BUSSINESS PLAN

BUSSINESS NAME :OMOTH GENERAL

HARDWARE.

COURSE : DIPLOMA IN BUILING TECHNOLOGY

PRESENTED BY : AIRO VADAN OMOTH.

INDEX NUMBER : 6191010508

CENTER NAME : FRIENDS COLLEGE KAIMOSI

COURSE CODE. : 2705/305

SUPERVISOR : MR JULIUS SAMOEI

PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL

IN PARTIAL FULLFILMENT FOR THE AWARD OF DIPLOMA IN BUILDING

TECHNOLOGY.

SERIES : JUNE/JULY 2024

DECLARATION

I hereby declare that this business plan is my original work and that it has never been
presented for the award of degree, diploma or certificate to any institution in Kenya.

DEDICATION
I sincerely dedicate this business plan to my parents Mr. and Mrs. Odongo who have
supported me financially and advised me in pursuing this plan, not forgetting the
faculty and supervisor for teaching the necessary knowledge that is required to startup
a business.

ACKNOWLEDGEMENT
I am very grateful to the Almighty God for giving me good health and guidance
during the whole process of my business plan .My sincere thanks to my family for
supporting me financially and spiritually .My gratitude also goes to the entire
Institution of Friends College Kaimosi for providing all the required resources that
help me in carrying out my project .I also thank course mates and my friends for their
generosity.

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Table of Contents
CHAPTER ONE ............................................................................................................ 1

1.0 EXECYTIVE SUMMARY ................................................................................. 1

1.1BUSINESS PLAN DESCRIPTION ..................................................................... 1

1.2 MARKETING PLAN .......................................................................................... 1

1.3 ORGANISATIONAL/ MANAGEMENT PLAN................................................ 1

1.4 PRODUCTION/OPERATIONAL PLAN ........................................................... 2

1.5 FINANCIAL PLAN............................................................................................. 4

CHAPTER TWO ........................................................................................................... 5

2.0 BUSINES DISCRIPTION ................................................................................... 5

2.1 OWNERS BACKGROUND ............................................................................... 5

2.2 BUSINESS NAME, ADDRESS AND LOCATION .......................................... 5

Key ............................................................................................................................. 6

2.3 BUSINESS TYPE ................................................................................................ 6

2.4 BUSINESS OWNERSHIP .................................................................................. 6

2.5 BUSINESS PRODUCT AND SERVICES ......................................................... 7

2.5.1 BUSINESS PRODUCT ................................................................................ 7

2.5.2 BUSINESS SERVICES ................................................................................ 7

2.6 BUSINESS JUSTIFICATION......................................................................... 7

2.7 BUSINESS INDUSTRY ..................................................................................... 7

2.8 BUSINESS GOALS ............................................................................................ 7

2.8.1 SHORT TERM GOALS ............................................................................... 7

2.8.2 LONG TERM GOALS ................................................................................. 7

2.9 BUSINESS ENTRY AND GROWTH STRATEGIES ....................................... 8

2.9.1 BUSINESS ENTRY STRATEGY ............................................................... 8

2.9.2 BUSINESS STRATEGY POLICY .............................................................. 8

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CHAPTER THREE ....................................................................................................... 9

3.0 MARKETING PLAN .......................................................................................... 9

3.1 THE POTENTIAL CUSTOMERS ...................................................................... 9

3.1.1 INDIVIDUAL CUSTOMERS ...................................................................... 9

3.1.2 INSTITUTIONS ........................................................................................... 9

3.1.3 COMMERCIAL ........................................................................................... 9

3.2 THE POTENTIAL COMPETITORS .................................................................. 9

3.2.1 KAGONYA RETAIL SHOP ........................................................................ 9

3.2.2 KAWERE WHOLESALE ............................................................................ 9

3.2.3 UGENYA MASIVE HARDWARE ........................................................... 10

3.3 MARKET SHARE............................................................................................. 10

3.4 SWOT ANALYSIS ........................................................................................... 12

3.5 ADVERTISEMENT AND PROMOTION STRATEGY .................................. 13

3.5.1 ADVERTISEMENT STRATEGY ............................................................. 13

3.5.2 PROMOTION STRATEGY ....................................................................... 13

3.6 PRICING STRATEGY ...................................................................................... 14

3.7 SALES TACTICS .............................................................................................. 14

3.8 DISTRIBUTION STRATEGY .......................................................................... 14

CHAPTER FOUR ........................................................................................................ 15

4.0 ORGANISITIONAL /MANAGEMENT PLAN ............................................... 15

4.1 ORGANISATIONAL STRUCTURE ................................................................ 16

4.2 KEY EXECUTIVE PERSONEL....................................................................... 16

4.2.2.1 GENERAL MANAGER .......................................................................... 16

4.2.2 FINAANCE MANAGER ........................................................................... 17

4.2.3 SALES MANAGER ................................................................................... 17

4.2.4 HUMAN RESOURCE MANAGER .......................................................... 18

4.2.5 CASHIER ................................................................................................... 18

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 4.2.6 SECURITY ................................................................................................. 18

4.2.7 OTHER WORKERS................................................................................... 19

4.3 RECRUITMENT, TRAINING AND PROMOTION ....................................... 19

4.3.1 RECRUITMENT ........................................................................................ 19

4.3.2 TRAINING ................................................................................................. 20

4.3.3 PROMOTION ............................................................................................. 20

4.4 REMENERATION AND INCENTIVES .......................................................... 20

4.4 TABLE SHOWING SALARY SCALE STRUCTURE FOR EMPLOYMENT

.................................................................................................................................. 21

4.5 GOVERNMENT REGULATIONS................................................................... 22

4.6 SUPPORT SERVICES ...................................................................................... 22

4.6.1 FINANCILA SERVICES ........................................................................... 22

4.6.2 INSURANCE SERVICES .......................................................................... 23

4.6.3 POSTAL SERVICES ................................................................................. 23

CHAPTER FIVE ......................................................................................................... 24

5.0 PRODUCTION/OPERATION PLAN............................................................... 24

5.1 PRODUCTION FACILITIES AND EQUIPMENT .......................................... 24

5.1.1 PRODUCTION FACILITIES AND EQUIPMENT ................................... 24

5.1.2 TABLE SHOWING PRODUCTION FACILITIES AND EQUIPMENT . 24

5.2 BUSINESS PREMISE/ FIRM LAYOUT ......................................................... 24

5.3 PRODUCTION STRATEGY ............................................................................ 25

5.3.1 MONTHLY MATERIALS REQUIREMENT ........................................... 25

5.3.2 LABOUR REQUIREMENTS .................................................................... 26

5.3.3 PRODUCTION OVERHEADS/EXPENSES ............................................. 26

5.3.4 TOTAL MONTHLY COST ....................................................................... 26

5.4 PRODUCTION PROCESS ............................................................................... 26

5.5 REGULATION AFFECTING OPERATIONAL PLAN .................................. 27

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 CHAPTER SIX ............................................................................................................ 29

6.0 FINACIALCOST ............................................................................................... 29

6.1 PRE – OPERATIONAL COST ......................................................................... 29

6.2 WORKING CAPITAL ...................................................................................... 29

6.3 CASHFLOW PROJECTION ............................................................................ 31

6.3.1 CASHFLOW STATEMENT FOR OMOTH GENERAL HARDWARE

FOR YEAR 1 ENDING 31ST DEC 2022 ............................................................ 31

6.3.2 CASH FLOW STATEMENT FOR OMOTH GENERAL HARDWAR

FOR YEAR 2 ENDING 31ST DEC 2023 ............................................................ 32

6.3.3 CASH FLOW STATEMENT FOR OMOTH GENERAL HARDWARE

FOR YEAR 3 ENDING 31ST DEC 2024 ............................................................ 32

6.4 PROFORMA INCOME STATEMENT ............................................................ 33

6.4.1 PROJECTED INCOME FOR FIRST YEAR ............................................. 33

6.4.2 PROJECTED INCOME STATEMENT FOR YEAR 2 ............................. 33

6.4.3 PROCTED INCOME STATEMENT FOR YEAR 3 ................................. 34

6.5 PROFORMER BALANCE SHEET .............................................................. 34

6.6 BREAK EVEN ANALYSIS.......................................................................... 35

6.7 PROFITABILITY RATIO............................................................................. 37

6.8 PROPOSED CAPITALISATION CAPITAL ............................................... 38

6.9 DESIRED CAPITALISATION ..................................................................... 39

OMOTH GENERAL Retailers Final consumer

HARDWARE

vi
CHAPTER ONE

1.0 EXECYTIVE SUMMARY

1.1BUSINESS PLAN DESCRIPTION

The owner of the business plan will be AIRO VADAN from HOMABAY county
SUBA SOUTH sub-county in GWASSI division. The owner is a diploma holder in
building technology. The business will mostly deal will building equipments and
facilities. The main purpose of the business is to make profit and help the final
consumer in the society the business will offer high quality goods and services to
customers. The address of the business will be
OMOTH GENERAL HARDWARE
P.O.BOX 52 MAGUNGA
Telephone number:
0758272525

1.2 MARKETING PLAN

The business will have a number of consumers i.e. individual consumers, institutions
and commercial consumers to be the best of the business will proffer high quality
goods and services and after sales services to the customers.
The following channel will be used to reach the final consumer.

1.3 ORGANISATIONAL/ MANAGEMENT PLAN

The business will be under o who will be the manager since it is a sole proprietorship.
He will ensure effective running of the business through managerial functions i.e.
planning, organizing, staffing and controlling.

The business will have the following staffs;

a) The general manager; who will be in charge of the organization as a whole.

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 b) Finance manager; who will who will be in charge of finance department.
c) Sales manager; who will conduct market research
d) Human resource manager; who will manage all resource of the business.
e) Cashier; who will keep cash transaction of the business.
f) Security; ensures conducive working environment.

The organization chart will be as follows.

General Manager

Finance Manager

Sales manager
Human Resource Manager

mM
Cashier

Man Security

1.4 PRODUCTION/OPERATIONAL PLAN

To ensure smooth running of the business the owner has to acquire enough goods and
manufacturing activities and equipment, also through selling the goods at affordable
prices to consumers. The production process can be below what can be used;

Placing order of raw materials

Buying of raw materials

Processing into finished goods

Packaging

Delivering to customers
3
1.5 FINANCIAL PLAN

Contains the financial objects that will be used to guide the business in its operation.
The pre-operational cost shows the costs in curved before the real operational of the
firm takes place e.g. research fee, transport cost, installation of power and water,
working capital, income statement and the cash flow statement.
Proposed capitalization capital
Source Amount

Bank loans 300,000

Donations 125,000

Savings 125,000

Partners contribution 250,000

Sales of personal property 200,000

TOTALS 1000,000

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CHAPTER TWO

2.0 BUSINES DISCRIPTION

2.1 OWNERS BACKGROUND

NAME AIRO VADAN OMOTH

AGE 23 YEARS OLD
MARITAL STATUS SINGLE
OCCUPATION BUSINESS MAN
ADDRESS P.O.BOX 144-200, MAGUNGA
EDUCATION DIPLOMA HOLDER
PROFESSIONAL QUALIFICATION: Holds a diploma in Building Tech at
The Friends Colloge Kaimosi
WORK EXPERIENCE: Worked as Site Manager at Pinne
Agency Limited

2.2 BUSINESS NAME, ADDRESS AND LOCATION

The business name is “OMOTH GENERAL HARDWARE SUBA” the selection was
reached after considering the environment i.e. competitors name and found that name
was the best and unique name in the environment. The business is located in
Homabay County, Suba south Sub-county along Mbita - Sori road, within Nyandiwa
town 200M from the police station, the address is P.o. Box 144-200, SUBA, the
email: omothgeneralhardware@gmail.com cell phone: 0758272525 .

5
 Sketch Map

Gwasi head office

Kenya women Key

Zz - Cement

xx – Metallic
DDDDD
AA – Customers
DDDDD
HOMABAY Omoth General Hardware Stores CCC – Targeted
DD
Sega customers
zzzzzzzzzz xxxxxxxx
zzzzzzzzzz DDD – Customers
xxxxxxxx
zzzzzz house
Mbita Nyandiwa xxxxx
Sori AAA
AAA -------
Bus
AA Main sale

--------
CCCCCCCC
CCCCCCCC
Kagonya CCCCCCCC
retail shop Kawere Wholesale

2.3 BUSINESS TYPE

My business is wholesaling type of business, that deals in selling to customers and

consumers who want to resale the properties to retailers and the business also offers
after sales services, breaking bulk, packages, transport and also offering discount to
the customers.

2.4 BUSINESS OWNERSHIP

The business is a sole proprietorship form of business is operated by only the owner
himself and the sources of capital to start the business were from loans, contributions
by the family and friends, selling of properties. I choose this form of business because
it requires few legal formalities as compared to partnership and company and the
benefits are all enjoyed by myself.

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2.5 BUSINESS PRODUCT AND SERVICES

2.5.1 BUSINESS PRODUCT

The business deals in selling products like cements of 40kg, 60kg, spades, iron sheets,
i.e. dumuzas, royal mabati, nyumba mabati 5litres , 3litres, 100mm of white, green,
red, black, brown paints and plumbing tools like; roundup black plumb bob and even
ropes and bubbled wires.

2.5.2 BUSINESS SERVICES

The business offers to the customers, after-sale services transport, repair and
maintainers services, the business also offer discount to purchase of good to certain
quantity.

2.6 BUSINESS JUSTIFICATION

I believe and have confidence that my business will prosper and in failure open
another branch, this is due to availability of capital, the customers, the government
policies are favorable support from the friends, county government and knowledge of
running the business also the demand of my product are high and all the raw materials
used in making my product are readily available.

2.7 BUSINESS INDUSTRY

The business belongs to the building and construction company industry I.e. it deals
with building materials like the plumb bob, the hammer, iron sheets, spades, nails and
construction materials such as the screw gauge, spanners, and pliers among others.

2.8 BUSINESS GOALS

2.8.1 SHORT TERM GOALS

The short term objectives of the business include giving job opportunities to the
society, producing what is demand by customers but not sold the competitors and also
to offer free gifts to potential buyers and also conduct an annually celebration of
anniversary with my customers.

2.8.2 LONG TERM GOALS

The loan term goals objectives includes; improving the transport and communication
system from my premises offering training services to the newly recruited members

7
and employees in the business, also a goal of opening other branches within the
county and allowing investors to invest within the business and ensure profit
maximization.

2.9 BUSINESS ENTRY AND GROWTH STRATEGIES

2.9.1 BUSINESS ENTRY STRATEGY

My business aim is capping up with competitors through advisement, promotion and

offering services like installing electricity to the locality and business premises to
attract customers and the business, this will be achieved by use of radio, telephone,
website, television to advertise and promote using posters and billboards.

2.9.2 BUSINESS STRATEGY POLICY

The business will ensure that it opens many branches as possible that can be managed
and generate profit to the business, the profit earned will be taken to the capital
account to assist the running of the business and it should ensure it offers trade
discount to attract many customers even from outside the location of the business and
finally offering better services and product to customers.

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CHAPTER THREE

3.0 MARKETING PLAN

3.1 THE POTENTIAL CUSTOMERS

3.1.1 INDIVIDUAL CUSTOMERS

These are customers of the business who by goods and services for the purpose of
consuming in their own names i.e. pedestrians, farmers, constructors and students.

3.1.2 INSTITUTIONS

These are academic areas where learning takes place and they do buy in large
quantities compared to individuals they do also buy with intension of consuming and
they buy in their own names e.g. Mawego Technical Training Institute Tom Mboya
University.

3.1.3 COMMERCIAL

These are big organization that buys goods in bulk for the purpose of reselling, they
buy in their own names, they buy goods regularly and they buy in large quantities
compared to other customers.

3.2 THE POTENTIAL COMPETITORS

3.2.1 KAGONYA RETAIL SHOP

It was started five years ago, the firm is in the southern part from Omoth general
hardware and 250M away, its offers after sales services, discount to customers but the
disadvantages are that they do not have a perfect knowledge of their products and they
offer goods of low quality to customers and they lack good public relation with
customers.

3.2.2 KAWERE WHOLESALE

It was started three years back, the firm is in the western part and 260M away from
Omoth general hardware , they sell in bulk, they give discount to customers, the
disadvantage are that they do not break bulk, they do not offer packages to the
consumers.

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3.2.3 UGENYA MASIVE HARDWARE

It was started ten years back and it is in the eastern part 300M away from Omoth
general hardware and they sell at a cheaper price but they sell goods of low quality
and quantity to customers and they have poor public relations with customers.

3.3 MARKET SHARE

In the market we four major competitors and our firm has an area to control.

a) The pie chart before entry

Ugenya massive hardware started earlier hence it was able to occupy the largest area
capacity, followed by Kagonya retail shop that had better managerial skill than
Kawere which occupied the least space and the rest of the space is not occupied by
any competitor.

Key
Ugenya Massive Hardware
Kasonya Retailshop
20% Kawere Wholesale
Gap in the Market
40%

10%

30%

b) Market share after entry

10
 Key
Ugenya Massive Hardware
20%
Kagonya Retail Shop

40% Kawere Whole sale

10%

30%

c) A pie chart after five years

The business of Omoth general hardware has prospered and occupied and occupied
the highest space because of the better managerial skills, team work, good decision
making and good entrepreneurial skills.

Key
Ugenya Massive Hardware

Kagoya Retail Shop

30%
40% Kawere Whole sale

20%
10%

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 3.4 SWOT ANALYSIS

Firm Strength Weakness Opportunity Threats

Omoth - Good - Poor - Security - Insecurity

General public location guards - Drought
Hardware relation - Stiff - Finance - Theft
- Good competition institutions - Robbery
reputation - Poor - Good - Earthquakes
- Trained services infrastructure
personnel - Poor - Good roads
- Quality customers - Training
service ethnics institutions
- Improved
technology

Ugenya - Good - New in the - Good market - Corruption

Massive services market - Financing - Stiff
Hardware - Quality - Bad public institution competition
goods relations - Good - Famine
- Trained - Poor communication - Drought
personnel opening network - High tax
- Improved hours
technology - Poor
- Good closing
public hours
relations - Poor
customer
ethics

Kagonya - Good - Poor public - Good roads - Insecurity

Retail opening relations - Good - Drought
Shop and infrastructure - Robbery

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 closing - Now in the - Training - Theft
hours market institutions - Corruption
- Improved - Stiff - Good markets
technology competition
- Trained - Poor
personnel location
- Good - Poor
reputation services
Kawere - Improved - Now in the - Financial - Famine
Wholesale technology market institution - Earthquake
- Good - Stiff - Security - Robbery
reputation competition guards - Theft
- Good - Poor ethics - Good roads - insecurity
public - Poor - Training
relation closing and institution
- Quality opening - Good market
goods and hours
services

3.5 ADVERTISEMENT AND PROMOTION STRATEGY

3.5.1 ADVERTISEMENT STRATEGY

The business has brought into existence of movable iron sheets, new cheap and strong
cement long-strong spades, strong colourful plumbing tools and shining paints. This
will be able through the use of radios, billboards, signposts, TVs, newspapers to
advertise the product.

3.5.2 PROMOTION STRATEGY

The business will try to increase the appetite of the customer and demand of the iron
sheets, cements, paints, nail, bobbed wires, manure tiles so that the sales volume may
increase by means of road show, free samples, offering after sales services and trade
discount to customer as means of promotion.

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3.6 PRICING STRATEGY

The business will intend to insert appropriate value in terms of money on product and
services, due to different factors to be considered such as;

i) Demand of products; products that customers are willing and able to buy at a
set price within a period of time.
ii) Customer preference; these are what the customers like most e.g. iron sheet in
Omoth general hardware.
iii) Target group in the society; these are the customers leaving near the business
area and what they like in business.
iv) Government policy; the government sometimes fix the price of a commodity
to the business especially essential product like drugs and medicines.
v) Climatic conditions; climate or weather changes may result into an increase or
decrease in the price of commodities in the market.

3.7 SALES TACTICS

The business may persuade customers to increase their consumptions when sales are
declining through the following methods;

i) Selling door to door; Omoth general hardware can decide to assign to

his or her employees to offer personal services to the customers.
ii) Applying discount on product; this will enable the customers to buy in
bulk hence will increase sales
iii) Sell through middle men and pay as commission; the hardware can
decide some clients to sell on their behalf and pay a commission
agreed on.
iv) Diversifying the product and services; through giving after sales
services to attract more customers hence increase sales.
v) Carrying out more advertisement and promotion; the business can
advertise and promote their products through; television, radio,
billboards, road shows to enhance the business to gain popularity.

3.8 DISTRIBUTION STRATEGY

The method used by business while moving products to consumers from the traders
premises through channel of distribution, Omoth general Hardware can decide to

14
distribute directly to the consumers, wholesalers or middle men to ensure the
customers get the services at time of need.

i) Omoth General Hardware Customers

ii) Omoth General Hardware Retailers Wholesales
Customers
iii) Omoth General Hardware Retailers Customers
iv) Omoth General Hardware Whole salers
Customers
v) Omoth General Hardware Middle men
Customers

CHAPTER FOUR

4.0 ORGANISITIONAL /MANAGEMENT PLAN

The purpose of organizational plan is to assist management to develop policies

regarding staffing and management of common resources for effectiveness and
efficient production of quality and durable products and its performance of services.

15
4.1 ORGANISATIONAL STRUCTURE

The business will be under Airo Vadan who will be the manager since the business is
a sole proprietorship. This is after his qualification in diploma in building technology
from Friends College Kaimosi. He will ensure the managerial functions i.e. planning,
organizing, staffing, controlling and directing.
The organization chart is as shown below

General Manager

Finance Sales Manager Human Resource Subordinate Staff

Manager Manager

Cashier
Security Officer Other Workers

4.2 KEY EXECUTIVE PERSONEL

4.2.2.1 GENERAL MANAGER

Qualifications
i) Must be 26 year and above and has 2 years of work experience.
ii) Must speak fluent English and Kiswahili.
iii) Must have national identity card.
iv) Should have good managerial skills.
v) Should have good communication skills.
vi) Must be Kenyan citizen.

Duties and responsibilities

i) He/ she would be in charge of the control of the organization as a whole.
ii) He will appoint managers at different department
iii) He will analyse and cope up with the surrounding environment
iv) He will ensure proper running and management of the business.

16
 v) He will ensure a fair competition amongst other competitors.
vi) Establish methods and procedures to guide the operations of the business.

4.2.2 FINAANCE MANAGER

Qualification
i) Must be certified public account (CPA).
ii) Should be 29 year and above.
iii) Must have certificate of good conduct
iv) Must 2 years off work experience.
v) Should be a computer literate.
vi) Should speak fluent English and Kiswahili.

Duties and responsibilities

i) Should be answerable to general manager.
ii) He will be in charge of finance department.
iii) He should delegate duties to the cashier.
iv) Should prepare the entire business budget.
v) To supervise and review the reports of the cashier.
vi) Give financial reports and statements of the business whenever required by
the general manager.

4.2.3 SALES MANAGER

Qualification
i) Should attain a diploma in sales and marketing.
ii) Must be 30 years and above.
iii) Should at least have 3years working experience.
iv) Should have good communication skills.
v) Should have a national identity card.

Duties and responsibilities

i) Will conduct market research.
ii) Will conduct survey and look for market for the business products and
report to the general manager.
iii) Come up with more ideas regarding more selling.
iv) Carry out product promotion for the business.

17
 v) Advertise the firm to gain more customers through road show, attending
business shows and exhibitions.

4.2.4 HUMAN RESOURCE MANAGER

Qualification
i) Should be 25 year and above.
ii) Should have Kenya national identity card.
iii) Should have good communications skills.
iv) Should have a work experience of at least 2 years.
v) Should have a diploma in human resource management.

Duties and responsibilities

i) Should be answerable to the office of the general manager.
ii) Should manager all resource of the business.
iii) To make and record of the business.

4.2.5 CASHIER

Qualifications
i) Should the honest and trust worthy
ii) Should be computer literate.
iii) Must be 27 years and above.sss
iv) Must be qualified for certified public accounts
v) Must have 3year work experience

Duties and responsibilities

i) Pay workers their salaries and wages.
ii) Keep the cash transaction of the business.
iii) Deals with all the cash used in the business
iv) Receive and make all petty cash payment.

4.2.6 SECURITY

Qualifications
i) Have attained a KCSE mean grade of D.
ii) Have at least 24 years and above.
iii) Have working experience for 4years.

18
 iv) Should be physically fit.
v) Ready to serve at anytime.

Duties and responsibilities

i) To secure all the resources of the business.
ii) Ensure conducive working environment of the business.
iii) Report frequently concerning the security threats in the business to the
general manager.

4.2.7 OTHER WORKERS

Qualifications
i) Must be industrious.
ii) Must speak Kiswahili and English.
iii) Must have requirements laid down since they will be the people serving
the customers.
iv) Must be able to work under minimal supervision.

Duties and responsibilities

i) Ensures the working environment is clean.
ii) Ensures the customers are served the best way.
iii) They will be answerable to respective department.
iv) Park goods to the customers.

4.3 RECRUITMENT, TRAINING AND PROMOTION

4.3.1 RECRUITMENT

Recruitment is the process of researching for prospective employees and stimulating

them to apply for jobs available in the enterprise. This is done in order to fill
vacancies created or available in the business with qualified people. Advertisement is
done through magazines, mass media i.e. Television and radios so that it may reach
many people and the interested people can apply for the vacancies available. The
business then selects the relevant applicants in accordance to the business rules and
regulations to avoid ignorance. In commencement of the business. This can be done
either through internal or external recruitment.

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4.3.2 TRAINING

Training is the process of increasing the employee’s skills and knowledge for doing a
particular job in the area of specialization. This can be achieved through seminars and
workshops whereby the employees attend such seminars and workshops. In order to
gain skills and knowledge above the job he/she has.

Need for Training

 Train the workers so that they can handle their work more effectively and
efficiently.
 To impart employees the skills and knowledge for promotion.
 To secure their job and advancement of opportunities.

Benefits of Training
i) For manpower development in the business.
ii) Helps to facilitate delegation and decentralization of authority.
iii) Helps to reuse need for close and constant supervision.
iv) Standardization of working procedure and practices to improve
performance.
v) Higher business performs in a large quality and quality.

4.3.3 PROMOTION

Promotion is appointing employees to a position of greater responsibility or authority.

The business will be offering two types of promotion.

i) Seniority – This is where the employees w8ill be promoted basing on their

position in the business.
ii) Merit and promotion – This is where employees will be promoted basing
on their work, hard work, discipline performance and competence whereby
minimal supervision will be an added advantage on promotion provision in
the business.

4.4 REMENERATION AND INCENTIVES

Other than salaries and wages the firm will offer additional incentives to its
employees. The incentives include medical allowances, transport allowances, house
allowances, off duties and also provide both lunch and breakfast to the employees.

20
 Employees can also access loans at low interest rates. Parties will be held annually
and competent employees awarded. This will motivate them to work hard.
The table below shows the salary scale structure for employment.

4.4 TABLE SHOWING SALARY SCALE STRUCTURE FOR EMPLOYMENT

Post Numbe Basic Allowances Gross PAY NHI Total NET

r of Salar Hous Medica Transp Tota wage E F deductio PAY
Staff y e l ort l n

General 1 15,00 800 800 800 2,40 17,40 1,50 500 2,000 15,400
Manage 0 0 0 0
r

Finance 1 14,00 600 600 400 1,60 15,60 1,00 400 1,400 14,200
Manage 0 0 0 0
r

Human 1 13,00 500 500 600 1,60 14,60 800 250 1,050 13,550
Resourc 0 0 0
e
Manage
r

Sales 2 24,00 900 800 1,400 3,10 27,10 1,00 400 1,400 25,700
Manage 0 0 0 0
r

Cashier 2 20,00 800 600 400 1,80 21,80 800 400 1,200 20,600
0 0 0

Security 4 24,00 1,600 2,000 1,600 5,20 29,20 1200 800 2,000 27,200
0 0 0

Total 11 11,00 5,200 5,300 5,00 15,7 125,7 6,30 2,75 9,050 116,650
0 00 00 0 0

21
4.5 GOVERNMENT REGULATIONS

Before the business commerce, it should have valid document from the government to
enable smooth flow of its operations.
These documents include

Trading license
This will be obtained from Homabay County at a cost of 5000. It has to be renewed
after every one year to allow legality existence of the business.

Registration permit
The business will require business permit that will be obtained from the District
Commissioner officer in Homabay County at cost of ksh1000.

By-laws
The business will also comply with building by- laws which are controlled by the
county council of district health office at cost of Kshs 400. The business is also to pay
taxes to the county government of Homabay as stipulated by the county government.

4.6 SUPPORT SERVICES

These are the service that the business enables it run smoothly. They include;
finance/bank services, insurance and postal services.

4.6.1 FINANCILA SERVICES

THE PROPOSED BUSINESS HAS OPENED AN ACCOUNT ON Kenya

Commercial Bank located in Mbita town. This bank will be conducted to give
information on matters relating to the finance of the business. It will also save its
money in the bank and its starting capital will be obtained through loans from the
bank.
Address for the branch is; KENYA COMMERCIAL BANK,
P.O. BOX 284 – 6009,
MBITA BRANCH,
EMAIL info@ugunjakcb.co.ke.

22
4.6.2 INSURANCE SERVICES

The proposed business has to ensure it has an insurance cover incase of any losses
that may be insured by the business brought by fire or any other form of loss. This
will guard the business against risks of losses. An insurance company located in
Homabay county will be conducted to offer information on policies available. The
insurance company will offer services like compensation.
The company’s address is; SUBA INSUARANCE COMPANY
P.O.BOX BOX 100-1000
SUBA
TELEPHONE 0758272525

4.6.3 POSTAL SERVICES

The business is to access mail service like letters transaction services, sending and
receiving parcels via post office. The branch selected by the business is in Nyandiwa
post office

23
CHAPTER FIVE

5.0 PRODUCTION/OPERATION PLAN

5.1 PRODUCTION FACILITIES AND EQUIPMENT

The reposed business uses manufacturing facilities and cement, iron sheets, nails
wheelbarrow, building facilities, doors windows, tables and chairs.
Apart from the named above facilities, there are additional facilities required to enable
smooth running of the business i.e. electricity, store, office, receipt book e.t.c

5.1.1 PRODUCTION FACILITIES AND EQUIPMENT

5.1.2 TABLE SHOWING PRODUCTION FACILITIES AND EQUIPMENT

Items Quantity Units (Kshs)Cost Per Total Cost (Kshs)

Item

Computer 4 30,000 120,000

Transporting van 1 250,000 250,000

Store rooms 2 40,000 80,000

Jembes 5 250 1,250

Spades 3 300 900

Folks 5 30 1,500

Wheelbarrow 6 1,000 6,000

Plumb bob 3 200 600

TOTALS 460,250

5.2 BUSINESS PREMISE/ FIRM LAYOUT

The business is arranged in a proper manner for easy accessibility and smooth
running. this will prevent risks and problems that might arise from the firm.
The following shows the firm layout.

24
 SECURITY RECEPTIO SALES ROOM
ENTRANCE N
SECRETAR ACCOUNTS
Y OFFICE
WAITING AREA

HUMAN
RAW
RESOURCE
MARTIRIALS
MANAGER

GENERAL
PRODUCTION
MANAGER
AREA

WASH ROOMS
MAIN EXIT EMERGENCY EXIT

5.3 PRODUCTION STRATEGY

5.3.1 MONTHLY MATERIALS REQUIREMENT

The proposed business got its raw materials from both nearly source and overseas or
other counties. The raw material undergoes manufacturing process and we end up
with processed product.
The following table shows the raw materials.

TABLE SHOWING MOTHLY STOCK REQUIRED

Material Quality (units) Cost per quality Total

Iron sheets 20 700 14,000

Cements 20bags 500 10,000

Nails 15kgs 100 1,500

Jembes 20 350 7,000

Spades 20 400 8,000

Computer 3 20,000 60,000

Total 100,500

25
5.3.2 LABOUR REQUIREMENTS

Direct labour Amount (monthly) Amount (yearly)

General manager 15,400 184,800

Finance manager 14,200 170,400

Human resource manager 13,550 162,600

Sales manger 25,700 308,400

Cashier 20,600 247,200

Security 27,200 326,400

TOTAL 116,650 1,399, 800

5.3.3 PRODUCTION OVERHEADS/EXPENSES

Material Amount (monthly) Amount (yearly)

Rent 5,500 66,000

Electricity 500 6,000

Transport 5,000 60,000

Water 5,000 60,000

Repair and maintance 4,000 48,000

TOTALS 20,000 240,000

5.3.4 TOTAL MONTHLY COST

Items (MONTHLY) AMOUNT

Overheads 20,000

Labour 116,650

Materials 100,500

TOTAL 237,150

5.4 PRODUCTION PROCESS

The proposed business acquires its raw materials from nearby source and international
sources which are then transported to the business for further processing. The

26
business will be making order to the other companies to ensure the raw materials are
steadily supplied to avoid shortages. The procurement officer will receive the good
and inspect their quality and quantities. The raw materials will be processed after
inspection to finished goods. They goods will then be packed and checked to ensure
that all product have been delivered below is the production process.

Placing order of raw material

Buying of raw materials

Processing into finished goods

Packaging

Delivery to customers

5.5 REGULATION AFFECTING OPERATIONAL PLAN

These are set rule and laws that the business will have to comply with in order to
avoid disorder of complaints from customers and employees.
They as follows;
i) Taxation; all will be paid inform of VAT as a way of complying with the
government regulation to enhance legality of the business.
ii) Trade license; the business will be paying for necessary document in order
to enhance legality of the business and will ensure frequent renewed of the
business
iii) Public holidays; incase of public holidays and Sundays the business will
not be operate since the employees are require to participate in nation
building and their spiritual matters.

27
iv) Health and safety at work; the business will provide frequent medical
checkup to the whole staff to sure they are safe and have medical care.

28
CHAPTER SIX

6.0 FINACIALCOST

6.1 PRE – OPERATIONAL COST

Are the costs which are incurred before the real operation of the firm take place e.g.
research fee, transport cost, installation of power and water.

Item Cost in cash

Rent 25,000

Equipment 70,000

License 40,00

Insurance 2,000

Electricity 20,000

Transport 40,000

Water 8,000

Advertisement 25,000

TOTAL 230,000

6.2 WORKING CAPITAL

Is that amount which is required so as to meet daily obligation such as purchase of

new materials payment of rent and salaries of the business.

Items Amount Amount

Current Assets

Stock

Accounts receivables 400,000

Cash at hand 250,000

Cash at the bank 50,000

100,000

TOTAL Assets 800,000

Less: current liabilities

29
Bank overdraft 110,000

Creditors 90,000 (200,000)

Working capital 600,000

30
 6.3 CASHFLOW PROJECTION
6.3.1 CASHFLOW STATEMENT FOR OMOTH GENERAL HARDWARE FOR YEAR 1 ENDING 31ST DEC 2022

Cash flow JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER TOTALS

CASH INFLOW
Bal b\d _ 11900 247500 370900 492250 601150 711400 826850 942150 1056700 1166250 1274050 7808200
Sale 300000 302000 301000 300500 290650 295000 297000 298000 300000 300100 300050 299000 3583300
Debtors _ 10000 11000 10000 9000 8500 10000 11100 11500 12000 12500 12600 118200
Others 10000 11000 12000 11500 11000 12000 12200 12500 12300 12700 13000 13500 143700
Total 310000 442000 571500 692900 802900 916650 1030600 1148450 1265950 1381500 1491800 1599150 11653400
CASH OUTFLOW
Cash 126000 124500 125000 124000 124000 126000 125000 128000 130000 135000 137000 138000 1543400
purchases
creditors _ 12000 11000 10000 11500 12500 13000 13300 13500 14000 15000 16000 141800
Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Insurance 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
Salaries 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 480000
Loan 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
repayment

Interest 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
on loan
Sundry 7000 7750 6600 7750 8250 8750 7750 7000 7750 8250 7750 8400 93000
expenses
Total 191000 194500 200600 200650 201750 205250 203750 206300 209250 215250 217750 220400 24742000
Bal c/d 119000 247500 370900 492250 601150 711400 826850 942150 1056700 1166250 1274050 1378750 9179200

31
 6.3.2 CASH FLOW STATEMENT FOR OMTH GENERAL HARDWARE FOR YEAR 2 ENDING 31ST DEC 2023

Cash flow JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER TOTALS

CASH INFLOW
Bal b\d 1378750 1490450 1592450 1677750 1757250 1862150 1963600 2066500 2174800 2293000 2416600 2522500 23195800
Sale 300000 295000 280000 275000 295000 297000 298000 300000 310000 315000 299000 310000 3574000
Debtors 3000 2500 2300 2000 1900 1950 2200 2500 2700 2600 2400 2500 28550
Others 10000 9500 9000 9500 10000 11000 11500 12000 11000 10000 9000 9500 122000
Total 1691750 1797450 1883750 1964250 2065150 2172100 2275300 2381000 2498500 2620600 2727000 2844500 26920350
CASH OUTFLOW
Cash 125000 127000 128000 129000 126000 130000 131000 128000 126000 125000 126000 127000 1528000
purchases
creditors 10000 12000 11500 11000 10500 12000 11000 12500 12700 12800 12500 13000 141500

Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Insurance 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000

Salaries 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 480000
Loan 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
repayment

Interest on 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
loan
Sundry 8300 8000 8500 9000 7500 8500 8800 7700 8800 8200 8000 8700 100000
expenses
Total 201300 205000 20600 207000 202000 208500 208800 206200 205500 204000 204500 206700 2465500
Bal c/d 1490450 1592450 1677750 1757250 1865125 1963600 2066500 2174800 2293000 2416600 2522500 2637800 24454850
6.3.3 CASH FLOW STATEMENT FOR OMOTH GENERAL HARDWARE FOR YEAR 3 ENDING 31ST DEC 2024

Cash flow JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER TOTALS

32
CASH INFLOW
Bal b\d 2637800 2704550 2765050 2817550 2873400 2926900 2976650 3028400 3086900 3146150 3203400 3258150 35423900
Sale 260000 255000 250000 256000 257000 258000 256000 259000 258000 255000 255000 260000 3079000
Debtors 7000 6500 6000 6600 7000 7500 8000 8500 8000 7500 8000 8500 89100
Others 9000 10000 11000 11500 11000 11500 10000 9000 9500 10500 11000 11100 125100
Total 2913800 2977050 3031050 3091650 3148400 3203900 3250650 3304900 3362400 3419150 3477400 3537750 38717100
CASH OUTFLOW
Cash 130000 133000 135000 140000 145000 150000 145000 140000 138000 137000 139000 140000 1672000
purchases
creditors 12000 12500 11500 11000 10000 9500 10000 11000 11500 12000 12500 115000 135000

Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Insurance 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000

Salaries 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 480000
Loan 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
repayment

Interest on 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 18000
loan
Sundry 8750 9000 8500 8750 8000 9250 8750 8500 8250 8750 9250 9250 105000
expenses
Total 209250 213000 213500 218250 221500 227250 222250 218000 216250 215750 219250 219250 2614000
Bal c/d 2704550 2764050 2817550 2873400 2926900 2976650 3028400 3086900 3146150 3203400 3258150 3318500 36103100

33
6.4 PROFORMA INCOME STATEMENT

6.4.1 PROJECTED INCOME FOR FIRST YEAR

Particulars Amount Amount

Sales 3,583,300
Credit (20% of cash sale) (716,660)
2,866,640
Less cost of sales
Purchase – cash 1,543,400
Credit (30% of cash purchase) (463,020) (1080,380)
Gross profit 1,786,260

Less expense
Rent 60,000
Insurance 24,000
Salaries 480,000
Loan and interest 132,000
Salary expenses 93,000 (789,000)
Net profit before tax 997,260
Less cooperation 30% (290,178)
Net profit offer tax 707,082

6.4.2 PROJECTED INCOME STATEMENT FOR YEAR 2

Particulars Amount Amount

Sales 3,574,000
Credit (20% of cash sales) (714,800)
2,859,200

Less cost of sales

Purchase – cash 1,528,00
Credit (30% of cash purchase) (488,400) (1,069,600)
Gross profit 1,789,600
Less expensive

33
Rent 60,000
Insurance 24,000
Salaries 600,000
Loan and interest 132,000
Sundry expenses 100,000 (796,000)
Net profit before tax 993,600
Less corporation tax (30% X 993,600) (288,000)
Net profit after tax 705,600

6.4.3 PROCTED INCOME STATEMENT FOR YEAR 3

Particulars Amount Amount

Sales 3,079,000
Credit (20% ash sale) (615,800)
2,463,200
Less cost of sales
Purchase – cash 1,672,000
Credit (30% of purchase cash) (501,600) 1,170,400
Gross profit 1,292,800
Less expense
Rent 60,000
Insurance 24,000
Salaries 480,000
Loan and interest 138,000
Sundry expenses 105,000 (607,000)
Net profit before tax 785,800
Less corporation tax (30% X 785,800) (205,740)
Net profit after tax 580,060

6.5 PROFORMER BALANCE SHEET

Fixed assets Cost Depreciation Net book

value

34
Machine 250,000
Furniture 955,000
Buildings 240,000
1,445,000

Add Working Capital

Current Assets
Stock 400,000
Account receivables 250,000
Cash at hand 50,000
Cash at bank 100,000
800,000

Current liabilities
Creditors 90,000
Overdraft 110,000 (200,000)
NET ASSETS 2,045,000
Financed by:
Owner’s equity 1,000,000
Bank loan 95,000
Net profit 950,000
2,045,000

6.6 BREAK EVEN ANALYSIS

Year 1
Fixed cost
Salaries 480,000
Rent 60,000
Loan and interest 132,000
Insurance 24,000
696,000

Variable cost
Electricity 20,000
Advertisement 25,000
Water 8,000

35
Transport 40,000
93,000

CONTRIBUTION = Total – Variable cost

= 2,381,200 – 93,000
= 2,288,200
= 696,100 X100%
2,288,200
= 30.4%

Year 2
Fixed cost
Salaries 600,000

Rent 60,000
Loan and interest 198,000
Insurance 24,000
882,000

Variable cost
Electricity 20,000
Advertisement 25,000
Water 15,000
Transport 40,000
100,000

CONTRIBUTION = Total cost – Variable cost

= 2,545,500 – 93,000
= 2,452,500
= 882,000 X100%
2,452,500

= 36%

Year 3
Fixed cost
Salaries 660,000
Rent 60,000
36
Loan and interest 198,000
Insurance 24,000
942,000

Variable cost
Electricity 20,000
Advertisement 25,000
Water 10,000
Transport 50,000
105,000

CONTRIBUTION = Total cost – Variable

= 2,749,000 – 105,000
= 2,644,000
= 942,000 X 100%
264,400
= 37%

6.7 PROFITABILITY RATIO

i) Gross profit ratio Year 1 Year 2 Year3

= Gross profit X
100%
1,786,260 X 1,789,600 X 1,292,800 X 100
Sales
100% 100% 3,079,000
3,583,300 3,574,000

= 49.9%
= 49.8% = 50%

5800600 X100%
ii) Net profit ratio
707,082 X 705,600 X 3,079,000
= Net profit X 100% 100%
100%
3,583,300 3,574,000

37
 Sales = 18.83%

= 19.73% = 19.74%

960,000

iii) Liquidity ratio 800,000 820,000 250,000

= Current assets 200,000 210,000

Current liabilities = 3.8:1

= 4: 1 = 4:1

6.8 PROPOSED CAPITALISATION CAPITAL

SOURCE AMOUNT (KSHS)

Bank loans 300,000

Donations 125,000

Total savings 125,000

Partner contribution

i) Kevin’s contribution 125,000

ii) Antony’s contribution 125,000
Sale of property 200,000

TOTALS 1000,000

38
6.9 DESIRED CAPITALISATION

AMOUNT AMOUNT (KSHS)

Pre-operational cost 230,000

Working capital 600,000

Fixed assets 1,445,000

Others 400,000

TOTALS 2,675,000

39