lOMoARcPSD|31020887

BUSINESS NAME : GIGABIT ELECTRONI

ADDRESS: P.O. BOX 212, MERU

EMAIL: wesleywenceslaus07@gmail.com

Presented by: WENCESLAUS WESILEI

INDEX NUMBER:

COURSE CODE:

SUPERVISOR NAME: MADAM TABITHA

PRESENTED TO: KENYA NATIONAL EXAMINATIONS COUNCIL IN

PARTIAL FULFILMENT OF THE AWARD OF DIPLOMA IN
COMPUTER SCIENCE.

EXAM SERIES: NOVEMBER 2023

Downloaded by Wesley Wenceslaus (wesleywenceslaus07@gmail.com)

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DECLARATION
I declare that this project is my effort and original work and has never been presented to any
other examination body for academic credit.
Student Name: ..................................
SIGN: ..................................
DATE: ..................................
Supervisor Name: ..................................
SIGN: ..................................
DATE: ..................................
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DEDICATION
I dedicate this business plan personally to myself, my mother and my teacher Madam Tabitha
who have enabled me to come up and draft it. I also give thanks to God for guiding me while
writing this business plan.

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ACKNOWLEDGMENT
The preparation of this booklet would have not been possible without the support of my
lectures. I want to give thanks to God for his guidance throughout my research period and in
the completion of this business plan preparation. I would also like to acknowledge the
academic advice I acquired from my supervisor Madam TABITHA
Thank you all.
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Contents
EXECUTIVE SUMMARY.......................................................................................................................6
Business description..........................................................................................................................6
Market plan.......................................................................................................................................6
Organizational and management plan...............................................................................................6
Production/Operation plan................................................................................................................6
Financial plan.....................................................................................................................................6
Chapter One......................................................................................................................................7
Business Description..........................................................................................................................7
1.1 Business Name.............................................................................................................................7
1.2 Business location and address.....................................................................................................7
1.3 Form of Ownership......................................................................................................................8
1.4 Type of Business..........................................................................................................................8
1.5 Products and Services..................................................................................................................8
1.6 Justification of Opportunities.....................................................................................................10
1.7 Industry......................................................................................................................................11
1.8 Goals & Objectives.....................................................................................................................12
1.8.1 Objectives...............................................................................................................................12
1.8.2 Goals.......................................................................................................................................12
1.9 Entry and growth strategy.........................................................................................................13
1.9.1 Entry Strategy.........................................................................................................................13
1.9.2 Growth strategy......................................................................................................................13
Chapter Two....................................................................................................................................15
2.0 Marketing Plan...........................................................................................................................15
2.1 Customers..................................................................................................................................15
2.2 Market share..............................................................................................................................15
2.3 Competition...............................................................................................................................17
2.4 Methods of promotion and advertising.....................................................................................19
2.5 Pricing strategy..........................................................................................................................20
2.6 Sales Tactics...............................................................................................................................22
2.7 Distribution strategy..................................................................................................................23
Chapter Three..................................................................................................................................24
3.0 Organizational/Management Plan.............................................................................................24
3.1 Organization Structure...............................................................................................................24
3.2 Key Management personnel and team......................................................................................24
3.3 Other business personnel..........................................................................................................27

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3.4 Recruitment, training and promotion........................................................................................28

3.4.1 Training...................................................................................................................................28
3.4.2 Promotions.............................................................................................................................28
3.5 Renumeration, salaries and incentives......................................................................................29
3.5.1 Renumeration.........................................................................................................................29
3.5.2 Incentives................................................................................................................................29
3.6 Licenses, permits and by-laws....................................................................................................29
3.6.1 Permits....................................................................................................................................30
3.6.2 By-laws....................................................................................................................................30
3.7 Other support services..............................................................................................................30
Chapter 4.........................................................................................................................................32
4.0 Production/Operational Plan.....................................................................................................32
4.1 Plant facilities & Equipment.......................................................................................................32
4.1.2 Repair and Maintenance.........................................................................................................32
4.1.3 Office Layout...........................................................................................................................33
4.1.3 Plans for future Expansion......................................................................................................34
4.2 Production Strategy...................................................................................................................34
4.2.1 Production Design and Development.....................................................................................34
4.2.2 Monthly Material Cost & Requirement...................................................................................34
4.2.3 Technology..............................................................................................................................35
4..2.4 Number of Direct and Indirect workers.................................................................................35
4.2.5 Total Labour Cost per Month..................................................................................................35
4.2.6 List of Preliminary Production Cost.........................................................................................36
4.2.7 Total Production Cost per Month............................................................................................36
4.3 Production Process....................................................................................................................37
4.3.1 Factors affecting Operations...................................................................................................38
4.4 Regulations affecting the Business.............................................................................................38
4.4.1 Health Regulations..................................................................................................................38
4.4.2 Trademarks, patterns & Copyrights.........................................................................................38
4.4.3 Safety Regulations...................................................................................................................38
4.4.4 Environmental Regulations.....................................................................................................39
Chapter Five.....................................................................................................................................40
5.0 Financial Plan.............................................................................................................................40
5.1 Pre-Operational Cost..................................................................................................................40
5.2 Estimated Working Capital.........................................................................................................41
5.3 Projected Cashflow Statements.................................................................................................42
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5.3.1 Monthly Proforma Cashflow Statement..................................................................................42

5.3.2 Proforma Cashflow Statement for the first 3 Years.................................................................43
5.4 Proforma income statement......................................................................................................43
5.4.1 Proforma income statement for the first 3 Years....................................................................43
5.4.2 Proforma income statement for every month........................................................................44
5.5 Proforma Balance Sheet............................................................................................................45
5.6 Break Even Point........................................................................................................................45
5.7 Profitability Ratios......................................................................................................................47
5.8 Desired Financing.......................................................................................................................47
5.9 Proposed Capitalisation.............................................................................................................47

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EXECUTIVE SUMMARY
Business description
The name of the business will be called GIGABIT ELECTRONICS. The business will be
dealing with the purchasing and selling of ICT devices, gadgets and materials which include,
computers, laptops, smartphones, printers, projectors etc. The business will also offer repair
services for broken down devices, and also offer after sales services. The business will be
located in Meru town, along the Meru-Maua highway. The business is a sole proprietorship.

Market plan
Potential customers include residents, students and teachers from the various institutions
around the area. The enterprise is to analyse its strength and weakness and find effective
methods of capitalizing on the weaknesses. The business intends to use ICT as part of the
marketing plan. This is because majority of the potential clients are tech savvy and most of
them have access to the internet and the internet has made the world a global village.
Marketing will be done through the internet using various social media platforms, banners,
brochures etc.

Organizational and management plan

The organizational structure is to consist of seven employees who will help carry out day to
day business. they include: the manager, accountant, supervisor, sales manager, technician,
security personnel and a driver. The job vacancies will be posted on the internet for any
interested people to apply. All persons interested must be IT proficient. The recruitment and
interviews will be held online using video calls platforms before a physical interview.

Production/Operation plan
The service design and development are to meet with clear adherence to organization
objectives. It also entails training of employees to enable them to use modern technology and
skills to profit the enterprise and to produce high quality services. To increase accuracy and
efficiency of these facilities, maintenance shall be carried at regular intervals and also so as to
ensure that business goals are achieved, business strategies are laid down for easy production.

Financial plan
The proposed capitalization for the business enterprise is Ksh 300,000. Owner’s contribution
Ksh 200, 000, loans from family and friends Ksh 40,000, and loan from bank Ksh 60,000.
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Chapter One
Business Description
1.1 Business Name
The name of the business is called GIGABIT ELECTRONICS. The entrepreneur comes from
Meru Town, in Meru county. He was born in 10th May, 1997. He is currently a student at The
Kisumu National Polytechnic, pursuing a Diploma in Computer Studies

1.2 Business location and address

The business will be located in Meru-Maua highway, opposite Meru University of Science
and Technology, two kilometers from Meru town, in a building called Jeniko Plaza, ground
floor, shop number G003.

The business address is:

GIGABIT ELECTRONICS

Po box 212

Meru

Email: wesleywenceslaus07@gmail.com

The sketch of the map to the proposed business from Meru town is as shown in the figure
below:

Meru University of science &

technology Meru Main Bus Terminus/stage

Meru-Maua Highway

Meru
KEMUNJA ELECTRICALS
AP
(Jeniko Plaza)
Camp

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1.3 Form of Ownership

GIGABIT ELECTRONICS will be a sole proprietorship business due to the following
reasons:

i. Easy to establish the business.

ii. Create job opportunities to the unemployed youth in the area.
iii. To enjoy the freedom and flexibility that comes with self-employment and avoiding
dependence on people.
iv. Availability of entrepreneurial culture due to the reason of being an ICT student.
v. Availability of capital to finance and kickstart the business. vi. Availability of
market for the electronic equipment.

The proposed business will require 300,000/= Kenya shillings to start its operations. The
entrepreneur will contribute 200,000/= towards the business. This capital will come from the
entrepreneur’s savings. The remaining 100,000/= will be raised through family, friends and
loan from bank.

1.4 Type of Business

The business will deal with selling of electronic products, equipment and related electronic
accessories. Most of the electronic equipment will be outsourced from China, Japan, and
Dubai. There will be a wide range of products varying from size and models in order to give
the customers a wide choice to choose from.

1.5 Products and Services

The business will carry an expansive line of well-known and brand name electronic products
to service a wide range of clients and of course to make profits, which is why the
entrepreneur will ensure that the business will make available a wide range of consumer
electronics from top manufacturing brands in Dubai, China, Japan and other countries of the
world. The proposed business will provide a wide range of electronic products and services
which include:

i. Sale of consumer electronics (e.g. Monitors, CPUs, laptops, printers, hard

drives/solid state drives, UPS devices).
a. Monitors- these will be high end latest UHD (Ultra High Definition) monitors
whose visual display is 4K resolution, which is exactly four times the pixel
count of normal HD (High definition) monitors.
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b. CPU- there will be mid-range and high-end latest product which run on 11th
generation Core i9 processors. The particular processors feature enhanced
graphics, enhanced tuning & expandability and increased performance.
c. Laptops- there will be a variety of brands, prices and features to suit and cater
for all types of customer needs. They include Windows 11 business notebooks,
gaming rigs, Chromebooks, laptops for school, and 2-in-1 convertibles.
d. Printers- these will be all-in-one printer which are capable of printing, copying
and scanning, which will also provide centralized document management for
large and small enterprises. Also, there will be home printers for personal use,
which cost will be user-friendly.
e. Hard drives- there will be different types of Hard drives, that is, hard disk
drives (HDD), which use one or more rotating discs and rely on magnetic
storage, and solid-state-drives (SSD), which have no moving mechanical
parts, but use flash memory like the kind found in USB flash drives. If a
customer has a regular desktop computer, they most likely have or use a hard
disk drive.
Solid state drives are more typical for high-end, expensive laptops.
f. Power supply units (PSU)-these are used to convert mains alternating current
(AC) to low-voltage regulated direct current (DC) for the internal components
of a computer. The business will sell different variety of power supply units
like: switched mode power supply (SMPS) which includes a switching
regulator for converting electric-power powerfully, uninterrupted powers
supply (UPS) which is a device that permit a PC to keep working for some
time as the main power supply is lost.
ii. Sale of cell phones and tablets.
iii. Sale of computer and mobile accessories such as: mouse devices, keyboards,
headsets, memory cards)
iv. Repair, maintenance and cleaning of CPUs, monitors, laptops and printers.
v. Free estimates on repair jobs.
vi. Authorized warranty servicing on all major brands electronic gadgets and devices.
vii. In-house calls and free pickup and delivery.

All the devices and gadgets are designed and optimized to suit all our current technological
lifestyle, from performance, convenience, economy for money, durability, flexibility,

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servicing and warranties. This will be the benefits that the customers will obtain from using
the products.

The most important unique feature will be the focus on customer satisfaction. The customers
should have a positive experience with the company, which starts with the first contact and
continues after the purchase. For example, there will be a 3-month exchange period, free
delivery and return: and in the future, also the option of paying for old equipment. The
payment process is also designed to give the customer a wide range of options, including
discounts on certain types of payment.

Another unique feature are the positive references from customers. As customers often
choose to buy products because of the opinions of other buyers, Kemunja Electricals already
has a significant competitive advantage. The entrepreneur of Kemunja Electricals has
business management knowledge and has successfully managed other small-scale businesses
successfully as a sole trader. With his know-how acquired so far, he is well able to assess in
which areas a focus is important, which is also an important strength of the business.

The entrepreneur also intends to develop an expansive online ordering platform that will
allow the business to maximize its inventory profits on a monthly basis and to effectively
generate sales from outside of its physical location. This will reduce the overall operating risk
associated with the business as sales turnover will increase. This website will be developed
within the first six months of operation after the company launches its operations location.

The business will also maintain a private label gift card program so that during the holiday
seasons (or for year-round gifts), the business can sell preloaded “credit card” style gift cards
that will allow the customer/redeemer to make purchases. Kemunja Electricals intends to
create a competitive advantage through both the low-cost strategy and by offering greater
value through its broader product and service line. Future products and services that Kemunja
Electronics will prepare to institute include TVs, home theaters and gaming devices. The
entrepreneur is also investigating the possibility of offering a new product line of consumer
electronics.

1.6 Justification of Opportunities

The business was established due to the demanding market of technology. The need to own
advanced gadget has been increasing day by day and with the improved network reception
and rural electrification programs from the government, the entrepreneur saw a market gap
and an attractive opportunity to invest in. The area is a budding town, where majority of the
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population are the youth and young employed fellows. These were the target market for the
business. Most of the would-be customers are the students from Meru University of Science
and Technology, Kenya Methodist University, Meru School, Meru Technical, government
employees which comprises 70% of the population around.

The entrepreneur is affirmative that Kemunja Electricals will be able to solve the problem
and provide service due to the following reasons:

i. High market demand from the people around Meru and its environs.
ii. Availability of knowledge and technical skills regarding the business. the
entrepreneur is well informed regarding ICT and he has experience of running a
business.
iii. Good and strategic location which is easily accessible and visibly open to the public
eye including passersby and drivers on the roads.
iv. Availability of security. The business location is 300 metres away from Meru AP
camp, and the area county government has installed street lights to allow traders and
businesses to operate late in the night thus ensuring their safety.
v. Good transport network due to the well tarmacked road and the construction of
bypass thus reducing time taken on road and easing the hecticness involved in
packing, on loading, off-loading and delivery of product to customers.
vi. Availability of resources used in maintenance, repair and servicing of electronic
devices.
vii. Quality staff who will offer top notch services. viii. Favorable climate in the region,
suitable to conduct business any day any time.

1.7 Industry
The business is categorized under the electronics industry. The electronics industry is made
up of companies that manufacture, design, assemble, service and sell electronic products. The
industry is very large in size due to the demanding need of modern technology. According to
latest report Electrical and electronic manufacturing market briefing 2017 from The Business
Research Company (TBRC), the global electrical and electronics manufacturing market is
expected to reach $3 trillion by 2020.

The market is one of the fastest-growing industries attributed to the emergence of new
technologies. Rapid advancements in technology to cater to consumer demands will create
market opportunities during the forecast period.

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Seasonal factors have significance in the industry. For example, during school and colleges
intakes and admission, the business expects a high number of customers compared to low
seasons, that is when schools and institution are closed. Some of the seasonal factors
experienced in the industry include:

i. Finances- seasonal changes in consumer demand can have a significant effect on

working capital if the entrepreneur is not prepared for the off-season because he will
be spending a lot of his working capital before or during the peak season to keep up
with the demand.
ii. Staffing and labour- busy seasons may affect the levels of staffing, for example, high
demand for temporary labour.
iii. Supply chain- when vendors and suppliers have seasonal changes in their production,
if one unexpectedly runs out of raw materials during peak season, he/she could be in
for a rough time.
iv. Marketing- knowledge and understanding of the business seasonal peaks and
offseason also enable the entrepreneur to maximise on their marketing budget.

The industry also faces some trends in growth and stability whereby technological
advancement in products, growing demand for technologically integrated devices, rising
consumer disposable income and spending capacity, government policies which support the
industry, growing popularity of modern consumer electronics. There is also trends in decline
of the industry, which include: rising unemployment rates and high availability of counterfeit
material.
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1.8 Goals & Objectives

1.8.1 Objectives
The proposed business aims to achieve the following short-term goals:

i. To be the top-quality lender and market leader.

ii. To penetrate in other markets
iii. To maximize profits.
iv. iv. To minimize operational costs.
v. To use available resources usefully.
vi. To increase sales turnover.
vii. Satisfy customers need and wants.
1.8.2 Goals
i. To capture the entire electronics market by being the main supplier
and distributor of products and services.
ii. To establish other branches in other locations.

iii. To create more employment opportunities.

1.9 Entry and growth strategy

1.9.1 Entry Strategy
The business is going to penetrate and attain acceptance in the area due to the following:

i. Price adjustments.
ii. Acquiring a competitor in the market.
iii. By use of digital marketing strategies to increase brand awareness, like use of social
media or developing a website which will offer online presence. I
iv.
v. Modifying the products to specifically solve the customers problems.
v. Developing new products and services to attract new customers.

The business also intends to examine weaknesses of competitors which include:

i. Poor leadership.
ii. Unskilled workforce.
iii. Poor product quality.

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iv. Slow distribution and delivery channels.

v. Poor planning.
vi. Insufficient resources.
vii. Use of outdated technology.

1.9.2 Growth strategy

The business intends to use the following strategies in order to grow:

i. Opening multiple locations by setting up retail stores in different geographical places.

ii. Acquiring new customers after reaching the original core customers by offering
business to business services.
iii. Introduction of new products which will expand the overall customer base. iv.
Online expansion by developing a website and use of social media to market
products.
v. Creative marketing by use of print media, visual media, to advertise the brand and
create awareness. vi. Decreasing costs
vii. Acquisition of other companies and businesses that fit the product and service
distribution methods as the proposed business which present new opportunities for
growth.

The entrepreneur plans to develop a website after six months of operating. The business also
intends to penetrate the market in order to increase sales of existing products and services on
existing markets, thus increasing market share. The business also intends to develop their
market by increasing sales of existing products and services on previously unexplored
markets. Product development by launching new products on existing markets which may be
used to extend offers proposed to current customers with aim of increasing profits. The
business also intends to diversify by launching new products and services that were not
previously available on the market. The business intends to have return on investment within
the first six months of startup.
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Chapter Two
2.0 Marketing Plan
2.1 Customers
The business is located in a densely populated area which is surrounded by learning
institutions, banks, county offices, stage terminus. The population is approximated to be
around 200,000 people and the potential target customers are 80,000 people most of whom
comprise of the students and civil servants in the area. These is 40% of the population density
of the location. The environment where the business will be located has people of different
classes who will contribute positively in the growth and expansion of the business. The
following includes the majority of people who will be the customers:

i. Individual customers- these will be the youth, majority of whom are studying at the
various institutions located in the area. Most of them are aged between 18-27 years
old. There also will be people from the community who work in various institutions
who will be the target customers of the business. They include: lectures, civil
servants most of whom are aged between 30-65 years old. They are government
employees who earn monthly salaries, meaning their income is stable. Their mode of
payment will be cash, mobile money or bank transfer.
ii. Institutional customers- these include institutions like Meru University of Science
and Technology, Weru tea factory, Kenya Methodist University, Mafuko Bakery. The
business will also offer after sale services to the institutional customers and place
business personnel technicians and sales agents within the institutions. The mode of
payment will be bank transfer and cheque deposit.
iii. Commercial customer- These are customers who have to buy goods for resale. These
include retail outlet, stockist shops, kiosks and supermarkets. These customers buy in
large quantities and this register large sales volume. The group comprises of middle
age buyers, middle income earners and low-income earners both men and women,
school leavers from different educational levels, business men and women from
various religious backgrounds.
2.2 Market share
The business intends to capture a large percentage of the market share compared to the
competitors. This is because the business will offer discounts and aftersales services that
other businesses are not offering. The business intends to make a total number of 60000/= ksh
total sales in units per month during the first 3 months of operation. The main competitors
will be:
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i. Nyota Electrics
ii. Soulpoint entertainment.

Table 1: - Model of a market tabular explanation.

Before penetration in the market

Kemunja Nyota Electrics Soulpoint Ent Total
Electricals
Sales(ksh) 60,000 20,000 20,000 100,000
Market share 60% 20% 20% 100%

After penetration in the market

Kemunja Nyota Electrics Soulpoint Ent Total
Electricals
Sales(ksh) 100,000 40,000 60,000 200,000
Market share 50 20 30 100

Figure 1: - Pie chart showing distribution of the customer share in the market.

Sales

Soulpoint Entertainment;
30.00%

Kemunja Electricals;
50.00%

Nyota Electrics; 20.00%

Kemunja Electricals Nyota Electrics Soulpoint Entertainment

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2.3 Competition
The proposed business is based on electronics industry whose growth is incentive and rapid.
Therefore, many electrical shops are emerging on a daily basis due to the demand of
technological gadgets and devices. The potential competitors of the proposed business
include: -

i. Nyota electrics
ii. Soulpoint entertainment

Both competitors have penetrated the market by being in business for the past three and 5
months respectively. Both are small in size and do not offer a wide range of products and
services. Both competitors lack customer satisfaction and customer care. They also don’t
offer aftersales services to their customers. Nyota Electrics is located near the proposed
business premises, and has good return on investment but they only sell outdated products
and gadgets. Soulpoint entertainment on the other hand only sells refurbished products. Both
competitors have a medium range of assets, sales volume, market share and profit per annum
and employees. The proposed business intends to offer top notch quality products and
services that will enable it to capture the market and win its competitors.

Table 2: - Tabular explanation of competitors

KEMUNJA NYOTA SOULPOINT TOTAL

ELECTRICALS ELECTRICS ENTERTAINMENT
Assets 200,000 100,000 200,000 500,000
Sales volume 500,000 400,000 300,000 1.2M
Market share 0.5M/1.2M=42 0.4M/1.2M=33 0.3M/1.2M=25% 100%
% %
Profit p/a 100,000 80,000 60,000 240,000
Employees 4 3 2 9

Further assessment of the competitors’ businesses can be analysed and explained through
their strength and weaknesses.

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Table 3: - SWOT analysis.

Strengths Weaknesses
• Knowledge: our competitors are  Prices and volume: the major stores pushing
boxes. but we know pushing boxes can afford to sell for systems, networks,
programming less.
and data management.  Brand power: the business can’t
• Relationship selling: we get to know match the competitors full-page our customers,
one by one. advertising in the Sunday paper.
• History: the proposed business They don’t have the national brand entrepreneur
has grown up and lived name.
in the town. He has the loyalty of customers
and vendors.
Kemunja Electronics Opportunities and Threats OpportunitiesThreats
• Training: the major stores don’t  The larger price-oriented store: provide
training, but as systems when they advertise low prices in become more
complex, training is in the newspaper, the proposed
greater demand. business customers think they are
• Service: as our target market needs not getting good value.
more service, the competitors are  The computer as appliance: volume less likely
than ever to provide itbuying of computers as products in boxes. People think they
need our services less.

2.4 Methods of promotion and advertising.

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The proposed business intends to employ various methods of promotion and advertising in
order to increase sales. The various methods that will be used for promotion include:

i. Coupons- this can be redeemed for a discount or rebate when purchasing products
from the business.
ii. Point of purchase displays- is an area where the business can market and plan
promotional activities surrounding the consumer products.
iii. Product demonstration-by demonstrating the products to potential customers.

The business also intends to use advertising in various methods which include:

i. The internet (including the business website, email, social media campaigns,
etc.)
ii. Doot-to-door flyer delivery. iii. Cooperative advertising with
wholesalers, retailers, or other businesses. iv. Bus/ bench/ stage terminus
adverts.
v. Magazines.
vi. Billboards.

The total annual budget for promotion and advertising is 100,000/=ksh. Within the first six
months the business intends to use a total of 50,000/=ksh on advertising and promotional
materials. The adverts will be strategically placed in order to get return on investment which
is projected to be 300,000/= through the adverts. Most of the advertising will be done over
the internet since the world is now a global village thanks to the availability of fast internet.

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2.5 Pricing strategy

The entrepreneur of the proposed business intends to use various methods and strategies of
pricing the products and services which include: -
i. Penetration pricing- which is starting the business and starting selling products at low
prices and gradually increase them as the business gains traction.
ii. Competitive pricing- here the goal is to drive the target audience or customers away
from the competitors and towards the business. However, instead of making price
increases later on, one will continue to track what the competitors are charging and
beat them out.
iii. Premium pricing- low prices are not always the most attractive offer. Some of the
business target customers are high end and they seek quality over a good deal.
Premium pricing will enable business to build the perceived value of products or
service, straight from initial launch.
iv. Loss leader pricing (discount)- One major thing the business will look at is the
purchase of product at discounted prices. This is to encourage customer to purchase
more and the end result is great profit.
v. Psychological pricing- numbers influence customers a lot. Instead of changing
customers perceptions about a product, psychological pricing uniquely aims to
change perceptions about what the price even is in the first place. This may include:
ending prices with odd number to make a customer feel like they are spending much
lee e.g. 999/= instead of 1000/= and placing the original price next to a sale price to
show the customers how much they are saving.

The business considered the following factors when choosing a pricing strategy:

i. Competitors- the market strength of the competitors will influence whether the
business will set prices independently or whether it will follow the lead shown by
other competitors.
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ii. Costs- the entrepreneur is well informed on the costs involved with running of the
business which include fixed costs (monthly expenses that come in regardless of
sales) and direct costs (the expenses incurred by sourcing, delivering the products
and services).
iii. Positioning in the market- the business intends to be the most luxurious, high-end
and the cheapest and most affordable go-to business for products in the market thus
the ideal pricing.
iv. Profit- while the business intends to add value to the lives of others, it also considers
giving value to itself by maximising on profits in order to expand.
v. Customers- most of the target customers are driven by cheap prices, value for their
money and high-end quality products thus the pricing strategies.

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Table 4: - Prices of products and service

CATEGORY PRODUCT PRICE
Laptop  Dell XPS i7 8gb 43,000/=
RAM/ 256gb SSD
 HP Folio 9470m i7/ 36,000/=
4gb RAM/ 500gb
HDD
 HP 840 G3 i5 4gb 37,500/=
RAM/500gb HDD
 MacBook Air M1 i5/ 105,000/=
8gb RAM/ 512gb
SSD
Power Supply Units  Mercury UPS 850VA 6,500/=
 Mercury UPS
1050VA 12500/=
 APC UPS 800VA
12,000/=
Desktop computers (PC)  HP 200G4/ 22” inch 65,000/=
monitor, Core i3, 4gb
RAM, 1TB HDD
 HP 21, A.I/ 27” inch,
Corei5, 4gb ram/ 64,000/=
1TB HDD
 Dell 7420/ 22” inch/
i7/ 8gb RAM/ 1TB
HDD 79,999/=
Smartphones  iPhone 6s/ 128gb 20,000/=
 iPhone 7/ 128gb 30,000/=
 iPhone 8+/ 256gb 45,000/=

The business intends to offer discount prices on products and services, warranties on items
ranging from six month to 2 years, the company will also offer free delivery to customers
within the location, and affordable and secure delivery to faraway customers. The business
also intends to offer a wide variety of after sale services including maintenance. No credit
shall be offered in the business.
 lOMoARcPSD|31020887

2.6 Sales Tactics

The business intends to make sales through the following methods:

i. Direct selling- whereby the business makes money buy selling products directly to
customers.
ii. Sales representatives/ agents- using sales agents who market and promote the
products by creating awareness and educating people on products and services being
offered. The sales agents will be recruited after establishing the target potential
market, then building the business brand to find the agents, and writing to interested
parties inviting them for interviews so as to determine great salespeople from good
ones. Once they are selected, they will be taken through and educated about the wide
range of products being offered by the business and given basic dynamics on how to
market and make sales.
The sales agents will be motivated through the following ways:
• Setting goals for improvement of their wellbeing and aspiration to their
success.
• Focusing on purpose- as the manage it will be his job to keep the salespeople
engaged and fully supportive of the business vision and mission.
• Building trust between the team and the managers. If the team does not trust
the head, and believes that the head does not have their best interests at hear, it
will be difficult for them to feel inspired and driven by their work.
• Creating a culture of recognition by publicly rewarding the agents with
commission and recognizing them for their achievements.

2.7 Distribution strategy.

The business will offer direct selling and over the counter purchasing, where the customers
will buy over the counter, bargain and pay for the products and services offered at the cashier
desk. In a case where a customer will require delivery the main channel of distribution will be
through road by use of a pick-up. Clients who are in close proximity will get the advantage of
free delivery, while those that stay far away will get delivery at pocket-friendly prices. The
total transport cost of delivery per month will be 10,000/= which will cater for fuel and hiring
transport vehicle.

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Chapter Three
3.0 Organizational/Management Plan
This is the business intended framework for decision making and control of its operations.
The business intends to achieve this through employing different workers. Employing of
workers enhances effective services production through division of work. The proposed
business will be managed by the owner who is also responsible of formulating the rules
and regulations that will govern the firm.

3.1 Organization Structure

MANAGER24
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3.2 Key Management personnel and team

POSITION QUALIFICATION EXPERIENC DUTIES AND
E RESPONSIBILITIES
Manager Bachelors degree or Must have 1- He shall be the overall
ACCOUNTS diploma in Information year decision maker of the SALES
MANAGER SUPERVISOR MANAGER
Communication and experience in business.
Technology. the business He shall be the overall
Working knowledge of and policy formulator of the
relevant operating technological business.
systems, software and fields. Shall be responsible for
programming. Must have recruiting and dismissing
Excellent problem- experience workers.
SECURITY solving and critical from industrial He shall be responsible
DRIVER TECHNICIAN
PERSONNEL thinking skills. attachment and for carrying out
Keen attention to detail. internship. purchases.
Efficient He shall be responsible
troubleshooting for carrying out research
abilities. on business
Effective improvement.
communication skills,
including, speaking,
writing and active
listening.
Great customer service
and interpersonal skills.
Accounts manager Bachelors degree or Must have 1- Preparing annual
diploma in accounts/ year account reports.
business experience. Keeping books of
administration/ finance/ accounts.
economics. Writing receipts and
Must be a holder of filing copies for
CPA certificate. reference.
Should be registered in Depositing and
Certified Public withdrawing funds.

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Accountants
organisation.
Must be computer
literate.
Must be honest,
trustworthy and a
person of integrity.
Supervisor Should be a holder of a Should have at Ensuring that policies
degree or diploma in least 1-year formulated by the
information experience in manager are
communication and management. implemented.
technology or human Scheduling and giving
resource management. directives to the workers.
Must be computer Reporting progress and
literate. setbacks to the manager.
Should have good
public relations.
Should have effective
communication skills.
Sales manager Should have a diploma Should have at Marketing and selling
or degree in sales and least 1-year products and services.
marketing or any experience in Ensuring public
related field. sales and awareness of the
Should be computer marketing. business.
literate. Keeping inventory of
Should be proficient in sales made.
English and Swahili. Receiving and allocating
Should have effective orders from and to the
communication skills. clients.
Should have great
customer service and
interpersonal skills.
Should have good
public relations.
⁷

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 lOMoARcPSD|31020887

Should be honest and

be a person of integrity.
3.3 Other business personnel
POSITION QUALIFICATION EXPERIENCE DUTIES AND
RESPONSIBILITIE
S
Technician Should have a Should have at least To carry out
diploma in 1-year experience in preventive
information related field. maintenance on
communication and products.
technology or To carry out warranty
certificate in related issues on
computer products and
maintenance and services.
repair. To offer aftersales
Should be computer services to
literate and customers.
conversant with
computer networks.
Driver Should have a valid Should have at least Be in charge of
driving license. 5-year experience transportation and
Must be honest, on the related field. delivery of products
trustworthy and be a to the customers.
man of integrity. To liaise with both
Must be a form four sales department in
leaver with delivery of goods.
minimum grade C in
KCSE.
Security Must be trained at Should have To maintain law and
the National Youth minimum order in the business
Service. experience of 5 premises.
Should have years in security To provide 24-hour
minimum KCSE field. security at the
grade of D+. business.

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Should be honest,
responsible and
trustworthy.
3.4 Recruitment, training and promotion
Kemunja electricals intends to recruit employees based on their level of education,
experience in their respective fields. Recruitment will be done through advertisements
ranging from social media adverts, posters and fliers and through word of mouth. The
business also intends to recruit employee who have graduated from various institutions
within the business location.

3.4.1 Training
The business intends to interview and train shortlisted candidates for various positions.
Employees will be trained on the necessary skills required in the business. Employees will be
offered training through workshops, seminars and exchange programs which will elevate
skills required in running of the business.

3.4.2 Promotions
The business intends to motivate hardworking personnel in various fields. The promotion
will be based on:

i. Academic qualification- employees who posses higher education levels will be

promoted accordingly.
ii. Efficiency- the business intends to offer promotions to hardworking and efficient
employees in order to increase productivity.
iii. Work experience- employees who have a long work experience will be promoted
because they are conversant with the running of the business.
iv. Future returns and profits- the business intends to promote all employees once it has
attained high profits margin.

3.5 Renumeration, salaries and incentives

3.5.1 Renumeration
The business intends to pay employees wages and salaries according to the regulations and
terms of employment. Employees will be paid according to the type and nature of the job,
number of days worked, sales made by sales agents, and job group. This will ensure every
employee is paid fair amount to avoid discrimination among themselves. The the following
are the salaries to be paid to the employees:

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 lOMoARcPSD|31020887

i. Accounts manager will be paid 27,000/=

ii. Supervisor will be paid 31500/=
iii. Sales manager will be paid 22,000/= and will receive commission on every sale he
makes.
iv. Security personnel will receive 14500/=
v. Driver will receive monthly payment of 14,000/= and will be compensated for every
trip or delivery he makes.
vi. Technician will be paid 16,000/=

Commission will be paid to the sales manager in accordance to the number of sales made.

3.5.2 Incentives
This are rewards offered to employees that are meant to motivate them in order to increase
productivity an in carrying out their duties effectively. Some of the incentives the business
intends to offer include:

i. Gifts and rewards.

ii. Fully paid trips and vacations. iii. Public praising and motivating
employees. iv. Recommendation letters and letters of appreciation.

The employees will also receive the following benefits and allowances:

i. Free breakfast and lunch.

ii. Transport allowances to employees who commute. iii. Overtime salary
for every hour worked after close of business time.

3.6 Licenses, permits and by-laws

The proposed business will require licenses and permits to carry out its operations legally in
the county. The following documents and licenses to be acquired include:

i. Trade license from Meru county government.

ii. Operating license from Meru county government.

The business will obtain the licenses and work permits from the ministry of trade and
industry under the licensing laws of Kenya.

3.6.1 Permits
The business will obtain the required permits from the county government of Meru in order
to carry out its operations legally and without restrictions. The permits will be offered upon
 lOMoARcPSD|31020887

completion of filing a permit form that states and shows the business name, address, location
of business and the nature of business.

3.6.2 By-laws
The business intends to register its name in accordance to registration business ACT CAP
499 as Kemunja Electricals under the trade licensing ACT CAP 497 which will be obtained
at Huduma Centre or Meru county government.

The business is expected to submit 16% of its sales revenue to the Kenya Revenue Authority
in accordance to the value added tax (VAT) ACT 1989.

3.7 Other support services

The following are business support services located around the proposed business:

i. Banking services

Equity Bank-Meru branch

Po box 104, Meru

Tel: 020-845-0821

ii. Legal services

Kamundi and Associates

Po box 477, Meru

Tel: +254728739500

iii. Postal services

Meru Post office

Po box 223, Meru GPO

Chapter 4
4.0 Production/Operational Plan
4.1 Plant facilities & Equipment
Kemunja Electricals will require a premise to operate from. This premise will be situated at
Jeniko Plaza along Meru-Maua Highway. The enterprise will require offices for the manager,
accountant, supervisor, sales manager and technicians. There are other facilities and
equipment that will be required and are listed on the table below:

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Table 4.1

ITEM MODEL (QUANTITY) COST

Computer system Dell OptiPlex 3060 desktops 80,000/=
(4)
Server Dell R710 Intel Xeon E5640 24,000/=
Switch TP-LINK SF1024 3,000/=
Router TP-Link M7300 5,000/=
Telephone system Huawei Phone ETS5623 2,500/=
Furniture Office desk and chair (5) 40,000/=
Printer Kyocera FS3640 13,000/=
Electrical toolbox kit Bosch Combo kit 4,000/=

Total 171,500/=

4.1.2 Repair and Maintenance

The following maintenance measures will be taken by Kemunja Electricals in maintaining
the tools and equipment used:

i. Regular maintenance where tools and equipment will be checked for maintenance to
make sure they work effectively and to prevent tear and wear of equipment. Every tools
and equipment shall be inspected and checked thoroughly on a daily basis. ii.
Corrective maintenance whereby the tools and equipment shall be attended to when a
need arises in order to correct the prevailing situation, for example, sharpening of blunt
parts, greasing moving parts, blowing and wiping parts to remove dust that maybe within
inside of equipment.

The following maintenance practises will be done because of the following reasons:

i. To increase the efficiency of the tools or equipment.

ii. To increase and lengthen the durability of the tools and equipment.
iii. To increase accuracy of the tools while carrying out projects like opening up the
tiny screws of the internal components of a laptop while repairing. iv. To reduce
the cost taken while purchasing new tools and equipment.
v. To enhance and improve safety while working with the tools.
 lOMoARcPSD|31020887

4.1.3 Office Layout

The proposed business intends to have four offices and a workshop for the staff members.
There shall be offices for the manager, accountant, supervisor, sales manager and a workshop
for the technical staff. There shall also be a front office that shall act as a shop and reception
of customers. There shall also be a store to store tools, gadgets and equipment. The following
diagram illustrates how the office layout shall look like:

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4.1.3 Plans for future Expansion

The proposed business intends to expand its operation in the nearly future through the
following ways:

i. By adding a wide range and selection of electronic gadgets and equipment that meets
the needs of all classes of consumers from the low-end to the high-end gadgets.
ii. By offering more better and professional services and after services to the customers
and consumers.
iii. By adding additional retail stores all over the country and becoming an electronic
franchise company in the country.

4.2 Production Strategy

4.2.1 Production Design and Development
Kemunja Electricals shall use production techniques to efficiently produce quality products
and services to all consumers. It will then estimate distribution cost putting in mind good
customer care services and all attributes preferred of the products by the customer. The
business shall follow the criteria as shown below:

i. Determining the product market within which a market research will be

conducted.
ii. Determine the importance of the product in the area. iii. Presenting those
attributes in a configuration perceived by the customers.
iv. Developing a model relating to the customer’s preferences and tastes. This
development will be done by different personnel in different hours using different
equipment in order to suit the market.

4.2.2 Monthly Material Cost & Requirement

MATERIALS COST SUPPLIER

Insulting tape 300/= Ledai suppliers

Printing papers 500/= Sifa ventures

Printing ink 1,000/= Obuong limited

Anti static gloves 2,000/= Kali enterprises

Hard disks 3,500/= Sabah limited

Lubricants (WD-40) 500/= Shell products

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4.2.3 Technology
Since the proposed business will be a start-up, it intends to use various methods of
technology in outsourcing and offering quality product to the customers. The most used
technology will be the internet which will be used to market the business and the products
and running online promotions and campaigns online. The good thing with the internet is that
it is accessible using most gadgets and devices that people use and have nowadays.

4..2.4 Number of Direct and Indirect workers

The proposed business intends to have a number of workers who will be directly associated
or involved in the business. The table below shows the number of workers involved in the
business:
Manager 1 Direct

Accountant 1 Direct

Supervisor 1 Direct

Sales Manager 1 Direct

Security Personnel 1 Direct

Driver 1 Direct

Technician 2 Direct

4.2.5 Total Labour Cost per Month

The table below shows the total cost of labour every month:
JOB TITLE NUMBER SALARY

Manager 1 38,000/=

Supervisor 1 30,000/=

Accountants 1 28,000/=

Sales Manager 1 25,000/=

Security 1 13,500/=

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 lOMoARcPSD|31020887

Driver 1 15,000/=

Technician 2 23,500/=

TOTAL 173,000/=

4.2.6 List of Preliminary Production Cost

The table below shows the list of preliminary production cost of Kemunja Electricals:

PARTICULARS COST

Maintenance and repair 12,000/=

Paint 4,000/=

Licenses 15,000/=

Poster adverts 5,000/=

Stationery 1,000/=

TOTAL 37,500/=
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4.2.7 Total Production Cost per Month

The table below shows the total monthly cost of production:
Repair and maintenance 5,000/=

Insurance 7,500/=

Water bill 1,000/=

Rent 15,000/=

Advertisements 5,000/=

Postal services 300/=

Electricity bill 3,000/=

Transport 1,500/=

Internet service provider 2,500/=

Stationery 1,000/=

Telephone bills 1,000/=

Miscellaneous 2,000/=

TOTAL 34,800/=

4.3 Production Process

Kemunja electricals is a business that will deal with the sale and repair of all electronic
gadgets and devices like smartphones, laptops, computers etc. It also intends to sell electrical
equipment, materials and tools. The following steps will be used in the production process:

Step 1: Purchase of stock

This is the process of acquiring and purchasing the products that will be sold and the tools
needed to repair and maintain the gadgets in the business.

Step 2: Transportation of the purchased products to the business premise.

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Step 3: Offloading the goods from the trucks and storing in the store and arranging products
in the shelves.

Step 4: Welcoming customers warmly in the business premises for them to make a purchase
of their choice.

Step 5: Attending to the customers needs by offering them the services they require.

Step 6: Payment and legal transactions will be made if the customer is satisfied with the
product they want to buy or the services they have been offered. After payment has been
done, they will be issued with a receipt with a receipt indicating name of business and name
of customer, the item bought, and date of purchase and it will be stamped.

Step 7: The customer leaves at his/her own will.

Step 8: Replacing and purchasing other items.

When offering the services of repair and maintenance the following steps will be taken:

Step 1: welcoming the customer warmly

Step 2: to check for faults and diagnosing the gadget or equipment brought for servicing and
then advise accordingly.

Step 3: Initiate payment over the work and agree on the mode of payment.

Step 4: the customer to collect his/her item in good and working condition.
4.3.1 Factors affecting Operations.
Internal factors

Absenteeism- this is the tendency of employees missing and skipping work with no valid
reasons and without permission. This leads to delayed production.

Equipment breakdown- when equipment and machine breakdown there will be slow or no
production at all, thus increasing loss and decreasing profit.

Employees resignation- employees may decide to resign and this may lead to delayed
production and time wastage due to the time taken outsourcing and recruiting new
employees.
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External factors

Power failure- power rationing and black outs affect normal business operations since most
equipment will be reliant on electricity.

Competition- stiff competition is expected from other businesses.

Population- total population also affects the business operations, if there is no flow of people
in the area, the business will incur less sales.

Weather conditions- poor weather will also affect normal business operation.

4.4 Regulations affecting the Business

4.4.1 Health Regulations
The health provision act provides that all businesses environment should be clean and also all
workers should be clean and should observe hygienic measures.

4.4.2 Trademarks, patterns & Copyrights

it is required that all businesses intending to play music and/or show or display content to the
masses to have a copyright licenses from registered and relevant organisation.

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4.4.3 Safety Regulations

It is required that workers work under safe conditions and that all of them should be insured
against risk at all times.

4.4.4 Environmental Regulations

Kemunja electricals is committed to maintaining and conserving the environment. The
premises and its surrounding will be kept tidy and clean at all times. There will be enough
garbage bins for trash disposals to avoid polluting the environment. The business will adhere
to the environmental regulations given by the government.
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Chapter Five
5.0 Financial Plan
This involves determining the course of action to achieve desired results. It ensures economic
operations, improves motivation, and facilitates control by reducing uncertainties.

5.1 Pre-Operational Cost

The proposed business intends to incur the following costs before and at the start of business.
ITEMS COST

Rent 15,000/=
Insurance 7,500/=

License & permits 15,000/=

Electricity bills 3,000/=

Water bills 1,000/=

Furniture & fittings 40,000/=

Advertisements 5,000/=

Stationery 1,000/=

Internet service provider 2,500/=

Telephone bills 1,000/=

Stock 203,300/=

TOTAL 293,800/=

The costs above are expected to increase or reduce in specific span of time as the business
operation is ongoing.

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5.2 Estimated Working Capital

ITEMS YEAR ONE YEAR TWO YEAR THREE

Current assets Kshs Kshs Kshs

Opening stock 203,300 230,000 250,000

Cash at bank 300,000 850,000 1,500,000

Cash at hand 200,000 350,000 700,000

Debtors 50,000 60,000 70,000

Closing stock 100,000 120,000 130,000

Total 853,300 1,610,000 2,650,000

Current Liabilities

Current liabilities Kshs Kshs Kshs

Creditors 50,000 20,000 40,000

Rent 15,000 15,000 15,000

Insurance 7,500 7,500 7,500

Total 72,500 42,500 62,500

Working capital = Current Assets – Current Liabilities

Working capital for year 1 = 853,300 – 72,500

= 780,800/=

Working capital for year 2 = 1,610,000 – 42,500

=1,567,500/=

Working capital for year 3 = 2,650,000 – 62,500

2,587,500/=
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5.3 Projected Cashflow Statements
5.3.1 Monthly Proforma Cashflow Statement

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5.3.2 Proforma Cashflow Statement for the first 3 Years

PARTICULARS 2021 2022 2023

Opening stock 4,000,000 5,500,039 7,685,935

Sales 6,320,800 7,099,289 9,209,504

Cash inflow 4,602,719 5,009,000 5,638,292

Cash outflow 3,581,663 3,900,014 4,563,808

Purchases 294,000 365,000 406,092

Rent 180,000 180,000 180,000

Salaries 2,076,000 2,076,000 2,076,000

Net cash 1,404,830 1,854,454 2,298,590

5.4 Proforma income statement

5.4.1 Proforma income statement for the first 3 Years
PARTICULARS 2021 2022 2023

Sales 6,320,800 6,874,500 7,508,000

Purchases 4,940,000 4,066,980 5,627,014

Gross 1,380,800 2,807,520 1,880,986

PARTICULARS 2021 2022 2023

Expenses 900,000 2,305,000 1,308,109

Net profit 480,800 502,520 572,877

45

)
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5.4.2 Proforma income statement for every month

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5.5 Proforma Balance Sheet

5.6 Break Even Point

Break even provides an insight to the financial potential for the start-up of a business. it is
a useful technique for determining how many units must be sold or how many sales must
be achieved to break even. It is the volume of sales where the venture either makes a profit
or loss.

VARIABLE COST YEAR 1

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Telephone bills 12,000

Advertisements 15,950
Stationery 9,200
Repair and maintenance 50,000
Postage 9,000
Purchases 294,000
Wages and salaries 2,076,000
Miscellaneous 50,000
TOTAL 2,466,150

i. Contribution margin for the first year

Contribution = total sales – variable cost
6,320,800 – 2,466,150
= 3,854,650 ii. Percentage
contribution margin
Contribution margin * 100 / total sales
3,854,650 * 100 / 6,320,800
= 60.98% iii. Break even point = fixed cost / percentage
contribution margin

FIXED COSTS
Rent 180,000
Licenses and permits 195,000
Salary 2,076,000
Telephone bills 12,000
Electricity 36,000
TOTAL 2,499,000

2,499,000 * 60.98%

= 4,098,064

5.7 Profitability Ratios

Gross profit ratio 2021 2022 2023
= gross profit x 100 100,000 x 100 200,000 x 100 000,500 x 100
sales 66,320,800
, 88,640,000
, 10 ,
10,440,000

96.5% 94.9% 95.79%

Return on equity 404,0 0 x 100 ,0 3,000 x 100 09 00 x 100
2, 7 3 4 5, 0 4,
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46
= Net profit after tax x 100 1,000,000 900,000 800,000
owners’ equity
240.4% 338.1% 636.3%
Return on interest 2,552,600 + 148,530 3,239,000 + 5,410,600 +
= net profit before tax + x 100 196,000 x 100 00 x 100
interest x 100 1,068,800 1,729,460 32,402,601
20 ,2

capital employed
252.7% 198.6% 238.52%

5.8 Desired Financing

Pre-operational cost 293,800
Working capital 853,300
TOTAL 1,147,100

5.9 Proposed Capitalisation

1,000,000
Bank loan 200,000
Loans from friends 100,000
TOTAL 1,300,000
Owners contribution