injured during the operation and even be paid at the right time.

32
 6) Workers Compensation guide: The workers or employees are supposed to be
compensated for an example when one lost one of his or her relatives or your one child.
When you go through tough situations which cannot handle himself or herself should be
given the support from the company and their working colleagues or working mates the
support can be either financially or even other support can be applied.

4.6 EQUIPMENTS OR MATERIALS

The tools which can be used in crude oil distillation so as to enhance good production of the
finished products includes; strategic planning , benchmarking to the other companies so as to
improve on how to carry out their tasks well and effective , supply chain management , mission
and vision statements and customer satisfactions (Karimi, Shokri & Aghel, 2020).

33
 CHAPTER FIVE
5.0 FINANCIAL PLAN

This it shows how the funds were used and in which position were used and which the specific
section were used and well stated.

5.1 PRE-OPERATIONAL COSTS

These will be the cost of Arc Crude Distillation Company before it commence.

ITEM COSTS

Pumping installations 3000

Electricity installations 2000

Business permits and license 8000

Insurance 5000

Tools and equipment 1500

TOTAL 19500

5.2 ESTIMATION OF WORKING CAPITAL REQUIREMENT

The working capital increases yearly indicating that the business progress will and thus profit
which was made every year.

ITEM YEAR 1 2022 YEAR 2 2023

Stock 70000 10000

Work progress 40000 60000

34
 Stock of finished goods 20000 30000

Debtor 100000 150000

Cash 150000 200000

Cash at bank 250000 300000

TOTALS 630000 750000

5.3 PREPARATION OF CASHFLOW

Items Ja Feb Mar Apr May June July Aug Sep Oct Nov Dec Total
n ch il s

Balanc 302 142 110 650 1217 1549 1556 1902 1775 1831 1831 1365
e 00 40 200 00 00 00 00 00 00 00 00 740
before
inflow

Cash 20 400, 500, 600, 700, 700, 800, 800, 800, 900, 900, 9000, 7,700
sales 0,0 000 000 000 000 000 000 000 000 000 000 000 ,000
00

Loan 20 - - - - - - - - - - - 200,0
0,0 00
00

Debtor 20, 201, 201, 201, 201, 201, 201, 201, 201, 201, 201, 201,0 240,0
s 00 000 000 000 000 000 000 000 000 000 000 00 00
0

Total 42 631, 615, 811, 866, 1022 1055 1156 1171 1178 1284 1284 9505
inflows 0,0

35
 00 200 240 200 000 700 900 600 200 500 100 100 740

purcha 20 207 207 207 207 2070 2070 2070 2085 2085 2090 2096 2491
ses 70 00 00 00 00 0 0 0 0 0 0 0 36
0
210 2200 2300 2200 2200 2200 2200 2300 2100 2300 2200 2200 26500
Credit 0
ors

Electric 140 1400 1400 1400 1400 1400 1400 1400 1400 1400 1400 1400 16800
ity 0

Telepho 600 600 600 600 600 600 600 600 600 600 600 600 7200
ne

Water 200 2100 2200 2200 2100 2200 2600 2700 2900 3000 3100 3300 30400
bills 0

loan 150 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 18000
repaym 0
ent

Transp 100 1000 1000 1100 1200 1300 1400 1450 1600 1700 2000 2200 15150
ort 0 0 0 0 0 0 0 0 0 0 0 0

Station 100 1200 1300 1500 1700 2000 2400 2600 2700 2700 2800 2900 24800
ary 0

Miscell 100 1200 1300 1400 1900 2000 2400 2600 2700 2900 3100 3300 25800
anies 0

36
exp

Salaries 185 1859 1859 1859 1859 1859 1859 1859 1859 1859 1859 1859 22308
and 900 00 00 00 00 00 00 00 00 00 00 00 00
wages

Drawin 500 5000 1000 1200 1400 1700 1900 2300 2800 22300
gs 0

Rent 400 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000
0

Insuran
50 5000 10,00
ce
00 00

Total 231 2268 2042 2054 2070 2095 2093 2132 2153 2017 2208 2288 25732
outflow 200 00 00 00 00 00 00 00 30 50 00 00 80

Bal cld 372 1424 1096 7540 1327 1459 1557 1689 1775 1851 1831 1535 16070
00 0 00 0 00 00 00 00 00 00 00 00 0

37
5.4 PREPARATION OF PROFOMA INCOME AND BALANCE SHEET

This is a statement that will show how the business runs whether a running loss or making profit
during the period.

ARC CRUDE OIL DISTILLATION LABORATORY

INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2O23

Ksh Ksh Ksh

Sales 6,000,000

Add cost of sales

opening stock 650,000

add purchase 2,000,000

less closing stock 230,000 2,420,000

gross profit 3,580,000

Less expenses

Rent 40,000

Electricity 3,000

Telephone and postage 18,000

Advertisement 6,000

Water 1,080,000

38
Salaries 3,000

License and permits 1,000

Miscellaneous Expenses 15,000

Insurance 16,000

Stationaries 2,000

Total expenses 1,169,000 1,169,000

Net profit

BALANCE SHEET

ARC CRUDE OIL DISTILLATION LABORATORY

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

Ksh Ksh

Non-current assets

Fixtures and fittings 300,000

Motor vehicle 1,200,000

Total non-current assets 1,500,000

39
Current assets

Stock 60,000

Debtors 34,000

Cash at bank 200,000

Cash at hand 80,000

Total current assets 374,000

Long term liabilities

Capital 1,000,000

Loan from equity 300,000

Total long term liabilities 1,300,000

Short term liabilities

Creditors 420,000

Bank overdraft 600,000

Total short term liabilities 1,020,000

Total 2,320,000

40
5.5 CALCULATION OF BREAKFAST

PARTICULARS YEAR 2022 YEAR 2023 YEAR 2024

Salary 1,200,000 1,600,000 1,900,000

Rent 50,000 46,000 46,000

Loan repayment 100,000 100,000 100,000

Licenses 15,000 15,000 15,000

Insurance 8,000 10000 20,000

Miscellaneous 16,000 16,000 16,000

expenses

TOTAL OF FIXED 1,389,000 1,787,000 2,277,000

COST

Bank event point contribution = fixed cost

Year 2022; 1389000 /3782000 x 100 =36.73%

Year 2023; 1787000 /3782000 x 100 = 47.25%

Year 2024; 2277000 / 3782000 x 100 = 60.21%

41
5.6 CALCULATION OF PROFITABILITY RATIO

Gross profit percentage =gross profit/sales x100%

314000 / 1000000 x100 = 31.4%

Return on investment =Net profit tax /Total investment

2000000 /2000000 x100 = 100%

Hence the ration will be; 31.4%: 100%

5.7 PROPOSED CAPITALISATION

SOURCE OF FINANCE AMOUNT (KSHS)

Personal salary and money in the bank 800,000

Loan from the bank 600,000

Friends contribution 200,000

TOTAL 1,600,000

5.8 DESIRED FINANCING

This is the sum of the operational cost +fixed cost working capital of the company and other
assets.

ITEMS AMOUNT (KSHS)

Working capital 180,000

Pre-operational expenses 550,000

42
 Fixed assets 1,800,000

TOTAL 2,035,000

Total desired financing = Ksh. 1300000

43
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Karimi, S., Shokri, A., & Aghel, B. (2020). Remediation of spent caustic in the wastewater of oil refinery by photo-
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45
APPENDIX I: BUSINESS LAYOUT

Main Store

Watchman General Warehouse

Sales manager

46
APPENDIX II: LOCATION OF THE BUSINESS

Nakuru Health
Centre Police Post

ARC FIRM

Nakuru Teachers Nakuru High

Collage school Post Office

47