GUDGUY ELECTRICAL REPAIRS AND SUPPLIES

gudguyelectricals@gmail.com

NYAHURURU.

TITLE: BUSINESS PLAN.

PAPER NUMBER:

COURSE CODE:2601/306A

NAME OF THE PRESENTER:f

INDEX NO :

PRESENTED TO:KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILMENT OF
Executive Summary

GudguyElectrical Repairs and Supplies is located in NYAHURURU town, NYAHURURU

County. It is a retail electrical and electronics shop with a sole proprietorship ownership. The
business is meant to begin operations in July 2023 dealing with electrical products and systems
as well as offering repair services. The main target market are residents of NYAHURURU and
other institutions such as schools, churches and dispensaries. Being in the electrical and
electronics industry, the business has a potential to grow as people continue to adopt energy
saving electrical equipment such as bulbs, extensions and of course people turning to use
electrical products as electrification of residential buildings and homes expands. The main goals
of the business include to establish a customer base for the business offerings within the first
year of operation, to provide the best and quality products and services, profitability of the
business, and expansion of the business within the first five years.

The business will serve within the town as well as accepting orders from nearby towns. There is
both direct and indirect competition from already established electrical shops within the
location. The business will aim to get a competitive advantage over its rivals through quality
products and services as well as cheap and affordable prices, starting with a market share of
15% and employing pricing strategies such as competitive pricing and discriminative pricing.
The employees include the manager, cashier, store keeper, artisans and delivery person. The
owner’s contribution and loans from financial institutions will be the main sources of finance as
the business operationalizes.
 Chapter One
Business Description

1.1 Business sponsors.

My name is Gilbert Githegi, currently a student at The Nyandarua National polytechnic

pursuing Diploma in Electrical and Electronics Engineering in order to be an electrical and
electronics engineer as a profession. Over the last three years as a student, I have gained
knowledge and skills required to be able to repair and install electrical and electronic systems
and equipment. Furthermore, I can offer advice on the best electrical equipment to use for a
specific activity.

1.2 Business Name

GUDGUY ELECTRICAL REPAIRS AND SUPPLIES is the preferred name for the proposed
business. The names GUDGUY originates from two words good and guy which was my
nickname from high school having been named so by my collegues . As such, I believe the name
is concrete and catchy, thus will attract more customers.

1.3 Business Location and address

The business will be located at NYAHURURU TOWN center which is along NYAHURURU-
GILGIL road. I prefer this place for the reasons outlined below:

v' First, the location has a fast-growing infrastructure with several expansions ongoing that
will need supplies and installation of electrical equipment.
v' There is ready market as there are residents living in the area who maybe in need of the
business products and services. There are numerous residential households and
businesses that will be in need of electrical equipment and repair of domestic appliances.
v' NYAHURURU is strategically located and easily accessible with good access roads
in addition to the town’s status as a business hub. This will enable customers access
the business premises.
 v' The place is very secure. There are the police stations, including Nyahururu Police
Station, that make Nyahururu for business.
v' Few electrical shops along most streets within the residential areas hence a strategic
location within such streets would be a great business gap to exploit.

The business address is

GUDGUY ELECTRICAL REPAIRS AND SUPPLIES

P.O BOX 20300,

NYAHURURU.

Telephone Number: 0797203557

Email: gudguyectricals@gmail.com

1.4 Form of Business Ownership

The form of ownership for the proposed business will be sole proprietorship form of business.
This is based on the advantages that accrue to this form of business ownership as outlined below.

v' Easy to form: Sole proprietorship form of business are easy to form as there are fewer
legal formalities compared to other form of business such as partnerships and limited
companies. Furthermore, it is easier to start given it requires less capital compared to
other form of business.
v' Owner exercises complete control: As the owner of the business, I will exercise complete
control, making decisions on hiring and working hours. This is much unlike limited
companies that decisions have to be approved by the board of directors.
v' All profit goes the business owner. I choose a sole proprietorship form of business since I
would keep all the profits from the business to myself since I do not have to share the
income with other investors.

1.5 Type of Business

The business will operate as a start-up engaging in the following major and minor activities.
a) Selling of electrical materials such as cables, conduits, lighting systems, switches, sockets
etc., electrical tools such as electrical tool boxes, phase rasters and other electrical related
tools or equipment as well as electronic components.
b) Repair of faulty electrical equipment and home appliances such as iron boxes, water
heaters, refrigerators, and other electronics.

Furthermore, the business will also provide leasing services of particular systems such as
lighting system, public address systems for particular events and functions such as funerals,
weddings, and political gatherings. In addition, the business will consultancy services on
what tools or equipment are suitable for the clients’ needs or wants.

1.6 Product(s) and Service(s)

The business will provide the electrical and electronic products in different specifications
and from different manufacturers so as to provide options for customers. For instance, lights
bulbs will be availed in different power ratings, colors, and sizes to suit the customers
preferences. This will be the same for every other product such power extensions, power
cables, conduits, electronic spares and accessories, and electronic components such as
resistors, capacitors, IC’s, boosters, transformers, and transistors. For the minor business
activities involving leasing of lighting systems and public address systems services, the
business will provide quality and prompt service to any customer at affordable pricing.

Competitive advantages of the business products and services.

· High quality products: the electrical and electronic products that the business will sell
will be of high quality and from genuine and recognized manufacturers.
· Cheap and affordable prices: the business will offer discounts for various products it
sells to make the products affordable and attract more customers
· After sales services: the business will offer after sales services such as installation of
electrical systems require installation, warranty services, and training on use of
systems and tools.
The assurance that this business will be

1.7 Justification of Business Opportunity

successful is based on the following reasons outlined below:

a) Availability of knowledge and skills necessary to run the business. I have got the
knowledge from the numerous entrepreneurial classes attended at the college .I believe
the skills acquired from my engineering attachments will enable me do the business
activities effectively.
b) The business will satisfy the need by customers to use electrical systems since they are all
consumers of electricity that requires the use of certain systems such as lighting systems
and charging systems.
c) The environment in which the business will be set up is suitable given it has several
dwellers who will require to use, replace damaged and do repairs to their electrical
systems such as lighting systems. Security in the place will ensure the safety of the
business shop.
d) Accessibility of the business location. This enable customers have an easy access to
business premises in search of the products they are in need of.
e) Few available electrical shops around to provide the numerous electrical products needed
by customers. This business will avail electrical systems and tools that in the past
customers have had to source outside the location-NYAHURURU.

1.8 Industry

This business falls under the retail industry in the electrical and electronics retail sector. The
business will provide customers an opportunity to purchase electrical products and repair and
installation services. The retail industry is a diverse field involving the selling of all types of
physical goods from pharmaceuticals, food stuffs, clothing and domestic appliances. The amount
of capital required to open up a retail store ranges from 200k-500k.

The industry is characterized by the following features:

 · Different channels-the goods and services can be sold through different ways including
through mail, vending machines, in person and online (internet).
· Sale to the final consumer- retailing involves selling the product to the final consumer.
· Large assortment of goods- the retailer keeps a wide variety of goods. For instance, a
retailer dealing with electrical products keeps different forms of electrical equipment to
meet customers’ needs.
· Can be done through online stores, especially with rise in e-commerce in the
business sector.

Industry trends

The industry has grown over the years with technology evolving the way in which retailers
conduct their business. These trends are a response to the ever-changing customer behavior and
stiff competition. Below are some of the major trends in the industry.

· Personalized retail experience: this involves giving consumers suggestions based on their
taste, location, order histories and previous searches. The rise of personalization in the
retail industry has paved way for use of more advanced and innovative technologies as
retailer move to online stores.
· There is growing culture of immediacy as customers want immediate results while
retailers speed up and expand their services as response to the immediacy culture.
· Use of digital mobile wallet: most customers are preferably using mobile payment
method, a trend further fueled by COVID-19. For instance, the use of Mpesa Pay bill
Number and Till number has grown overtime.
· Expansion into emerging markets. Retailers are no longer confined to a single market or
location as they are able to expand using effective digital strategy.

Competition

The amount of competition in the retail industry is very stiff as more and more people continue
to prefer to get into entrepreneurship rather than formal employment. Thus, to have a competitive
edge, a person will have to ensure he or she comes up with a proper strategy to have the largest
share in the market.
Projected Future Industry Performance.

Still reeling from the effects of COVID-19, it is expected that the different categories of the retail
industry such as electricals, mobile electronics, grocery and fashion stores will foresee potential
and constant growth, with a 32% projected expansion of new branches, 21% average projected
expansion of new business activities as well as more adoption of e-commerce online stores
(Retail Trade Association of Kenya, 2020). With COVID-19 still on the horizon in the country,
retailers are constantly being forced to meet the changing consumer demand for online shopping.
As such, the adoption of e-commerce has been and will be on the rise.

1.9 Business Goals.

Short term goals

a) To establish a customer base for the business offerings within the first year of operation.
b) To provide the best and quality products and services.
c) Profitability of the business

Long-term Goals.

a) Expansion of the business i.e., increase the quantity of stock, product and service offering
and improving sales.
b) Employing others to assist with the work within the shop, thus creating employment
opportunities for the youth.
c) Opening other business branches in other locations within Nairobi County and in other
neighboring counties in the next 5-7 years.

1.10 Entry and Growth Strategy

ENTRY

The business will employ the following strategies to gain entry into the market and get
acceptance as a new business.

a) Offering affordably lower prices than competitors to certain products such as electronic
components.
b) Offering after sales services such as installation of particular electrical systems.
 c) Promotions such as offering products at discounted prices.
d) Creating awareness e.g., advertisement via posters, brochures and social media
marketing.

GROWTH

To grow the business, I will employ the strategies outlined below:

a) Employing skilled and qualified workers to assist with the management of the business.
b) Purchasing a van use in transport of merchandise to reduce cost transport.
c) Create an online store to enable online order purchases by customers and reach out to a
wider audience.
d) Intense marketing of the business through various platforms and strategies such as social
marketing and direct marketing.

The business has an opportunity to utilize the opportunity in online commercial spaces, a trend
currently being embraced in the wake of COVID-19 as more and more consumers continue to
prefer online shopping and deliveries over the traditional physical shopping. to maximize on that
opportunity, I will create the business website and social media platforms to spur growth through
digital marketing within the first three years of the business establishment.
CHAPTER TWO: MARKETING PLAN
2.1 CUSTOMERS
GUDGUY Electrical repairs and supplies has targeted its customers who are classified into
the following categories;
1. Final consumers or end-users – These refer to customers who use the products to satisfy
their own needs. They include local residents who live aroundNyahururu, and even walk-
in customers who pass by along the Nyahururu-Gilgil road.They may buy products such
as bulbs, extension cables, electric sockets, earphones, headphones, batteries and wiring
cables. Apart from buying the products, they may require repair services on their phones
and electrical appliances such as fridges, iron box, blow dry and even washing machines.
2. Institutional customers – These customers include Nyandarua National Polytechnic,
Ndururi high school and Gatimu secondary&primary school. They may purchase
products such as bulbs, wiring cables, sockets, extensions as well as require installation
services of various equipment. Such institutions may also require repair services to
various equipment and appliances of which my business will provide.
3. Commercial customers – These refer to customers who buy products to sell to others.
They include wholesalers who sell products to retailers and final consumers as well as
retailers who sell products to the final consumers.
4. Industrial customers- these are customers who come buying electronic microchips used in
industrial prototyping and fabrication.
Gudguy’s customers are from Nyahuru round Estates , located in Nyahururu town
concituency.
2.2 MARKET SHARE
Gudguy Electrical Repairs and Supplies focuses its sales in Nyahururu with estimated
population of target customers of approximately 30,000 and in addition it is planning to partner
with various organizations such as schools, churches and companies so as to make supplies of
the electrical equipment required. The total population of the area is 200,000, it will thus have a
market share of 15%.
The following are the market shares;
Glint Energy- 40%
Duncan Repairs- 25%
Master Supplies- 20%
Gudguy Electrical Repairs and Supplies- 15%
2.2.1 MARKET SHARE CHART

MARKET SHARE

GLINT ENERGY DUNCAN REPAIRS

MASTER SUPPLIES GUDGUY ELECTRICAL REPAIRS AND SUPPLIES

2.3 COMPETITORS
There are two types of competitions experienced;
i. Direct competition which includes competitors offering the same products and
services that my business offers.
ii. Indirect competition which includes competitors offering products and services that
are substitutes to those of my business.
The following are the strategies I will use to cope with the competition;
1. Embrace modern technology and ensure extensive and thorough marketing. I will ensure
the technology used is updated so as to keep up with the trend and not be obsolete.
2. Set up competitive prices to be able to obtain a large revenue base. I will set up
affordable prices so that my customers are able to buy my products.
3. Offer personalized customer services, respect and close proximity to customers.
4. Ensure products appeal to customers through display.
5. Ensure open communication channels with my customers so that they can give honest
feedbacks concerning my products as well as share any recommendations.
6. Ensure timely delivery of my products to customers to enhance efficiency
and effectiveness.
7. Ensure timely repairs to customers’ equipment to gain trust and confidence in them.
This will help me retain my customers.
Name of competitor Location Strengths Weaknesses
Glint Energy NYAHURURU - Offers large - High prices of
quantity products.
products Some
- Offers variety products are
of products not affordable
- Offers after by some
sales services customers.
- Offers -
delivery
services
- It has
operated for
some years,
therefore has
gained more
customers
over time
Duncan Repairs NYAHURURU - Due to its - High prices.
extensive and The products
thorough are sold at
marketing, high prices
more and many
awareness has local
been created customers are
therefore it not able to
serves a larger afford.
geographical
area.
- Embraces
modern
technology
Master Supplies NYAHURURU - Offers after - High prices.
sales services Most
- Offers customers are
delivery not able to
services order
- Uses modern frequently
technology since they
cannot afford.
2.4 METHODS OF PROMOTION AND ADVERTISEMENT
Advertisement
a) Before the entry into the market, I will be advertising to create awareness of the
business existence through the online platforms like WhatsApp, Instagram, Facebook
and the website www.gudguyelectrical.com. I will create a page in every platform
which will display the kind of products I will be selling.
b) Use of posters: the posters will indicate all activities and location associated with
the business.
c) Use of sign post to show where Gudguy Electrical Repairs and Supplies is located.
d) Through local newspaper such as Nyandarua Daily to reach many people.
Promotion
a) I will also do personal selling to customers, that is, face to face sales promotion in order
to generate sales by offering discounts and various offers.
b) use of brochures: I will produce brochures which I will be distributing to my customers
and other people I meet. This will cost me about sh. 600 for more than 20 brochures.
c) Promotion through the online platforms will be done everyday to enhance consistency in
creating awareness.
d) Marketing the services and products through business exhibitions and shows. These
methods will increase sales because people will be aware of the existence of the
business and will support it.
2.5 PRICING STRATEGY
Pricing techniques used will include cost related techniques, that is,
a) Competitive pricing: competitors’ prices will be analyzed and compared to come up with
a suitable price relatively cheaper for the products and services.
b) Pricing based on the cost incurred in production. These costs include; cost of raw
materials, labour, overheads and promotional pricing will be used especially during
entry so that the customers can experience the products and make purchase decision.
c) During the entry affordable prices will be set which will be a bit lower than the
competitors so as to gain customers and retain them. There will be a convenient mode
of payment which is MPESA for those preferring cashless payment and cash for those
with physical money.
d) Discriminating pricing: the enterprise will be selling a commodity at two different prices
e.g., time pricing where the morning charges are different from evening.
2.6 SALES TACTICS
In order to retain customers;
 a) I will ensure that the customer service is the first priority, that is, respect and enhance
good personalized relationship with them and also follow up on customers to bring
about feedback that will help us to better the services.
b) Updating the customers in case of new products and also when products are on offer.
c) Ensuring products are of high quality and enough stock of highly demanded products.
d) Providing discounts to my customers who buy large quantity goods as well as free
gifts and samples during celebrations such as Christmas holidays.
2.7 DISTRIBUTION STRATEGY
Distribution is the method used to disseminate goods and services to end-users. The distribution
of the products will be through various channels like direct distribution which involves face to
face with customers who come to the shop. I will also ensure a well-developed e-commerce
website where users will be making their orders online.
Another channel I will employ is indirect distribution where products will be delivered to
institutions and final consumers. As my business develops, I will put my products in as many
retail shops as possible in order to reach a wide coverage of customers and potential customers.
Some of the challenges that this business may encounter due to the distribution channels include
the following; high costs of hiring and training sales people, costs of travel and transportation of
the products to the final consumer, limited customer focus since the business may focus on
higher sales volume rather than customer satisfaction of their needs and also the distribution
process is time-consuming. Some of the solutions to these challenges include providing training
programs for the sales people to improve product knowledge, invest some funds in marketing
programs such as producing brochures as well as focusing on customer satisfaction rather than
the high volume of sales.

SUPPLIER
GUDGUY ELECTRICAL
REPAIRS AND SUPPLIES

INSTITUTIONS
FOR EXAMPLE, CHURCHES,
SCHOOLS, HOSPITALS.
FINAL CONSUMER
CHAPTER THREE: ORGANIZATION AND MANAGEMENT PLAN
An organization is an entity comprising of people having a particular purpose. Management on
the other hand, is a set of principles relating to the functions of planning, organizing, directing
and controlling as well as the application of this principles in harnessing physical, financial,
human, informational resources efficiently and effectively to achieve the organizational goals.
This chapter includes business organizational structure, details about ownership of the
business, profiles of the management team and the qualifications of my board of directors.
Since the business is a start-up, there will be few employees. This includes the following posts;
the manager (Owner), store keeper, cashier and delivery person.

MANAGER

CASHIER

STORE KEEPER

ARTISANS

DELIVERY PERSON

3.1 BUSINESS MANAGER

The business owner will be the business manager that is Denish Otieno, a Kenyan citizen. I will
be a graduate of Diploma in Electrical and Electronics engineering. Having experience of
repairing a few electronic equipment, I will have the skills to work in the business.
Qualifications
1. Diploma in Electrical and Electronics engineering from a recognized institution.
2. Certificate in Mechatronics.
3. Work experience of at least 6 months in the related field.
4. Great communication skills
5. Computer literate
Duties and responsibilities
1. Training and supervision of employees.
2. Conducting interviews and hire suitable staff
3. Ensure orders are delivered on time
4. Ensure timely payment of the employees and all utilities and expenses, for
example, electricity and rent.
5. Carrying out long term and short-term business planning.

3.2 OTHER PERSONELL

STORE KEEPER

He/she is in charge of keeping the records of the stock in the store. In case of any deficit,
he/she should ensure more is ordered. He/she should also ensure that the store is clean at all
times.
Qualifications
1. KCSE certificate with minimum grade of D+
2. Have good customer relation and communication skills.
3. Should be computer literate.

Duties and responsibilities

1. Ensuring that the store is clean at all times
2. Ensuring there is enough stock and at no point should there be a deficit of the stock.
3. Organizing the business premises.

CASHIER
He/she is in charge of managing all the transactions that are carried out in the
business. Qualifications

1. Diploma in Accounting from a recognized institution

2. Must be Computer literate.
3. Must have 2-year experience working as an accountant.
Duties and responsibilities
1. Book keeping for the business
2. Giving out salaries to employees
3. Receiving any cash in for the business
4. Conducting transactions on behalf of the business.
ARTISAN
He/ she is in charge of repairs and after sales services such as installation.
Qualifications

1. Be able to communicate in either Kiswahili or English.

2. Have knowledge and skills in repairing electronic gadgets
Duties and Responsibilities
1. Detect, diagnose and repair any fault in electrical or electronic equipment.
2. Carry out any other duties assigned by the manager or seniors.
DELIVERY PERSON
He/she is in charge of delivering customers’ orders on time.
Qualifications

1. KCSE certificate with minimum grade of D+

2. Have good customer relation and communication skills.
3. Must have a motorist or driver’s license.
4. Must be honest with his work i.e., no previous record of criminal activity.
3.3 RECRUITMENT, TRAINING AND PROMOTION
3.3.1 RECRUITMENT

This will be carried out by the manager and thus the position will not be available for
recruitment. It will only be the store keeper, cahier, artisan and the delivery person
post. It will be done through:
a) Advertising on the online platforms, local newspaper and radio.
b) Shortlisting and interviews based on the description of the available jobs and posts.
c) Familiarization of the new employees to the activities within the business enterprise.
3.3.2 TRAINING
i) The training will be done to the new recruits and the suitable training style used
will be on the job training method. This is meant to familiarize them with the
work environment and equip them with other skills they may lack.
ii) Training may also be done to the existing employees to advance their skills and
abilities. Training will take place once a month for the existing employees and
every time recruitment and selection takes place for the new employees.

3.3.3 PROMOTION
Promotion will be done on the basis of:
 i) Merit.
ii) Good public relations
iii) Accountability and punctuality
iv) Training and qualification
Promotions will also attract more benefits such as increased allowances. The promoted
employees will also be trained on how to go about their new roles in the new positions.
Promotion in this business will apply when it has grown and expanded within a period of one
and a half years since hard work, discipline and resilience will have been reflected on the
performance of the employees.
3.4 RENUMERATION AND INCENTIVES
All the staff will be paid at the end of every month. At first the average employee salary
will be paid and when the business will have obtained stability in terms of revenue and
the market base, the salaries will be paid according to qualifications and duties carried
out.
Table 3.3.1
Serial Number Job title Basic salary Total monthly Total annual
(Kshs) salary (Kshs) salary (Kshs)

0001 Manager 20,000 20,000 240,000

0002 Cashier 13,000 13,000 156,000
0003 Store keeper 9,000 9,000 108,000
0004 Deliver 7,500 7,500 90,000
y person
0005 Artisan 8,000 8,000 96,000
TOTALS 57,500 57,500 690,000

INCENTIVE SCHEME
The business will offer the following financial incentives to boost employees’ morale;
i. Give annual leaves to employees with pay so that they can refresh and come back
better and ready to work harder.
ii. Pay workers on time.
iii. Provide vouchers of sh.1000 each during the December holidays.
iv. Share the profits when they are high.
v. When the business grows, allowances will be given to employees.
The business will also offer the following non-financial incentives;
i. Provide lunch to employees.
ii. Embrace employee recognition program where employees are recognized when they
perform well.
 iii. Ensure proper working environment which is conducive for the employees. For
example, proper lighting, effective machines and a clean environment.
iv. Later, the business may sponsor an employee for any career advancement in
the respective related area of specialization.
3.5 LEGAL REQUIREMENTS
License, permits and by-laws

The trading license will be obtained from the county council of Nairobi at sh.6000 and the
business will register by January 2022. This being a business, it will obtain
i) Permit from the Ministry of Trade for it to legally operate at sh.2000.
ii) Certificate of ownership
By-laws
The business will comply with all the laws by authorities and inspection will always be done by
relevant authorities in relation to the location, environment and sanitation of the firm through
inspection by the public health personnel.
3.6 SUPPORT SERVICES
Banking services will involve opening an account with Equity bank, NYAHURURU branch, so
as to make deposits and withdrawals whenever necessary and even in the long run can obtain
loans for expansion.
Insurance services will be obtained from Jubilee Insurance thus the business will be insured
against a peril like fire which is among the most probable risk. Legal services involve lawyers
and advocates, if any is needed, they will be outsourced from Milimani law courts.
Information Technology (IT) services will be required in developing and maintaining a business
website which will help in communication with our real customers and potential customers.
Medical services will be provided by the local dispensary within
NYAHURURU. Water will be provided by the piped water done by the
Municipal council.
 CHAPTER FOUR
PRODUCTION/OPERATION PLAN
This chapter involves the core function of the business such that without it the business would
not be in existence. This chapter highlights the operation strategy, processes and regulations that
can likely affect the business operations.

4.1 PRODUCTION FACILITIES AND CAPACITY

i) Capital
The table below shows the business’s capital investment and sources.
Source Amount
Savings 200,000
KCB Bank Loan 1,000,000
Total 1,200,000

ii) Premises
The premises on which the business will be housed will be a rented one. The rent cost will be
20,000 Ksh. Per month. Drawn below is the ground plan of the business layout that shows
that various sections of the business premises and the functions to be carried out in them.

B C

D A

A=Shop area
B=Store
C=Office
D=Repairs room.
The work shop space will allow for future expansion plans. However, if the business expands
at a greater speed, the business will open other branches in different parts of the town to
accommodate its expansion plan or move to a bigger premise.
iii) Tools, Machines, and Equipment.
The table below shows the type of machines, tool or equipment, its capacity, quantity or
number required, price per unit, total price and the supplier the business will require to
operate suitably.
In order to be able to process products and services, the following facilities will be required;
EQUIPMENT NUMBER COST PER TOTAL SUPPLIER/SOURCE
REQUIRED UNIT COST

Television 1 15,000 15,000 Hotpoint appliances

Radio 2 4,000 8,000 Hotpoint appliances
Tool box set 1 5,000 5,000 Imani Electronics

Drilling 1 20,000 20,000 Imani Electronics

machin
e
Extension cable 10 500 5,000 Imani Electronics
Inverter 1 3,000 3,000 Imani Electronics
Total 16 47,500 56,000

FURNITURE
AND
FITTINGS
Work table 2 3,500 7,000 Zack Carpentries
Sink 4 1,500 6,000 Hotpoint appliances
Chairs 4 500 2,000 Hotpoint appliances
Total 5,500 15,000

OTHER
EQUIPMENT
Laptop 1 35,000 35,000 Maxworld computers
Overalls 4 500 2,000 Zone collection
 Headcover 4 200 800 Zone collection
Cleaning tools 2,500 2,500 JIF matt
Total 38,200 40,300

TOTAL COST 91,200 111,300

OF
FACILITIES

Maintenance techniques
This involves ensuring that every equipment is properly used and well stored to avoid
damages. For the equipment that may require cleaning like the overalls, they should be kept
clean at all times. All repair services will be done by relevant persons for the various types of
equipment and some equipment with warranty period can also be repaired by their suppliers
if they are damaged within the warranty period. The following maintenance measures will be
taken by the business in maintaining the tools and equipment used.
a) Regular maintenance: tools and equipment are checked for maintenance to ensure they
work effectively.
b) Corrective maintenance: tools and equipment are attended to when need arises so as to
correct the prevailing situation e.g., greasing of movable parts.
c) Preventive maintenance: tools and equipment are kept clean and maintained in order to
prevent them from rust, dust and harm etc.
I will carry out the repairs together with the artisans on designated periods such as on a
monthly basis. The spare parts for the major items will be locally available while for
instances requiring importation, the business will make orders and source for them from
foreign countries.
iv) Labor
The business will need both skilled and unskilled labor force for its operations.
v) Social amenities.
Given the type of business I operate, there will be need for interaction with certain social
amenities structures to supply them with electrical products or services. The business will require
social amenities such as hospitals for treatment, shopping and recreational centers to purchase
items such as food stuffs and for recreational activities.
4.2 PRODUCTION STRATEGY
The manager will do supervision to ensure that the employees do their job as required as well
as ensure that the business has all the necessary equipment to carry out operations.
The operation will start at 8am every morning and close at 8pm every evening apart from
weekends. Weekends’ operation will start at the normal time and end at 5pm.
 The targets for the day are set the previous day in the evening so that each employee will
work towards meeting the set target since there will be evaluation of the day’s activities.
The cashier who is the accountant in this case, will have recorded financial information
which includes financial statements of the business at the end of each day.
4.2.1 Cost of raw materials
This is the amount incurred in the production of
goods. Cost of materials per month
Item Sources Quantity Unit cost Total
cost
(Kshs)
Wiring Cables Imani 500m 16 per meter 8,000
Electronics
Meters Imani 4 1,500 6,000
Electronics
Tool box Metro 1 30,000 30,000
Mechatronics
Total costs 42,000

The materials will readily be available throughout the year.

4.2.2 Cost of labor

This is the sum of all the wages paid to employees, cost of employees benefits and
payroll taxes paid by employer.
Cost of labour per month
Title No. of Salary per Allowances Amount (Kshs)
position month
s
Manager 1 15,000 5,000 20,000
Cashier 1 10,000 3,000 13,000
Storekeeper 1 7,000 2,000 9,000
Artisan 1 5,500 2,500 8,000
Delivery person 1 7,500 - 7,500
 Total Costs 45,000 12,500 57,500

4.2.3 Overhead costs

These includes the expenses incurred in the production process.
Overhead costs per month
Type of overhead Amount (Kshs)
Electricity 4,000
Water 1,000
Telephone 1,000
Rent 20,000
Insurance 2,000
Total 28,000
TOTAL COST OF PRODUCTION PER MONTH
This accounts for costs incurred in raw materials, labour and overheads every
month. Total cost of production per month
Item Amount (Ksh)
Cost of raw materials 42,000
Cost of labour 57,500
Overhead costs 28,000
Total costs 127,500

4.3 PRODUCTION PROCESS

a) Product steps.
i. Requisition of raw materials in the manager’s office. The production department will use
a source document to request for materials for the operational process.
ii. Selection of suppliers considering high quality and low cost. The manager will select
appropriate suppliers who offer high quality raw materials and suppliers who are
consistent in offering their service.
iii. Placing an order of the materials with the selected supplier. The store keeper places
an order of the materials needed from the selected supplier.
 iv. Receiving the materials ordered and being released from the store. The materials
ordered are received and taken to the store.
v. Products are properly packaged for effectiveness especially when moving the
product from one place to another.
vi. Products are delivered to the customers around NYAHURURU for free.
b) Steps for offering proposed services
For sales services, the following steps will be followed:
Step 1: Welcoming of customers to the premises to purchase goods of their choice
this will be done by the manager and the storekeeper.
Step 2: Making transactions when customer buys an item(s). This will be done by the
cashier.
Step 3: Packaging of purchased good and special arrangement for after sales services
such as transportation. The storekeeper will be in charge of packaging purposes. Step
4: Replacement and order of other items in the shelves. This work will be done by
both the manager and the storekeeper.
For the repair services, the following procedure will be followed.
Step 1: Welcoming the customer to the repair service offered. The artisan will be responsible for
this.
Step 2: The artisan will then diagnose the gadget or equipment to find the problem and make
repairs accordingly. Materials to be used will include meters, soldering guns, soldering wires,
computer diagnostics. I will also take part in the repairs.
Step 3: Initiate payment according to the work done and make an agreement on how to be paid.
Step 4: Customer collects his/ her item or equipment in a good working condition.

c) The production process may be affected by external factors such as shortages of

products, high taxation, inflation and delays in processing of foreign orders.
The internal factors likely to affect the production process are lack of capital for
restocking, lack of particular products, and employee absenteeism.
d) To overcome the internal production factors, I will seek loans from financial
institutions such as KCB and Equity banks, source for particular goods from
different places to counter shortages, and have some employees on temporary basis
to cover for absent employees.
e) To minimize the impact of the internal factors, the business will seek to refer its
customers to other friendly competitors, source for products from competitors, and
seek temporary employees.
4.4 REGULATIONS AND REGULATIONS AFFECTING OPERATIONS
The business will comply with the government regulation of paying taxes to the
government in form of income tax.
According to health and safe act 2007 hygiene should be promoted in the workplace to
minimize illness of people within the area and also provide sanitary conveniences such as
washrooms. Other regulations include:
a) Environmental protection: GUDGUY business fully participate in cleaning and
conserving the environment. The premises will be kept tidy and all trash disposed in a
dustbin. All workers must also be clean.
b) Ventilation: the business premises will be well ventilated for fresh aeration and to create
comfortable working condition for workers.
c) Safety and protection gear: the business will purchase safety gear for every worker
within the premises, including dust coat, boots, gloves.
d) Fire extinguisher: there will be a fire extinguisher in every room to help during fire
outbreaks. Every employee will be taught on how to handle such situations and use of
extinguishers.
e) Trade license: for legal business operation, the business will obtain a trade license.
 CHAPTER FIVE
FINANCIAL PLAN
This chapter contains all the financial information of the business highlighting the capital
expenses, profits and losses all represented in financial statements and all cashflows projected.

5.1 PRE-OPERATIONAL COSTS

Pre-start up requirements Cost (Kshs)
Business registration 1,000
Trading license 7,000
Rent 15,000
Insurance policy 2,000
Machine, equipment and tools 73,000
Installation of electricity 30,000
Water installation 10,000
Telephone 1,000
Total pre-operational costs 139,000

5.2 WORKING CAPITAL

Item Amount (Kshs)
Current assets
Cash at hand 150,000
Cash at bank 250,000
Stock 40,000
Total Current Assets (C.A) 440,000
Current liabilities
Creditors 100,000
Total current liabilities (C.L) 100,000
Estimated working capital (C.A-C. L) 340,000

5.3 PRO-FORMA INCOME STATEMENT

Item Year 1
Sales 1,200,000
Less cost of goods sold 20,000
Gross profit 1,180,000
Expenses
Wages 468,000
Rent 180,000
Water 12,000
Telephone 12,000
Electricity 48,000
Advertising 24,000
Transport 30,000
 Depreciation 17,887.50
Loan payment 40,000
Interest 2,500
Repairs 10,000
Total profit before tax 335,612.50
Tax 91,683.75
Net profit after tax 243,928.75

5.4 PRO-FORMA BALANCE SHEET

Pro-forma balance sheet at start-up and the first two years of operation
ASSETS AT START END OF YEAR 1 END OF YEAR 2
Current assets
Cash 900,000 200,000 100,000
Debtors 0 30,000 60,000
Stock of unfinished goods 40,000 60,000 80,000
Stock of raw materials 18,000 2,000 5,000
Total current assets 958,000 292,000 245,000
Fixed assets
Machinery and equipment 73,000 73,000 63,875
Furniture and fittings 15,000 15,000 13,125
Other facilities 55,100 55,100 48,212.50
Less accumulated 0 17,887.50 17,887.50
depreciation
Total fixed assets 143,100 125,212.50 107,325
Total assets 958,143 472,212.50 352,325
Liabilities
Owner’s equity 504,500 330,000 315,300
Long-term liabilities
Bank loan 350,000 50,000 25,000
Short-term liabilities
Creditors 100,000 30,000 10,000
Accruals 3,643 7,212.50 2,025
Total liabilities 453,643 87,212.50 37,025
Total liabilities and equity 958,143 417,212.50 352,325
 5.5 PROJECTED CASHFLOW STATEMENT
Item Jan Feb Mar April May June July August Sept Oct Nov Dec Total
Cash - - - - - - - - - - - - -
inflow
Opening 35,147 20,294 10,441 15,558 50,735 65,882 86,029 121,176 186,323 221,470 256,617 0 1,069,702
balance

Cash sales 60,000 65,000 80,000 95,000 100,000 105,000 120,000 125,000 130,000 130,000 140,000 50,000 1,200,000
Other 30,000 30,000 30,000 50,000 20,000 20,000 20,000 50,000 10,000 100,000 10,000 100,000 470,000
cash
inflows
from
family
financin
g
Total 125,147 115,294 120,441 160,588 170,735 190,882 226,029 296,176 326,323 361,470 406,617 150,000 2,649,702
cash
inflo
w
Purchases 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Payment 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 99.996
to
creditors
Wages/sal 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 468,000
aries
Rent 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000
Water and 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
Electricity
Telephone 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Transport 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Loan 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 3,550 42,600
payment
Repairs 830 830 830 830 830 830 830 830 830 830 830 830 9,960
Advertisin 2,000 3,000 1,500 2,000 2,500 1,000 1,000 1,300 2,000 2,000 1,500 2,000 218,000
g
Taxes 7,640 7,640 7,640 7,640 7,640 7,640 7,640 7,640 7,640 7,640 7,640 7,640 91,638
Total 104,853 105,583 104,083 104,583 105,083 103,583 103,583 103,883 104,583 104,583 104,083 104,583 1,148,183
cash
outflow
Net cash 20,294 10,441 15,588 50,735 68,882 86,029 121,716 186,323 221,470 256,617 256,617 35,147 1,375,006
BREAK-EVEN ANALYSIS
Gross profit = Sales- total direct costs
1,200,000- 20,000 = sh. 1,180,000
Gross profit margin = gross profit/sales X 100
1,180,000/1,200,000 X 100 = sh. 98.33
Break-even level = (Expenses/overheads)/gross profit margin X 100
844,387.50/98.33 X 100 = sh. 858,728.26

FINANCIAL REQUIREMENT
Item Amount (Ksh)
Pre-operational costs 139,000
Working capital 840,000
Fixed assets 73,000
Total 1,052,000

PROPOSED CAPITALIZATION
Source Amount (Ksh)
Personal savings 500,000
Own contribution 450,000
Bank loan 250,000
Total investment 1,200,000

EXPECTED PROFITABILITY RATIOS

RATIO FORMULA YEAR 1
Gross profit ratio (Gross profit X 100)/sales 98.33
Net profit ratio (Net profit before tax X 27.97
100)/sales
Return on equity (Net profit after tax X 48.35
100)/owners’ equity
Return on investment (Net profit after tax X 20.33
100)/total investment