BUSINESS PLAN

BUSINESS NAME : EVER BEST SECURITY SERVICES

BUSINESS LOGO

PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL

NAME OF COURSE: DIPLOMA IN INFORMATION COMMUNICATION

TECHNOLOGY

COURSE CODE : 2920

NAME OF SUPERVISOR : MADAM FAITH

SERIES : JULY 2023
 DECLARATION
I declare that this is my original work and has never been submitted for examination
to any institution of higher learning.
Name: NDAVI MESHACK MUSEMBI
SIGNATURE……………………………………..
DATE……………………………………………….

The business plan been submitted to the Kenya National Examination Council with
the approve of my supervisor.

SUPERVISOR NAME : MADAM FAITH SIGNATURE

RE………………………………………………………….
DATE……………………………………………………....

ACKNOLEDGEMENT

I would like to acknowledge Madam Faith who made this work possible. Her teaching
and instructions guided till the success of this business plan.

Finally, I think the almighty for guiding me through the difficulties when writing the
business plan. Thanks to God.
 DEDICATION

I would like to dedicate this business plan to God and the entire family. The family has
been very supportive to the plan since the start until the end. The have encouraged me
with hardworking props so to successive in my education will young.
Table of Contents
DECLARATION..............................................................................................................................................2
ACKNOLEDGEMENT............................................................................................................................3
DEDICATION...............................................................................................................................................4
EXECUTIVE SUMMARY.........................................................................................................................7
Chapter Two....................................................................................................................................................7
Chapter Three..................................................................................................................................................7
Chapter Four....................................................................................................................................................7
CHAPTER ONE..............................................................................................................................................8
1.0 BUSINESS DESCRIPTION........................................................................................................................8
1.2 BUSINESS LOCTION AND ADDRESS.............................................................................................8
1.3 FORM OF OWNERSHIP....................................................................................................................10
1.4 TYPE OF BUSINESS..........................................................................................................................10
1.5 PRODUCTS AND SERVICES...........................................................................................................10
1.6 JUSTIFICATION OPPORTUNITY....................................................................................................11
1.7 INDUSTRY.........................................................................................................................................11
1.8 GOALS OF THE BUSINESS.............................................................................................................12
1.9 ENTRY AND GROWTH STRATEGY.............................................................................................12
• Growth strategy........................................................................................................................................12
CHAPTER TWO...........................................................................................................................................13
2.0 MARKETING PLAN................................................................................................................................13
2.1 Customers............................................................................................................................................13
2.2 CUSTOMER SHARE..........................................................................................................................14
2.3 COMPETITORS..................................................................................................................................15
2.4 METHODS OF PROMOTION AND ADVERTISING......................................................................17
2.5 PRICING STRATEGY........................................................................................................................18
2.6 SALES TACTICS................................................................................................................................19
2.7 DISTRIBUTION STRATEGY............................................................................................................19
CHAPTER THREE.......................................................................................................................................20
3.0 ORGANIZATION AND MANAGEMENT PLAN............................................................................20
3.1 BUSINESS MANAGER AND QUALIFICTIONS............................................................................21
3.2 PERSONNEL NUMBER OR DUTY..................................................................................................21
3.3 OTHER PERSONEL.................................................................................................................................21
3.4 RECRUITMENT TRAINING AND PROMOTION..........................................................................22
3.5 RENUMERATION AND INCENTIVES RENUMERATION..........................................................23
3.6 LICENCES, PERMITS AND BY-LAWS...........................................................................................23
3.7 SUPPORTIVE SERVICES Banking services.....................................................................................24
CHARPTER FOUR.........................................................................................................................................26
4.0 PRODUCTION AND OPERATIONAL PLAN..................................................................................26
4.1 PRODUCTION FACILITIES AND CAPACITIES............................................................................26
4.2 PRODUCTION STRATEGY..............................................................................................................29
4.2.1 Production plan strategy..............................................................................................................29
4.2.2 Monthly material requirements....................................................................................................29
4.2.3 Monthly labor requirements.........................................................................................................30
4.2.4 Monthly production expenses......................................................................................................31
4.2.5 Cost of production........................................................................................................................31
4.3 PRODUCTION PROCESS.................................................................................................................31
4.4 REGULATIONS AFFECTING OPERATIONS.................................................................................32
CHARPTER FIVE.....................................................................................................................................33
5.1 FINANCIAL PLANNING...................................................................................................................33
5.2 Working Capital...................................................................................................................................33
Assumption:.....................................................................................................................................................34
5.3 Preparation of cash flow projections....................................................................................................34
5.4 Preparation of profoma income statement and balance sheet 5.4.1 Projected income statement........36
This shows the profits or loss made by a firm during a particular period e.g ONE YEAR, TRADING
PROFIT AND LOSS STATEMENT FOR THE YEAR ENDING DEC 2021...............................................36
5.5 Calculating of break-even point...........................................................................................................38
5.5.1 Contribution margin.........................................................................................................................38
5.5.2 Contribution margin %....................................................................................................................38
5.5.3 Determine the total fixed costs........................................................................................................38
5.5.4 Calculate the break even level of sales in shillings..........................................................................38
5.5.6 Break-even point in units...................................................................................................................39
5.5.6 Breakeven point in sales.........................................................................................................................39
5.6 Calculation of profitability ratios......................................................................................................39
5.6.1 Gross profit margin.............................................................................................................................39
5.6.1 Net profit margin.................................................................................................................................40
5.6.1 Return on assets...............................................................................................................................40
5.6.2 Current ratio.....................................................................................................................................40
5.7 desired financing..................................................................................................................................41
5.8 Proposed capitalization.......................................................................................................................41
 EXECUTIVE SUMMARY

Chapter One

This chapter summarizes the business description and its ownership. The
services being offered in the business become well known by customers and also
show how it can cope with the competitive trends in the industry and also how it
penetrates in the market by advertising and offering their different services at
affordable price to the customers.

Chapter Two

This chapter explains the business type of customers and how they will be offered the
services. It also entails the market size in the Biometric field and the total services in the
business to its goals n also how the services will cost the customers. It also explains the
methods of advertisement will be used example through radio, billboards and others.

Chapter Three

In this chapter the business employees are introduced and also their qualifications. The
employees’ salaries are introduced .The licenses, permits and by-laws which trigger the
business operations are explained.

Chapter Four

In this chapter the business layout is illustrated. The cost of the monthly labour and
material requirements are illustrated which shows the business incurs in labour per
month and materials required required respectively. The servicing and process and the
features of offering the proposed business services and the factors that affect the
production process.

Chapter 5

This chapter shows an in depth of how the business incurs in profit and losses and also
the expenses.The business assets are explained.
 CHAPTER ONE
1.0 BUSINESS DESCRIPTION
The proposed business will be dealing with biometric services. Examples are
fingerprint mapping, facial recognition.

1.2 BUSINESS NAME

The name of the proposed business will be EVER BEST SECURITY SERVICES. The name
facilitates the services will be of high quality. The entrepreneur intends to start the business on
January 2026 immediately after completion of studies. It will operate on a sole proprietor. The
major activities will be voice recognition, fingerprint scanning and facial recognition. The
proposed business will also be identifying and access control or for identifying individuals
who are under surveillance. Our principal customers will be in military, civil identification,
border migration control and physical and logical access by application of fingerprints, facial,
voice, palm and palm.

1.2 BUSINESS LOCTION AND ADDRESS

The proposed business will be located along Thika Town, Makongeni road, opposite Thika
Police Station next to DCI Offices, second flow room number E10. The place is near the DCI
Offices where it can be used to identify some fingerprint if they match. Also, the place is
highly populated as well as good infrastructure in terms of good networking services.
Availability of water and electricity in the town. The business will be also near the sub county
law court where some fingerprints may be needed to be matched, or identifying the face of
people.

EVER BEST SECURITY

SERVICES, P.O BOX 6254-01000,
THIKA, KENYA,
EMAIL:
meshackmusembi042@gmail.com
WEBSITE: www.everbestservices.org.ke
TEL.NO: 0704174415
THE MAP

POLICE STATION
DCI OFFICESE

MAKONGENI ROAD THIKA HIGHWAY

EVER BEST SECURITY

SERVICES

STADIUM ROAD
GERDEN
1.3 FORM OF OWNERSHIP
The proposed business will operate as a sole proprietorship. The business will be owned by
Meshack Ndavi as the owner of the business. I will be twenty-two years old by that time. My
current occupation is a student at Thika Technical Institute pursing Diploma in Information
Communication Technology.
The benefit of biometric is authentication, privacy or data discretion, authorization or access
control, data veracity, and non-repudiation.
Due to inadequate experience I will have to employ a person with more skills in biometric. I will
also do some research concerning biometric technology.
The proposed business will ensure that it visits websites like Google to get more details on how
to run the business effectively and smoothly and listening to the advertisements so as to be
position to advertise its services so that to gain the customers easily.

1.4 TYPE OF BUSINESS

The proposed business will operate as sole proprietor since it will be owned and managed by a
single person. The proposed business is intended to be started by January 2026 after the
completion of my studies. As the owner of the business I will saved KSH500, 000 for the start
of the business. There will be other contributions amounting KSH250, 000 from family and
friends. I will have contributed 66.67% to the proposed business and 33.33% by family and
friends. The repayment period will be done one year later after the start of the proposed
business.

1.5 PRODUCTS AND SERVICES

Ever Best Security Services will offer the following as the main services:
• Identification and access control
• Identifying individuals who are under surveillance
There will also be:
✓ Finger and hand vein recognition
✓ Patient identification
✓ Authentication for access
✓ Healthcare information
✓ Fingerprint scanning
✓ Facial recognition
✓ Voice recognition
The services will be affordable to every client according to the service they want. The services to
be offered will be of high quality. The performance of servicing will be of high convenience and
comfort compared to other competitors.

1.6 JUSTIFICATION OPPORTUNITY

The location of business will be located strategically positioned where there are several potential
customers and also densely populated location.
The targeted customers include:
• Voters registration
• Government agencies
• Military

The proposed business will also offer opportunities to local community by hiring of skilled and
non-skilled employees. The owner or the manager of the proposed business will capitalize on
offering high quality services to satisfy customer needs.

1.7 INDUSTRY
The proposed business lies on ICT industry. It will be composed in two rooms.
The size of the proposed business will be medium for the start and later it will be expanded. The
name of the proposed business will be EVER BEST SECURITY SERVICES BIOMETRIC.
Which facilitates that the services to be offered will be of high quality?
The entrepreneur will use modern technology where he will be searching for order on line.
The proposed business will have a maximum of five employees in the business to ensure that the
business operates and runs smoothly. The basic capital required will be 2.3 million .The business
will be upgrading with the latest technology.
The entrepreneur will make sure he has competitive trends that will be extra from the competitor.
Understanding customers need is required for successful innovation helping them develop a new
service to support the decision in order to create strategy aligned to business visions.
Competitors mostly occur during when we have theft cases, voting registration, visa applications
and immigration records. Due to this the proposed business will come up with unique way to
overcome competitor.
1.8 GOALS OF THE BUSINESS
The proposed business will be having a long-term and short-term goal to achieve after the end of
five years.
Long-term goals
✓ Opening five branches within the country
✓ Buying a land later for the expansion of business
✓ Buying a personal vehicle to be delivering the advertising materials to customers.

Short-term goals
✓ To retain personal customers by offering good service to them.
✓ Servicing 100 customers within a month.
✓ Updating to what is trending.
✓ Develop new services.
✓ Ensure the business remains stable.
✓ Paying off all the debt borrowed during startup of the business.

1.9 ENTRY AND GROWTH STRATEGY

• Entry strategy
To penetrate and have acceptance in the market the owner of the proposed business will
advertise the business to the people by having road shows around the town which will enable
people know there is a new business in the town. The owner of the proposed business will use
posters and billboards at the entrance of the town to advertise new business in the town.

• Growth strategy
The proposed business will gain growth strategy by offering after sell services to customers to
create a good name. The business will work hard to meet the needs of the customers and satisfy
the owner of the business
 CHAPTER TWO
2.0 MARKETING PLAN
Ever best security services will have many strategic plans to achieve the objective
of customer service. Some of the plan is like expanding its operation, space and
even employing skillful personnel to help in the management of the proposed
business. Ever best security services will be located at the center of the town so as
to reach many customers as possible. The proposed business will throughout be
advertising its services, and its offers and some discounts for the customers after
their services. The charges for the services will be relatively cheaper compared to
the other competitors near the proposed business.

2.1Customers
The proposed will be serving different potential customers. The customers are as follows:
1 Government agencies
Government agencies also use biometric to verify identity at international
borders. In some countries, visa application must provide biometric
samples to be searched against criminal databases and immigration
records.
2 Law enforcement
The proposed business will be serving in the law enforcement by the use of
biometric technology which is commonly used in the justice system for:
Verification-by confirmation of person’s identity that is are
they who they are? Human identification-determination of a
person’s identity (who is this)

3. Military
The proposed business will be serving in the military by use of biometric
identification tools to help cut through disguises, such as name changes, hair
color and gender alterations, to remove anonymity from a potential adversary. It
is used in military operation for example to be employed to control access to a
military installation by verifying that only authorized individuals are granted
such access.
Voters registration
The proposed business will be serving in the voter’s registration by use of biometric technology
for capturing unique physical features of an individual. Fingerprint is the most commonly used,
most of the times in addition to demographics of the voter, for polling registration and/or
authentication. The enrollment infrastructure allows collecting and maintaining a database of the
biometric templates for all voters.

Health care
This is another field of customers where biometric is used when a patient enters a medical
facility, a biometric search using their biometric data can confidently locate the corresponding
identity in the master patient index. This search determines with a high degree of certainty if a
record exist for that patient

2.2 CUSTOMER SHARE

The market survey carried out in the area showed that the business will capture fifty percent
(50%) of the market size. Although this evident that the business will not expect serving a large
number of customers in the start but it will ensure that it will capture its customers through the
advertising of the business services in the media and organization programs. The town will
develop and grow in population hence more government will need the use of biometrics and
other institutions which need the use of the same.
This growth will guarantee the growth of the business as well. The proposed business will be
expected to grow up to 60%through the advertising their services, service promotion, discounts
on the charges of the services to the customer. The proposed business owner will apply for
skillful personnel in the business to be able to serve variety of sectors where the biometric
technology is needed at a relative charge.
 Sales

Ever bes security Fozmula Anderaa Company 4th Qtr

2.3 COMPETITORS
There are three major existing potential competitors. They are as follows:
2.3.1 Fozmula limited
2.3.2 Aanderaa
2.3.3 HID Global Corporation
The Fozmula has the largest serving solution taking 30%, followed by the Aanderaa taking 15%
and finally the HID Global Corporation taking 5%, although Ever Best Security takes the largest
service size of 50%. It will be advantageous since the larger the business the more expectation of
more potential customers.
BUSINESS COMPETITIORS MARKET SHARE

Ever Best Security 50%

Fozmula limited 30%

Aanderaa Company 15%

HID Global Corporation 5%

 Strength and weakness of the competitors

COMPETITIORS STRENTH WEAKNESS OPPORTUNITIES THREATS

Ever Best Has a good Open late and Good means of Unauthorized disclosure
quality close early transport around the of data
Security
service area
Fozmula Limited Customer Not punctual Allocated to most Presentation attacks
friendly developed countries (spoofing)

Aanderaa Well known Poor quality Close to the most Biometric processing
by many services populated area attacks
people
➢ HID Global Has many Impolite to Its old in the market Rise in social perception
workers customers as they thus known
Corporation
serve them

2.4 METHODS OF PROMOTION AND ADVERTISING

The owner of the proposed business has the knowledge in Information Technology thus will use
it to advertise services offered in the business in order to get more customers. Advertisement will
be made to gain exposure and reach your desired audience at an affordable price.
The following are methods to be used to venture in the market:
➢ Use of posters-the owner intends to use posters so as to get Slide Share without ads. This
facilitate to access to millions of presentations, documents, eBooks, audio books, magazines,
and more ad-free. This advertisement method will be costing KSH5, 000 per advertise.

➢ Social media-this will be done by posting all the charges of the services done by the business
in the social media It will also be showing the different services offered in the business and
their charges. This method of advertising will be costing KSH3, 000 per advertise.

➢ Trend shows-the company will be holding trend shows to promote their services. They will
also tag the charges to different biometric services that the proposed business is offering.
This type of advertising will be costing KSH3,000 per advert
The proposed business will be able to offer promotional services by giving discounts on services
they offer of 10% of its profit shall be allocated onto promotions of services and shall be done
more regularly when the level of customers tends to decrease. The proposed business shall
evaluate effective promotion through analyzing of the offer at a given period of time. This type
of promotion will be costing KSH45, 000 per a given period of time.

Ever best security services will also create offer to internet browsing to its frequent customers
and will also open emails. The proposed business will eventually grow big hence more
employees in the business in order to assist in the distribution of the services offered in the
business and ensure smooth running in the business management. This type of promotion method
will be costing KSH30, 000 per month.

2.5 PRICING STRATEGY

The proposed business will consider the charging fee per services offered by the potential
competitors surrounding the business, before setting up and calculating the charging fee of the
services the proposed business will be offering and also consider the demand of the proposed
customers. The proposed business will also take into consideration the government legal actions
before setting up the final charges for the services, and afterwards the business will also have a
chance to offer credit to customers within the agreed period. The proposed business will also
come up with the discount strategies which it will be using to discount those customers who will
be placing more using our services more times within a month.
Fee table for each service offered are as follows:
SERVICE NAME CHARGE

Fingerprint mapping 10,000

Facial recognition 4,700

Retina scans 15,000

Finger geometry 3,000

Biometric matching 7,000

2.6 SALES TACTICS

The proposed business intends to use direct conduct to the customers who will be visiting our
office. The proposed business may also use indirect technique where agents will be required to
offer services to the customers. This will lead to the business hiring skilled personnel who will
 be interacting with the customers in the field. This will enable the business to remunerate its
services and recruit its services effectively.
The agents will be covering the metropolitan of the county and also the neighboring counties.

2.7 DISTRIBUTION STRATEGY

The important thing in this case is to make it possible and realistic, the owner will hire or buy a
pick up for easy transportation and it will be a long term basis i.e. 7,000 per month.
In this proposed business there will be one distribution channel.
Direct channel this is favorable for both individual and institutional customers. This channel
ensures maximum profit and has direct contact with customers. It also enables owner obtain
feedback about the services. It also eliminates middle men who inflate the price of services.

CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT PLAN
 GENERAL MANAGER

DEPUTY
MANAGER ACCOUNTANT

SECRETARY CUSTOMER SERVICE ATTENDEE SECURITY OFFICER

3.1 BUSINESS MANAGER AND QUALIFICTIONS
The proposed business will operate as individual and the owner will serve as the manager.
The qualification for this position will be a diploma in software engineering, a bachelor’s
degree in fields such as forensic or natural science, internship experience will be required.
The manager of the proposed business will be earning Ksh 10,000 per month for the start of
the business, also the manager will be granted transportation and health allowances

3.2 PERSONNEL NUMBER OR DUTY

PERSONNEL QUALIFICATION DUTIES AND RESPONSIBIITIES

Diploma in business Shaping the work environment
GENERAL management Setting strategy
MANAGER Strong leadership qualities Allocating resources
Excellent communication skills Overseeing managers

DEPUTY GENERAL ➢ Should have managerial ➢ Acting in place of manager

MANAGER skills ➢ Assisting managers in taking
➢ Medical letter important decisions regarding
management procedures and
operations
➢ Hiring and training new staff in
their department

3.3 OTHER PERSONEL

ACCOUNTANT ➢ Diploma in accounting ➢ Keeping books of account
➢ Computer literature ➢ Preparing business budget,
➢ Medical letter employee pay slips, salaries and
➢ Certificate of good wages
conduct

➢ Requires particular ➢ Answering calls, taking messages

information on secretarial ➢ Filing
SECRETARY
practice, agenda, ➢ Maintaining diaries and
declaration, minutes of a arranging appointments
meeting ➢ Prorating workloads
➢ Must have adequate
knowledge of companies
 act
CUSTOMER ➢ Strong customers service ➢ Answering questions about the
SERVICE ➢ Cleanliness company service
ATTENDANCE ➢ Good communication ➢ Processing orders and
skills transactions
➢ Delivering information about a
company’s services

➢ A KCSE Certificate ➢ Guarding business premises

➢ Good communication ➢ Giving directions to the new faces
SECURITY skills ➢ Monitor surveillance cameras
OFFICER ➢ Basic training from a ➢ Monitor proper entrance
certified security
firm

3.4RECRUITMENT TRAINING AND PROMOTION

RECRUITMENT
This will be the selection of the qualified personnel whom will be having the required
qualities and qualifications to run the business. The proposed business will be carrying out
regular recruitment s, where there will be printed posters showing the vacant positions or
advertise in the Daily Nation. After that the business will receive application from varies
applicant and then they short list the applicants by going through their CVS and get the most
qualified. Afterward the proposed business will invite them for an interview. The interview
will be conducted by the General Manager assisted by Deputy Manager. After the interview
they will call them back those who qualified to the business to start their job.

TRAINING
The proposed business will organize training to the new workers in the business. They will
train them on how to perform the work they will also conduct orientation for workers to
familiarize with the business terms.

PROMOTION
The proposed business will be conducting a promotion to its employees by considering:
The promotion will be done based on work performance of the workers in the business. This
is how they will be doing and conducting their job as expected. The proposed business will
also consider the number of years an employee has being working in that company. They will
be promoting the ones who have stayed for a long time in the business due to the skills they
have gained in the business
3.5 RENUMERATION AND
INCENTIVES RENUMERATION
Position Gross Health allowance Transport Total
monthly per month allowance per
salary month
General Manager Ksh.20,000 Ksh.1,000 Ksh.1,000 Ksh.22,200

Deputy Manager Ksh.15,000 Ksh.900 Ksh.800 Ksh.16,700

Accountant Ksh.10,000 Ksh.800 Ksh.700 Ksh.11,500

Secretary Ksh5.,000 Ksh.600 Ksh.500 Ksh.6,100

Customer service Ksh.3,000 Ksh.500 Ksh.400 Ksh.3,900

Attendance
Security guard Ksh.2,000 Ksh.400 Ksh.300 Ksh.2,700

Total=6 Total=55,000 =3,700 =3,950 =4,200

INCENTIVES
Incentives are either gifts that you give to your employees to motivate them.
The proposed business will be giving all the employees tea for their breakfast; they will also
be given vouchers at the end of every year. The proposed business will held a thanksgiving
party at the end of every year to the employees to celebrate together, they will also be given
off days, for the public holiday they will be given leave. The proposed business will also
guarantee them with maternity leaves and sick leaves where necessary.

3.6 LICENCES, PERMITS AND BY-LAWS

LICENCES
The proposed business will acquire its licences from the Kiambu county government
following all the legal procedures and by-laws, some of the licences are: Business operating
licences, obtain registration with National Social Security Fund (NSSF), Kenya Revenue
Authority (KRA). This will be done before opening the business so that the proposed
business will be legally recognized by the county council of Kiambu.
PERMITS
The proposed business will acquire the following permits:
 A single business permits which will be obtained from the county
government of Kiambu at Ksh.90, 000 annually.
This permit consolidates all the licences required for running a business within the
county.
 Planning and zooing permits which will also be obtained from the county
government of Kiambu at Ksh.60, 000 annually. Helps in applying
adopted zoning regulations to land use and duly processing development
request.

BY-LAWS
Are laws set aside by an industry or government for you as a business person if you what to
venture in a certain business you must follow them.
The proposed business will have some by-laws in place that are to ensure smooth running in
the business operation as well as comply with the government laws which are as follows:
Proper importation of goods: the government will ensure all steps are correctly followed
while importing the goods hence preventing losing some equipment.
Hygiene-the management will ensure health and safety of the employees.

3.7 SUPPORTIVE
SERVICES Banking services
The owner of the proposed business will open a business account with EQUITY BANK
THIKA BRANCH where it will be more secure than caring money with them and the
business will have a playbill account which the customers will be using to make payment for
the services.
Legal services
All the legal services and matters of the business will be handled by:
Ever best advocate
P.O BOX 973-01000
Kiambu
Email:everbestadvocate@gmail.com
Telephone number: 0704174415
Location: opposite the DCI offices and women prison second floor.
Insurance cover
The proposed business will pay monthly premiums for the employees and assets to the below
insurance firm:
Better insurance company limited. P.O
BOX 987-01101
Kiambu Email:betterinsurance@yahoo.com
Telephone number: 0748321861 Located:
Avenue tower, 3rd floor

Electricity
Kenya Power and Lightning Company-Kiambu County P.O
BOX 973-011000
Kiambu Email:kenyapowerkiambu@gmail.com
Telephone: 0704174415

Water supply
Thika water Limited P.O BOX
973-011000
Kiambu
Telephone: 0748321861
Email:info@wasco.co.ke
 CHARPTER FOUR
4.0 PRODUCTION AND OPERATIONAL PLAN

4.1 PRODUCTION FACILITIES AND CAPACITIES

Machinery equipment-are those major tools and implements used in the operation of the
business.
Equipment’s Qty Supplier Cost(Ksh) Use
Facial 4 Aware limited 60,000 They will be used when they want to recognize
recognition face identification of individuals
terminals
Fingerprint 4 Fingerprint cards 40,000 For scanning finger nails of individuals
scanners supplier
Biometric mobile 3 IDEX biometrics 50,000 For mobile banking and e-commerce
devices suppliers
Files 5 Ufaulu suppliers 500 Keeping the business record

Computer More computers 15,000 Facility communication in the business

suppliers
Desktop 4 Apple suppliers 12,000 Social media offering, consultant table service

Tables 6 Best hardware 5,000 Placing the desktop computers

Stationery

Mobile phones 10 Apple Company 90,000 To identify the fingerprints of individuals

Palm vein 9 Aware suppliers 35,000 It will provide authentication technology used to
scanners identify person
Chairs Best hardware 10,000 To provide comfort for the employees in the
business
Plan for repair and maintenance
Repair refers to actions taken to restore proper functionality of asset while maintenance is the
way of keeping assets in a good working condition.
The business will ensure the machines in the industry will be maintained in good working
conditions by:
✓ Ensuring that the machines are kept clean and in good working condition.
✓ Machines should be under high surveillance to avoid theft
✓ Ensure the business software are updated that is because outdated software can cause
things to come to alt
✓ Ensuring any equipment brought in the enterprise the user guide should be well read and
understood.
The suppliers of the machines will be the one maintaining the machines whereby the first
year they will maintain them for free and the second year the business will be paying
Ksh1000 for equipment
In case of any fault in a machine the business will be hiring the suppliers to make the machines
work properly.
 Ground plan of the proposed business

EXIT

Security
office
Customer
Service
Attendanc
e Office

General
Manager
Office

Accountant
Office

Secretary
office Deputy
General
Manager

Entrance
4.2 PRODUCTION STRATEGY
4.2.1 Production plan strategy
This how the business is able to offer their services to customers.
The business will use two production planning and control methods that are:
➢ Make to stock –is a traditional production strategy that is used to match inventory
with anticipated customer demand. This method will be used to increase the inventory
cost.
In this case this method will help in that when a customer visits the customer service
attendance desk shall be shown all the services being offered in the business and they should
find them in the business.
The business services will then be put into the inventory so that the potential customers can
view what is available.

➢ Chase strategy –refers to the notion that you are chasing the demand set by the market
whereby the servicing is set to match demand and doesn’t carry anything leftover.
The business will use this strategy due competitors doing the same services and the
business what to meet the demand of their customers.
By using the chase strategy services will be set to match the demand and ensure no losses
of services offered are incurred, this method also ensures that minimum cost will occur
during servicing.

4.2.2Monthly material requirements

The following shall be proposed monthly expenses:
PRODUCTS SOURCES AMOUNT
Kiambu Water Sacco Ksh.7000
Water
Kenya Power and Lighting Ksh.5000
Electricity Company
Mediacom Ksh.2500
WI-FI
Alliance Media Ksh.2000
Billboards
TOTAL Ksh.16,500
4.2.3 Monthly labor requirements
This is the amount of money that the business incurs in paying all the workers at the end of every
month.
Position Skill required Monthly salary
General Manager ➢ A diploma in business Ksh.20,000
management
➢ Strong leadership
qualities
➢ Excellent
communication skills
Deputy Manager ➢ Should have Ksh.15,000
managerial skills
➢ Medical skills
Accountant ➢ Diploma in accounting Ksh.10,000
➢ Computer literature
➢ Medical letter
➢ Certificate of good
conduct
Secretary ➢ Requires particular Ksh.5,000
information on
secretarial practice to
deal with notice,
agenda, declaration,
minutes of a meeting
➢ Must have adequate
knowledge of the
companies act
Ksh.3,000
Customer Service Attendance ➢ Strong customers
service
➢ Cleanliness
➢ Good communication
skills
Security guard ➢ A KCSE Certificate Ksh.2,000
➢ Good communication
skills
➢ Basic training from a
certified security
officer
TOTAL Ksh.55,000
4.2.4 Monthly production expenses
This is expenses that occur in a business for it to run smoothly.
Production expenses Amount
Licenses Ksh.4,000
Water Ksh.500
Supplier of equipment Ksh.10,000
Electricity Ksh.1,000
Trash Ksh.500
Total Ksh.16,000

4.2.5 Cost of production

The cost of production will be determined by calculating the total cost of machines adding it up
together with the monthly production expenses. That is:
FORMULA:
Cost of Production=Total Cost of Machines + Monthly production expenses

4.3 PRODUCTION PROCESS

Production process is the process of using economic input or resources like labor, capital,
requirements or land to provide goods and services to customers.
The business servicing process will begin when a customer arrives in the business. They first are
at customer service attendee. They will be able to know whether the services that the need is
available at the current time and whether they will be delivered directly or indirectly.
For the direct customer they will be attended immediately in the business while for the indirect
customers due to many services they will give out the location where their services will be
delivered by the business hence the customers will be realized from the business.
Factors that are likely to affect the production process will include:
➢ Skilled labour-when there is minimum number of employees with minimum skills the
business is likely to experience a huge loose.
And to prevent this enterprise should ensure that all the employees are highly trained to
gain many skills on the technology about biometrics and have the knowledge needed in
that field.
 ➢ The demand of services-when the demand is high the business should
ensure that it meets the demands for their customers failure to that the
business is likely to face a huge loose in the process of its operation which
may lead to loosing of its potential customers. When a business offer
quality services it leads to the demand being high.

➢ Keeping up with licenses requirement-this will ensure that the

business operation are always legal if any need of licenses is needed.

How to minimize the impact of the external factors

The proposed business will ensure the impact of the above factors is minimized by:
➢ Ensure that all the employees have the required skills for the job
hence highly quality goods will be offered leading to more customers
in the business
➢ The business will ensure that services are offered accordingly to customers
demand hence all customers demand will be meet.
➢ Ensure all the business licenses are within the business premises incase
when they needed can be easily traced.

4.4 REGULATIONS AFFECTING OPERATIONS

They include:
➢ Health regulation
➢ Trend marks
➢ Patterns
➢ Environmental regulations
➢ Safety regulation
Some of government regulations compliances and approvals that will
affect the proposed business that is regulations to government are as
follows:
➢ The business will ensure that all it meets the government regulations that
is it will pay all taxes and all licenses and business permits shall be
acquired before the business starts.
➢ The proposed business will ensure that all taxes in the business are paid in advance.
➢ The factors that are likely to affect the business because of government
regulations may include: paying a large sum of money to government
when found without a business permit in the premises.
CHARPTER FIVE
5.1 FINANCIAL PLANNING
These are the costs or expenses incurred before the start of the business operations.
What cost will the proposed business incur before the start of operations?

Items Amount Ksh

Licences 6,000

Permits 7,000

Deposits for water connection 700

Raw materials

Equipment’s 20,000

Machineries 317,500

Insurance 2,000

Advertisement 13,000

Telephone supply 300

Total 372,800

5.2 Working Capital

This is the difference between the current assets and current liabilities of a firm on a given
date.
CURRENT ASSETS –CURRENT LIABILITIES=WORKING CAPITAL
 ITEMS YEAR 1 Ksh YEAR 2 Ksh YEAR 3 Ksh

Stock of raw
materials
Stock in progress
Stock of finished
good
Cash in hand 300,000 400,000 500,000
Cash at bank 400,000 500,000 700,000
Debtors 10,000 10,000 15,000
Total current assets 1,300,000 1,500,000 2,000,000
Less: Current 372,800 400,000 500,000
Liabilities
Creditors 5000 5,000 5000
927,200 1,100,000 1,500,000
Estimated working
capital

Assumption:
1. All stocks will be reducing in the subsequent years to minimize too much money tied
in stock.
2. Cash at bank will be increasing as customers will be encouraged to pay through the
bank account of lipa na mpesa accounts or paybill.
3. Debtors will be maintained to avoid defaulters.

5.3 Preparation of cash flow projections.

It is a list of receipts (cash inflows)cash payments (outflows) and the net cash available at
regular period of time.
 JA FE M AP M JU JU AU SE OC NO DE
N B A R A N L G P T V C
R Y
Cash 17, 19, 21, 23, 25, 27, 29, 31, 33, 35, 37, 39,
inflows 000 000 000 000 000 000 000 000 000 000 000 000
Opening 100 105 110 115 120 125 130 135 140 145 150 155
cash ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00
0 0 0 0 0 0 0 0 0 0 0 0
Cash 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, 75, 80,
sales 000 000 000 000 000 000 000 000 000 000 000 000
Receipts 1,3
from 00
debtors
Loans
received
Total 143 154 166 178 180 202 214 226 238 250 262 274
cash ,30 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00
inflows 0 0 0 0 0 0 0 0 0 0 0 0
Cash 257 262 267 273 223 284 289 239 299 304 309 314
outflows ,00 ,30 ,50 ,90 ,80 ,00 ,30 ,60 ,50 ,50 ,50 ,70
(paymen 0 0 0 0 0 0 0 0 0 0 0 0
t)
Payment 1,5 1,5 1,5 1,5 1,5 1,5 1,5 1,5 1,5 1,5
to 00 00 00 00 00 00 00 00 00 00
creditors
1Purcha 200 205 210 215 220 225 230 235 240 245 250 255
ses ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00 ,00
(cash) 0 0 0 0 0 0 0 0 0 0 0
Wages 55, 55, 55, 55, 55, 55, 55, 55, 55, 55, 55, 55,
and 000 000 000 000 000 000 000 000 000 000 000 000
salaries
Transpo 1,0 1,2 1,3 1,1 900 1,0 1,3 1,4 1,2 1,1 1,0 1,1
rt 00 00 00 00 00 00 00 00 00 00 00
Electrici 1,0 1,1 1,2 1,3 1,4 1,5 1,6 1,7 1,8 1,9 2,0 2,1
ty 00 00 00 00 00 00 00 00 00 00 00 00
Loans
repayme
nt
Total 257 262 267 273 223 284 289 239 299 304 309 314
cash ,00 ,30 ,50 ,90 ,80 ,00 ,30 ,60 ,50 ,50 ,50 ,70
outflows 0 0 0 0 0 0 0 0 0 0 0 0
Net cash 400 416 433 451 403 486 503 515 537 554 571 588
 brought ,00 ,30 ,50 ,90 ,80 ,00 ,30 ,30 ,50 ,50 ,50 ,70
forward 0 0 0 0 0 0 0 0 0 0 0 0

5.4 Preparation of profoma income statement and balance sheet

5.4.1 Projected income statement
Trading, profit and loss account
This shows the profits or loss made by a firm during a particular period e.g ONE
YEAR, TRADING PROFIT AND LOSS STATEMENT FOR THE YEAR
ENDING DEC 2021

YEAR 1 Ksh YEAR 2 Ksh YEAR 3 Ksh

Sales 630,000 650,000 700,000
Less costs of 470,000 540,000 580,000
goods sold
Gross profit 100,000 110,000 120,000
Less expenses
Selling and
distribution
General 50,000 55,000 60,000
administration
Salaries and 754,800 754,800 754,800
wages
Telephone 3,600 3,700 3,800
Water 8,400 8,000 7,000
Electricity 6,000 6,200 6,400
Stationery 5,000 5,100 5,200
Interest in loan
Maintenance and 6,000 7,000
repair
Trading profit and 30,000 40,000 50,000
loss
Less 10,000 11,000 12,000
taxation(VAT-
16%)
Net profit/after 90,000 99,000 100,000
taxation

5.4.2 pro-forma balance sheet

A balance sheet shows the assets liabilities and capital of the business at a given time e.g
end of the year.
PRO FORMA BALANCE SHEET A SAT 31ST DEC 2023

ASSETS AMMOUNT LIABILITIES AMMOUNT

KSHS KSHS
FIXED ASSETS CAPITAL
LIABILITIES
LAND SHARE 927,200
CAPITAL
BUILDING 60,000 PROFIT AND 30,000
LOSS
FURNITURE 20,000 BANK LOAN
MACHINERY 150,000

CURRENT 230,000 CURRENT 957,200

ASSETS LIABILITIES
RAW CREDITORS 15,000
MATERIALS
WORK IN TAX
PROGRESS
FINISHED
GOODS
DEBTORS
CASH IN HAND 500,000
CASH AT 250,000
BANK
 CAPITAL 750,000
EMPLOYED

5.5 Calculating of break-even point

This is an attempt to determine the level of sales at which the business does not suffer a
profit or a loss. It is that point where the sales are only enough to cover the business fixed
expenses. Once you reach the break even any extra sale that you make gives profit.

5.5.1 Contribution margin

Contribution margin=sales – total variable costs
Year 1 = Kshs630,000 - 87,500 = 542,500
Year 2 = Kshs 650,000 – 87,500 = 562,500

5.5.2Contribution margin %

Contribution margin * 100 = contribution margin %

sales
Year 1 = Kshs 542,500 / 630,000 * 100 = 86.11%
Year 2 = Kshs 562,500 / 650,000 * 100 = 86.54%

5.5.3 Determine the total fixed costs

i.e operating expenses for one year
660,000 + 20,000 + 2,000 = 682,000

5.5.4 Calculate the break even level of sales in shillings

Fixed costs
Contribution margin in percentage
First year -70,000 / 86.11 = Kshs 813
Second year – 70,000 / 86.54 =Kshs 809
 5.5.6 Break-even point in units

Fixed costs
Contribution margin per unit
70,000 / 45,208 = 1.55

5.5.6 Breakeven point in sales

Fixed costs
Contribution margin per unit *sales price per unit

70,000 / 45,208 * 52,500 = 81,375

5.6 Calculation of profitability ratios

These are techniques which help the businessman in interpreting the
information contained in a financial statement.
They help in making important decisions.

5.6.1 Gross profit margin

Gross profit(Kshs)

Gross profit *100

Sales
Year 1 =Kshs 100,000 / 630,000 * 100 =
15.87%
YEAR 2 =Kshs 110,000 / 650,000 * 100 =
16.92%
5.6.2 Net profit margin

Net profit aftertax

*100
Owners equity

Owners’ equity Year 1 = 90,000 / 750,000 * 100 =

12%
Year 2 = 99,000 / 750,000 * 100 = 13.2%

5.6.3 Net profit margin

Net profit after taxes

*100
Sales
First year-90,000 / 630,000 * 100 = 14.26%
Second year- 99,000 / 650,000 *100 = 15.23%

5.6.4 Return on assets

Net profit after taxes(Kshs)

Total assets *100

Year 1 = 90,000 / 230,000 * 100 = 39.13%

Year 2 = 99,000 / 230,000 * 100 = 43.04%

5.6.5Current ratio
Measures the ability of the business to meet its current obligations.
Current assets Kshs
Current liabilities Kshs
Year 1= 230,000 / 957,200 = 0.24%
Year 2 = 230,000 / 975,200 = 0.24%
5.7 desired financing
Item description Year 1 (Kshs) Year 2 (Kshs) Year 3 (Kshs)
Pre-operational 300,000 310,000 320,000
costs
Working capital 927,200 1,100,000 1,500,000
Fixed assets 230,000 235,000 240,000
TOTAL 1,457,200 1,600,000 2,020,000

5.8 Proposed capitalization

Item description Amount Kshs
Owners contribution 500,000
Bank loan
Loans from friends and relatives 250,000
TOTAL 750,000