TABLE OF CONTENTS CHAPTER ONE BUSINESS DESCRIPTION……………………………………………………………….

1.1 Business description

The business will be formed as retail stores dealing in furniture and fabrics. The name of thebusiness will
be Philo Elegace furniture and fabrics operated in Rongai town.

1.2 Business name

The business will be called Philo Elegance furniture and fabrics. The name of the businessimplies the
owner’s intention to provide quality products to its customers with the first initials drawn from the
name of the owner. The name will be easy to remember since the owner is well known therefore it will
be easy to master by customers.

1.3 Business location and address

The business will be located at Ongata/Rongai township plot no L/R 42130 house no 7. Thelocation is
preferred since the area is densely populated and it is also a developing town. Thetown is cosmopolitan
with people of diverse economic status. The address of the businesswill be as follows;

Philo Elegance furniture and fabrics,

P O Box 2482-00200, Nairobi Email: pelegance@yahoo.com

Tel no. 0772667829/0706222677

The following sketch map will be of help to customers from outside Rongai town who wishto locate our
business premises

1.4 Form of business ownership

Philo Elegance furniture and fabrics shall be a sole proprietor business. The ownership will be only one
person, that is, the owner herself. The owner has gained experience over the years by managing
his uncle’s similar business in Denholm area. Therefore, the owner is confident of success in the
business due to prior experience. Sole proprietorship will be appropriate for the owner since she will
enjoy all the profits by herself and endure any loss. Besides, the owner will enjoy the privilege of quick
decision making since there will be no consultations from any quotas.

1.5 Type of business

Philo Elegance furniture and fabrics shall be a retail form of business. The owner will be obtaining
supplies from major carpenters in town and at times use its own carpenters to produce furniture. The
owner will enter the business as a startup since there will be enough capital to kick start the operations

1.6 Products and services

The business will be retailing ready sofa sets, carrying out repairs of old sofa sets, retailing cushions,
cushion covers, foam chips, foam sheet, upholstery materials, fiber and makonge for a start with a plan
to roll out retailing of wooden tables and beds Quality of the products will be key distinct feature of this
business. Before we commence in make a sofa set on order we will always explain to the customer the
materials available in the market and the customer will choose accordingly to ensure total customer
satisfaction. Below are sample pictures of the kind of furniture the owner intends to retail

Pictures

Apart from selling the readymade furniture the business will also be doing repairs and
rebranding of old furniture for customers at affordable prices. The owner intends to employ staffs with
knowledge in carpentry that will help in the task of doing repairs for customers. The business will stock
rare designs of furniture that will make it unique among its competitors. The owner will be conducting
market research to identify the latest designs of furniture ahead of her competitors. This will make the
products unique and value based rather than just affordability.

1.7 Justification for the Business Venture

The owner chooses this kind of business because of many reasons such as;

i) Philo Elegance furniture and fabrics will meet the needs of the residence of Rongai for newarrivals
type of furniture that the competitors take long time to acquire. The owner will bethe first person to
avail any latest design in the market. The business will contribute to the number of designs currently
trending in the market bydisplaying them to customers at the right time. This will give customers
opportunity tochoose from wide range of furniture products.

iii) Based on the previous experience from the sale of furniture the owner will apply her skills toensure
customer satisfaction and profitability of the business. Also the owner will be able toidentify quality
materials required for the repairs of old furniture brought by customers.

iv) The town itself will give the business an upper hand since it is densely populated. The owneris
assured of attracting a large segment of the population since the prices will be affordable tocustomers
of different purchasing powe

V) The materials used in the business will be degradable hence conducive for the environment.All the off
cuts of materials used in the business will be taken by various recycling firms toensure clean
environment for the business.

1.8 Industry
The proposed business belongs to furniture industry. The Kenyan furniture industry wasestimated to
be USD 456 million in sales in 2013 and has been growing at a rate of 10%annually since 2009. Growth
has been driven by urbanization, economic growth, housing andoffice construction, and these trends are
largely expected to continue. The furniture market inKenya is serviced by the formal furniture sector,
Jua Kali enterprises (the informal sector),and imports. In terms of market segment furniture
industry mainly services households,offices, kitchens and high end customers. The global sales of
furniture have grown over theyears to a tune of USD 140 billion in 2014. The industry is expected to
grow further in thenext five years due to increased urbanization and modernization in the world over

i) Size of the industry

The furniture industry is one of the largest economic sectors in Kenya. The industry valuechain cuts
across various sectors of the economy that are related to it. The main componentsthat form the
furniture industry include; forestry, timber harvesting and transport, timberprocessors, furniture
manufacturers, timber traders and furniture outlets. The furnitureindustry in Kenya was
estimated to worth USD 492 million in 2014 according to the ministryof industrialization and
enterprise development sources. The size of the furniture industry isfurther indicated on the graph
below Source: Ministry of industrialization and enterprise developmentii) Trends in the industryThe
furniture industry has grown over the years with evidence of increased demand forfurniture
products. However, in the recent past the industry has faced setbacks such as lowsupplies of timber
due to imposed restrictions on logging by the government. The stakeholders in the industry have
cried foul to these underlying circumstances, which have seenthe prices of furniture increasing
hence, limiting certain class of people in the economy.

Despite the challenges of availability of timber the industry has recorder tremendous growthover
the years. Below is a summary of sales growth in the furniture industry for a period ofthe last five
years

ector 2012 (USDmillions)2013 ( USDmillions)2014 (USDmillions)2015 ( USDmillions)2016

(USDmillions)Formalsector66 85 112 124 129Imports 58 65 87 115 123Jua kali 70 100 98 108 118Total
194 250 297 347 37

ii) Characteristics of the industry

a) Capital requirements

To be successful in this business it requires a capital investment of not less than Ksh 2.5million. The
business requires a substantial amount of startup capital since there are so manyitems needed to
kick start the operations.

b) Technology

The furniture industry requires advanced machinery for operations which requirestechnological
expertise. There are software for inventory management and sales planningused by furniture shops
 such as SYSPRO ERP system mostly used by formal sector. Thissoftware enables a business to track
their quality standards, inventory levels and display theirproducts on the online platform

c) Technology

The furniture industry requires advanced machinery for operations which requirestechnological
expertise. There are software for inventory management and sales planningused by furniture shops
such as SYSPRO ERP system mostly used by formal sector. Thissoftware enables a business to track
their quality standards, inventory levels and display theirproducts on the online platform.The
adoption of technology in the furniture industry is aimed at increasing output by drivingsales to
profitability. This business will opt for the most cost effective technology inmanaging its
operations.

d) Number of employees

Furniture business requires at least 12 employees for effective operations. There must be
anadministrator, accountant, sales representatives, loaders, cleaner and technician.
Thedistribution of employees is as in the table below

Designation Number requiredAdministrator 1Sales representative 2Accountant 1Technician 2Loaders

3Drivers 1Cleaners 1Security 1Total 12

e) Competition in the industry

The products of the furniture industry are homogenous therefore competition is very stiff. It
requires product differentiation in order to stay on top of your competitors. One major way of
product differentiation is furniture design which varies from one dealer to another. However, a new
design in the market only last for a while before competitors copy it and replicate the same.
Therefore, competition in the furniture industry is very high and it takes highly effective sales
strategies to survive) Future of the furniture industry With the current trends in the furniture
industry it is likely to experience exponential growthin future. The industry is estimated to double its
revenues in the next five years. This isaccording to the ministry of industrialization and enterprise
development report of 2018. Themarket is likely to expand both domestically and internationally
due to growing demand offurniture products in all areas of the economy. However, the industry is
likely to face the short comings associated with inadequate supply of timber and timber products.
The government of Kenya in 2018 signed into law regulations regarding logging which islikely to limit
the supplies of timber. The local market might suffer set back and set pace forthe thriving of
furniture imports

1.9 The Business Objectives

The main objective of this business will be to empower the owner to be self-employed andattain
financial and time freedom. However, the objectives of the business are categorizedinto short term and
long term as indicated below.

a) Short Term Objectivesi.

 To offer affordable, modern and quality furnitureii.
 Establish sustainable business by the end of the first year
 Have first year total sales in excess of kshs 500,000iv.
 Producing net profits of not less than 1,000,000 in the first yearv.
 Providing employment for other youths
b) Long Term Objectives

In the long term objectives the owner intends to:-

i. Attain more 50% of the market share in the furniture business in Rongai.
ii. To be an outstanding furniture business dealing with local and international product.
iii. To Establishing a chain of furniture shops in other locations within 4yrs.
iv. To increase the asset base to 3000000 in four years
v. To develop an computerized system for customer service in two years
vi. Offer online booking services in two year

CHAPTER TWO

MARKETING PLAN

2.1 Introduction

Marketing plan is a written statement of marketing objectives, strategies and activities thatthe Business
will follow. The business marketing plan will establish how the entrepreneurwill effectively compete and
operate in the market place to meet the goals and objectives

2.2 Customers

Customers are the lifeline of any business. The entrepreneur will cater for various categoriesof
customers who are; Individuals, Organizations and commercial customers.

i) Individual customers

These will be customers that mainly comprise of single persons, couples and families. Theywill be
buying furniture in small portions. There are individuals who want to acquire urniture for the
first time while others would like to upgrade the quality of the furniture theypossess. There will also
be those that come for repairs of their tone and old furniture that thebusiness will target.

ii) Organization customers

 This will mainly comprise of Universities within Ongata/Rongai as well as within Nairobi.They are not
as many as the other customers but they are very important. They are; CatholicUniversity, Adventist
University of Africa and Nazarene University and other corporateorganizations. The
entrepreneur will ensure that special rates are provided for these particularcustomers since they
have great capacity and they will really grow the business.The private sector will provide the
main corporate customers in this case. There aremultinational organizations and private
companies that fall into this category, for exampleGarland medical centre, Nairobi women’s,
Equity bank, Barclays and National Bank ofKenya etc. These customers will experience
standard offering for products from the businessat all times. In retrospect, the customers will be
looking for quality furniture’s and economyof scale in terms of price, dependability and convenience
of the location

iii) Commercial customers

These will be customers that buy furniture for with the intention of reselling to their owncustomers
at a profit. Commercial customers will include other furniture dealers withinRongai town
and its environs.Due to the fame of our standards and unique quality commercial customers will be
comingfrom high end estates such as Karen, Runda, Muthaiga and Kileleshwa among others to
seekfor the products of the business

2.3 The Market Share

To establish the existing market share, a survey was conducted in Rongai area on apopulation of
3000 customers that were randomly selected to represent the entire population.The conclusion drawn
from the survey indicated that there are three key competitors in thetown.. These are; Sofa center, Joe
Craft and Fair Matt. The three furniture businesses own thelargest share of the market in the area.

At the start Philo Elegance furniture expects to take 15% of the market share. The marketshare will be
distributed as in the table below.

Table 2.1; Market share

Sr.No Business No. of potential Percentage share

customers
1 Philo Elegance furniture 450 15%
2 Sofa Center 900 30%
3 Joe Craft 660 22%
4 Fair Matt 480 16%
5 Others 510 17%
Nitch 3000 100%
Source:

2.4 Competition

Philo Elegance furnitureSofa CenterJoe CrafFair MatOthersCompetitors of the proposed business as

mentioned earlier are; Joe Craft, Sofa Centre andFair mat Furniture’s which are located in the region.
The competitors are well distributed butnot very close to the new business. Philo Elegance Furniture’s &
Fabrics location is howeververy strategic as it is in Ongata/Rongai and none of the other competitor are
as close to thetargeted customers. This brings the most vital customers close to the firm e.g.
Supermarketsand Banks

The strategies that are going to be implemented by Philo Elegance Furniture’s & Fabrics tocounter
competition are: Enhancement of skills. This is through taking workers for furthertraining, holding in-
house training and workers attending workshops which will benefit themat work. This will ensure
maximum conformity to the laid down rules regarding the runningof the Organization by initiating good
customer relations and giving high quality products.However, all the businesses use the same level of
technology and it is therefore probable thatthe competitors being in the market already may be
using the latest systems in technologythat make work easier and more efficient. Philo Elegance
Furniture’s & Fabrics may alsohave to work hard to win the customers in the locality as they may be
giving business to acompetitor who came into the market earlier

he location of the business will be of big advantage to the goal achievement and long termbusiness
operations because of the following advantages. There are two universities in theregion meaning there
will be a big market for furniture’s from the students, our competitorsare a bit far from the universities
positioning Philo Elegance at location advantage.The region is one of the highly growing areas in Kenya
attracting investment from employedgroups, hence increasing the demand of furniture’s from the
working persons and familieswho need quality products. On the other hand, our competitors knowing
the demand that is inthe area, have not yet come up with professionals to provide the quality of
furniture asdemanded by the customers nor have they started up strategies to bring on board
theimported design of furniture’s.The region being one of the metropolitan areas, there is an increased
number of settlementand population from the newly migrating people from rural to urban areas
creating a big demand of furniture’s, Philo Elegance has seen this opportunity and has strategized on
howto offer the services to satisfy the demand as opposed to all other competitors who haveremained
on the same volume of production all through making it difficult to satisfy thedemand due to lack of
capacity. These are some of the major factors that the location willprovide to the business.Philo
Elegance Furniture’s & Fabrics being a small enterprise will enjoy certain advantagesover the
competitors which are direct control of the business, close contact with theemployees and
customers, easy decision making and establishment and the sponsor willenjoy the profits made.
There will be long working hours however especially before thebusiness is well established, aggressive
marketing, sales and set up of the business.

2.5 Advertising and promotional Strategy

i) Advertising strategy
The business will adopt different methods to advertise to the potential customers. Key amongthe
advertisement strategies will be;•Social media such as Facebook, twitter and Instagrams•Print media
such as newsletters, newspaper, magazines, flyers and brochures•Electronic media which includes radio
and televisions.The effectiveness of the advertising will be monitored consistently to ensure the
business ismaking profits. The sales volume will be monitored month on month from the second
monthof the business opening and it should have 30% increases every month from then.There should
also be notable market share increase as the new customers come in and newsales are done. This will
be noticed since there will be increase in the number of enquiries bynew or interested customers

i) Promotion Strategy

The business will adopt various ways of promotion to reach the target market.
Mainpromotion strategies will include the following;

•Personal selling – The business will engage sales representatives to carry out personalselling to
customers through product demonstrations and open air promotions of thefurniture.

•Open sales promotions – All the products of the business will be sold at a discountedprice in order
to attract potential customers during the initial stages of operation

 Direct selling – The business will carry out direct selling by reaching out to
potentialcustomers on a door to door promotion through flyers and brochures. A list
ofpotential customers will be made by picking their contact information and location
forfollow up.

Table 2.2 Cost of advertising and promotion

Item Costs (Kshs)Advertisement 7,500Promotion 6,000Totals costs of advertisement 13,50

2.6 Pricing Strategy

Considering that this is a new business in the target market, the derivation of pricing willgreatly
impact on future prices and attraction of potential clients. The price will determinePhilo Elegance
Furniture’s & Fabrics success in the market especially in the first year ofbusiness.Some of the
factors that the business will consider when determining the price are:Operational costs,
Competitor prices, The market fundamentals, Promotional pricing, Pricepenetration, The pricing
model is designed for achieving break-even point in one yea considering the above market
fundamentals above.

The table below indicates the prices for various furniture products
 Category Price (Ksh)
Sr.No.
1 Beds 20000
2 Shoe racks 5000
3 Sofas 60000
4 Dining table 15000
5 Office tables 15000
6 Office chairs 8000
7 Dining tables 8000
8 Kitchen cabinets 4000
9 Wall drops 9000
10 Cushions 2000
Total 61000
Average Price

2.7 Sales Tactics

The business will sell its products directly to the customers. This will be done using various methods.
The firm will employ a direct sales representative who will be paid on commission. The sales
representative together with the manager will do customer visits and sell the services directlyto
them.The firm will also establish a website which will have all the information about the
business,the products and it will be updated every so often to make sure it is relevant and timely.
Itwill be accessible worldwide hence reaching those with internet access.The entrepreneur will also
make use of networking where they will make known of the business in social forums. This is bound
to bring in sales

2.8 Distribution Strategy

The business will adopt two main channels of distribution. That is, buyer to
customerdistribution and buyer to wholesaler/retailer to customer distribution. Customers that
caneasily access the business premises will obtain their products directly from the shop.
Thebusiness shall acquire a second hand pick up vehicle to assist in deliveries to customers’premises
at a feePotential buyers will also be able to get our products through other distributors in
variousoutlets in the city. These outlets will be our commercial customers who will be
purchasingthe products for reselling.As the business grows the owner will establish distribution
centers across the city and othertowns around Nairobi and beyond. There will be show rooms where
potential customers can easily view the furniture without necessarily coming to the main service
center in Rongai.The main distribution problem would be lack of good will by potential customers to
pay ontime.
 Also distribution is likely to be affected by weather conditions such rainy seasonswhich
makes it difficult to deliver some furniture to customers on time. The business plans toenforce a
credit agreement between it and potential customers. The customers will be equired to sign the
agreement before any transaction is accepted. Upon breaching of thecontract there will be law suit
injunction against the customer. For transportation challengethe business will acquire a water proof
cover that will be used to cover the furniture in transitduring rainy season.

3.Organization Structure
CHAPTER FOUR

OPERATIONAL AND PRODUCTION PLAN

4.1 Introduction

This chapter focuses on the operational and production plan of the business. The plan willinclude
production facility and capacity, production strategy, production process andregulations
affecting the production process.

4.2 Production facilities and capacities

The business will make use of specific facilities and equipment available so as to ensureswift
and effective production process. While adhering to the regulatory requirements, thebusiness will
ensure that the clients are given the best.

Table 4.1; Facilities require

Item

Total Cost (Kshs.)

Carpenter equipment 120,000Telephone 4,000Stock 337,000Box files 1,200Stapler 600Paper punch

720Calculator 900Date stamp 1,600Executive chairs 10,000Executive Tables 20,000Office desks
24,000Trolley 000TOTAL 532,020

Facility required for operation

I) The facilities required for operation include; carpenters equipment (tools), stock
(rawmaterials), chairs, tables and office desk. These will be adequate to kick off the
business.
II) Plan for maintenance and repairs of facilities

Maintenance and repair will be done only when there is need for the service. The businesswill pay
for annual physical checkup and any other periodical inspections. Replacement willbe done by the
supplier of the machine.

III) Features of the proposed premises

 The business premises will be rented from the owner at the cost of Ksh 240,000 per annum.Being a
rented property, expansion and restructuring capacities for the business are limited. The business
will however hire the neighboring go downs during expansion as the businessgrows

iv) Machinery and equipment requirements

Table 4.2; Monthly machinery and equipment requirements

Type of raw Frequency Source Quantity By Cost per Total cost

materials Required Month Unit (Kshs.)
(Kshs.)

Timbers Once in a Rongai 1000 feets 30 30,000

month Timber Yard
Nails Once in a Dallas 10kgs in 150 1500
month Hardware different sizes
Paints Once per Dallas 10 ltrs 250 2500
week Hardware indifferent
colours
Fabrics Once in a Josh Fabric 100meters 130 13000
month Suppliers of
different
material

adhesives Once per Dallas 2 liters 500 1000

week Hardware
Files and Once per year Office matt 1 piece each 250 500
Quire Book
Total 48,500

The materials are well available throughout the month but shopping and storage should bedone
quarterly for the non-perishable goods

4.3 The production process

Material planning

Material acquisition

Material assembling

Inspection and painting

Product display/sales

Product delivery
 i) Material acquisition

The business will acquire its raw materials from local suppliers around Rongai town. Thosematerials
that are scarce in the town will be acquired from Nairobi CBD. The businessmanager will
oversee all the material acquisitions into the business and thereof facilitatepayments through the
accountant.

ii) Material preparation.

This is the second step in the production process. Materials acquired will be prepared for thefinal
product. The process starts with wood cutting, size inspection, making joints, trimmingand finally
coloring.

Iii)Assembling

After material acquisition the third step is the assembling of materials. The carpenter will use the
machines available to assemble all the parts into the desired furniture. The assembling process will
also involve the repair of old or faulty furniture that has been brought by customers

iv) Final inspection and painting The finished product will be inspected to determine whether it has met
the desired design. Upon the satisfaction of the quality and design the final product will be painted and
set for display.

v) Display

The finished products will be put on display by the loaders and the sales team. On the otherhand the
sales team will be negotiating with the customers that have come to patronize thebusiness premises.
The sales team will also go to the field to prospect for new customers.

vi) Deliveries

Upon request by customers the furniture will be delivered to their premises. The businesswill
charge little delivery fee for customers that are outside Rongai town

5.1 Pre-Operational Costs These are the costs that the business has to incur before it starts its
operations, and these costs occur only once

Item

Amount (Kshs.)

Registration, Permits and Licenses 40, 500

Stationery 153,000

Water connection fee 1,000

Machines 40,000

Advertising and promotion 13,000

Salaries to pay person sticking posters 1,500

Prepaid insurance premiums 30,000

Furniture and fittings 44,500

Bank charges 500

Postal services 1,500

Legal services 3,000

Staff training costs 14,000

Total Pre-Operational Cost 302,000

CHAPTER THREE

ORGANIZATION PLAN

3.1 Introduction

In this chapter, the management plan of the enterprise will be discussed extensively to outlinehow
recruitment, remuneration, training and other issues concerning human resources will behandled.

3.2 Business manager

The business will employ one business manager who will serve as the administrator to oversee all
operations.

Qualifications and experience

i) Bachelors degree in business administration, accounting, management science,public

relations or equivalent qualifications
ii) Minimum of 3 years experience in a similar role in the furniture industry
iii) Familiar with the business trends in the furniture industry
iv) Vast knowledge of marketing strategies in the furniture industry

Duties and responsibilities

i) Overseeing the management of the organization ;

ii) Business development manager;
iii) Providing a policy framework to guide staff in the management of their recordsand use of
the employer's records system;
 iv) Ensuring compliance with relevant legislation and regulations;
v) Standardizing information sources throughout an organization or group of
organizations;
vi) Managing and monitoring budgets and resources

3.3 Other key personnel of the business their duties, qualifications and experience

a) Sales representatives

The business shall employ 2 sales representatives who will be responsible for promoting andselling the
furniture to potential customers and prospects.

Qualifications and experience

i) Diploma in sales and marketing from a reputable institution

ii) Minimum of 2 years experience in selling and marketing furniture products
iii) Knowledge of sales strategies used in the furniture industry
iv) Familiar with digital and social media marketing

Duties and responsibilities

i) Sells furniture and bedding in furniture or department store. Suggests furniture size, period
style, color, fabric, and wood that will complement customer's home and other furnishings.
ii) Discusses quality of fabric and finish, and type and quality of construction with customer.
iii) May resolve customer complaints regarding delivery of damaged or incorrect merchandise

b)Accountant

The business will employ a qualified accountant who will be responsible for the daily financial
transactions of the business

Qualifications and experience

i) Diploma in accounting from a recognized institution

ii) At least CPA
iii) At least 2 years experience in a similar role in a furniture business environment
iv) Experience with quick books and sage

Duties and responsibilities

i) Manage the financial flow of the business

ii) Manage all the cash payments and receipt
iii) Initiate payments of suppliers and all service providers
iv) Responsible for balancing cash books, profit and loss accountants and daily ledgers
v) Other duties as assigned by management
c) Technicians
 The business will employ technicians or carpenters who will be charged with the responsibility
of fixing furniture and all the repair

Qualification and experience

i) Certificate in carpentry.
ii) Good problem solving skills.
iii) A good listener.
iv) Able to work under pressure.

Duties and responsibility

i. Repairing of sofa s and other furniture’s.

ii. Designing of new furniture
iii. Product demonstration to new customers
iv. Advice on the best quality materials that can be used
d) Other personnel

Other personnel of the business will include driver, loaders, cleaners and security. Their duties and
responsibility will be assigned by the manager from time to time

Organization structure

Director

Business manager

Table 4.2 Monthly labor Requirements

Designation No. Basic Total per Total cost

salary per month per year
person

Manager 1 26000 26000

Accountant 1 21500 21500
Sales representative 2 21500 43000
Technician 2 18500 37000
Loaders 3 14500 43500
Drivers 1 14500 14500
Cleaners 1 12500 12500
Security 1 12500 12500
Total 12 141500 210,500 252,600