BUSINESS PLAN

NAME : COLLO’S SOFTWARE AND HARDWARE INSTALLATION

CENTRE : RIFT VALLEY TECHNICAL TRAINING INSTITUTE

CENTER NUMBER : 534201

INDEX NUMBER :12775S22

PRESENTER : COLLINS KIPNGETICH

PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULFILMENT OF THE AWARD OF

DIPLOMA IN INFORMATION COMMUNICATION

TECHNOLOGY

SUBJECT CODE :

SUPERVISOR : MADAM MELFA

SERIES : JULY/AUGUST

1
 DECLARATION
I hereby declare that the contents of this business plan are my own work and that no part of it has
been captured from elsewhere. This work is presented to the Kenya national examination council
as part of the requirement
Name of the student: ………………………………
Signature :
Date :

This work has been presented with the approval of my project supervisor
Supervisor : …………………………………………..
Signature :
Date :

i
 DEDICATION
I would like to dedicate this business plan to my entire family for their entireness efforts in
financing and even moral support in marking sure that this business plan is a success

ii
 ACKNOWLEDGEMENT
I would like to acknowledge the immense support I have received during writing of this project.
My supervisor for the committed guidance from the start to the end of the project. I also
acknowledge my loving mother for financial support, also my friends for encouraging me
throughout my research.

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Contents
DECLARATION...............................................................................................................................................i
DEDICATION.................................................................................................................................................ii
ACKNOWLEDGEMENT.................................................................................................................................iii
Executive summary....................................................................................................................................vii
1.0 Business description.............................................................................................................................vii
2.0 MARKETING PLAN................................................................................................................................vii
3.0 Operational plan and production.........................................................................................................vii
4.0 Organizational plan..............................................................................................................................vii
5.0 Financial plan......................................................................................................................................viii
CHAPTER ONE..............................................................................................................................................1
1.0 BUSINESS DESCRIPTION.........................................................................................................................1
1.1 NAME OF THE BUSINESS........................................................................................................................1
1.2 BUSINESS LOCATION..............................................................................................................................1
1.3 BUSINESS OWNERSHIP..........................................................................................................................2
1.4 FORM OF OWNERSHIP...........................................................................................................................2
1.7 INDUSTRY..............................................................................................................................................2
1.8 JUSTIFICATION OF OPPORTUNITY..........................................................................................................2
1.9 BUSINESS OBJECTIVES AND GOALS........................................................................................................2
LONG TERM GOALS.....................................................................................................................................2
SHORT TERM GOALS....................................................................................................................................2
ENTRY AND GROWTH STRATEGY.................................................................................................................3
GROWTH STRATEGY....................................................................................................................................3
CHAPTER TWO.............................................................................................................................................4
MARKETING PLAN.......................................................................................................................................4
2.0 POTENTIAL CUSTOMERS........................................................................................................................4
2.1 COMPETITION........................................................................................................................................4
2.2 MARKETING.......................................................................................................................................4
2.3 SALES TACTICS.......................................................................................................................................5
2.4 ADVERTISEMENT...................................................................................................................................5

iv
PROMOTION................................................................................................................................................6
2.5 PRICING STRATEGY................................................................................................................................6
2.6 DISTRIBUTION STRATEGY......................................................................................................................6
CHAPTER THREE..........................................................................................................................................7
3.0 ORGANIZATIONAL MANAGEMENT PLAN...............................................................................................7
3.1 MANAGEMENT TEAM............................................................................................................................7
3.2 OTHER PERSONNEL................................................................................................................................8
3.3 RECRUITMENT, TRAINING AND PROMOTION OF PERSONNEL..............................................................8
RECRUITMENT.............................................................................................................................................8
TRAINING.....................................................................................................................................................8
PROMOTION................................................................................................................................................8
3.4 RENUMERATION AND INCENTIVE FOR PERSONNEL..............................................................................9
RENUMERATION..........................................................................................................................................9
3.5 INCENTIVES............................................................................................................................................9
3.6 LEGAL REQUIREMENT............................................................................................................................9
CHAPTER FOUR..........................................................................................................................................10
4.0 PRODUCTION AND CO-OPERATION PLAN INTRODUCTION.................................................................10
4.1 FACILITIES............................................................................................................................................10
EQUIPMENT...............................................................................................................................................10
4.2 MAINTAINANCE AND REPAIR..............................................................................................................10
4.3 PREMISE LAYOUT.................................................................................................................................11
4.4 PRODUCTION AND OPERATIONAL STRATEGY......................................................................................11
PRODUCTION DEVELOPMENT...................................................................................................................11
4.5 MONTHLY MATERIAL REQUIREMENT..................................................................................................11
4.6 MONTHLY LABOUR REQUIREMENTS...................................................................................................11
4.7 MONTHLY PRODUCTION/OPERATION COST........................................................................................12
4.8 PRODUCTION PROCESS........................................................................................................................13
4.9 RELEVANT REGULATION......................................................................................................................13
CHAPTER FIVE............................................................................................................................................14
5.0 FINANCIAL PLAN..................................................................................................................................14
5.1 PRE-OPERATIONAL COST.....................................................................................................................14
5.2 WORKING CAPITAL..............................................................................................................................15

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5.3 PROFORMA ONCOME STATEMENT.....................................................................................................15
5.4 PROFORMA BALANCE SHEET...............................................................................................................16
TOTAL SALES FOR THE FIRST YEAR............................................................................................18
CONTRIBUTION MARGIN....................................................................................................................18
TOTAL SALES FOR THE SECOND YEAR.......................................................................................19
CONTRIBUTION MARGIN....................................................................................................................19
BREAK-EVEN POINT.............................................................................................................................20
TOTAL SALES FOR THE THIRD YEAR...........................................................................................20
5.7 DESIRED FINANCING............................................................................................................................21
5.8 PROPOSED CAPITALIZATION................................................................................................................22

vi
 Executive summary

1.0 Business description

Under the heading of the proposed business will feature the name of the proposed business and
explain why I choose such a name. Other things to be discussed in this heading include the
location and address of the business, form of ownership, products offered and the type of the
business. It will also discuss the industry under which the proposed business will fall and entry
and growth strategies.

The business name and address will be:

COLLO’S SOFTWARE AND HARDWARE INSTALLATION

P.O BOX 78-30100

ELDORET, KENYA.

TEL:0745328967

2.0 MARKETING PLAN

Marketing plan is going to be featured in chapter three of this business plan. Subheadings of
potential customer’s market share of the proposed business competitors and printing strategy are
to be discussed in this heading among others.

3.0 Operational plan and production

In this chapter, premises layout will be discussed, different types of facilities and equipment will
be required for operation of the business when it begins to operate.

In here subheadings like repair and maintenance of the equipment will be production strategy
and design production process and regulation affecting the operation

4.0 Organizational plan

This chapter will deal with organizational structure of proposed business. It will discuss how the
authority and its objectives. It will also feature the management personnel together with all their
qualification, duties and responsibilities. Other organizational structure will include recruitment,
promotion and training among others.

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5.0 Financial plan
Financial plan will be featured where it will deal with the pre-operational cost, capital, cash

statement break even analysis and the desired financing together with the proposed

capitalization. This chapter will highlight the source of finance and discuss how it is going to be

utilized in order to reach the proposed business most anticipated objectives.

Owners’ contribution= 700,000

Bank loan= 80,000

Friends and family contributions= 500,000

viii
 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

The business Will be laid down after going through all the legal formation i.e. Uasin Gishu
County to facilitate the business permits. COLLO’S SOFTWARE AND HARDWARE
INSTALLATION will be able to provide the internet browsing, computer learning and data base
management.

1.1 NAME OF THE BUSINESS

The business name will be registered as Collo’s software and hardware installation The name
was chosen because it is easy to pronounce, it also describes the sur-name of the proprietor and
also goes hand in hand with business it offers as it is named

1.2 BUSINESS LOCATION

Collo’s software and hardware installation will be located near Telkom house near Eldoret
Technical Training Institute (ETTI)
The area of business venture is accessible. The building which the business is located will also
have other necessary activities like bookshop facilities in which a student will be able to buy
books related to computer.
The business will be conducted through the following address;
COLLO’S SOFTWARE AND HARDWARE INSTALLATION,
P.O BOX. 78,
ELDORET.
Mobile number: 0745328967
Email:

1
1.3 BUSINESS OWNERSHIP
The proposed business will be a sole proprietorship. This kind of ownership was chosen after
considering its advantages which include enjoyment of profit alone and it’s simple to start.

1.4 FORM OF OWNERSHIP

The business will be owned by sole proprietor by name COLLINS, who will be considered in the
operation of the business. This owner will be able to have privacy of the business success since
the owner will use the business skills which she obtained from Rift Valley Institute College.

1.7 INDUSTRY
The business fall under service industry, it will enjoy the privilege of the high demand products
thus it will increase the volume of sales.

1.8 JUSTIFICATION OF OPPORTUNITY

The business was chosen because there is high demand from the people who want to learn and
access the internet within the town and the owner will use entrepreneurial skills that he obtained
during the course period to achieve its goals.

1.9 BUSINESS OBJECTIVES AND GOALS

This business will have to achieve both long term and short-term goals.

LONG TERM GOALS

The business is aiming at establishment of supportive services to the industry like bookshop and
the creation of employment to skilled personnel.

SHORT TERM GOALS

The business is aiming at putting into practice the acquired knowledge and skills to generate
income to both employees and employer through the provision of facilities.

2
ENTRY AND GROWTH STRATEGY
The sponsor intends to gain entry into the market through the county.
The business will grow because it will be among the businesses that offers the cheapest services.

GROWTH STRATEGY
The business will be able to grow because the profit earned from its facilities e.g., more
computer offering many times of internet services and expanding the business through the
opening or establishing many cyber cafes within the town.

3
 CHAPTER TWO

MARKETING PLAN

2.0 POTENTIAL CUSTOMERS

The proposed business intends to target mostly the students, men and women who are interested
in accessing the internet and also learning in the locality.
The customers are to be ready to use their money on, browsing and printing.
Since most of the customers are students in which the business will be cheaper for them to pay.
The customers will be focusing on the performance of the products and services.

2.1 COMPETITION
The business will expect to have the main competitor that is smart cyber cafe which is located
along Oloo Street at 64 plaza which is a well-known building so it is easy to be spotted. Smart
cyber cafe has developed because of the products which they offer e.g. cheap internet books,
magazine, large number of computers which accommodate large number of customers and high-
quality printing.

2.2 MARKETING

The business intends to attract three quarter of people in Eldoret town, the town has a total
population of 20,000 people but since there are a number of same businesses which have more
customers when shared among its competitors will be as follows.
Number of businesses. Number of customers.
Smart cyber cafe. 15,000.
Pizza cyber cafe. 3,000.
Collo’s software and hardware installation 20,000.

4
 population

collo's software and hardware installation

population
pizza cyber

smart cyber

0 5000 10000 15000 20000 25000

2.3 SALES TACTICS

The selling methods to be employed is that I will be a director so that the customers will be able
to ask concerning the products or services, also will be in charge of money. the other methods
will be indirect in which the customers will require for services or products in exchange for
another services or products in a greed situation. There will be a possibility of utilizing the
distributors and agencies because the services will attract many customers hence the distributors
and agencies will be able to supply more products to meet customer needs.
The business will have to cover the whole area of Eldoret town and its estates because of the
expansion of the business.

2.4 ADVERTISEMENT
The business will advertise its services and products using posters on various place in town,
word of mouth to persuade customers to visit the cyber cafe media like radio, television. The
mention advertisement will be effective to the business

5
PROMOTION
The business intends to promote its frequent customers by offering a free internet browsing and
computer learning on Saturdays and also the customers will be given. T shafts and bags with the
name of the business written on it.

2.5 PRICING STRATEGY

The price for the services will be determined by the market force by increasing and lowering the
prices will cause a social impact on customers, by lowering the prices the business will be able to
meet its objectives as required.
The potential arid frequently customers will get discount according to their needs e.g., browsing
which will be lowered by 8% of the normal and the computer learning will be lowered by 5%.

2.6 DISTRIBUTION STRATEGY

Distribution of products will mainly be done through the direct method where this will be
cheaper ways of getting products to the people living near to the business.
The business will mostly use the road as a means of transport, costs will be expected to be high
per month when the business will have expanded because there will be a high need of
transporting more products. The problems that may be anticipated in distribution may include
climatic changes e.g., rainy seasons and high transportation cost which arises through business
buying the most expensive vehicle and hiring of qualified drivers in which it will reduce the
anticipated problems.

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 CHAPTER THREE

3.0 ORGANIZATIONAL MANAGEMENT PLAN

Organizational structure
The business will use the method of vertical chart structure in which the chain of
Command will also flow through the designed chart.
The following is the structure of the organization at the beginning of the business.

Manager

Secretary

Cashier

Watchmen

General Manager

Assistant manager

Accountant

3.1 MANAGEMENT TEAM

The business will include the main personnel who will ensure that the business runs towards
achieving its goals.
The manager will be Collins who is also the owner of business who pursued
certificate in information technology, he will ensure that he assigns duties on the workers as well
as planning and making the final decisions and also, he will be responsible for payment of
salaries and wages to the workers.
The assistant manager will be keeping in computer and digital electronics repair and assist in
assigning duties to workers concerning the new technology.

7
3.2 OTHER PERSONNEL
The business will comprise of three other personnel who will be employed according to their
qualifications.
The business should have a supervisor who should have Diploma in business management whose
duties will only comprise of supervision and also act as a supplier of information to the farm.
The other personnel will be a customer operator who should have a Diploma in information
communication technology and his /her duties will advertise the computer operators, responsible
for general equipment layout within the computer room e.g., the computer room is tidy. The
other person will be a cashier should have a Diploma in accounting and should have an
experience of two years in related field. His /her duties will be to make a financial record and
plan for the firm and also make records of the money gained as per day.

3.3 RECRUITMENT, TRAINING AND PROMOTION OF PERSONNEL.

The proposed business will tend to use porters in advertisement for the application and
recruitment of the qualified personnel; these qualified personnel will be promoted.

RECRUITMENT
The general manager and the assistant manager will administer all recruitment process which
includes advertising, short listing and replacement of employees according to the required
qualification, recruitment will be continuous process depending on the expansion of business
labour turn over and dismissal.

TRAINING
The employees will be trained and allowed to attend seminars according to the area of work they
partake. This will make them to do their jobs effectively.

PROMOTION
The proposed business will promote employees on merits and activities of trained employees and
also according to seniority to achieve the discipline and targeted goals of the business.

8
3.4 RENUMERATION AND INCENTIVE FOR PERSONNEL
The business will ensure employees will be highly valued by provision of fair wages and salaries
according to their positions.

RENUMERATION
The business will ensure that the administration will be fair in payment and increased according
to the expansion of the business.

3.5 INCENTIVES
The business will provide transport to the workers, loan and lunch provision which are not
deducted from their salary, there will also be leaves under each department

3.6 LEGAL REQUIREMENT

The business will be licensed by County government of Uasin Gishu which will be paid after
every six months and the permits be issued for the business often obtains the required legal
formalities. The cost of the license will be Kshs 6,000 which is five hundred shillings per month.
The local taxes will be paid according to the services and products on their prices; the other
requirement is that there will be no more than unlicensed business to be conducted.
Other supportive services
The business is to acquire its banking services at Eco bank at Eldoret branch.
ECO- BANK
P.O BOX 1925, ELDELDORET

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 CHAPTER FOUR

4.0 PRODUCTION AND CO-OPERATION PLAN INTRODUCTION

The business will lay down its strategies concerned customers, the production and services will
be unique and of high quality.
The proprietor will be both creative and innovative when production or giving services.

4.1 FACILITIES
Facilities that will be required by the business to achieve its objectives will be electricity which
is necessary for the computers and provision of light, the store room will be needed for storing
the products e.g., the typing material and other facilities.

EQUIPMENT
The business purchases the required equipment for the efficient running of the business.

4.2 MAINTAINANCE AND REPAIR

The manager of the business will make sure that the business is running smoothly through the
repairing of the equipment’s which will be done after 4 months e.g. the chairs and tables will be
repaired by a carpenter from Dida carpentry shop which will cost Kshs 500. The computer will
be required with its spares being bought from Safaricom towers will cost Kshs 1,500 after every
route months.

10
4.3 PREMISE LAYOUT
The premise will consist of the reception, counter for cashier, working room, washroom, store
room and manager office and the security

4.4 PRODUCTION AND OPERATIONAL STRATEGY

The proposed business will minimize its prices on services and produce offering to its customers
to adapt to the other competitors in the market.

PRODUCTION DEVELOPMENT
The intended business will sell high quality products and services at favorable prices to increase
diversity and widen the revenue base. With time the business will expand to gain stability and
become more complex in its operations with the rising technology which will speed up the
operations thus it increasing the quality of goods and services.

4.5 MONTHLY MATERIAL REQUIREMENT

The proposed business will be able to purchase the monthly material which will enable the
smooth running of business. The table below shows the material needed.

4.6 MONTHLY LABOUR REQUIREMENTS

The proposed business will have both direct and indirect labour for the flow of the
Business

11
4.7 MONTHLY PRODUCTION/OPERATION COST
The business will have to some up all the material requirements, monthly labour cost and the
monthly overheads which will show out all the expenses incurred in the business. The overhead
will include the electricity bill, rent, advertisements, water bills and telephone. Items. Total
Cost in Kshs
Electricity. 4,000
Rent. 3,200
Advertisements. 800
Water bill. 200
Telephone. 1,000
Total. 9,200
Particulars. Amount

12
Monthly material. 19,000
Monthly labour cost. 49,000
Monthly overhead cost. 9,200
Total. 77,200

4.8 PRODUCTION PROCESS

The business will start by buying the material and the spare parts of computers which will be
stored in the store room. After the customer has been served then he/she will be issued with a
receipt which will show the amount paid for a particular item. For the business to ensure that it
will produce the services and products of high quality then the manager will ensure that the
qualified personnel is hired with time management.

4.9 RELEVANT REGULATION

The regulation affecting production operation include the health regulation which is under
computer operation e.g. shock from the electronics in which operations will be given rules in
which will avoid them from shock and radiations.
The second regulation is the labour laws; the act provides that an employee should be confirmed
permanent.
In case of any overtime work, employee will then be paid for it.
The third regulation is the environment in which the business is running on e.g. the operations
room should be clean for the personnel and workers safety from disease. If the business
environment is not conducive then the business will be closed down,

13
 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COST

DETAILS AMOUNT

Registration 8.,000

Advertising 1,000

Telephone 5,000

Rent 1,000

Electricity 500

Water 150

Banking 350

Insurance 3,000

Postal services 1,000

TOTAL 32,000

14
5.2 WORKING CAPITAL

ITEM FIRST YEAR SECOND YEAR THIRD YEAR

Bank loan 50,000 50,000 50,000

Personal saving 300,000 400,000 60,000

Family contribution 200,000 130,000 100,000

Stock of raw materials 5650 1,500 8000

Creditors 10,000 12,000 11000

TOTAL 565650 609,500 169,000

5.3 PROFORMA ONCOME STATEMENT

ITEM AMOUNT(KSH) AMOUNT(KSH) AMOUNT(KSH)

YEAR ONE YEAR TWO YEAR THREE

Sales 46,814,850 61,362,300 32,820,000

Cost of goods sold 1,480,000 9,600,000 8,910,000

Gross profit 45334850 51762300 23910000

EXPENSE

Rent 81,500 88,000 95,000

Wages/Salaries 1,388,000 12,900,000 12,900,000

Electricity 5,250 4,250 4,250

15
Advertising 84,000 43,000 42,000

Water 2,350 1,300 1,300

License 2,000 2,000 2,000

Insurance 1,000 2,000 5,000

Postage 9,400 4,300 4,300

Telephone 48,500 9,500 9,500

Banking 3,550 1,950 1,950

Loan repayment 80,000 50,000 50,000

Miscellaneous 32,000 25,000 16,500

TOTAL EXPENSE 1,149,550 13131300 13,131,800

PROFIT BEFORE 44185300 38631000 10778200

TAX

TAX PROVISION 20*31,585,300= 20*44,631,000= 20*10,118200=

100 100 100

8837060 8,926,200 2155640

NET PROFIT AFTER 30,068,240 35,104,800 8,622,560

TAX

5.4 PROFORMA BALANCE SHEET

ITEM AMOUNT(KSH) AMOUNT(KSH) AMOUNT(KSH)

YEAR ONE YEAR TWO YEAR THREE

ASSETS

CURRENT ASSETS

Cash at hand 300,000 400,000 600,000

Cash at bank 50,000 50,000 8,000

16
Debtors 10,000 12,000 11,000

Raw materials 5,650 1,500 8,000

TOTAL CURRENT 365650 463500 627000

ASSETS

FIXED ASSETS

Machinery Equipment 186,000 186,000 186,000

Furniture 16,100 16,100 16,100

Land 250,000 250,000 250,000

TOTAL FIXED 452,100 452,100 452,100

ASSETS

TOTAL ASSETS 818,350 922,200 1,019,100

LIABILITIES

CURRENT
LIABILITIES

Creditors 10,000 12,000 11,000

Bank overdraft 20,000 18,000 15000

TOTAL CURRENT 30,000 30,000 26,000

LIABILITIES

LONG TERM
LIABILITIES

Bank loan 50,000 50,000 50,000

Capital employee 300,000 400,000 600,000

TOTAL LONG 350,000 450,000 650,000

TERM
LIABILITIES

TOTAL 380,000 480,000 616,000

LIABILITIES

17
5.5 BREAK-EVEN POINT

TOTAL SALES FOR THE FIRST YEAR

=46,814,850

VARIABLE COST AMOUNT(KSH)

Telephone 48,500

Electricity 5,250

Advertising 84,000

Postage 9,400

Water 2,350

Loan repayment 80,000

Miscellaneous 32,000

TOTAL 261500

CONTRIBUTION MARGIN

=1,218,500

FIXED COST AMOUNT(KSH)

Rent 81,500

Wages/Salaries 1,388,000

Insurance 1,000

Banking 3,550

Registration 8,000

TOTAL 1482050

18
BREAK- EVEN POINT

=4,981,666.661

TOTAL SALES FOR THE SECOND YEAR

=61,362,600

VARIABLE COST AMOUNT(KSH)

Telephone 9,500

Electricity 4,250

Advertising 43,000

Postage 4,300

Water 1,300

Loan repayment 50,000

Miscellaneous 25,000

TOTAL 112350

CONTRIBUTION MARGIN

=9,481,650

FIXED COST AMOUNT(KSH)

Rent 88,000

Wages/Salaries 12,900,000

Insurance 2,000

Banking 1,950

Registration 8,000

TOTAL 12999950

19
BREAK-EVEN POINT

=1,299,995,000

TOTAL SALES FOR THE THIRD YEAR

=32,820,000

VARIABLE COST AMOUNT(KSH)

Telephone 9,500

Electricity 4,250

Advertising 42,000

Postage 43,000

Water 1,300

Loan repayment 50,000

Miscellaneous 16,500

TOTAL 166550

CONTRIBUTION MARGIN

=8,143,450

FIXED COST AMOUNT(KSH)

Rent 95,000

Wages/Salaries 12,900,000

Insurance 5,000

Banking 1,950

Registration 8,000

TOTAL 13009950

20
BREAK-EVEN POINT

=13,215,459.18

5.6 PROFITABILITY RATIOS

RATIO YEAR ONE YEAR TWO YEAR THREE

Gross profit ratio 39,334,850*100 51,162,300*100 23,910,000*100

1,480,000 9,600,000 8,910,000

=525.861 =601.690 =268.350

Return on Equity 30,068,240*100 35,104,800*100 8,622,560*100

300,000 400,000 600,000

=10,022.141 =8,962.2 =1,431.093

Return on investment 30,068,240*100 35,104,800*100 8,622,560*100

565,650 565,650 565,650

=5,315.691 =6,312.111 =1,524.363

5.7 DESIRED FINANCING

ITEM AMOUNT(KSH)

Pre-operational cost 32,000

Working capital 565,650

Fixed assets 4,981,666.661

TOTAL 5579316.661

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5.8 PROPOSED CAPITALIZATION
ITEM AMOUNT(KSH)

Owners’ contribution 300,000

Bank loan 50,000

Friends and Family contribution 200,000

TOTAL 550000

22