Ammi HOUSEHOLDINGS SUPERMARKET

P.O BOX 116, KABARNET

) PHONE :0700004389

EMAIL: annexmurimi@gmail.com

BUSINESS PLAN 2017/plm/576

PRESENTED BY : Annex murimi

PRESENTED TO : THE KENYA NATIONAL EXAMINATIONS

COUNCIL IN PARTIAL FULFILLMENT FOR

THE AWARD OF CERTIFICATE IN PLUMBING

AND PIPE FITTING

CENTRE : KENYA INSTITUTE OF HIGHWAYS AND

BUILDING. TECHNOLOGY

TEL: 020-2023390/02035131119-20

DATE OF PRESENTATION: JULY 2018

DECLARATION

I declare that this is my original work and that it has never been presented to the Kenya

National Examinations Council or any other examining body.

NAME OF STUDENT: ANNEX MURIMI.

SIGNATURE: ______________________________________

DATE: ____________________________________________

NAME OF SUPERVISOR: JOHN K SITUMA

SIGNATURE: _______________________________________

DATE: _____________________________________________

PREFACE

The business plan plays some important roles in that it assists proprietors in venturing

into such proposed business mainly to avoid business failure. Secondly the business is

also suitable for proprietors in borrowing loans to finance the business from financial
institutions. Finally the business plan enable the proprietor to achieve the requirements of

the Kenya National Examinations Council to complete her course.

It majorly covers:

a) The business description

b) The marketing plan.

c) The organization and management plan.

d) The operational and production plan and

e) The financial plan.

ACKNOWLEDGEMENT.

I take this time to express my sincere regards and appreciations to the KENYA

INSTITUTE OF HIGHWAYS AND BUILDING TECHNOLOGY for the cordial

acceptance for the study in the institution.

Special thanks goes to MRS P. KARANJA, my supervisor for reading the full

preliminary draft of the business plan and counseling me on how to better organize and

alter certain parts and sections.

I further wish to appreciate the following who collectively assisted me morally,

intellectually and financially to make sure that I have successfully finished my course.

Mr. KARANJA and not forgetting my brothers and sisters, KAMAU, KELVIN and

BRIAN, WANJIKU, OBAMI and LYNE.

I am also indebted to my sincere friends and classmates who equipped me with the

Knowledge pertaining my business plan thus enabling me to finish the whole project

without a lot of difficulty: Janet, Mary, Virginia and Shenaz.

Last but not least, appreciation goes to the person who typed and printed this project.

May God bless them all.

DEDICATION

I dedicate this business plan to my beloved parents Mr. and Mrs. Chemitei
TABLE OF CONTENT

DECLARATION

PREFACE
ACKNOWLEGDEMENT

DEDICATION

EXECUTIVE SUMMARY

TABLE OF CONTENT

CHAPTER ONE .

1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

1.2 BUSINESS LOACTION AND ADDRESS

1.3 FORM OF OWNERSHIP

1.4 TYPE OF THE BUSINESS

1.5 PRODUCTS AND SERVICES

1.6 JUSTIFICATION OF OPPORTUNITY

1.7 INDUSTRY/SECTOR

1.8 GOALS OF THE BUSINESS

1.9 ENTRY AND GROWTH STRATEGY

CHAPTER TWO

2.0 MARKETING PLAN

2.1 CUSTOMERS

2.2 MARKET SHARE

2.3 COMPETITION

2.4 METHODS OF PROMOTION AND ADVERTISING

2.5 PRICING STRATEGY

2.6 SALES TACTICS

2.7 DISTRIBUTION STRATEGY

CHAPTER THREE

3.0 ORGANISATION AND MANAGEMENT PLAN

3.1 KEY MANAGEMENT PERSONNEL

3.2 OTHER PERSONNEL

3.3 RECRUITMENT, TRAINING AND PROMOTION

3.4 RENUMERATION AND INCENTIVES

3.5 LICENSE, PERMITS AND BY-LAWS

3.6 SUPPORT SERVICES

CHAPTER FOUR

4.0 OPERATIONAL/ PRODUCTION PLAN

4.1.1 PRODUCTION FACILITIES AND CAPACITY

4.1.2 ENTERPRISE LAYOUT

4.1.3 REPAIR AND MAINTENANCE

4.2 PRODUCTION STRATEGY

4.2.1 PRODUCTION DESIGN AND DEVELOPMENT

4.2.2 MONTHLY MATERIAL REQUIREMENT

4.2.3 MONTHLY LABOUR REQUIREMENT

4.2.4 MONTHLY PRODUCTION COST

4.3 PRODUCTION PROCESS

4.4 REGULATION AFFECTING OPERATION

CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COST

5.2 ESTIMATED WORKING CAPITAL

5.3 CASH FLOW PROJECTION

5.4 PROFORMA INCOME STATEMENT

5.5 PROFORMA BALANCE SHEET

5.6 BREAK EVEN POINT ANALYSIS

5.7 PROFITABILITY RATIOS

5.8 DESIRED FINANCING

5.9 PROPOSED CAPITALISATION

APPENDICES

EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

AMMI house holdings supermarket is the name of the business a sole proprietor type of

business which is owned by the proprietor ANNEX MURIMI with the assistance of her

brothers and sister Mathew Chebor, Patrick Chebor and Mercy Chebor. The owner of the

proposed business also intends to employ other ten people to act as directors to the

customers on where they can get what they want.

The owner of the business chose the name ‘AMMI’ which is a slang word meaning

“[togetherness ” hence customers will know togetherness is present in the business and

good quality free from defects. The name is easy to read and pronounce. The name also

shows that the employees are good hence customers are assured of good services offered.

The business will be located at Kiamutugu trading centre in ngariama location,,kirinyaga

county. The enterprise will offer goods to customers living within the area and the

surrounding region and also commuters traveling to and from mombasa to MT kenya.

2.0 MARKETING PLAN

The target markets include domestic (people who live in ndishu T. centre, institutions like

secondary schools, hospitals, primary schools, village polytechnics, training institutes and

commuters

The business will initially rely on the regular customers. The main competitive advantage

of the proposed business is that they charge their commodities a cheaper price compared

to other business. Another advantage is that the customers will be given an opportunity to

go round to check and compare prices of their needs before picking and paying for them

which is not offered by the retails shops around and paying for them which is not offered

by the retails shops around.

Also, there is no supermarket within the area except in ten kilometers away hence the

customers can access easily the business.

3.0 ORGANIZATION AND MANAGEMENT PLAN

The proprietor of the business will be the general manager, NEPHAT KITHOME will be

the assistant general manager, GRACE KUI will be the purchasing manager concerned

with purchases of goods from the manufacturing firms and MARK MACHARIA will be

the financial controller of the business.

The owner of the business intend to employ ten more people who will be the directors to

assist customers get access to the goods they want including the watchman to guard the

premise all through.

4.0 OPERATIONAL PLAN

The services and products t be offered to the customers are expected to be of high

quality. Any mistake that might arise due to unsatisfactory services will be solved

immediately, to avoid losing customers.

The business will run throughout the week that is from Monday to Saturday and Sunday

in the afternoon. There will also be stock taking to verify the necessary re-ordering levels

and replenishment to be done.

The business will also ensure that all regulations affecting the business are followed to

avoid conflicts with the authority.

5.0 FINANCIAL PLAN

Funds will be needed for paying salaries to the owners, buying more stock for resale and

renovation of the building.

The proposed business is expected to start with a capital of ksh 2,015,000 of which

900,000 will be the owners equity ksh 402,000 from cooperative bank of Kenya –

Kiamutugu branch 100,000 from creditors and remaining Ksh 613,000 from the brothers

and sister.

CHAPTER ONE
1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The proposed business will bear the name AMMI HOUSE HOLDING

SUPERMARKET. The name suits the venture because customers will be able to

read and pronounce it with ease.

The name AMMI is a slang word meaning togetherness which comes from the

proprietors name AnnexMuriMI. Therefore customers will know and understand

in-depth that the commodities sold are of good quality free from defects. The

proposed business is going to be involved in the sale of kitchen goods, all types

of petroleum jelly, body lotions, bedroom requirements and all other types of fast

moving goods e.g. sugar, salt etc.

1.2 BUSINESS LOCATION AND ADDRESS

The business shall be located at NDISHU T. centre, NGARIAMA location

Kirinyaga county. The business will be along mombasa-mt kenya road near the

ngariama junction.

The owner chose the site because of the following reasons: first the premise is

already set up which is building of the proprietors parents, secondly the location is

an upcoming T. centre with various types of retail business, schools, institutions,

village polytechnics and industries around thirdly there is good infrastructure and

communications systems and security for safety and finally high population, in

which most people are employed hence having higher purchase power.

The centre is also privileged by coffee factory, rural coffee growers, valley bakery

and hotels. Therefore many people will come and buy from the business since it
 will sell to them commodities they need at a cheaper price than what retailers

charge for. In addition to that the business will get customers from commuters

traveling to and from Kabartonjo to Nakuru.

The contact address of the business will be:

AMMI HOUSEHOLDINGS SUPERMARKET

P.O BOX 336

NGARIAMA.

Tel : 0700004389

Email:annexmurimi@gmail.com

1.3 FORM OF OWNERSHIP

The business will be a sole proprietorship where the owner will be the sponsor of

the proposed business. The owner is a certified graduate from the Kenya institute

of highways and building technology having done and completed a certificate

course in plumbing and pipe fitting , this will assist her in understanding the need

of customers by interacting with them and also enabling the proprietor to

supervise and motivate her workers with ease. Further more the owner will be the

boss, keep secrets herself enjoy profits just to mention but a few.

TYPE OF THE BUSINESS

Ammi HOUSEHOLDINGS SUPERMARKET is a sole proprietor kind of

business dealing with the sale of fast moving goods e.g. maize flour, wheat flour,
 kitchen wares and other commodities like bedding, soaps, sprays, body lotions

etc.

The fundamental objective of the proposed business is to bring different kinds of

products and services close to customers that meets and exceeds expectations and

sell to them at a cheaper price compared to what other retailers charge for the

same goods / services.

1.5 PRODUCTS/SERVICES

The products which will be offered by AMMI HOUSEHOLDINGS

SUPERMARKET includes: maize flour, cooking oils and fats, sugar, body lotions

and sprays, soaps and ingredients and many others.

On the other hand the services which will be offered will be after sale services

advising and educating the customers on how to use some types of products.

Therefore to obtain maximum profit out of the business, the proprietor will make

sure that the goods needed by the customers are brought to the business premise

without any delays or incurring extra costs. To avoid competition from other

business operators the owner will or is intending to keep all the activities of the

business secret as on of the advantage of sole proprietorship

1.6 JUSTIFICATION OF OPPORTUNITY

Since the proprietor has acquired skills in marketing management and

entrepreneurship she discovered that there is need to start a supermarket type of

business due to the rise in population and to check the retailers who have the habit

of increasing the cost of their products thus exploiting the customers.

 Another motivating factor is the experience which the proprietor acquired after

working in a similar business Ukwala supermarket of a relative in Eldoret. This

enables the owner of the proposed business to have skills and knowledge on how

to run a supermarket type of business.

The other factor is that there are few competitors who operate the same type of

business succeeding is very high. More over people in that area were forced to

travel to town to go and buy what they cannot get from retailers. This motivated

the proprietor to try and bring these goods close to customers.

Lastly but not least is due to the failure of other people who tried to venture into

this business in the area, therefore she invented into the business to prove a

capability to operate and succeed in such a business in the area hence gaining

fame in the society.

1.7 INDUSTRY /SECTOR

The business will be a commercial or trade industry which will be dealing with

the purchase of products from the manufacturers and selling them to the final

users. Secondly there is no business which have venture into a supermarket in the

area. People have ventured mainly in retail shops. Thirdly, another reason being

there is nobody who is qualified in marketing management hence the business is

likely to expand and be successful. Since the owner is qualified for marketing

management and there are no competitors within the area the proposed business

will be established even though there are other 6km which are well established

and have been in operation for long. The business will be Labour intensive which

will include loading and off loading of goods.

1.8 GOALS OF THE BUSINESS

Goals are targets or set standards which have to be achieved within a specific

time. They are short term and long term goals.

(i) SHORT TERM GOALS

They include:

1. Self employment to the owner and employment of other people and hence

creation of employment.

2. To provide quality products and services which meet customer’s satisfaction.

3. To charge goods at competitive price compared to other retailers.

4. to buy a small pick up which will help the major in transporting goods from

the manufacturers.

(ii) LONG TERM GOALS

They include:

1. To open other branches of Kianyaga centre

2. To construct a bigger store for storage of products which are brought in bulk

to avoid shortage / stock outs.

3. To maximize profits as the major motive

4. To purchase a centre for transporting larger consignments

1.9 ENTRY AND GROWTH STRATEGY

To enter the market the proprietor will take possible steps to make business pick

up very fast. The owner will make a special offer to the customers through price

reduction of products being sold so as to make them buy frequently from the

business. Again there will be the use of postures and advertisement to create
 awareness of the new business. Further more free samples on top of the goods

they purchase, therefore making then to continue keep buying from the business.

As the customers keep coming frequently to buy from the premise the owner of

the business is going to ensure that the profits from the business is used for

expansion purposes. This will be an advantage for those customers who does not

have an access to that location. This will only be done by opening other branches

in other centre hence enhancing growth.

CHAPTER TWO

2.0 MARKETING PLAN

2.1 CUSTOMERS

The customers targeted by the proposed business includes institutional domestic

commercial and occasional customers. The major reason for these is that the

business foresees a good market set up in the area.

(i) INSTITUTIONAL CUSTOMERS

He customers consist of secondary schools, hospitals, primary schools,

institutions and polytechnics. They include kiamutugu high school, St. Annet

high, government training institute, Bartek institute, among others. When these

institutions make purchases, discounts will be offered to them which will enable

them save for other purposes e.g. transport cost.

(ii) DOMESTIC CUSTOMERS

These are individuals who will purchase products from the supermarket as the

business projects this category of customers will provide the largest percentage of

the total market for the initial stage of the business. This is because the people of

ngariama T. centre are mainly civil servants and others are casual workers from

the nearby coffee factory. Most of these people will depend on the products of

the business enterprise since the proprietor will ensure that there is efficiency in

serving customers by buying products in bulk to avoid stock out and delivering

them to the premise too at the right time.

(iii) COMMERCIAL CUSTOMERS

 These are customers who buy products for resale. In the location there are small

entrepreneurs who will have put up kiosks and canteens hence buy from the

enterprise and resale them at a profit. These customers will form a smaller

percentage of the total market share.

(iv) OCCASIONAL CUSTOMERS

These are customers who buy the products on occasional basis e.g after two

weeks a month. Mostly those people who travel at the end of the month to their

homes will be able to purchase the goods from the business. There are also people

who travel from mombasa to MT kenyaand will be able to stop buy from the

premise.

2.2 MARKET SHARE

Through research the population of Kirinyaga is 100,000 and all these people live

in the area of approximately 3 – 4 km and are well paid. Therefore the owner of

the business plans to expand the market for her products by bringing substitutes

and complimentary goods to meet the customers taste and preference. Although

there will be a slight competition from other business operating in the area for the

same customers the business will be selling its goods at a lower price thereby out

competing them. The market share will be :

NAME OF THE % SHARE NUMBER OF CUSTOMERS

BUSINESS
KAPSACHO 15 15,000

SUPERMARKET
PLEASANT DOVE 25 25,000

SUPERMARKET
CAmmi 50 50,000

HOUSEHOLDINGS

SUPERMARKET
KIPLELMET 10 10,000

SUPERMARKET
TOTAL 100 100,000

2.3 COMPETITION

The proprietor of the business carried out a market survey and found that there

were few business offering the same products and services like hers. The owner of

the proposed business will capitalize on it so that it can out weigh them.

The owner also noted that her competitors are located 10km away from the

proposed business. Therefore the owner intends to employ tactics like giving of

free samples, gifts and high quantity discounts when customers purchase goods

over ksh 2,000.00. The competitors of proposed business will be:-

(i) DIRECT COMPETITORS

Among the direct competitors include pleasant dove and Kiplelmet supermarket.

These competitors sell similar goods as those which are going to be sold by the

proposed business. They have pick ups which help their customers who purchase

in large quantities to ferry to their respective places. They have also been engaged
 in such business for along time hence have acquired more skill and knowledge

concerning the market.

(ii) INDIRECT COMPETITORS

The business has one indirect competitors which is the JUA KALI SECTION

which will be selling substitutes. The goods include kitchen wares sold by

hawkers along the streets making jikos, frying pans and selling them to the

customers.

Through this the proprietor of the business is going to use her knowledge which

she acquired after taking a certificate course in plumbing and pipe fitting . This

will help her to interact with the customers on their needs and wants. The business

will engage in aggressive advertisement so as to influence and lure the customers

to keep carrying and do frequent purchases.

STRENGTH AND WEAKNESS ANALYSIS

NAME OF THE STRENGTH WEAKNESS

BUSINESS
Ammi.  Well established market  No means of

HOUSEHOLDING  Effective communication and transport

SUPERMARKET distribution channels

  Trained personnel therefore better

services offered.

 Quality products offered with lower

favorable and cheap prices.

 
KAPSACHO  Have good transport system  Have less personnel

SUPERMARKET  Established market  Low quality goods

 Skilled and have knowledge of the  Poor services offered

market
KIPLELMET  Trained personnel  Charge higher prices

 Good transport network  business not famous

 Underpaying of

personnel

NAME OF THE PRODUCT/S PRICI PROMO PERSO LOCA SIZ TOTA

BUSINESS ERVICE NG TION NNEL TION E L

Ammo 6 5 4 6 5 6 32

HOUSEHOLDINGS
PLEASANT DOVE 5 4 3 2 3 2 19
KAPSACHO 5 2 1 2 1 3 17

SUPERMARKET
KIPLELMET 4 3 1 1 3 4 16

SUPERMARKET
MAXIMUM 6 6 6 6 6 6 36

SCORE

2.4 METHODS OF PROMOTION AND ADVERTISING

(i) PROMOTION
 The owner of the business intends to use the following promotion techniques in

order to increase the sales and maximize profits:-

(a) Free gifts – the proprietor will attach some goods which are slow moving with a

free gift.

(b) Trade discounts – the proprietor intends to give trade discounts to those

customers who will purchase goods worth more than shs 1000

(c) Free samples – the proprietor intends to introduce free samples for customers to

taste first in which they will eventually buy if they are satisfied with it.

(ii) ADVERTISING

The main aim of advertising will be to attract the attention of customers. Posters will

be the desired method in which they will be placed in strategic points of the market

place e.g. in front walls of business premises. There will also be the use of face to

face conversations with potential customers so as to know exactly what is being sold

compared to other supermarkets. Again the owner of the business intends to locally

print trade journals with the picture of the premise, goods sold and how they are

arranged in the premise. The method uses attractive and different colors whish will

attract the attention of the customers. Finally the availability of broadcasting station

within the area will enable the proprietor to advertise by use of Kiswahili and local

language because radios are very popular in the location.

2.5 PRICING STARTEGY

The owner of the business considers to employ the following methods of pricing her

goods after considering:- customers income, license expense and transport expenses:-
 (i) Psychological pricing – the proprietor will use this method e.g instead of a

product which costs kshs 200 will be ksh 199

(ii) Promotional pricing – the proprietor intends to lower prices charged on some

products and increase the price of other products to gather for the goods

charged below the cost.

(iii) Going rate pricing – the proprietor will also consider what other competitors

charge for their goods and then charge her own goods a bit lower than for the

competitor.

(iv) Cost plus pricing – the proprietor will consider the cost of transport of goods

to the premise and add a small percentage of mark ups so as to arrive at a

profitable selling price.

2.6 SALES TACTICS

In order to achieve the main objectives of the enterprise i.e satisfying customers needs

and maximizing profits the proprietor will use certain sales tactics which will assist

her competition. These sales tactics will include:-

(i) Personal selling – this will create dialogue between customers and attendants

hence good relationship. The attendants will be able to persuade the workers

to buy slow moving goods

(ii) Self services –this is where the customers will come and pick trays themselves

and go round the shelves and collect what they need

(iii) Offering high quality products and services – the proprietor will ensure that

quality products are ordered and offered including services based on the

current technology to meet customers needs and wants.

 (iv) Telephone order – the owner will receive telephone orders from institutions

and factories and deliver them according to their orders.

(v) Free gifts – the proprietor will offer free gifts to her customers to attract more

customers and maintain them hence frequent purchases.

2.7 DISTRIBUTION STRATEGY

The proprietor intends to use a hired lorry to transport the manufactured goods from

the industry to the business premise. This type of business will have only three

distribution channels namely:

Manufacturers – The finished goods will be bought directly from the manufacturers and

transport to the supermarkets.

Supermarkets – this is where goods will be arranged on the shelves of the premise in a

way to attract customers and price tags attached to them.

Customer – the final consumer in the channel who buy goods to satisfy their needs.

DISTRIBUTION CHART

The proposed business will buy goods from the manufacturers and distribute them to

institutional customers, domestic customers, retailers who will further sell to the final

consumer at a profit.

AMMI
HOUSEHOLDINGS
SUPERMARKET

RETAILERS INSTITUTIONAL DOMESTIC

CUSTOMERS CUSTOMERS
DOMESTIC SECONDARY VILLAGE MEDICAL
CUSTOMERS SCHOOLS POLYTECHNIC INSTITUTIONS
S

CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

CHEMA HOUSEHOLDING SUPERMARKET is going to be a sole

proprietorship of business which will be controlled by the owner who is the

proprietor of the business. She will be assisted by three other people in the

management of the business and employ eleven other personnel to assist in the

smooth running and success of the business. These people will include: assist in

the smooth running and success of the business. These people will include:

assistant general manager, purchasing manager, accountant, workers (shelve

attendants cashiers) and the watchman.

3.1 KEY MANAGEMENT PERSONNEL

(i) GENERAL MANAGER

Qualification

 She should be a diploma holder in Marketing Management with a pass and

above.
 She should have entrepreneurial skills and good public relations

 She should also be governed with ethical standards and high integrity with

high-tech office methods.

 Should be computer literate, fluent in English and Kiswahili

 Should be aged between 30 -35 years

Duties / Responsibilities

 She recruits and fires employees who are non performing to their expectations

 She should provide capital required to operate the business since she is the

owner of the business

 She should also assign and delegate all the workers their duties and

responsibilities they are expected to do

 She should be able to identify new areas where there are market for opening

other branches of the supermarket.

 She should give guide to the purchasing manager to buy all the goods needed

in the business premise by signing and giving an authority note to this effect.

(iii) ASSISTANT GENERAL MANAGER (1)

Qualifications

 He should be a certificate holder in sales and marketing with a credit pass

 He should have at least 2 years of experience

 Must posses management and entrepreneurial skills from a recognized

institution

 Should be computer literate which will be an added advantage

 Should be aged between 23 -30 years

Duties / Responsibilities

 He helps the general manager in all levels of management for instance in the

implementation of decision and policies of the business.

 Ensures that all the properties of the business are maintained in good

conditions

 Assist the workers when there is a problem in the business

 He should act as a link between the workers and general manager

 He should also supervise the workers, purchasing manager and the accountant

so as to see that there is no mismanagement of business funds.

(iv) PURCHASING MANAGER (1)

Qualifications

 Should be a certificate holder in purchasing and supplies management with a credit pass.

 Should have high integrity

 Should be aged between 21 – 25 years

 Computer literacy will be an added advantage

Duties / Responsibilities

 Responsible for the purchase of all products needed in the enterprise by

writing a requisition to the general manager for signatory of purchase

 Ensures that products bought for the supermarket is p[aid by advising the

accountant to pay for the goods

 Also responsible to carry out a market research to know the goods needed by

the customers so that they are bought to the business premise.

 Should be able to negotiate for price reduction of the goods / products being purchased.
(v) ACCOUNTANT (1)

QUALIFICATION

 He should be a certified public accountant CPAI holder

 Aged between 25 – 30 years

 He should have good financial management skills and a person of high

integrity

 Must be computer literate

Duties / Responsibilities

 He will help in the maintenance of the books of account

 Responsible for preparing cash flow statements for use in the business in

borrowing loans for purchasing goods to the premise

 Ensures that goods purchased are paid on time

 Also ensures that the acquisition of a new trade license is done every year

 He will also ensure that workers are paid on time to avoid complains and strikes.
ORGANIZATION CHART

GENERAL MANAGER

ASSISTANT
GENERAL MANAGER

PURCHASING MANAGER ACCOUNTANT

WORKERS WATCHMAN
3.2 OTHER PERSONNEL

WORKERS (10)

QUALIFICATIONS

 They should be form four leavers with a minimum grade of C- (minus)

 Must have attended and have certificate in public relations and sales and

marketing courses so that they will be able to attend to all customers coming into

the business to buy their needs

DUTIES / RESPONSIBILITIES

 Ensure that all customers get what they need with ease by showing and directing

them where they can be found.

 They should arrange the goods on the shelves in an attractive manner.

 They alert the purchasing manger on the goods which are getting finished from

the shelves

 They should also be keen lookers and ensure that there is no theft cases

WATCHMAN

QUALIFICATIONS

 Must be a form four leaver with Kenyan Certificate of Secondary Education with

a mean grade of D+(plus)

 He should also have pursued a securicor course with a pass so that he may be able

to deal with burglars.

 Duties / Responsibilities

 He is going to be in charge of the security of all the properties of the business

 He will be directly answerable to the assistant general manger on the properties of

the business destroyed / stolen.

3.3 RECRUITMENT, TRAINING AND PROMOTION

RECRUITMENT

This involves the process of searching for prospective employees and stimulating

them to apply for the job. This exercise is done by the manger in order to acquire

qualified and experienced staff to run the day to day activities of the enterprise. This

includes:-

ADVERTISEMENT

Therefore the owner of the proposed business plans during recruitment of personnel

to use advertising media for job posts. Short listing and inviting qualified individuals

for an interview. The proprietor plans also to place posters on the front walls of

various premises, installations, notice boards on the local trading centers. She will

indicate all the job title, academic qualifications for job title, academic qualification

for job title, age bracket required in each job and the salaries which are going to be

paid for each job.

The owner will also place advertisement on locally circulars / newspapers which is

written in both the local language and Kiswahili.

TRAINING
 After the recruitment process of employees, the owner plans to train them further to

suit the job. The various forms of training will include:

(a) Attending seminars

Trained personnel are encouraged and sponsored to attend relevant seminars relating

to dealing with customers.

(b) Business tours

The personnel are also sponsored to tour successful super market so that they can

acquire more skills and knowledge on how to manage and operate the supermarket

without a lot of difficult.

PROMOTIONS

Promoting of these personnel shall be done on merit of each worker e.g a worker will

be promoted to a senior position of management after working for more than 10

years in the supermarket. Academic qualifications will also be a determining factor

in their promotion, the more the qualified person the higher chances he/she will be

promoted fast. The discipline and integrity of a person will also be considered as

indiscipline persons can make the business to run at a loss. Such persons will be

addressing the customers in an unpolite way.

3.4 RENUMERATION AND INCENTIVES

In order to boost the morale of the employees, the proprietor of the proposed

business plans to make arrangement so that the employees can have their tea break

and lunch at the work place so that customers can be served throughout the day.

In addition to providing them with meals every day the proprietor also plans to give

employees traveling allowances, salary increment of about 10% of the net profit
 made out of the business and also provision of houses to those employees whose

names are very far from the business premise.

Moreover the employees will be taken for tours to towns within the country at the

end of each year when the business attains the target % profit the management plans.

They will also be given Christmas gifts making them happy while working since they

know tat at the end of the year they will be given a gift.

REMUNERATION AND INCENTIVES LEVEL

JOB TITLE NUMBER OF SALARY HOUSE INSURANCE TOTAL

PERSONNEL PER ALLOWAN

MONTH CE
GENERAL 1 6,000.00 2,000.00 400.00 8,400.00

MANAGER
ASSISTANT 1 5,000.00 1,000.00 300.00 6,300.00

MANAGER
PURCHASING 1 4,000.00 800.00 200.00 5,000.00

MANAGER
ACCOUNTANT 1 3,000.00 500.00 100.00 3,600.00
WORKERS 10 @2000.00 @300.00 500.00 23,500.00
WATCHMAN 1 1000.00 200.00 40.00 1,240.00
TOTAL 15 1,540.00 48,040.00

3.5 LICENSE / PERMITS AND BY LAWS

License will be issued by the ministry of trade and industry through the district trade

office Kabarnet branch.

Service charge permits and local authority charges will be acquired from Kirinyagt

county council bas in Kabarnet town. All the license required to operate the business
 legally will be acquired from the town council officers at Kiamutugut town trade

office so as to avoid conflicts with the government procedures as shown below:-

(i) Trade license: The trade license will be obtained at the county council of

Kabarnet. The trade licensing act states that “No person will be allowed to carry

any business in Kenya without a valid trading license. The license acts as a

permission to start and operate a business and also it’s a way in which the

government checks on people who have it motivate of carrying out legal trade

e.g sale of unauthorized drugs. This costs ksh 2,000.00

(ii) Permits: the permits will be issued by the Kabarnet District Commissioner

(DC). This cost ksh 2,500.00. This permits the business to start its intended

activities. An occupational license will also be obtained at the local municipal

council which costs 1,500.00

(iii) Public health act cap 242: this act relates to the hygienic condition of the

building of the business in relation to surrounding environment and that of the

personnel working with the firm. Every business must be in a suitable

environment. These include; good sanitation and working environment of the

workers.

3.6 SUPPORT SERVICES

(a) POSTAL SERVICES

The proprietor of the business is to open a post office box number which will be 116

kiamutugu for the business and a telephone number which will be 0517-02010.

All the letters and special documents addressed to the business is to be posted

through it. However orders can be received from the institutions and secondary

schools within the area by the telephone.

(b) BANKER

The proprietor of the business is to open an account with the Kenya Commercial

bank, kiamutugut branch. This involves opening a current account for the business

which is going to provide financial assistance to the business when its expanding to

other places e.g. Kituro and Kaptimbor trading centres.

(c) INSURANCE

The insurance policy for the premise and all goods in it including the

employees are to be taken with the Amaco Insurance Company k iamutugu branch.

(d) CONSULTANT AND ADVISORY

AMMI HOUSE HOLDING SUPERMARKET will solicit the advisory services

through the associations such as Kenya National Chamber of Commers and

industry (KNCCI) who will be advising on trade financial matters of the firm.

The owner of the business will also seek advice on how to manage the business

efficiently and effectively from the managers of other supermarkets like pleasant

dove and Kapsacho supermarkets because they have been in the business for along

time and they have been successful.

The Public Health officers from the district head office will also come and certify the

hygiene and good health of goods and personnel working in the supermarket.
 CHAPTER FOUR

4.0 OPERATIONAL / PRODUCTION PLAN.

4.1 PRODUCTION FACILITIES AND CAPACITY.

These are the long term assets which will be used in the day to day running of their

business and they are shown in the table below:

ITEM QUANTITY UNIT COST TOTAL COST

Cash register 4 125,000 500,000
Picking trays 20 2,500 50,000
Picking trolleys 5 20,000 100,000
Television surveillance 2 250,000 500,000
STORE
Camera surveillance 2 PURCHASING
500 FINANCE
1,800
TOTAL 1,151,800

SHELVES SHELVES SHELVES

CASH REGISTER CASH REGISTER

CASH REGISTER

4.1.2 ENTERPRISE LAYOUT.

GENERAL GENERAL
MANAGER MANAGER

PARKING SITE MALE FEMALE

WATCHMAN
TOILETS TOILETS
4.1.3 REPAIR AND MAINTENANCE

The facilities of the proposed business will be maintained in two phases namely:

i) Regular maintenance.

Here the facilities are repaired incase they broke down. This will be done after

every days work. For example, picking trays handles might break down if a
 customer over puts the commodities he/she picks from the shelves. This is

undertaken for smooth running of the next days work and to improve its life span.

ii) Major maintenance.

The facilities will be repaired after being used for six months. This will facilitate

the smooth running of the business activities and improve efficiently. An example

is the cash register should be in working condition all the time so that it cannot

overcharge the customers or give more than what the customer should be given as

change.

The television surveillance should also be in good condition all the days of the

business operation so that incase some customers wants to put small product into

their pocket they can be noticed.

4.2 PRODUCTION STRATEGY

4.2.1 PRODUCT DESIGN AND DEVELOPMENT

The owner f the business intend to arrange its goods in attractive way in that all

the detergents will be located in one row of the shelf, food staff in another row,

stationary, hardware, cookeries, cosmetics in different rows. The owner of the

proposed business also intends to stock some items which are not under the above

headings. These items includes cards like Christmas, exams, birthday, valentines

and spotlight batteries.

4.2.2 MONTHLY MATERIAL REQUIREMENT

ITEM QUANTITY AMOUNT

Detergents 8,000 120,000
Beddings 1,200 150,000
Food stuff 12,000 480,000
 Stationeries and 2,500 50,000
Hardware
Cookeries 1,200 95,000
Cosmetics 1,500 75,000
TOTAL 970,000

4.2.3 MONTHLY PRODUCTION COST

PARTICULARS AMOUNT
Materials 570,000
Labour / salaries 48,040
Transport 2,000
Water 500
Insurance 1,000
Advertisement 1,500
License and permit 3,500
Bank charges 500
TOTAL 1,027,040
4.3 POPULATION PROCESS

The proprietor of the business plan to start the commercial trade in a most

efficient and appropriate way. The steps are given below:

STEP I

All the customers coming into the supermarket and are having luggage like bags

will first deposit them in a pigeon office and in return they will be given an

identification number on when the luggage are placed. Those who do not have

any luggage will go straight into the supermarket.

STEP II

After depositing or keeping the luggage, they will enter into the supermarket and

either pick a tray/ trolley depending on the amount of commodities one wants to

purchase.

STEP III
 On picking the tray/trolley they will then go all round the supermarket comparing

and picking what they want.

STEP IV

After picking all the goods wanted from the shelves, the customers will then take

all the goods to the cashiers for payment. The customer will be given change if

there is excess accompanied by a receipt to show what has been purchased, the

prices and totals inclusions of the person who was serving him/her.

STEP V

The goods will be packed for the customer either by using a paper bag or if the

goods are few and light but if they are many and heavy a carton will be used.

STEP VI

The customer then takes his/her goods and goes out of the supermarket. If she/he

had deposited luggage in the pigeon office then he/she will go and present the

card showing the number of the pigeon hole where the luggage was kept and walk

his/her way.

4.4. REGULATIONS AFFECTING OPERATIONS

The proprietor of the proposed business is going to ensure that the business work

hand in hand with the government laws and regulations. This is done in order to

avoid interference and complications between the operation of the business and

the local government authorities coming into collision.

The government regulations include:

(i)LABOUR LAW
When there is a contract of service for a period of longer than one month from the

date of entering into it must be in writing and that person should be paid a salary,

compensated incase of injury and pay his/her dues after retirement.

This law will ensure that the owner of the business pays her workers on time and

compensate them incase of injury while carrying out the work. Failure to observe

will lead to the person suing the business of which the court might declare the

business bankrupt leading to its closure.

(i) BUILDING LAW

According to the building and Civil Engineering Act laws it requires that all the

buildings should be constructed well and should not have any cracks on the wall

which might endanger human life. This also ensures that there is safety to those

people who work inside the building and those who walk next to the building. The

building should also withstand any mechanical vibration of machines or big

vehicles.
 CHAPTER V

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COST

These are the costs incurred by the business before the start of the operation. These

costs include:

DESCRIPTION COST
Product facilities 1,151,800.00
License and permits 3,500.00
Renovation 34,200.00
Advertisement 3,500.00
GRAND TOTAL 1,193,000.00

5.2 ESTIMATED WORKING CAPITAL ASSETS

YEAR 1 YEAR 2 YEAR 3

ITEM KSH KSH KSH
Stock of goods 500,000.00 520,000.00 546,000.00
Cash at hand 100,000.00 220,000.00 300,000.00
Cash at bank 200,000.00 250,000.00 400,000.00
Debtors 20,000.00 23,000.00 30,000.00
TOTAL 820,000.00 1,013,000.00 1,270,000.00

LIABILITIES

YEAR 1 YEAR 2 YEAR 3

ITEM KSH KSH KSH
Creditors 50,000.00 45,000.00 35,000.00
Short term loan 50,000.00 40,000.00 30,000.00
Long term loan 100,000.00 85,000.00 70,000.00
Bank overdraft 100,000.00 80,000.00 65,000.00
TOTAL 300,000.00 250,000.00 200,000.00

WORKING CAPITAL = CURRENTS – CURRENT LIABILITIES

YEAR 1 = 820,000 – 300,000 = 520,000

YEAR 2 = 1,013,000 – 250,000 = 763,000

YEAR 3 = 1,270,000 – 200,000 = 1,070,000

 5.3 CASH FLOW PROJECTION FOR YEAR 1
DESCRIPTION Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Cash In Flow
Cash Sales 108,060 118,125 114,645 116,150 118,150 119,101 120,250 120,650 130,500 135,550 150,951 160,000 1,513,132
Debtors - - 3,000 3,500 3,600 2,200 2,000 2,500 6,000 5,500 4,000 7,000 39,300
Total cash inflow 108,060 118,125 117,645 119,650 122,750 121,301 122,250 123,150 136,500 141,050 154,951 167,000 1,552,432
Cash out flow
Local government 1,000 - - - - - - - - - - - 1,000
tax
Repair and - - - - 32,400 - - - - 1,800 - - 34,200
maintenance
Loan repayment 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Bank charges 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Transport 2,000 1,250 1,000 1,500 2,000 1,600 1,400 1,000 800 1,200 1,000 1,600 16,350
License and permit 3,500 - - - - - - - - - - - 3,500
Insurance 1,000 - - - - - - - - - - - 1,000
Advertisement 1,500 - - - - - 2,000 - - - - - 3,500
Postage 200 150 120 80 110 120 100 100 110 90 105 100 1,385
Water 500 200 250 100 150 120 250 275 300 280 215 240 2,880
Total cash outflow 63,240 55,140 54,910 55,220 88,200 55,380 57,290 54,915 54,750 56,910 54,860 55,480 706,295
Surplus / deficit 44,820 62,985 62,735 64,430 34,550 65,921 64,960 68,235 81,750 84,140 100,091 111,520 846,137
Accumulated cash 44,820 107,805 170,540 234,970 269,520 335,441 400,401 468,636 550,386 634,526 734,617 846,137
 5.4 PROFORMA INCOME STATEMENT

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Cash sales 1,513,132.00 1,613,132.00 1,812,160.00
Discount received - - -
Debtors 39,300.00 40,120.00 41,340.00
1,552,432.00 1,653,252.00 1,853,500.00
Less cost of sales 100,000.00 200,000.00 300,000.00
Gross profit 1,452,432.00 1,453,252.00 1,553,500.00
LESS EXPENSES
Salary 576,480.00 577,480.00 580,225.00
Transport 16,350.00 17,350.00 18,475.00
Insurance 1000.00 1,000.00 1,000.00
Postage 1,385.00 1,398.00 1,405.00
Water 2,880.00 2,916.00 3,147.00
Advertisement 3,500.00 3,650.00 3.750.00
Bank charges 6,000.00 6,120.00 6,545.00
License and permits 3,500.00 3,500.00 3,500.00
Repairs and maintenance 34,200.00 35,200.00 36,120.00
Interest 60,000.00 60,720.00 65,000.00
Local government tax 1,000.00 1,000.00 1,000.00
TOTAL EXPENSES 706,295.00 710.334.00 720,167.00
Net profit before tax 746,137.00 742,918.00 833,333
Less provision of tax 16% 119,381.92 118,866.88 133,333.28
Net profit after tax 626,755.08 624,051.12 699,999.72

5.5 PROFORMA BALANCE SHEET

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

FIXED ASSETS
Building 200,000.00 250,000.00 300,000.00
Production facilities 200,000.00 250,000.00 250,000.00
Furniture & fittings 100,000.00 100,000.00 150,000.00
Vehicle 800,000.00 400,000.00 350,000.00
1,300,000.00 1,120,000.00 1,050,000.00
LESS DEPRECIATION
5%building 10,000.00 12,500.00 15,000.00
5% production facilities 10,000.00 12,500.00 12,500.00
5% furniture & fittings 5,000.00 11,000.00 7,500.00
10% vehicle 80,000.00 40,000.00 35,000.00
TOTAL 105,000.00 76,000.00 70,000.00
TOTAL FIXED ASSETS 1,195,000.00 1,044,000.00 980,000.00
Current assets
Stock 500,000.00 500,000.00 520,000.00
Debtors 20,000.00 21,000.00 25,000.00
Cash at hand 100,000.00 120,000.00 125,000.00
Cash at bank 200,000.00 200,000.00 210,000.00
TOTAL CURRENT 820,000.00 841,000.00 880,000.00
ASSETS
TOTAL ASSETS 2,015,000.00 1,885,000.00 1,860,000.00
CURRENT LIABILITIES
Creditors 100,000.00 100,000.00 100,000.00
Short term loan 102,000.00 150,000.00 150,000.00
Long term liabilities
Long term loan 300,000.00 500,000.00 350,000.00
Borrowed from friends 613,000.00 335,000.00 400,000.00
Owners equity 900,000.00 800,000.00 860,000.00
TOTAL LIABILITE S 2,015,000.00 1,885,000.00 1,860,000.00

5.6 BREAK EVEN POINT ANALYSIS

DESCRIPTION SHS
Sales 1,513,132.00
VARIABLE COSTS
Purchases 500,000.00
Repair and maintenance 34,200.00
Transport 16,350.00
Advertisement 3,500.00
Water 2,880.00
Postage 1,385.00
558,315

CONTRIBUTION = sales – variable costs

= 1,513,132 – 558,315

= 954,817

(i) Contribution margin

= Contribution x 100%
Sales
 = 954,817 x 100 = 63 %
1,513,132
(ii)
FIXED COSTS SHS
Salaries 576,480
Insurance 1,000
Bank charges 6,000
Loan payment 60,000
Local government tax 1,000
TOTAL FIXED COSTS 644,480

Break even level of sales

Fixed costs x 100%

Contribution margin
= 644,480 x 100%
63%

= Ksh 1,022,984

5.7 PROFITABILITY RATIOS

5.8
A) Gross Profit Margin = gross profit x 100%
Sales

Year 1 = 1,452,432 x 100%

1,513,132

= 96%

Year 2 = 1,453,252 x 100%

1,613,132

Year 3 = 1,553,500 x 100%

1,812,160

B) RETURN ON EQUITY = Net profit after tax x 100%

Equity contribution

Year 1 = 626, 755.08 x 100 = 76%

900,000

Year 2 = 624,051.12 x 100 = 78%

800,000
 Year 3 = 699,999.72 x 100 = 81%
860,000

C) RETURN ON INVESTMENT

ROI = net profit after tax + interest on loan x 100%

Total investment

Year 1 = 626,755.08 x 100 = 31%

2,015,000

Year 2 = 624,051.12 x 100 = 33%

1,885,000

Year 3 = 699,999.72 x 100 = 38%

1,860,000

5.8 DESIRED FINANCING

Kshs
PRE-OPERATIONAL COSTS 1,193,000.00
WORKING CAPITAL 820,000.00
DESIRED FINANCING 2,013,000.00

5.9 PROPOSED CAPITALIZATION

Ksh
CO-OPERATIVE LOAN 402,000.00
OWNERS EQUITY 900,000.00
CREDITORS 100,000.00
BORROWED FROM FRIENDS 63,000.00
TOTAL INVESTMENT 2,015,000

APPENDICES

(i) SITE MAP (KIAMUTUGU TRADING CENTRE)