BUSINESS PLAN FOR

DIGITAL CYBER
P.O. BOX 25915 NAKURU

PRESENTED BY : NDICHU KEVIN PETER

MUIGAI

INDEX NO : 20700011/083

CENTER NAME: THIKA TECHNICAL

EXAMS SERIES: JULY 2020

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 ACKNOWLEDGEMENT
I wish to express my sincere gratitude to several people whom I feel deeply indebted for the
assistance and moral support they offered me.

Special regards to my parents for the financial support and advice they offered me, not
forgetting my brothers and sisters for their moral support and prayers.

To my fellow colleagues who supported me during this period.

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 DECLARATION
I NDICU KEVIN PETER MUIGAI declare that this project was done and researched by
me, hence making it my original work and has never been submitted to any organization or
examination body for reference.

Signature ……………………… Date ……………………………

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 DEDICATION
I dedicate this project to my best friend.

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 CERTIFICATE OF SUPERVISION
This business plan has been submitted to The Kenya National Examination Council (KNEC),
with my approval. I therefore certify that I supervised every stage of this project as given by
the report. The research and compilation is my student’s original work.

Supervisor: mrs salome

Signature: …………………… Date: …………………………

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 Table of Contents

ACKNOWLEDGEMENT------------------------------------------------------------------------------i

DECLARATION----------------------------------------------------------------------------------------ii

DEDICATION------------------------------------------------------------------------------------------iii

CERTIFICATE OF SUPERVISION---------------------------------------------------------------iv

CHAPTER ONE-----------------------------------------------------------------------------------------1

EXECUTIVE SUMMARY----------------------------------------------------------------------------1

CHAPTER TWO----------------------------------------------------------------------------------------3

BUSINESS DESCRIPTION---------------------------------------------------------------------------3
2.1 The Sponsor----------------------------------------------------------------------------------------3
2.2 Nature Of Business--------------------------------------------------------------------------------3
2.3 Business Location---------------------------------------------------------------------------------3
2.4 Address and Telephone---------------------------------------------------------------------------4
2.5 Forms of Ownership------------------------------------------------------------------------------4
2.6 Products and Services Offered.-----------------------------------------------------------------4
2.7 Justification of Opportunity----------------------------------------------------------------------4
2.8 The Industry----------------------------------------------------------------------------------------5
2.9 The Entry and Growth Strategy-----------------------------------------------------------------5
2.9.1 Objectives-------------------------------------------------------------------------------------6
2.9.2 Mission----------------------------------------------------------------------------------------6
2.9.3 Keys to Success------------------------------------------------------------------------------6

CHAPTER THREE-------------------------------------------------------------------------------------7

MARKETING PLAN-----------------------------------------------------------------------------------7
3.1 Customers-----------------------------------------------------------------------------------------7
3.2 Market Share---------------------------------------------------------------------------------------7
3.3 Competition----------------------------------------------------------------------------------------8
3.4 Pricing Strategies---------------------------------------------------------------------------------8
3.5 Promotion and Advertisement Strategy--------------------------------------------------------8

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 3.6 Sales Tactics---------------------------------------------------------------------------------------8
3.7 Services Distribution Strategy-------------------------------------------------------------------9

CHAPTER FOUR-------------------------------------------------------------------------------------10

ORGANIZATION AND MANAGEMENT PLAN---------------------------------------------10

4.1 Organization-------------------------------------------------------------------------------------10
4.2 Management Personnel-------------------------------------------------------------------------10
4.2.1Business manager----------------------------------------------------------------------------10
Duties-----------------------------------------------------------------------------------------------10
4.2.2 Assistant manager--------------------------------------------------------------------------11
4.2.3 Security personnel manager---------------------------------------------------------------11
4.2.4 System officer-------------------------------------------------------------------------------11
4.3.4 Cashier---------------------------------------------------------------------------------------11
4.4 Other Personnel----------------------------------------------------------------------------------12
4.5 Recruitment, Training and Promotion--------------------------------------------------------12
4.6 Remuneration and Incentives------------------------------------------------------------------13
4.7 Licenses, Permit And By-Laws-----------------------------------------------------------------14
4.8 Supportive Services------------------------------------------------------------------------------14
4.8.1 Insurance-------------------------------------------------------------------------------------14
4.8.2 Electricity----------------------------------------------------------------------------------14
4.8.3 Banking------------------------------------------------------------------------------------14
4.8.4 Advisors-----------------------------------------------------------------------------------14

CHAPTER FIVE---------------------------------------------------------------------------------------15

OPERATION PLAN----------------------------------------------------------------------------------15
5.1 Production Facilities----------------------------------------------------------------------------15
5.1 Operational Facilities and Capacity----------------------------------------------------------15
5.2 Attainable Capacity-----------------------------------------------------------------------------15
5.3 Production Strategy-----------------------------------------------------------------------------16
5.3.1 Operational design and development----------------------------------------------------16
5.3.2 Cost of operation----------------------------------------------------------------------------16
5.3.3 Labor-----------------------------------------------------------------------------------------17
5.4 Production Process------------------------------------------------------------------------------17
5.5 Regulation Affecting Operations--------------------------------------------------------------18
5.5.1 Internal rules and regulations---------------------------------------------------------------18
5.5.2 External regulations------------------------------------------------------------------------18

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CHAPTER SIX-----------------------------------------------------------------------------------------19

FINANCIAL PLAN-----------------------------------------------------------------------------------19
6.1 Pre-Operational Cost---------------------------------------------------------------------------19
6.2 Working Capital Requrements-----------------------------------------------------------------19
6.3 Proforma Income Statement For The First Tree Years-------------------------------------20
6.4 Proforma Balance Sheet------------------------------------------------------------------------21
6.5 Break – Even Point Determination------------------------------------------------------------22
6.6 Expected Profitability Ratio--------------------------------------------------------------------23
6.7 CRITICAL RISK AND SOLUTION------------------------------------------------------------23
MILESTONE SCHEDULE--------------------------------------------------------------------------24
REFERENCES---------------------------------------------------------------------------------------25

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 CHAPTER ONE
EXECUTIVE SUMMARY
The business name is Digital Cyber. It is to be located in Nakuru Town. The business is
recorded in the business register and legitimately owned under the Muigai's Family
Enterprises. The business address will be added in the yellow pages and a direct line to the
manager will be available to help the customers to allocate the business much easily, get
computer related help and other services. It will also have wireless services readily available
for the whole of Nakuru County.

The business will be a sole proprietorship with the owner; Kevin muigai serving as the
manager. He will be responsible for hiring and firing of the employees who will assist him
deliver the necessary services to her esteemed customers and guide the enterprise to greater
heights. The business will be a service oriented firm where entertainment and computer
related services will be offered to individuals while also lending out public address systems to
the general public. It will be located next to the Nakuru – Nairobi highway for easy
accessibility and a strategic place where everyone can easily locate it. The business falls in
the sub-sector of internet thus offering best Ethernet services to the public and offering the
best services to every company in the town.

Digital cyber will be targeting wide range customers involving individuals, companies,
institutions and the general public. It will beat competition by offering unique and quality
services to its customers and will be aiming at 50% market share which will increase
gradually as the business grows.

The business general manager will be kevin muigai who owns the business, a skilled and
qualified entrepreneur; He will be handling all business decisions and their implementation
with the knowledge and experience that he has attained from his previous entrepreneur
lessons in college and the experience attained for being in business for some time. He will
take the roles of delegating duties to all his employees and other people in the business. Most
of the negotiations for services will be done by him and will have to pass through him before
any action is taken. Any other member of the organization will be directly answerable to his
office for anything he/she does. He will consult other key personnel when making yearly
budget but will do the weekly budget by himself.

Digital Cyber will be providing computer services to the general public. The business will
open gates to private individuals who would use our service for educate , research ,a number
of computer spaces can be hired at an agreed price for a specified period of time. The above
should book with the manager a few days before for clarity and can even negotiate the
booking price for the system and agree upon the time of exiting the premises.

The business will require Kshs. 1000,000. Financing will be required for the purchase of
machine and equipment, payment of salaries wages, permits, advertising and sales promotion.
This money will be provided by taking a loan from the Cooperative Bank of Kenya, the

1
owner’s contribution and from friends and family contributions. The profit from the business
will be used for further expansion and investments in new areas.

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 CHAPTER TWO
BUSINESS DESCRIPTION
2.1 The Sponsor

The proposed business will be a sole proprietorship owned by kevin muigai and lives in
Nakuru town. Kevin works with a Non-Governmental Organization (Digitech Web maker
inc) and with the developing technology where one can work at home the idea of starting the
Cyber is ideal since it won’t conflict with his work. Kevin is at a young age of 20 will have
graduated from the THIKA TECHNICAL INSTITUTE with a certificate in information
technology

2.2 Nature Of Business

The business’ name will be Digital Cyber under which the business will be registered. I
picked the name since it brings to mind my Vision for digitalizing all our works with
perfection in mind. The name is also simple and attractive hence people will easily remember
it for reference. I believe it will also motivate those in the Computer field to do more research
and improve the digital world thus helping me improve my services.

2.3 Business Location

Digital Computer will be located in Nakuru Town in the Nakuru County. The business will
be located along Geoffrey Kamau Avenue. It will be on the Highway Tower building on the
first floor.

The business came up as an idea after a feasibility study of the area showed that there is high
demand for Telecommunication Medias, the study also showed that there is a high demand
on internet and computer services all around the town.

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2.4 Address and Telephone

The business address is: DIGITAL CYBER

P.O. BOX 149

NAKURU

TEL: 0768528002

EMAIL: digitalcyberKE@hotmail.com

FACBOOK: http://facebook.com/digitalcyberKE

The proprietor focuses on maintaining the business address for as long as possible to enable
easy location of the administration of the Cyber.

2.5 Forms of Ownership

The proposed business will be a startup sole proprietorship business. The starting capital will
be obtained via a loan from co-operative bank, friends and family contributions and the rest
from the owner’s personal savings. This type of ownership will enhance perfect
implementation of the owner’s ideas since decisions will be made faster because little
consultations will be involved.

2.6 Products and Services Offered.

Digital Cyber is more of a service oriented business than product selling. The clients in need
of our services shall be treated with ultimate kindness and quality services shall be offered.

The cyber has state of the art facilities with the fastest internet in Kenya. The computers in
this enterprise will be secured from viruses frequently. The business will also House
computer repair Technicians, simple applications Programmer and also Computer accessories
will be made available for our customers.

The cyber will be opened from seven in the morning and will remain opened until nine at
night. It will be well ventilated, well lit at anytime. There will be a variety of music played
always to keep our customer entertained as they use our facilities. It shall operate normally at
all time and any day of the week making it always available to all willing and able customers.

2.7 Justification of Opportunity

With the growth of the town significantly through the years, population has increased rapidly
and no high technology cyber has been established yet so I will be taking the opportunity of
being the first to giving them one. There are a lot of youthful people who in the weekends
have to go to music and video shops for entertainment but after establishing the cyber I hope
to attract them.
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There is establishment of various colleges and University campuses e.g. Kenyatta University
Nakuru Campus, Egerton University town Campus, Mount Kenya University Nakuru
Campus, Jomo Kenyatta University of Agriculture and Technology Nakuru Town Campus
etc. will also increase my customers since students love social networks and I will offer them
printing scanning and all the other education related services. They will also utilize internet
services during their academic research. The premise is located on the main highway to
Nairobi at an open place so customers will have no problem locating us.

I have the ability to employ some of the best in computer fields in town hence quality
services will assuredly be offered in my Cyber. My security personnel will also have special
training to enable them maintain the required peace and order and most off all CCTV to
ensure security of our customer’s properties . This will attract more customers as security is
ensured.

The employees will be from within the town hence the business will help create employment
opportunities in the community.

2.8 The Industry

Digital Cyber is a service oriented business and falls in the sub sector of entertainment
services the public or individuals shall be served. It will be a medium sized firm but with time
and more profits the business is expected to grow to a large firm.

Due to advancement in technology where wireless networking, wireless internet, fiber optics
and faster computers are being used the industry is expected to grow since quality services
will be provided and the likelihood of hitches is minimized.

There will be an average of four employees that will service the big hall cyber, two security
personnel, a cashier, a janitor and a system officer. I will require at least Kshs. 1,000,000 as
initial capital to start the business. The business is very profitable since people attend
gatherings occasionally and require a place to host meetings via Teleconferencing which will
be made possible by our machines.

2.9 The Entry and Growth Strategy

The first week in business I will arrange a programming competition where the winners will
receive an award. This will to familiarize the future customers with the place and also do
some indirect advertising. The competition will be advertised through leaflets and a large
billboard giving all the information about the Cyber and the annual competitions. With the
advertisement, timing (beginning of the month) and curiosity of the people to explore this one
of a kind amenity, it will surely attract a lot of new customers.

The business is expected to grow fast due to little competition and should have given back the
capital and made a lot of profit in the second year. Expansion plans will start at the end of the
second year.

2.9.1 Objectives
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 1. Providing quality internet services and introducing a higher class of computer services
level in Nakuru town.

2. Providing employment to a significant number of people in the area.

3. Net profit to have a 15% increase each year.

2.9.2 Mission

Our mission is to offer quality Internet services while not only focusing on profits but also the
customer’s welfare. We plan to enter into the computer services business and lure all
customers to our side due to the effectiveness and quality of our services. Our primary
objective at Digital cyber is to maintain the highest level of customer satisfaction.

2.9.3 Keys to Success

1. Quality internet services

2. Secure entertainment spot

3. Affordable services

4. Good relationship between the customers and our business.

5. Expanding the business as one earns more profit.

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 CHAPTER THREE
MARKETING PLAN
3.1 Customers

The customers will mainly include the youth for the Cyber and a broad range of people
among the public population. These involve the customers who will be leasing for projects,
subscribed for monthly internet, Teleconferencing, daily subscribers, online workers and
other internet related jobs. The money can be paid in cash, through M-PESA or cheque to the
business account in the Co-operative bank. For projects, group working, teleconferences
services will be required to pay a down payment of half the charge prior to the service and the
rest of the money after the service. For computer repairs and sells or Ethernet related
diagnosis full amount will be paid before any service. The fee will usually vary from Kshs
1,000-200,000 depending on the technology, type of computer, and service to be rendered.

Institutions subscribing to our wireless internet and the networking services will receive
discounts after six months of services. The target institutions include the campuses and the
few high schools and primary schools around.

Teenagers above the age of fifteen are the target for the cyber and will be charged an entrance
fee of Kshs 1 per minute and when the other services are needed the prices will be friendly
negotiated. For Teleconferencing the bigger the number of customer at ago and the higher the
number of hours in the conferencing the better the prices negotiated. This will be on daily
basis and will contribute a percentage share of 60% to the whole business.

3.2 Market Share

The market share for Digital Cyber fortunately will be 80%. This is attributed to the fact that
there is no other Cyber providing the kind of entertainment we offer in that area. The small
scale firms that lend out public address system to people will only have 20% market share
since my business’s services and equipment will be far beyond their capability. In a few
months the market share should have risen to 95% for Digital Cyber.

Pie chart showing the market share.

Digital Cyber
GOOD Cyber
Others

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3.3 Competition

The entertainment business is a highly competitive market but considering that the town is on
the path of development hence well-established entertainment providers are yet to set foot on
the scene. Digital Cyber will be the first to bring high standard to the town and therefore
competition will be from small sized firms.

There is small cyber cafe which only hosts around thirty customers while Digital has a
capacity of up to 150 people hence an advantage over all these competitors. In addition our
computers will use fiber technology which is more than ten times faster and ideal for
uploading and downloading large files as well as video calling and conferencing. They can
simply not be relied upon. These competitors may charge very little but at the end of the day
quality services will be key and that is where we excel best.

Therefore with great equipment, a large area and excellent services we will be able to
compete and even take most of our competitor’s customer a few months after entering the
scene.

3.4 Pricing Strategies

Pricing will be determined by cost of the business while also bearing in mind that they are
affordable to our customers. For hire of the public teleconference rooms the price will vary
with the time period of using the equipments and the services provided. The prices will range
from 5,000 to 50,000 depending on services provided. If the services require a lot of effort
and time to be chipped in, the fees will likely be higher.

For subscribing services pricing will also depend on the type of job that our facilities will be
used for. During holidays or the festive seasons, general operation costs that are the cost of
using our services and our employees may vary if the number of customers is lower than
expected.

3.5 Promotion and Advertisement Strategy

Digital Cyber main promotion strategy will be via leaflets and billboards that will be posted
all over the town. Word of mouth will also be among our advertisement due to our excellent
services that we will offer hence prompting the customers to spread news about the new,
unique, excellent business. The posters will be put along the busy streets and around our
target customers which mainly include the campuses. In case a big event is around we will
hire some local people to make announcements using the public address system and a pick-up
to ferry them around town.

3.6 Sales Tactics

Sales in our business will be based upon providing customers with quality accessories and all
computer related services that we will leave a lasting impression among them. We will be in
8
touch with the needs and desires of our clients in order to attract a consistent flow of
incoming residents.

The business will maintain high levels of discipline and courtesy among its clients such that
clients will be willing to work with us over and over again. In relation to the Cyber
customers, there will be no manhandling of unruly customers but instead they will be taken
out of the premises and given warning not to step inside the cyber till they modify their
behavior. The business will give the customers an opportunity to book or select the team to
serve them, including the computers they prefer to use and applications they prefer being
installed in the machines.

The business will pay for legal fees and licensing venues of operations thus cutting extra
costs that the customer would have incurred in case of damage and inconveniences. The
business will be taking full responsibility and later settling issues with the client.

We perceive a gradual increase in the total number rental services and customers coming to
our cyber over the years as we gradually move towards the next two years. As time goes on
and when we have formed a loyal clientele base we shall gradually increase the fees but very
carefully in order to keep our customers.

3.7 Services Distribution Strategy

Digital Cyber technicians will be committed to their work. Whenever you need our service
we shall be waiting for our customers. The technicians will be working from nine in the
morning till five in the evening, any service requested past or prior to these hours must be
given the first priority the next working hours. Client using specific resources will be held
responsible if they miss use them or lose them.

To solve the problem we will have to make sure that everything in the business will be
insured for full refund in case some of these problems arise. An alternative means of service
delivery could be arranged if the wireless breakdowns.

Producer customers
Producer manufacturer customers
Producer manufacturer wholesaler customer

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 CHAPTER FOUR
ORGANIZATION AND MANAGEMENT PLAN
4.1 Organization

The business general manager will be Kevin muigai who also owns the business and a
qualified entrepreneur. I will be handling all business decision and implementing them the
experience attained from entrepreneur lessons and having been in the business for so long,
will take the role of delegating duties to other personnel in the business. I will be earning
Kshs 25,000 per month and will review my salary in case need be. The following is the
management chat

MANAGEMENT

SECURITY
PERSONEL SYSTEM
MANAGER MANAGER ADMINISTARTOR

ASSISTANT
MANAGER

4.2 Management Personnel

4.2.1Business manager

Kevin muigai who is the owner of the business will manage the Cyber. As the business
manager he will earn the highest amount that is Kshs 25,000 per month.

Every six months, the manager and his advisor will assess the results of each employee’s
tasks, and the personality of the employee involved, to determine promotion and salary
issues.

Duties

 Giving salaries

 Overall supervising

 Monitoring and offering technical advices

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  Making the final decision

 Ensuring efficient promoting and advertising media

4.2.2 Assistant manager

 Should be experienced in the organization and management of the business.

 Should show qualities of a good leader that can enable me entrust him with the
business when not around.

 He will be in charge of any miscellaneous activities in the business.

 He will be conducting interviews when we want to hire casual employees.

He will earn a starting salary of 15,000 and the business progress will determine a raise or
not.

4.2.3 Security personnel manager

 Should be qualified as a security officer and ready to work extra hours.

 Will be in charge of maintaining the security during shows and in the cyber.

 Will be ordering his junior security managers and ensure their in place.

 Will be responsible and answerable to the general manager.

He will be responsible for the security of the equipment and ensuring order within the
business. He will help coordinate his junior security personnel who will assist him in his
duties.

4.2.4 System officer

 Should be qualified in electrical and electronics and have experience in computer

industry.

 Will be a general electrician and will be installing the gadgets and systems prior to
operators.

 He will be in charge of maintenance of the electrical systems.

All electrical or equipment faults shall be reported to him to ensure they are corrected

4.3.4 Cashier

 Must have at least a certificate in KATC 1.

 Should be above 18 years

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  Should be fluent in English and Kiswahili.

 He will be responsible for all financial transactions of the business.

 Will be keeping records of the daily transactions of the business.

4.3.5 System Administrator

 Must have experience in UNIX system with at least two years of experience

 Should be above the age of 18.

 Should ensures that all machines are up and running

 Maintain computer security and allocated system right according to privileges

 Should be fluent in English and Kiswahili.

He will be responsible for hosting the company’s website and maintain the server up and
running. Also to ensure there is back up and have a definite recovery strategy upon
infected by viruses.

4.4 Other Personnel

The business will require at least three extra personnel who will include the janitor and two
bouncers. The janitor will be responsible for the hygienic standards of the Cyber by cleaning
the place every day hence he must be a hardworking man and should always report to work
on time. The janitors salary will be 5,000 and will be reviewed, need there be.

The two bouncers will coordinate with the head of security to ensure peace and calmness is
maintained in the discotheque while also guarding the equipments when we have gone for
outside services. The bouncers will earn 6,000 each and the head of security will be
responsible for their needs.

4.5 Recruitment, Training and Promotion

As the manager any hiring will be done through me and in accordance to my regulations. All
the employees must have enough qualifications depending on their role in the business. Only
the key personnel will be require to produce documents certifying that their qualifications are
genuine while the other personnel can be evaluated using simpler techniques that is simple
interviews.

Letters of application will be brought to the general manager or one is expected to visit the
business premises in Ruttoh’s office and see the manager. The posters will contain the
business phone numbers which will enable the applicants reach the manager easily.

The job opportunities shall be advertised through posters and the interested individuals will
be interviewed.

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Training shall not be required since we trained personnel will be required but evaluations will
consider whether the individual is well qualified to work in the business or not.

4.6 Remuneration and Incentives

Remuneration and incentives shall be given to all staff members to motivate and boost their
morale. Their salaries shall be based on position held in business and in general business
output. The salaries and wages shall be fixed but as the business progresses it is expected to
increase.

PER MONTH
POSITION NO.EMPLOYED SALARY
General manager 1 35,000
Assistant manager 1 15,000
Security personnel manager 1 10,000
Systems Admin 1 8,000
Cashier 1 10,000
Cyber Assistants 2 7,500
Disk jockey 1 8,000
Cleaner 1 5,000
Bouncers 2 6,000

On days when business is slow leaves shall be offered to the staff depending on their roles.
Sick off leaves shall also be provided to workers.

Till the business grows to the capacity of employing more staff, the employees will have to
take only one day off per week and on these days I will have to hire temporary personnel to
cover the vacant spaces of the employees.

We will be hosting an end of the year party where the employees will chose a place to visit
and at least escape from their usual routine.

4.7 Licenses, Permit And By-Laws

The registrar of businesses will issue a certificate from municipal council of Nakuru town, his
hand and seal will do the registration of the business name pursuant and in accordance with
the provision of registration of business names Act (CAP 499 sec. 14).

For any business to succeed there should be legal laws governing it. Digital Cyber is not an
exception and the general rules of courtesy, honesty, kindness, humility and other virtues will
apply.

It will run in accordance to the N.E.M.A. regulations Bill of 2010.

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4.8 Supportive Services

Various support services will include insurance, electricity and banking.

4.8.1 Insurance

Digital Cyber will be insured by Pan African Insurance against theft, accidents and fire.

4.8.2 Electricity

Electricity will be provided by the Kenya power and lighting company. Operation of
machines will be entirely electrical but in case of power failure we will be renting generators
for power provision.

4.8.3 Banking

The business will have an account with Co-operative bank of Kenya, Nakuru branch. All
salaries will be paid across the banks counter for those who have accounts but through M-
PESA for those without.

4.8.4 Advisors

When making yearly budgets I will be consulting with the best business managers to assist in
major business financial works.

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 CHAPTER FIVE
OPERATION PLAN
5.1 Production Facilities

Every business requires financing in order to carry out its activities satisfactorily to meet its
objectives. Memories discotheque will need financing to run smoothly and attain set
objectives. Below are the operational facilities and expected sourcing.

5.1 Operational Facilities and Capacity

DESCRIPTION QUANTITY COST TOTAL SOURCE

Computers 45 1,350,000 Savings

Cash register 1 10,000 Savings

woofer 2 10,000 Loan

routers 8 32,000 Loan

Labor(workmen) 8 30,000 Loan

Premises(house rent) 1 12,000 Savings

Chairs and tables

70 78,000 Loan
Computer acc

Other expenses N/A 500,000 Savings

N/A 50,000 Savings

TOTAL 2,072,000

5.2 Attainable Capacity

The business will have a store located inside Cyber which will be holding all the operational
facilities for hire, example Projectors, large monitors, speakers, microphones, mixers and
boosters for easy access to the customers. To ensure efficiency, the business will purchase
machines of high quality and easy to use hence effective communication between the
customers since they will be easy to use. Communication facilities will be open during
business hours and in that way help customers who might require making orders. The
business will also buy a landline phone to serve the same purpose in a cheaper way.

15
5.3 Production Strategy

In order to get maximum benefits, Memories Digital Cyber will try to minimize wastage of
all the resources at all costs. This will ensure timely work and curb interferences.

5.3.1 Operational design and development

My business will place adverts to all sources accessible to all esteemed customers. This will
ensure that the target groups are all received and made aware of our services especially on
holidays. Hire a truck which will move around with our crew advertising events forth
coming.

As this business is expected to grow we shall be arranging with local authorities in town
center e.g. in stadiums and public grounds. Digital Cyber will be charging an entry fee to the
parking fee outside our premises. We also intend to be leasing out our systems to interested
individuals to use during their events at their desired location. This will definitely take care of
competition and increase our relation to customers. For those willing to hire we will be open
to all and operate with integrity.

5.3.2 Cost of operation

Good operation involves the purchase of the following materials: Accessories such as hard-
disks, RAMs, Processors, mother boards will be bought, cleaning materials including soap
and detergent plus brooms to clean the Cyber after being used. This will ensure high hygiene
standards, one of the qualities we will be known to uphold. The pathways will be indicated to
help customers find their way around the Cyber.

We shall also buy snacks plus beverages for the staff. The overhead cost will include water
bulb, electricity, transport, the telephone bill and maintenance i.e. buying cleaners and rent
including some miscellaneous activities.

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The following table illustrates cost per monthly salary allowance.

SERVICES COST PER MONTH

(KSHS)
Ethernet leasing 75,000

Daily Browsing 8,000

Accessories 30,500

Brooms and mops 100

Staff snacks and Beverage 2,000

TOTAL 115,600
Overheads Cost per month

Water bill 500

Electricity 1,500

Transport 5,000

Telephone 1,000

Maintenance 3,000
TOTAL 11,000
TOTAL COST OF OPERATION 126,600

5.3.3 Labor

Recruitment of workers and persons will be strictly on merits and experience. Newly
recruited personnel shall go through a probation period of one week after which the one who
shows competence will be eligible for the job. Those workers/personnel who do not perform
to the expectation of the business will be forced to leave the job. Lateness and absenteeism
will not be tolerated. Workers who show exemplary performance will be appraised and
rewarded accordingly for example they can be promoted to be supervisors. Water taps and
bulbs should be off always when not in use to limit wastages and every staff is expected to
turn them off when not in use. The systems operations will ensure that the machines and
services and also other properties are maintained.

5.4 Production Process

This will be a systematic process showing how activities and services towards perfect
production in Digital Cyber will be carried.
17
The team will have to prepare for competitions. In the event of school rallies, the booking
will be done one week prior to the date scheduled to give adequate time for organization and
obtaining licenses. Personnel whose duties have been carried out to satisfactory levels will be
given work offs as the business can be run by the other employees with tasks to complete.
The rotation will continue till the events pass.

Digital Cyber will have all the application forms for hire channeled to the manager when the
assistant manager has discussed the conditions and agreed on the terms of services. We will
send messages or call the concerned customers notifying them of the progress and giving
them our views. We will expect feedback which will help correct mistakes and serve the
customer to the best.

5.5 Regulation Affecting Operations

Digital Cyber will abide to all internal and external regulations in order to excel in the
business.

5.5.1 Internal rules and regulations

Employees of Digital cyber will always be in uniform and their name tag on for easy
identification by the customers and the audience.

No employee is expected to don casual or civilian clothes when at work. Each employee will
have to notify the personnel manager whenever he/she wants to be away from work and the
records kept.

All employees of the business must ensure that they are well behaved when handling
customers. Arrogance must be avoided at all times and customers treated with respect.

5.5.2 External regulations

The business will meet

 All the by-laws of the town

 It will register and obtain certificate of operation.

 Toilets and latrines will be kept clean to meet the health regulations and standards.

 We will expect all our employees to be members of National organizations like

the National social security fund unions.

We shall ensure that all our suppliers are issued receipts to every business transaction carried
out to avoid illegal deals and sale of stolen goods to the business. This will also help in
keeping track of money and equipment thus reduces losses. The business will not cause
havoc and inconveniences to its neighbors. Memories Discothèque premises will conform to
all laws on garbage disposal, sewage maintenance as directed by the laws of the town
council.
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 CHAPTER SIX
FINANCIAL PLAN
6.1 Pre-Operational Cost

These are expenses incurred before commencement of the operations. The following are the
projected pre-operational expenses.

ITEMS KSHS
Computer 55,750
Furniture 10,000
Software 6,000
Router 3,500
UPS 3,000
Cooler 2,500
Webcams 1,200
Headphones 1,050
Racks 1,000
Cable 600
Extensions 450
Ethernet ports 350
TOTAL 101,350

6.2 Working Capital Requirements

Working requirement for the first year will be used in operation on start of the business. This
will include purchase and any other operation cost.

SOURCE OF INCOME KSHS

Co-operative bank - 450,000

Contribution - 270,000

Friends & family - 162,000

TOTAL - 912,020

Working capital = total capital - operational cost

912,020 – 101350 = 810,670

6.3 Proforma Income Statement For The First Tree Years

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 Proforma Income Statement for Year One, Year Two and Year Three.

ITEM YEAR 1 YEAR 2 YEAR 3

Cash at hand generated 1,800,000 1,900,000 1,500,00
Cost of goods sold 480,000 500,000 300,000
GROSS PROFIT 1,320,000 1,400,000 1,500,00
Expenses
Rent 24,000 24,000 24,000
Payment to audition 30,000 31,000 32,000
Advertisement 1,000 1,000
Salary & allowance 826,000 874,000 740,000
Sundry expenses 20,000 21,000 15,000
Telephone 6,000 5,000 4,000
Maintenance 500 1,000 500
Transport 2,400 23,000 20,000
Water bill 3,000 3,500 4,000
Electricity bill 24,000 20,000 18,000
Receipt book 500 200 300
License 7,000 7,000 7,000

TOTAL EXPENSES 818,000 836,700 864,800

NET PROFIT BEFORE 502,000 563,300 635,200
TAXATION 3,000 3,000 3,000
LESS TAX
NET PROFIT 499,000 560,300 632,200

6.4 Proforma Balance Sheet

This shows the financial position of the business.

BALANCE SHEET FOR THE FIRST THREE YEARS

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 ITEM END OF YEAR 1 END OF YEAR 2 END OF YEAR 3
Fixed assets
Speakers 60,000 80,000 80,000
Conference rum 10,000 10,000 5,000
projector 10,000 10,000 5,000
plasma screens 4,000 4,000 4,000
Labor 30,000 32,000 30,000
Premises 2,000 5,000 2,000
Chairs & tables 4,000 2,000 4,000
lighting 2,000 1,000 2,000
Cables and wires 5,000 1,000 5,000
Computer 30,000 25,000 30,000
Total fixed assets 161,000 172,000 171,000
Current assets
Cash at hand 200,000 210,000 212,000
Cash at bank 582,020 590,000 585,000
Debtors 30,000 32,000 31,500
Total current 812,020 832,000 828,500
assets

Current liabilities
Creditors 6,000 5,000 9,000
Total current 6,000 5,000 9,000
liabilities
Long term
liabilities 450,000 300,000 150,000
Co-operative loan 270,000 270,000 250,000
Owner’s Equity
Total liabilities 726,000 575,000 409,000

6.5 Break – Even Point Determination

This is the point at which the business makes no profit or loss. All the sales are equal to the
expenses and cost of raw materials.

ITEM COST
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Fixed costs
Salaries and wages 795,000
Licenses 7,000
Rent 24,000
Total fixed cost 826,000
Electricity 24,000
Water 3,000
Telephone 6,000
Advertisement 1,000
Maintenance 500
Transport 24,000
Total Variable costs 58,500
Contribution
Sales 1,800,000
Variable cost 58,500
Sales-variable cost 1,741,500

 Total contribution = Sales – Total variable costs.

1,800,000 – 58,500 = 1,741,500

 Contribution Margin percentage = Contribution margin/sales * 100

1,741,500/1,800,000 * 100 = 96.75%

 Total Fixed Costs = 1,267,000

 Break Even level = Total Fixed Costs/Contribution margin

826,000/96.75 = 8537.50

6.6 Expected Profitability Ratio

Gross profit percentage

1,320,000/1,800,000 * 100 = 73.3%

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 Return on Equity = Net profit after tax/owner’s equity * 100

499,000/270,000 * 100 = 184.81%

Return of Investment = Net profit after tax/Total investment * 100

499,000/912,020 * 100 = 54.71%

6.7 CRITICAL RISK AND SOLUTION

 There is competition from existing firms. The proprietor will use effective promotion
methods to build a large customer care.

 Security threat. The proprietor will ensure the doors and windows are reinforced with steel
and also have a security personnel to guard the place.

 Power. The proprietor will ensure there are backup generators in case of power loss.

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 MILESTONE SCHEDULE

Milestone Start date End date

Choice of business plan proposal 22/02/2020 23/02/2020

Business plan drafting 26/02/2020 27/02/2020

Collection of data for business plan 01/03/2020 09/03/2020

Final business plan drafting 10/03/2020 13/03/2020

Commencement of business plan writing 15/03/2020 ___

Submission of progress 26/03/2020 26/03/2020

Corrections 27/03/2020 27/03/2020

Submission of corrections 28/03/2020 28/03/2020

Balancing of books of accounts 22/05/2020 24/06/2020

Completion of business plan writing ___ 07/07/2020

Submission of business plan progress 09/07/2020 09/07/2020

Corrections 10/07/2020 11/07/2020

Submission of corrections 14/07/2020 14/07/2020

Printing of compiled business plan 15/07/2020 15/07/2020

Binding of business plan 15/07/2020 15/07/2020

Submission to KNEC

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