BUSINESS PLAN

MOTTO: AT YOU SERVICE

SUBMITTED BY: FARIDAH NIGHT ODWORY
INDEX NO: 6021010277
CENTRE CODE 602101
PAPER 2901/108
CENTRE: THE BUNGOMA NATIONAL POLYTECHNIC
P.O BOX 158-50200,
BUNGOMA.

SUPERVISOR:
SUBMITTED TO: KENYA NATIONAL EXAMINATION COUNCIL AS A
PARTIAL FULFILLMENT FOR THE AWARD OF
A DIPLOMA IN SECRETARIAL STUDIES

SERIES: MARCH 2024

DECLARATION .

I declare that, this business plan is my original work and has not been presented for a diploma in any
other college. No part of this plan may be reproduced without the prior permission of the author or
Bungoma National Polytechnic

STUDENT NAME:

Signature____________________

Date _________________

DECLARATION BY SUPERVISOR

This business plan has been submitted for examination with my approval as the Bungoma National

Polytechnic supervisor.

NAME OF SUPERVISOR

Signature ________________

Date_________________
 DEDICATION

With lots of affection, I wish to dedicate my work to my Parents who contributed entirely

towards this undertaking’s promise to work hard and now here is my diploma.
 ACKNOLEDGEMENT

In a vast undertaking of this nature is not possible to acknowledge the contribution of all.
However first is for Almighty God for seeing me through the completion of this business plan,
special thanks goes to Mr lecturer of hospitality department for his tireless efforts in guiding,
supervising and correcting this work. Special gratitude goes to my father, my mother my sisters
and my brothers for their moral, spiritual and financial support makes a mark to a successive
undertaking

I would also like to express my gratitude to my fellow students, relatives and friends who
assisted me in one way another to ensure the success of this work .I’m deeply granted to entire
fraternity of Bungoma National Polytechnic , for their support, prayers, flexibility, understanding
and inspiration to me and for providing such a conducive environment for the study while
working on this plan and especially to all lecturers and particularly my supervisor who played a
big role through his professionalism and integrity to ensure that the work done meets the
required standards . God bless you.
 Contents
BUSINESS PLAN...........................................................................................................................1
DEDICATION.................................................................................................................................3
EXECUTIVE SUMMARY........................................................................................................10
2.0 Market plan.........................................................................................................................10
3.0. Organization and Management plan...................................................................................10
4.0 Production plan....................................................................................................................10
5.0. Financial plan......................................................................................................................11
CHAPTER ONE............................................................................................................................12
1.1. Business name.....................................................................................................................12
1.2 Business location and address..............................................................................................12
1.3Form and type of ownership.................................................................................................14
1.4 Products and service.............................................................................................................14
1.4 Justification of opportunity..................................................................................................14
1.5 Industry................................................................................................................................14
1.6 Goals of the business............................................................................................................15
1.7 Entry and growth strategy....................................................................................................15
1.7.1 Sales promotion.............................................................................................................15
1.7.2 Affordable price............................................................................................................16
1.7.3 Distribution....................................................................................................................16
1.7.4 Competitor.....................................................................................................................16
 It has many customers.....................................................................................................17
 It has high capital advantage...........................................................................................17
 Has a political strength....................................................................................................17
 Commonly known...........................................................................................................17
 The pricing policy is poor...............................................................................................17
 There is no business networking.....................................................................................17
 It lacks entrepreneurial skills..........................................................................................17
 It has a poor management...............................................................................................17
 High political advantage.................................................................................................17
 High scale due to popularity...........................................................................................17
 Access to industries by transportation means.................................................................17
 Inadequate pricing policy................................................................................................17
 Low pricing techniques...................................................................................................17
 Inadequate management skills........................................................................................17
1.7.5 Growth strategy.............................................................................................................18
1.7.6 Product differentiation...................................................................................................18
CHAPTER TWO...........................................................................................................................19
2.0 MARKETING PLAN..........................................................................................................19
2.1 Customers.............................................................................................................................19
2.1.1 Individual customers.....................................................................................................19
 2.1.3 Institutional customers..................................................................................................19
2.2 Market share.........................................................................................................................20
2.3 competitors...........................................................................................................................20
2.4 Pricing strategy....................................................................................................................22
2.4.1 Methods of promotion.......................................................................................................23
 Use of billboards.............................................................................................................23
 Use of business sigh posts...............................................................................................23
 Use of leaflets..................................................................................................................23
 By use of mass media e.g. radio, TV, newspapers, magazines, and journals as the
business expands....................................................................................................................23
Promotion...................................................................................................................................23
 Offering discounts during holidays.................................................................................23
 Participating in societal activities...................................................................................23
2.5 Sales tactics..........................................................................................................................23
2.6 Distribution channel.............................................................................................................23
CHAPTER THREE.......................................................................................................................25
3.0 ORGANISATION PLAN...................................................................................................25
3.1 Organization structure..........................................................................................................25
3.2 Manager qualification..........................................................................................................25
3.3 KEY MANAGEMENT PERSONNEL NUMBER AND DUTIES....................................26
3.3.1 Manager director...........................................................................................................26
3.3.2marketing manager.........................................................................................................26
3.3.3 financial manager..........................................................................................................26
3.3.4 security..........................................................................................................................26
3.4 Recruitment, Training and promotion..................................................................................27
3.4.1 Recruitment...................................................................................................................27
3.4.2 Training.........................................................................................................................27
3.4.3 Promotion......................................................................................................................27
3.5 Remuneration and incentives...............................................................................................28
3.5.1 Remuneration................................................................................................................28
3.5.2 Incentives.......................................................................................................................28
3.6 License, permit and by-laws................................................................................................29
3.6.1 License and permit........................................................................................................29
3.6.2 By-Laws........................................................................................................................29
3.7 Support service.....................................................................................................................29
3.7.1 Banking service.............................................................................................................29
3.7.2 Security services............................................................................................................30
CHAPTER FOUR.........................................................................................................................30
4.0 OPERATION PLAN............................................................................................................30
4.1 Production and service design and development.................................................................30
4.1.1 Machine tools and equipments......................................................................................30
 4.2 Production and service strategy...........................................................................................30
4.3 Production process...............................................................................................................31
4.4. Regulations affecting operation..........................................................................................31
CHAPTER FIVE...........................................................................................................................32
5.0 FINANCIAL PLAN.............................................................................................................32
5.1. Pre-operational cost.............................................................................................................32
5.2 Estimation of working capital..............................................................................................32
5.3 PRO- FROMA INCOME STATEMENT FOR BALANCE SHEET NASH MINI MATT
MINI MATT AS AT 2021 AND 2022.....................................................................................33
5.4 Preparation of Performa.......................................................................................................34
5.5 Calculation of the breakeven point......................................................................................35
5.5.1 Total contribution..........................................................................................................35
5.5.3 Total fixed cost..............................................................................................................36
5.5.4 Breakeven point.............................................................................................................36
5.6 calculation of profitability ration.........................................................................................36
5.6.1 Gross profit percentage.................................................................................................36
5.6.2 Return on equity x 1oo................................................................................................36
5.6.3 Return on investments...................................................................................................37
5.7 Desired financing.................................................................................................................37
5.8 Proposed capitalization........................................................................................................37
5.9 Business Risks and Uncertainties........................................................................................37
 EXECUTIVE SUMMARY
1.0. Business description
The name of the proposed business will be Nash mini Matt, and shall be a sole proprietorship.
The business will deal with the assorted products and services and will be located in kakamega
county at ekero Trading Centre along mumias kakamega highway.
The address of the proposed business will be,
Nash mini Matt
P.O BOX 77
mumias

2.0 Market plan

Nash mini Matt will categorize its customers into three groups
Individual customers
Domestic customers
Institutional customers
The business will have its aggregate market share of 40% at the beginning though it will aim
at increasing in due time of its operation.
The competitors shall be Frank matt 25%, Mumias super market 20%, and Walias super
market 15%. The methods of production will be free sample, discounts on products and after
sale services, this will attract customers.

3.0. Organization and Management plan

Nash mini Matt will operate under sole proprietorship form of business operation where the
business will be under the control of the manager and will be assisted by 20 other employees to
ensure the objectives of the mini matt are achieved .Promotion of the employees will be based
on discipline, level of qualification hard work .

4.0 Production plan

For the business to operate smoothly and effectively, production facility will be required. They
include mainly tools and equipments and machines required to make work easier to all
employees .The production strategies that Nash mini Matt will focus on will be;
Pricing products and services
Quality products and services
Motivation of workers and customer relation
All machines and equipments will be fixed asset of the business and the business will have
permanent and casual workers.

5.0. Financial plan

The financial plan shows the source of the funds and uses in the business. The business proposed
shall have the following sources of funds
Owner’s equity: 100000
Bank loan: 100000
Friends and relatives: 70000
Well wishers: 10000
Total: 300000
Besides, the business shall also have to incur preliminary cost at the start of the business which
shall total up to Ksh.732050 In addition the business shall have an estimated capital of
Ksh.231,550, [Link].580000 and Ksh80000 during the first, second and third year respectively.
The proforma balance sheet of the proposed business shall have asset amounting Ksh 972050,
Ksh 560500, Ksh500000 during the first ,second and third year respectively . The liabilities of
three consecutive years shall be equivalent to the total assets. However the business shall have a
total fixed of Ksh 507000 and the variable cost amounts to Ksh 456600.
Total contribution 2,643,500
Contribution margin84.45%
Fixed cost 1507000
Break point17844.87
Gross profit percentage76.24%
 CHAPTER ONE

1.1. Business name

The name of the proposed business will Nash mini Matt, Nash is a short form of my Night
which is a name known by many occupants which means more people will know know about
the existence of the mini matt .

The purpose of choosing on this name was to attract customers based on the fact that the name ia
well known

Another reason was to enhance uniqueness of the business from other small operating business
within the market centre and across the county and attract customer’s attention. It also creates a
colorful picture of the mini matt to the Public

1.2 Business location and address

Nash mini Matt will be located at Ekero trading centre in Mumias along Kakamega-Mumias
highway

It will be exactly 5 km from Mumias town next to Ekero police station opposite Frankmatt
supermarket Ekero catholic church and Mumias teachers training college.

The location of Nash mini Matt was proffered to market demand, good transport and
communication facility, good security, nearness to water body, i.e Nzioia River which is 2km
away, labor supply ; the people around will majorly offer the services to the Nash especially the
youths .

NASH MINI MATT

P.O BOX 200

MUMIAS

Website:Nash mini Matt .[Link]

 SKETCH MAP

WEMA
WEMADO VILLA
HOTEL
HOTEL

WESTERN AMBIENCE
HOTEL

KAKAMEGA MUMIAS
HIGHWAY
PROPPOSED SITE FOR
Nash Mini
MUMIAS REFFERAL matt
HOSPITAL
ENTERPRICE
PESHMATT

SUPERMARKET

MUMIAS CATHOLIC CHURCH

MUSIAS PARKING

EKERO POLICE
MUMIAS HIGH STATION

SCHOOL
1.3Form and type of ownership
Nash mini Matt will be owned as a [Link] owner of the business chose it because
of the following factors:

Enjoy profit alone. The owner of the business will be the boss thus has all the authority over
profit realized by the business

Easy and fast decision making since the owner will not consult anyone when making effective
decisions exploiting self talent, the owner will be able to work in line with his talented path thus
being satisfied in all manners. Easy management and low legal facilities are required.

1.4 Products and service

Nash mini Matt will offer variety of products and services; this includes food staffs, toiletries
electronics, furnitures and home appliances which will be displayed in designed shelves and
counters.

1.4 Justification of opportunity

The proposed mini matt business will have the following opportunity;

Existence of local demand due to availability of large number o f people in the area. The
proposed business will offer quality service which will automatically attract customer and also at
a favorable and affordable price. The community will benefit from the business since some of the
products will be supplied to the business directly by the producers.

The business will generate revenue to the government through payment of tax. Also living
standard will be improved through employment of people thus reducing crime cases and idleness
among youths and occupants.

1.5 Industry
The business will be under Chain store industry. The business in area and county is still small
but offers commencing the proposed business the size of the restaurant will increase with great
percentage. There are only three small businesses within the area who also deal with mini matt
products and services. The proposed business will have its branches.
The average number of the employees of the mini matt will be20 members of the staff but In
the due time the business will employ more people as Expansion of the mini matt shows exactly
growth . The business receives high rate of profit day and thus they always make a lot of sales.

1.6 Goals of the business

The business will open an online shop where customers will be able to order products easily .The
business will be able to pay the bank loan in six months. The proposed business will also
popularize itself with people through advertisement by posters, newspapers and news persons.
The business will be in position to employ more workers so as increase output and its business.
The business will increase its sales from 30% to 35% within the first ten months and the business
will also fix billboards around the highway to show direction of the industry so as to show
direction to the customers.

The proposed business will enlarge its operation within the two years in order to increase sales
by purchasing business machines. The machines will start designing its products thus products
thus attract more customers and increase sales due to uniqueness of the products.

The business will open three branches one in Busia, another one in kakamega town, and
bungoma within five-year of its operation. The business will buy a vehicle after four years of its
operation so as to ease supply of products to the sub-branches. Therefore the business will buy a
van for the staff members which will be catering for their transport in due of the duties within
five years of its operation.

1.7 Entry and growth strategy

The proposed business advertisements will be done through social magazines, posters, bill
boards and newspapers to make public aware of the business in market and also to attract
customers.

1.7.1 Sales promotion

The proposed business will promote its products in a period of time through giving discount to
regular customers and those buying in bulk thus leading to attraction of new customers and retain
potential customers hence developing customer loyalty.
Activities designed to promote regular sales, the business will offer security to customers, will
ensure consistent in production, offer free WI-FI to customers, place days special of the menu at
the entrance, offer second free deals especially during pick times.

1.7.2 Affordable price

The business offers products at favorable price to every person hence making it available to
everyone, therefore satisfies the customers’ needs.

1.7.3 Distribution
The business will offer transport to new and regular customers as an after sale service and also
home deliveries will be encouraged.

The proposed business will sell its products direct through two methods, the first one is where
the manager will sell products o the customers and the other will involve agent where delivery to
the agent from the business they will be delivered to the wholesalers and finally to the
customers

The products will be transported to the customers. The channel of distribution will be adopted by
the proposed business which include

Nash mini matt ---customers

Nash mini matt -----agent------wholesalers-----customers

1.7.4 Competitor
NASH MINI MATT will be very strong than its competitors who are becks mini matt ,watakas
mini matt because it will enjoy use of modern technology where existing one use local
technology and therefore when the business expand will lack competitors

They are potential entrepreneurs that offer similar products and services to the existing market.
My business shall experience competition from two competitors, namely, becks mini matt and
watakas mini matt .

Beckys mini matt

Strength
  It has many customers
 It has high capital advantage
 Has a political strength
 Commonly known
Weakness

 The pricing policy is poor

 There is no business networking
 It lacks entrepreneurial skills
 It has a poor management

Watakas mini matt

Strength

 High political advantage

 High scale due to popularity
 Access to industries by transportation means
Weakness

 Inadequate pricing policy

 Low pricing techniques
 Inadequate management skills
1.7.5 Growth strategy
The business shall use and employ modern technology in its operations and this includes use of
machines to replace human labor thus expanding of the business.

The strategy to be used by the proposed business enterprise, it penetrate and gain acceptance in
the market,it includes displaying high styled posters in town to attract potential customers.

It will also advertise in local media cervices to ensure that people arc well informed about the
business

The proposed business is bound to grow due to large and available market [Link] owner is
to offer a quality discount and this fact will lead to increase sales. Also employing skilled
personnel` who will attract more customers. All the funds should be safe to avoid
underproduction and services in business.

1.7.6 Product differentiation

Nash mini Matt will differentiate its products because it will be the only existing business which
will have different services and quality thus maintains the uniqueness of the products

1.7.7 Opening other branches

The business will be in position to make more profits as it expand and use modern technology
therefore the business will open more branches to spread its operations to different parts of the
county.

1.7.8 Potential management

The business will be well managed by the owner and hired qualified staffs that will ensure proper
operations and listen to their customers’ views about their products.
 CHAPTER TWO

2.0 MARKETING PLAN

2.1 Customers
Nash mini Matts will serve the following customers;

2.1.1 Individual customers

The business will sell its products to individual customers basically wholesalers who will be
mainly be part of the potential customers of the proposed business and will be served same all
over the country without discrimination

2.1.2 Domestic customers

The proposed business will sell its products to specific people who will require its products and
services they will be found all over the country but specifically within the location of the
business.

2.1.3 Institutional customers

The proposed business will sell its products to institutional tourists, students and players it will
ensure that the need of the customers Is adhered to. The proposed business price of the products
will also attract customers to purchase products because it will favor them from that of the
competitors.

They will pay for the purchased products i.e food staffs and services through proposed national
bank and m-pesa till number.
2.2 Market share
In the market there are approximately six hundred thousand customer targeted by Nash mini
Matt but of the six thousand, thirty thousand customers will depend on the business directly or
indirectly.

The following are the objectives of Nash mini Matt ;

a] To provide affordable price to customers in order to get more profit.

b] To provide after sale services in order to attract more customers and to retain the existing
ones as well.
c] To provide quality products in order to meet customer satisfaction.
d] To go ahead of the competitors through providing unique product and services.
e] To occupy the biggest market area through advertisement.

sales(%)

watakas
beckys hotel

2.3 competitors
The proposed business will have the following competitors around it;

 Beckys mini matt

 Wataka mini matt
It’s important to have those competitors because they will ensure that the business thrive well ,
due to high competition, the proposed business will ensure quality and quantity, it will price its
products favorably in order to bit the competitors.

ANALYSIS TABLE

COMPETITOR’S STRENGTH WRAKNESS OPPOTUNITY THREAT

NAME

NASH MINI MATT [Link] quality Inadequate workers [Link] highway 1. no

products [Link] Mumias enough operation
[Link] and teachers training space
affordable prices college

WATAKA MINI [Link] workers Near [Link] mumias [Link]

MATT 2. good mumiascatholic trading centre advertisement
management church [Link] Ekero A.C [Link] use of
[Link] high school machines
technology [Link] security
[Link] customer
relation.

Becky mini matt [Link] staff [Link] customer Near Ekero police [Link] media
[Link] service station advertisement
system 2. poor quality [Link] banking
[Link] labor products services
[Link] prices [Link] working
condition
 SCALES TABLE

competitors strength weakness opportunity threat

WATAKA MINI 4 2 3 3
MATT

WATAKA DO 3 4 4 2
VILLA MINI
MATT

BECKYS MINI 1 2 2 1
MATT MINI
MATT

4= maxmum score

2.4 Pricing strategy

The proposed business will only allow cash as a way of selling its products and services. The
selling price of the products will be variable this will ensure that the business maximizes profit
and also cater for customer retention attracts more.

The selling price will be based on;

The price of competitors-the proposed business will sell at a high than competitors and also it
will not sell its products t a low price

Cost of production-the proposed business will sell its products based on the cost of production
involved i.e if the product will require high production cost, basically the price of the product
will be average but if the demand will be very low the price will also be low.
2.4.1 Methods of promotion
Advertisement

The enterprise shall inform the public about its existence; this will help in making the enterprise
increase its customers thus making a lot of profit. The enterprise shall use the following
advertisement strategies;

 Use of billboards
 Use of business sigh posts
 Use of leaflets
 By use of mass media e.g. radio, TV, newspapers, magazines, and journals as the
business expands.

Promotion
NASH MINI MATT enterprise shall use the following promotion strategies;

 Offering discounts during holidays

 Participating in societal activities

2.5 Sales tactics

The proposed business will sell its product through the agent and direct to customers as below

Direct to customers through-through this method, the business owner will have control over sales
for his or her products and also the owner will have direct and personal contact with the
customers of which will control overcharging of the products

Agent-they will be chosen on the basis of influential skills, good negotiation skills as they will be
negotiating with customers on behalf of the business of which they will be rewarded according to
the sales agreement

Direct sales to customer-The owner of the business being the manager will be dealing without
involving any other person.

2.6 Distribution channel

The proposed business will sell its products direct through two methods, the first one is where
the manager will sell products o the customers and the other will involve agent where delivery to
the agent from the business they will be delivered to the wholesalers and finally to the
customers

The products will be transported to the customers. The channel of distribution will be adopted by
the proposed business which include

Nash mini Matt ---customers

Nash mini Matt -----agent------wholesalers-----customers

 CHAPTER THREE

3.0 ORGANISATION PLAN

3.1 Organization structure

The organization chat of the business will be as follows

MANAGER DIRECTOR

ASSISTANT MANAGER
DIRECTOR

PRODUCTION MANAGER MARKETINGMANAGER

FINANCIAL MANAGER

Teller attendant security

3.2 Manager qualification

Nash mini Matt s will be managed by Farida, who will have a Diploma sexretarial studies chain
management . This will make management easier since the manager would have studied some of
business skills in class.
3.3 KEY MANAGEMENT PERSONNEL NUMBER AND DUTIES

3.3.1 Manager director

The manager director will a general administrator and have bachelor in business management
with experience of at least two years, will be aged between thirty to 35years

Duties and responsibilities

1. oversee daily operation of the business

2. handle all purchases
3. completion of peoriodic employee evaluation

3.3.2marketing manager
in the proposed business the marketing manager will require a degree in marketing from a
recogniised institution with an experience of atleast one year inproduct production

duties and responsibilities

1. creation promotional activities and monitoring sells

2. designing and distribution of all direct marketing materials
3. establishment of effective strategies for creation of awareness of the business

3.3.3 financial manager

will have a diploma in account with experience of atleast two year in managing and training
people as well as financial management

duties and responsibilities

will be responsible for finance accounting,payroll,billing and other matter relatiting to sales and
revenue budget

3.3.4 security
will be a well trained security guard from a well recognized security company with experience of
atleast one year will be aged between 18 – 40years

duties
He will be safeguarding premises against any kind of insecurity day and night

3.4 Recruitment, Training and promotion

3.4.1 Recruitment
Most of the workers and staff will be recruited as the business grows therefore the business will
employ people to facilitate its operation

Recruitment will be done through placing posters in different areas hence inviting people for
application in vacancy posts. The vacancy will be advertised through social media in order to
reach many people. Interviews will be conducted by panel from the business staff in order to
select hardworking, potential and qualified employees.

3.4.2 Training
The business will offer free training to its employee especially the new ones On the first day
when they report to work they will be taken through a short term workshop and seminars so as to
shown on how to use machines.

The employees will also be given rules and regulation to guide them.

3.4.3 Promotion
Nash mini Matt s will offer promotion to workers based on the ability, hard work and the
services that an employee offers Promotion

Will be done using the following ways;

Increasing employee’s salary

Giving employee allowance and paying overtime or any extra hour that render their service to
the business

Employee will be given leave during holiday

3.5 Remuneration and incentives

3.5.1 Remuneration
To ensure good relation between employee and the firm, employees will be paid their salary
according to nature of work and services that they are allocated to perform

Their salary wills e allocated in a way that helps them to cater for its financial needs.

[Link] Remuneration Table

Employee Number of staff Salary per month

Manager director 1 Net profit

Ass manager director 1 20,000

Financial manager 1 20,000

Production manager 1 20,000

Marketing manager 1 20,000

teller 2 16,000

Assistant 1 2 14,000

Shelf assistant 6 12,000

Accounts 2 10,000

TOTAL
3.5.2 Incentives
The proposed business will pay for extra work depending on overtime or extra hours the workers
have exceeded at work. It will be paid at the end of every month. The business will offer
working uniform to all workers and it will also sponsor employees in some posts in attending
training in various institutions for them to acquire extra knowledge and skills.

3.6 License, permit and by-laws

3.6.1 License and permit

The business will acquire license from the sub county of Mumias . This will ensure that the
business is recognized by the legal authority .it will also obtain permit from the government of
Kakamega

3.6.2 By-Laws
The business will insured to ensure its safety and employees safety. Employees will register to
national Health Insurance Funds [NHIF], which will cater for them when they fall sick or get
injured in line of duty. The employee will also register to national security fund [NSSF], to
safeguard the workers retirement fund

3.7 Support service

The business will require support services to assist the firm to run its operation efficiently. The
support service will include; banking service, insurance services, consulting service, legal
services, postal services’ security services

3.7.1 Banking service

The business will open a bank account in order to help in banking service which include deposit
and withdrawal services. It will use the following bank

National bank

Account number 20543386100

Address P.O BOX 499 Mumias

TELEPHONE 0743356125
WEBSITE: W.W.W [Link]

Email: [Link]

3.7.2 Security services

The proposed business will be protected by the security company. It will provide security from
theft of the business items

P.O box 11

MUMIAS

Website;[Link]

CHAPTER FOUR

4.0 OPERATION PLAN

4.1 Production and service design and development

The proposed business will require production facilities in order to operate smoothly. It will
include tool, equipment and machines, oven, microwaves, gas cookers, boilers; weighing scale,
pans, heaters, and blenders to operate efficiently.

The equipment and machine will help the business too in providing higher output because
machines can provide a lot of labor compared to human labor.

4.1.1 Machine tools and equipments

The proposed business will require equipment for smooth efficient and quality production.

4.2 Production and service strategy

The business will use various methods to cater efficient production which will motivate the
workers by providing various initiatives that will move the business t highest level.

The following methods will be applied in production strategies

I] Pricing of products

Ii] Product quality

Iii] Relation with customers

Iv ] Ways of motivation

Pricing of the products- The proposed business will offer fordable and affordable prices of the
products to the market to satisfy the needs of the customers and attract more customers.

Product quality- the business will offer quality products to the customer due to fact that it will be
good and shaped according to customers specification

Relation with customers-The business will maintain good contact with customers through good
language

Ways of motivation-It will motivate the employees by increase their salary and giving them
allowances

4.3 Production process

The proprietor will use the key strategy items like competitive advantage, distinctive computers
and strategies. In destructive capillarity the proprietor will use every kind uniqueness in
producing food and beverage and service to outsmart its competitors. The competitive advantage
is where the proprietor will survey its strength to improve innovation quality and maintain steady
production of food and beverage and service to capitalize on the competition weakness and
threats. Quality of stock will be expanded once the Nash mini Matt s has stable suppliers with
output sales.

4.4. Regulations affecting operation

The business will acquire production operation license and permit from county council of
Kakamega at estimated cost of sh. 9000
 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1. Pre-operational cost

The proposed business will incur the following pre-operational cost

ITEM COST

License and permit 31000

instralation 98450

rent 75000

Tools and equipment 140000

Machines 500,000

Electricity 2000

Transport 30000

Water bill 3550

Telephone 1000
 Advertisement 19000

TOTAL 1000000

5.2 Estimation of working capital

ITEM 1ST YEAR 2ND YEAR 3RD YEAR

Current assets

Cash in hand 100000 1650000 235000

Cash at bank 267950 350000 450000

Stock 543600 700000

Debtors 520000 680000 700000

Total current 2331550 338000 440000

assets

5.3 PRO- FROMA INCOME STATEMENT FOR BALANCE SHEET NASH MINI
MATT MINI MATT AS AT 2021 AND 2022
ITEM JAN FEB MAR APRI MAY JUNE JULY AUG SEP OCT NOV DEC TOT
CASH CH L AL
FLOW
SALES 280,0 230,0 230,0 250,00 2600 2700 2700 2500 2400 28000 2800 2900 3130
000 00 00 0 00 00 0 00 0 0 00 00 00
DEBTORS 130,00 1400 1200 13000 5200
0 0 00 0 00
TOL 2800 230,0 230,0 280,00 2600 2700 4100 2500 3600 41000 2800 2900 3650
FLOW 00 00 00 0 00 00 0 00 00 0 00 00 000
CASH-
OUTFLO
W
PURCHAS 8000 35,00 31,00 52,000 8400 8500 8400 8600 9000 30000 1000 9000 9970
E 0 0 0 0 0 0 0 0 00 0 00
SALARY 106,0 106,0 106,0 106,00 1060 1060 1060 1060 1060 10600 1060 1060 1272
00 00 00 0 00 00 00 00 00 0 00 00 000
LICENSE 1000 7000 1000
0
WATERBI 6000 3000 5000 6000 6000 5000 6000 4000 5000 4000 3000 6000
LL
ELECTRI 2000 3000 2000 3000 4000 4000 2000 2000 1000 2000 2000 3000 3000
CITY 0
INSUARA 2500 2500
NCE 0 00
TELEPHO 1000 1000 2000 1000 1000 1500 1000 1000 1000 1000 1500 1500 1450
NE 0 0 0 0
ADVERTI 9000 8000 9000 7000 7000 8000 9000 5700
SEMENT 0
TOL 269,0 223,0 216,0 188,00 2310 2295 2330 2700 2350 17500 2500 2416 2760
OUTFLO 00 00 00 0 00 00 00 00 00 0 00 00 500
W
NET 1100 7000 14,00 92000 2900 4050 1770 3000 1250 23500 2950 4850 8395
CASH 0 0 0 0 00 0 00 0 00 0 00
ACCUMU 1100 18,00 32,00 12400 1530 1935 3705 4010 5265 76150 7910 8395
LATED 0 0 0 0 0 00 000 00 00 0 00 00
CASH
5.4 Preparation of Performa
ITEM 2020 2021 2022

Sales 4850000 7200000

Less cost of 830000 184900

sales

Gross profit 4020000 535100

Less expenses

Salaries & 1400000

expenses

License & 15000 18000

permit

Electricity 35000 38000

Transport 350000 4000000

Telephone 17000 20000

Advertisement 65000 70000

Water 70000 80000

Insurance 68000 75000

Total expenses 2020000 2351000

Net profit 200000 300000

before tax

Less prov for 200000 300000

10% tax

Net profit after 1800000 2700000

tax 10%
5.5 Calculation of the breakeven point

PARTICULAR AMOUNT

Fixed cost

Rent 100000

Salaries and wages 1272000

Insurance 25000

License 10000

Loan payment 100000

Total fixed cost 1507000

Variable cost

Advertisement 57000

Transport 295000

Telephone 14500

Electricity 30000

Water 60000

Total Variable cost 456500

5.5.1 Total contribution

Sales-variable

130000-456,500

=2,643,500.
5.5.2 Contribution margin percentage

= total contribution/sales x 100

=88.4

5.5.3 Total fixed cost

= 1,507,000

5.5.4 Breakeven point

Fixed cost/ contribution margin

=1,5o7ooo/ 84.45 = 1, 7844.879

5.6 calculation of profitability ration

5.6.1 Gross profit percentage

Gross profit/sales x 100

=2,363,500/3,130,000 x 100

=16.24

5.6.2 Return on equity x 1oo

Net profit after tax /owners equity x 100

=540,000 x 100

=2,000,000

=27%
5.6.3 Return on investments
= net profit after tax / total investment x100

= 540,000 / 3,972,050 x 100

=13.59%

5.7 Desired financing

item Amount

Pre- operational cost 1,732,050

Working capital 1,599,500

Fixed assets 3,972,05

Total desired financing 7303600

5.8 Proposed capitalization

ITEMS AMOUNT

Owners equity 2000000

Bank loan 700000

Friends and relatives 300000

TOTAL 3000000

5.9 Business Risks and Uncertainties

Death

Sickness
Pests and disease attack

Drought and floods

Fire outbreak

Stiff competition

Robbery

Accidents

Price changes

5.9.1 Solution to uncertainties

Insurance covers for the business

Security intensity

Contracting with market agencies

Control of pests and diseases

Production of quality and quantity products to fetch more customers

APPENDIX 2

OFFICE LAYOUT

1 2 3 4

5 6 7