0% found this document useful (0 votes)
45 views30 pages

Business Plan: HTP//WWW - Info@linxelectronics - Co.ke

Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
45 views30 pages

Business Plan: HTP//WWW - Info@linxelectronics - Co.ke

Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 30

BUSINESS PLAN

P.O BOX 593-50100, KAKAMEGA

PHONE NO: +254 702 092 119 +254 713 419 860 +254 736 684 492

Website: htp//www.info@linxelectronics.co.ke

Email address: linxelectronicsoln@ymail.com

NAME: SANYA C. FELIX

ADMISSION NO: 2015/BE/30655

CLASS: 2015/BE/BA1A

SUPERVISOR: MR. LIDIGU S. SEBASTIAN

DATE OF SUBMISION: NOVEMBER 2015

SUBMITED TO: KENYA TECHNICAL TRAINERS COLLEGE (K.T.T.C) FOR THE PARTIAL FULFILMENT FOR
THE AWARD OF A DIPLOMA IN TECHNICAL EDUCATION BUSINESS ADMINISTRATION OPTION
Declaration

I declare that the information content of this report is absolutely and entirely personal. The research
ideas and facts have never been presented to any examination body, institution or whatsoever case for
the award of a certificate, diploma or degree.

COMPILED BY;

NAME ADM.NO SIGN DATE

SANYA C. FELIX 2015/BE/30655 12/11/2015

This Business plan has been submitted for examination purpose with my approval as the college
supervisor Entrepreneurship Department.

NAME OF SUPERVISOR: MR. LIDIGU S. SEBASTIAN SIGN DATE

i
Dedication

I wholly dedicate the successful completion of this business plan work to my affectionate and beloved
parents; my dad MR. WANDERA JACKSON MANGALA and mom MRS. PHANICE KHAERE WANGA for
their consistent financial, advisory and moral support.

ii
Acknowledgement

I truly thank the ALMIGHTY GOD for making this project work a total success. Praise be to his name.

My gratitude goes to my dear parents MR. WANDERA JACKSON MANGALA and MRS. PHANICE KHAERE
WANGA for their endless moral, financial and advisory support. Their total consistent effort during this
academic period has been the key perpetuator of this project work. Many heartfelt thanks for their
valuable support.

Many heartfelt thanks to the entire KENYA TECHNICAL TRAINERS COLLEGE (K.T.T.C) fraternity. To
mention only but a few; the supervisor MR. LIDIGU S. SEBASTIAN worth mentioning is his valuable
support guidance and direction issued during the project work, the INSTITUTION MANAGEMENT for a
conducive learning environment, my CLASSMATES for their brilliant contributions through consultations
and giving me the morale to complete this work.

I would also like to extend my gratitude to my family member’s especially my siblings ERICK, MORDDY,
EDDY and AMO for their affiliate support during this period.

I owe the successful completion of this project to all these people for they were constantly beside me,
cheering me and supporting me all the way during my fruitful struggle to ensure this work turns out a
success. God bless you all.

iii
Table of content

Preliminary pages

Declaration ………………………………………………………………………………… (i)

Dedication ………………………………………………………………………………… (ii)

Acknowledgement ………………………………………………………………….… (iii)

Table of content ……………………………………………………………………. (iv)

CHAPTER ONE

1.0 Business description ................................................................................................ 1

1.1 Business information ……………………………………………………………………………………………... 1

1.2 Business name and location ………………………………………………………………………………………………

1.3 Reasons for the choice of the location ………………………………………………………………………………

1.4 Form of ownership ……………………………………………………………………………………………………………

1.5 Objectives of the business ……………………………………………………………………………………………….

1.6 Keys to success ……………………………………………………………………………………………………………

1.7 Products or services ……………………………………………………………………………………………………………

1.8 Justification of the opportunity …………………………………………………………………………………………

1.9 Industry ……………………………………………………………………………………………………………………….

1.10 Entry and growth strategy ……………………………………………………………………………………………..

CHAPTER TWO

2.0 Marketing plan …………………………………………………………………………………………………………..

2.1 Customers ……………………………………………………………………………………………………………………….

2.2 Competitors ………………………………………………………………………………………………………………………

iv
2.3 Strength Weakness Opportunity Test (SWOT) Analysis …………………………………………………….

2.4 Methods of Promotion/ Advertisement ……………………………………………………………………………

2.5 Pricing strategy ……………………………………………………………………………………………………………

2.6 Sales strategy/ techniques ………………………………………………………………………………………………

2.7 Distribution strategy ………………………………………………………………………………………………

2.8 Challenges and their solutions …………………………………………………………………………………

CHAPTER THREE

3.0 Organization and management plan ……………………………………………………………………………………

3.1 Organization structure ………………………………………………………………………………………………...

3.2 Employees qualifications …………………………………………………………………………………………………

3.4 Remuneration/ Salaries and allowances ……………………………………………………………………………..

3.5 Training and Staff ……………………………………………………………………………………………………………..

3.6 Managing change ……………………………………………………………………………………………………………..

3.7 Support services ……………………………………………………………………………………………………………..

CHAPTER FOUR

4.0 Production and operation plan …………………………………………………………………………………….

4.1 Production facilities ………………………………………………………………………………………………………………

4.2 Production layout plan and office layout ………………………………………………………………………..

4.3 Production process ………………………………………………………………………………………………………………

4.4 Government regulations ………………………………………………………………………………………………….


CHAPTER FIVE

5.0 Financial plan ……………………………………………………………………………………………………………….

5.1 Pre-operational cost …………………………………………………………………………………………………………….

5.2 Working capital estimations …………………………………………………………………………………………………


v
5.3 Income statement for the year ending31st December 2015, 2016 and 2017 …………………….

5.4 Balance sheets for 2015, 2016 and 2017 ……………………………………………………………………….

5.5 Projected cash flow for the Business for 2015, 2016 and 2017 …………………………………

5.6 Break Even Analysis ……………………………………………………………………………………………………………..

5.7 Proposed Capitalization ……………………………………………………………………………………………………….

5.8 Profitability ratio…………………………………………………………………………………………………………………..

vi
CHAPTER ONE

1.0 BUSINESS DESCRIPTION

The proposed business will be a sole proprietor business known as LINX ELECTRONICS AND
ACCESSORIES SOLUTIONS HOLDINGS basically dealing with electronics and their accessories and
services.

The anticipated business will be a potential business based on the fact that the demand of modern
electronic accessories in KAKAMEGA town has rapidly increased due to the rapid changes in the
technological advancement of electronic accessories. This is majorly due to the paramount shift into the
digital operations of the modern electronics leading to wide scope in electronics demand, taste and
preferences.

1.1BUSINESS INFORMATION

The proposed business will be a sole proprietor business .The business will be dealing with electronic
products and services such as; repair, fixing, selling, shopping, cleaning of electronics and other essential
services like charging of car batteries and mobile phones. The business is designated to commence in
January 2016.

1.2 BUSINESS NAME AND LOCATION

The sponsor intends to start an electronic and accessories shop by the name “LINX ELECTRONICS AND
ACCESSORIES SOLUTIONS HOLDINGS” which is derived from the proprietors’ name FELIX SANYA - LINX
and whose pronunciation creates the meaning of connecting.

The proposed business will be located in LURAMBI MARKET- JUNCTION situated alongside KAKAMEGA-
WEBUYE road 0.9 KMs from form KAKAMEGA TOWN CENTRE (CBD), 0.3 KMs from MASINDE MULIRO
UNIVERSITY OF SCIENCE AND TECHNOLOGY (MMUST), opposite the Chiefs camp and Administration
police post in the SAVLON BUILDING.
1.2.1 LOCATION MAP

UNIVERSITY
MMUST

STATION
PETROL
KAKAMEGA WEBUYE ROAD
TO ACK SHOW GROUND
TO LURAMBI

PETROL
CHIEFS
STATION
CAMP

1.3 REASONS FOR THE CHOICE OF THE LOCATION

From the market survey carried out by the proprietor it is noted that there is stiff competition already in
existence among the electronics and accessories shops in KAKAMEGA town. These shops are majorly
located in the central business district (CBD) of the town. This location close to the central business
district (CBD) but outside the central business district (CBD) will offer the enterprise a good opportunity
to attract new customers based on the region as well as reducing sharing of customers with the other
existing electronics and accessories shop.

1.4 FORM OF OWNERSHIP

The proposed business will be a sole proprietorship business because it is easy to manage and enhance
quick decision making.

1.5 OBJECTIVE OF THE BUSINESS

The primary objective of the business is to ensure that the business opportunity provides products to its
customers and accelerate good customer services to win customers confidence.

The objective of the business in relation to the product performance will be to ensure maximum
customer satisfaction through provision of high quality products of original standards at customer
friendly prices.

Other objectives include;

 To create employment to the sole proprietor and other business employees


 To ensure profit generation so as to sustain the business operators
 To ensure customer satisfaction through good customer service provision and
quality product delivery

1.6 KEYS TO SUCCESS

LINX ELECTRONICS AND ACCESSORIES SOLUTIONS HOLDINGS has two main competitors namely;
MENENGAI ELECTRONICS AND ACCESSORIES and KAKAMEGA KIDS CAMP ELECTRONICS AND
ACCESSORIES. The competitors offer same services as that proposed by LINX ELECTRONICS AND
ACCESSORIES SOLUTIONS HOLDINGS. However LINX ELECTRONICS AND ACCESSORIES SOLUTIONS
HOLDINGS has a suitable location away from the town center reducing competition, operates at middle
level which is easier to manage and organize, offers products at a customer friendly price and has more
operational hours thus will serve more customers. Therefore LINX ELECTRONICS AND ACCESSORIES
SOLUTIONS HOLDINGS is deemed to succeed.

1.7 PRODUCTS OR SERVICES

The production services will be offering different types of electronic accessories inclusive of modern
computers, mobile phones, radios, television and their accessories so that customers can have a wide
choice from the variety.

Basic repair and maintenance of electronics such as computers and mobile phones will also be carried
out.

1.8 JUSTIFICATION OF THE OPPORTUNITY

The potential of the business prosperity is based on the fact that there is a high demand of electronics
and their accessories in the densely populated urban setting of KAKAMEGA town. The proposed
business has the potential to perform due to the available proprietor’s vast entrepreneur knowledge
and competency skills acquired through training. This includes price setting policy which is customer
friendly thus attracting more customer attention as well as favoring the business growth, proper
accounting and record keeping to facilitate swift decision making and minimizing losses, special and
careful credit.

It is important to note that the business entails selling and service of machines which are non-
perishable commodities. This provides for all season availability of the market thus minimizing chances
of incurring losses due to the perishability of stocks. On the contrary it is also beneficial to have much
electronics on the display as it reduces the stock costs.

The business is cheap to start and more beneficial than any other forms of businesses identified in the
region.
1.9 INDUSTRY

The anticipated business belongs to the Electronic and Electronics Industry which has a higher potential
growth capability in KAKAMEGA COUNTY region.

1.10 ENTRY AND GROWTH STRATEGY

The anticipated business will be a potential business based on the fact that there is a high demand of
electronics and their accessories in the densely populated urban setting of KAKAMEGA town. The
available opportunity being that the demand is caused by shifting from usage of analogue electronics
systems to the modern digital system.

The proprietor has decided to set his enterprise in KAKAMEGA town entrance alongside the KAKAMEGA
WEBUYE ROAD only 0.9 KMs from the Central Business district (CBD) where competitors are congested
as an entrance strategy to minimize competing for customers. The business enterprise will major on
advertisement of its products and services through local station sign posts, posters, and brochures local
newspapers and magazines and sharing information with its customers so as to penetrate the
anticipated market. Also the business shall instill honest character amongst works to win the trust of
existing customers for the purpose of retaining them.

The business will easily grow into a success because its customers will enjoy customer friendly services
as well as special credit facilities to the esteemed customers thus meeting the anticipated market share
of up to 1500 people within and outside environment. Thus through the laid strategies the business
established is set to perform right from the opportunities available for market penetration.
CHAPTER TWO

2.0 MARKETING PLAN

The proposed business is aimed at serving customers from all level, these includes; institutional
customers, commercial customers and individuals of ordinary prudence.

2.1 CUSTOMERS

The holding has a target of customers within KAKAMEGA COUNTY region and its neighboring counties.
The anticipated customers were grouped into three major sub divisions which are discussed below.

2.1.1 INSTITUTIONAL CUSTOMERS

Proposed business targets neighboring institutions as its potential customers. The major institutions
include Kenya Medical training college (K.M.T.C), Masinde Muliro University of Science and Technology
(M.M.U.S.T), Kenya institute of management, The Kakamega Provincial General Hospital (K.P.G.H),
Kenya Agricultural Reseearch Institute (K.A.R.I), Shikoti Girls High School, Ingotse Boys High School and
potential churchs i.e the Salvation Army Church and the Catholic Church. All these institutions found in
KAKAMEGA COUNTY. They will provide a ready-made market as well as a bulky purchase for large scale
consumptions.

2.1.2 COMMERCIAL CUSTOMERS

The business shall identify commercial customers and has planned to contract successful business with
them. It will offer credit facilities to trustworthy and creditworthy customers as well as reasonable
discounts on bulky purchases. Since LURAMBI ESTATE is growing rapidly, the business will identify
commercial customers within the estate and its neighboring regions like SICHILAYI MARKET.

2.1.3 LOCAL CUSTOMERS

The business anticipates being the leading customer satisfying holding Therefor as part of the marketing
strategy the business targets to attract more local customers of all social caliber in the society. This is to
be met by availing a variety of product range so that each customer finds his./ her flavor. The business
also intends to set prices of the commodities basing on the average local customer income and as low as
possible compared to competitors in the market. The business is interested in local customers as they
serve a great role in advertisement of the enterprise through grapevine communication.
2.2 COMPETITORS

LINX ELECTRONICS AND ACCESSORIES SOLUTIONS HOLDINGS has two main competitors namely;
MENENGAI ELECTRONICS AND ACCESSORIES and KAKAMEGA KIDS CAMP ELECTRONICS AND
ACCESSORIES. The competitors offer same services as that proposed by LINX ELECTRONICS AND
ACCESSORIES SOLUTIONS HOLDINGS. However MENENGAI attempts to offer satisfactory services to its
customers compared to KAKAMEGA KIDS CAMP.

LINX ELECTRONICS AND ACCESSORIES SOLUTIONS HOLDINGS also has minor competitors who are
individual sole proprietors. They are AMANI ELECTRONICS and CHAGA ELECTRONICS.

2.3 STRENGTH WEAKNESS OPPORTUNITY TEST (SWOT) ANALYSIS

It is evident that the proprietor will compete on the competitors’ weaknesses to win more customers
and ensure business success as shown in the tables 2.3.1 and 2.3.2 below

2.3.1 MAIN COMPETITORS

EVALUATION KIDS CAMP MENENGAI LINX ELECTRONICS &


DETAILS ELECTRONICS & ELECTRONICS & ACCESSORIES SOLN.
ACCESORIES ACCESORIES HOLDINGS
Location Town Centre Town Centre Estate and Town
Bus stop Stage Entrance Junction
Scale of production Top level Top level Middle level
Technological level Mechanical & labor Mechanical & labor Mechanical & labor intensive
intensive intensive
Products offered Electronics & Electronic Electronics & Electronic Electronics & Electronic
Accessories dealers Accessories dealers Accessories dealers
Customer – Poor Fair Good
Employee relation
Time Management:
Opening time 10.00 Am 8.30 Am 6.30 Am
Closing time 4.00 Pm 5.00 Pm 6.30 Pm
Strengths  4 Years’ Experience  7 Years’  Good location
 Good size Experience  Modern Technology
 Fair price
Weaknesses  Very Expensive  Poor location  New in the field
(price)  Low skilled labor
 Poor services
 Poor Reputation
2.3.2 MINOR COMPETITORS

Table 2.3.2 Shows rating by effort

FACTORS LINX HOLDINGS AMANI ELECTRONICS CHANGA ELECTRINICS


Size 1 2 3
Price 2 1 4
Personnel 1 4 2
Service 1 2 3
Promotion 1 2 4
Location 1 2 4
Total Score 7 13 19
Mean Score 1.16 2.1 3.1

2.4 METHODS OF PROMOTION/ ADVERTISEMENT

The enterprise will ensure product and services promotion is fostered due to the need to maintain
customers. This will be done through special offers being awarded to esteemed customers, provision of
after sale services to bulky purchases, free consultancy services and direction of customers at the start
of the business, issue of discounts to products on a regular schedule, association of products and
services with prominent and famous persons in the society i.e. talented musicians and finally issue of T-
shirts, scarfs, handbags, caps etc. with printed organization logo and name.

2.5 PRICING STRATEGY

The business aims of pricing level are to generate maximum profits possible without exploiting the
customer. Products and service quality will commemorate the price charged to the customer.

2.6 SALES STRATEGY/ TECHNIQUES

The entire population of LURAMBI ESTATE and KAKAMEGA TOWN is 15,000 roughly by estimation. The
entire population is evenly distributed in both homesteads and rental apartments as well as in firms. The
business is expected to serve around 8,000 customers in a year with at least 30 customers in a day
within the region. Thus the market share will be based on the following target;

30(Customers per day) X 30(Days of the month) = 900(Customers per month)

900(Customers X 12 Months) = 10800 (customers per Year)


Market Share= 10,800(Expected customers per Year X 100%)

15,000(Expected customers in total population)

= 72%

Target (%) = 8,000 (Estimated customers to be served per year) X 100%

15,000(Expected customers in total population)

=53.3%

The business will then operate on the return on investment by computing expected profits earned in
relation to the capital employed to the business in order to basically satisfy the proprietor, that the
percentage target and market share percentage were perfectly estimated.

R.O.I = N.P X 100%

2.7 DISTRIBUTION STRATEGY

The channel of distribution will include supply of products i.e. electronics and electronic accessories and
services i.e. basic repair and maintenance of computers, phones etc. directly from the business to the
customers and penetrating the market in the business area. The channel of distribution will therefore be
ZERO CHANNEL AS OUTLINED BELOW.

LINX ELECTRONICS AND ACCESSORIES SOLUTIONS HOLDINGS CUSTOMERS

2.8 CHALLENGES AND THEIR SOLUTIONS

The challenge involved in the zero distribution channel is discussed below and an attempt to find its
solution so as to cope with the challenge swiftly.

2.8.1 CHALLENGES OF DISTRIBUTION STRATEGY

All other competitors use intermediaries in their day to day transactions. This makes it easy for them as
they can easily dispose their products to the market as well as have larger market coverage through the
intermediaries’ interaction with the customers on their behalf.
2.8.2 SOLUTION TO THE PROBLEM

To ensure the business captures a wider market using the ZERO distribution channel, It is important to
sell Products to other retailers and encourage placement of orders directly from customers. The delivery
of products and services by order from customer should be quick and efficient too.
CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

The proposed business enterprise is designed to have a precise channel of flow of authority and
communication within members of the organization. The formal channel of communication and
authority bestowed will base on various department levels as indicated in the organization structure.

3.1 ORGANIZATION STRUCTURE

MANAGER

MANAGER

RECEPTIONIST CASHIER CLEANER

SECURITY/ GUARD OFFICER

3.2 EMPLOYEES QUALIFICATIONS

LINX ELECTRONICS AND ACCESSORIES SOLUTIONS HOLDINGS members will have the following
qualifications.

3.2.1 MANAGER

The business sponsor MR. SANYA C. FELIX will partake the roles and responsibilities of the overall
management of the enterprise.

3.2.1.1 QUALIFICATIONS

Holder of a Diploma in Technical Education (Business Administration Option)

Holder of a Diploma in Business Administration

Adequate knowledge in computer related field


3.2.1.2 DUTIES AND RESPONSIBILITIES

Chief financial controller of the business

Sole final decision maker

Chief formulator of business policies in regard to business operation

Managing/ checking books of accounts final statement

Overall resource allocation

3.2.2 ASSISTANT MANAGER

The assistant manager will be charged with the responsibility to assist the manager in day to day
operations and serve his roles in the manager’s absence or as assigned by the manager.

3.2.2.1 QUALIFICATIONS

Diploma holder in Business management related course

Ability to communicate fluently

3.2.2.2 RESPONSIBILITIES

Assist management in the execution of the topmost duties

Charged with personnel management

Charged with operations management

3.3 OTHER PERSONEL

Other personnel will include the receptionist, two cashiers, two cleaners and one security officer

3.3.1 CLEANER

Must have working experience in the field

Adequate knowledge in handling electronics

Must be person of good conduct and of high integrity


3.3.2 CASHIER

Must have certificate in K.A.T.C I and II (or an Equivalent certificate)

At least two years’ experience in financial department

Must have both accounting and secretarial skills

Aged 25-35 years

3.3.3 RECEPTIONIST

Fluent communication ability in both English and Kiswahili

Experience in attending to office operations

Adequate knowledge in office management and administration

Any public relation related field certificate will be considered advantageous

Should be computer literate

3.3.4 SECUIRITY OFFICER

The business shall have one security officer obtained from a well-known, qualified and certified security
agency. The security guard officer shall not be permanently employed but will be change/ replaced from
time to time basing on the contract established between the organization and the security agency firm.

3.4 REMUNERATION/ SALARIES AND ALLOWANCES

The enterprise will carry out job evaluation so as to determine importance of a job to its worthiness in
relation to payments to be established in order to motivate workers. This will be stipulated through
salaries, remunerations and incentives.

The enterprise intends to give attractive salaries on monthly basis so as to effect and employ of studying
and measuring the work by description this will depend on the job title and education level.

Essential incentives will be given inform of Bonus pay on overtime work, commissions on salaries, salary
advance, lunch will be provided and tea in the evening, educative trips for training, payments will be
administered during annual leave and annual awards on great performance.
3.4.1 REMUNERATION TABLE

JOB TITLE NO MOTHLY PAY ALLOWANCE TOTAL


& BENEFITS
Manager 1 12500 2500 15000
Assistant Manager 1 11000 2000 13000
Cleaner 2 4000 200 4200
Receptionist 1 5000 400 5400
Cashier 2 6000 500 6500
Security guard 1 2800 200 3000
TOTAL 8 41300 5800 47100

3.5 TRAINING AND STAFF

The major purpose of training employees will be to ensure they are well versed with the job they will be
performing so as to increase their vast knowledge and skills in doing the required jobs. The following
trainings will be conducted on various groups of employees.

a) Orientation training will seek to adjust the newly employed employees to the working
environment and to make them fully familiar with their superiors and subordinates and the
regulations of the organization so as to instill confidence in them
b) On- the job training will aim at increasing employees knowledge and skills on the technical
know-how to perform duties at the place of work.
c) Safety training will aim at minimizing accidents at work and reducing damage of electronics and
accessories hardware
d) Promotion training will seek to ensure existing employees are able to perform higher level jobs
for internal recruitment purposes
e) Refresher training will be designed to revise the knowledge and to upgrade the skills of existing
employees
f) Remedial training will be arranged by the top level management to overcome shortcomings in
the behavior and performance of old employees so as to rectify inappropriate methods and
style of working picked by employees.
g) Supervisory and managerial training will seek to train top level management to facilitate
effective decisions, how to work with people, improve communication, how to motivate
employees and finally problem solving.

3.6 MANAGING CHANGE

The business enterprise will conduct survey from time to time in the market and compare other related
businesses activities so as to cope with changing trends of the market. It will always establish customer
needs and requirements so as to be able to meet their changing needs. Employees of the enterprise will
be consulted at the point of need to change operations and management programs. Technological
change will be initiated in adequate time as well as scrutinize the need for embracing new technology in
the business.

3.7 SUPPORT SERVICES

The business will demand support services in its operations from other relevant institutions. These
services will include the following.

3.7.1 BANKING SERVICES

The enterprise will require several accounts i.e. saving accounts to save its money, deposit account for
purposes of deposit transactions etc. The enterprise will also establish itself to greater heights through
borrowing loans and financial advice seeking on investment from the banking institution.

3.7.2 INSURANCE SERVICES

The enterprise has resources that are useful assets. The enterprise will ensure both natural and its
human resources against expected occurrences of risks i.e. medical insurance scheme for all employees
and insurance of organization property against collateral damage like, fire, theft etc. at ARMACO
INSSURANCE COMPANY.

3.7.3 CONSULTANCY SERVICES

The enterprise management will consult on how to run their daily operations for the successive
attainment of set goals from various sources i.e. financial consultancy on banking and investment will be
done in banking institutions etc.

3.7.4 LEGAL SERVICES

Legal services will be required when establishing contracts, drafting legal letters, interpreting labor laws
and during employment. The enterprise will be associated with LIGONO AND SONS ADVOCACY
COMPANY LIMITED in its legal affairs and will obtain relevant documents from the government through
the Kenya Industrial Labor courts whenever aggrieved.
CHAPTER FOUR

4.0 PRODUCTION AND OPERATION PLAN


The plan involves activities which the operator has to meet to make the business run smoothly.

4.1 PRODUCTION FACILITIES

The intended enterprise will require equipment and facilities for its operations. The table below shows
the equipment and facilities to be bought and the cost per item.

4.1.1 PRODUCTION FACILITIES TABLE

ITEM QUANTITY COST/UNIT TOTAL COST


Taster 3 5,000 15,000
Radio/ DVD Player 1 20,000 20,000
Mobile Phones 20 80,000 80,000
Adapter 2 2,000 2,000
Generator 1 5,000 5,000
Solar 2 20,000 20,000
Computers 4 80,000 80,000
Chargers 3 30,00 3,000
Televisions 5 20,000 20,000
Electrical cables 4 2,000 2,000
Invertors 3 3,000 3,000
TOTAL 210,000

4.2 PRODUCTION LAYOUT PLAN AND OFFICE LAYOUT

The enterprise will be designed in an orderly manner of arrangement of offices and other specific
working areas within the identified business premises so as to allow smooth flow of work. Each office
will have a special design of arrangement of furniture and equipment within the office depending on the
nature of the work to be done and the number of employees expected to work in the office. The general
business enterprise layout is proposed to be as follows.

4.2.1 OFFICE LAYOUT

4.3 PRODUCTION PROCESS

The production process will be divided into four different sections all operations will be carried within
the enterprise. These will include the following stages;

1st stage - Assembling of raw material


2nd stage - Repair of electronics/ electronic materials

3rd stage - Fixing of repaired electronics

4th stage - Displaying the electronic ready for customer view

From the above major stages involved in the production process various production materials will be
required to adapt for breaking hardware problems among others.

4.4 GOVERNMENT REGULATIONS

The government sets policies and legislation to act as a guide to business operations within its area of
jurisdiction. The enterprise will major on the following legislations and policies for its smooth running.

4.4.1 GOVERNMENT TRADE LISENCE LEGISLATION

The business will obtain a trade license under the trade license Act of the Kenyan law which states that
“persons may conduct business in accordance with the terms of the current license”

4.4.2 HEALTH REGULATION

Regular advice will be sought from the public health department to ensure quality assurance in
standards of sanitation of the office premises. Requirements from the public health department will be
adhered to.

4.4.3 SAFETY REGULATION

This requires the business to ensure safety of workers all time while performing their duty. Necessary
measure shall be taken to ensure employees are safe from injuries i.e. through safety training, provision
of work attire i.e. aprons, boots, dust coats, wrist straps, gloves etc.

4.4.4 LABOUR REGULATION

This provides legal obligations of the employer to keep up to date files on issues relating to promotion,
hiring, firing, remunerations etc. The enterprise is determined to keep detailed information and never to
intimidated or marginalizes employees at work but to stick by the employment agreement with workers.
CHAPTER FIVE

5.0 FINANCIAL PLAN

The financial objectives of the business will be to:

a) Maintain a healthy liquidity position throughout the trading period.


b) Maintain return on owners’ equity at an enjoyable rate.
c) Realize a steady growth of income throughout the trading period.
d) Maintain and control expenses.
e) Maintain an effective accounting system.

5.1 PRE-OPERATIONAL COST

ITEM COST

License and permits 6,500

Water installation 1,200

Initial advertisement 2,000

Rent deposit 36,000

Equipment and machinery 100,000

Furniture and fittings 15,000


Telephone and installation 2,000

PrOforma fee 2,000

TOTAL 168,700
5.2 WORKING CAPITAL ESTIMATIONS

ITEM AMOUNT
Ksh. Ksh.
CURRENT ASSETS
Stock 100,000
Debtors 108,000
Cash in bank 10,000
Cash at hand 40,000
Prepayments (Expenses) 168,700
TOTAL CURRENT ASSETS 436,700

CURRENT LIABILITIES

Creditors 10,000
Bank overdrafts 30,000
Expense owing/ Arrears/Outstanding 10,000
TOTAL CURRENT LIABILITIES (50,000)
WORKING CAPITAL 376,000
5.3 INCOME STATEMENT FOR THE YEAR ENDING31ST DECEMBER 2015, 2016 AND 2017

ITEM YEAR 2015 YEAR 2016 YEAR 2017

Shs. Shs. Shs. Shs. Shs. Shs.

1,620,000 1,994,000 2,332,800


Sales
(500,000) (550,000) (605,000)
Cost of sales
1,120,000 1,394,000 1,727,800
Gross profit c/d
5,000 5250 5,512.50
Discount Received
1,125,000 1,399,250 1,733,312.50
Expenses
72,000
Recent Deposit
5,000
Advertisement
12,000
Electricity bill
8,000
Water bill
7,000
Installation & fittings
565,200
Salary & wages
6,500
Licenses & Permits
3,000
Telephone & postage
3,000
Depreciation on machine
(618,700) (649,785) (714,763.50)
506,300 749,465 1,018,549
NET PROFIT BEFORE TAX (10%)
(50,630) (749,465.50) (101,854.90)

455,670 674,518.50 916,694.10


NET PROFIT AFTER TAX

5.3.1 Assumptions

a) The business sales are expected to increase at a rate of 20% P.A


b) The cost of goods sold amount is expected to increase by10% annually
c) The expenses and income for are expected to increase at a rate of 5% P.A
d) The enterprise expects 10% rate depreciation on machines annually
e) Current liabilities are expected to reduce at a rate of 10% P.A
5.4 BALANCE SHEETS FOR 2015, 2016 AND 2017

ITEM YEAR 2015 YEAR 2016 YEAR 2017

Shs. Shs. Shs. Shs. Shs. Shs.


Fixed Assets
50,000 50, 000 45,000 45,000 39,500
machines
(5,000) (4,500)
(Less dep. 10%)
15,000 15,000 135,000 13,500 12,150
Furniture & Fittings
(1,500) (1,350)
(Less dep. 10%)
65,000 73,125 73,562.50
Total Fixed Assets

Current Assets (W.C)


Stock
100,000
Debtors
108,000
Cash in bank
10,000
Cash at hand
40,000
Payments
168,700 426,700 512,040 614,448
Total Current Assets
491,700 585,165 688,010.50
TOTAL ASSETS

Current Liabilities
10,000
Creditors
30,000
Bank Overdrafts
10,000
Expense owing
(50,000) (45,000) (40,500)
Total Current Liabilities

Long Term Liabilities


210,000
Bank loan
250,000
Owners’ Equity

Total Long term Liabilities


(460,000) (322,000) (225,400)
(510,000) (367,000) (265,900)
TOTAL LIABILITIES

5.4.1 Assumptions

a) Fixed assets are expected to increase in value at a rate of 25% P.A


b) Provision for depreciation on fixed assets is 10% P.A
c) Working Capital is expected to increase at a rate of 20% P.A
d) Long term liabilities are expected to reduce at a rate of 30% P.A

5.4.2 FINANCED BY;

CAPITAL 426,700 (1ST YEAR 2015)

Add Net Profit 455,670

882,370

Long term Liabilities (460,000)

422,370
5.5 PROJECTED CASH FLOW OF LINX ELECTRONICS AND ACCESSORIES SOLUTIONS HOLDINGS FOR THE
YEAR ENDING 31ST DECEMBER 2015

ITEM Jan- April May- Aug Sept- Dec Total


(Kshs.) (Kshs.) (Kshs.) (Kshs.)
Balance b/ f 24,000 915,900 1,544,700 2,736,600
Cash Inflow:
Sales 570,000 650,000 730,000 1,950,000
Loan 200,000 - - 200,000
Debtors 80,000 80,000 80,000 240,000
Cash in hand 6,500 6,500 7,000 20,000
Cash at bank 10,000 10,000 10,000 30,000
Total Inflow 1,106,500 1,698,400 2,371,700 5,176,000
Expenses:
Salaries 56,000 56,000 56,000 168,000
Rent 20,000 20,000 20,000 60,000
Water 4,000 4,000 4,000 12,000
Telephone 4,000 4,400 8,400 16,800
Electricity 4,000 4,000 4,000 12,000
Transport 4,000 4,000 4,000 12,000
Creditor - - 240,000 240,000
Advertisement 1,000 500 1,000 2,500
License - - 9,000 9,000
Materials 60,000 60,000 60,000 180,000
Insurance 1,200 1,200 1,200 4,800
Stationery - - 2,000 2,000
Repair - - 24,000 24,000
Miscellaneous Expenses - - 1,000 1,000
Total Expenses 154,600 153,700 434,600 527,100
Net Income 951,900 1,544,700 1,937,100 4,649,500
Cumulative Cash 951,900 2,496,600 4,657,500
5.6 BREAK EVEN ANALYSIS

The enterprise Break Even can be analyzed as in the following Calculations

Sales Year 1: =Kshs 514800

(i) Total contribution margin =Sales year 1 – Total variable costs

=Kshs. 514500 -180000

=Kshs. 334800

(ii) Contribution margin % = Contribution margin/Sales x 100

= Kshs. 334800/Kshs 514800 x 100

= 6.5%

(iii) Total fixed costs = Ksh. 263000

(iv)Break-even level of sales = Fixed cost/Contribution margin%

=Kshs 263000/6.5 x 100

=Kshs 4046153

(v) Break Even Point as a ratio of year 1 = Break-even point/Sales x 100

=Kshs. 4046153/Kshs 514800 x 100

=Kshs. 785966%

(vi)Return on Equity (ROE) = Net profit after tax/ Owners equity x 100

=Kshs. 21692/30000 x 100

=72.3%
(vii) Return on investments (ROI) = Net profit after tax/ Total investment x 100

=Kshs. 21692/Kshs 40000 x 100

= 52.3%

(viii) Net profit objectives year 1 = Net Profit after Tax/Sales x 100

=Kshs21692/ Kshs 51800 x 100

= 4.2%

5.7 PROPOSED CAPITALIZATION

PARTICULAR (S) AMOUNT (KSHS.) PERCENTAGE CONTRIBUTION


Owners’ equity 250,000 51.02
Friends & Relatives 30,000 42.8
Bank Structure (Loan) 210,000 6.12
TOTAL INVESTMENTS 490,000 100 %

5.8 PROFITABILITY RATIO

Profitability Test Ratio = Current assets/ Current liabilities

= C.A: C.L

= Kshs. 236100/Kshs280000

=0.8:1

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy