BUSSINES PLAN

K…… BUTTERFIELD WORKSHOP

P.O BOX

ELDORET

EMAIL :k…….@gmail.com

NAME:

ADM. NO: 2023P00623

INSTITUTION: THE ELDORET NATIONAL POLYTECHNIC

COURSE :

COURSE CODE: 2

SUPERVISOR: MR.TANUI EZRA

PRESENTED TO: IT IS SUBMITTED TO KNEC FOR THE PARTIAL AWARD

i
EXAM SERIES: NOVEMBER 2023

ii
 DECLARATION
I declare that this business plan is my real and authentic work and no part of it has been
presented anywhere else other than Eldoret National Polytechnic

Declaration by student

STUDENT NAME:

SIGNATURE……………………………………….

DATE:………………………………………………………….

Declaration by the supervisor

The report has been submitted to the examination body with my approval as the supervisor

NAME: MR.TANUI EZRA

SIGNATURE:………………………………………………………..

DATE:…………………………………………………………………..

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DEDICATION
I dedicate this business plan with love and appreciation parents, friends, relatives whose love
care support deep interest and constant advices they normally give me. And my sincere thanks
and gratitude goes to my supervisor MR.TANUI EZRA for the help and guidance towards the
writing of this business plan.
God bless you all.

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ACKNOWLEDGEMENT
My most sincere thanks and gratitude goes to my course tutor information technology for his
efforts towards the success of my business plan. I thank the Eldoret National Polytechnic,
computer department for availing their information technology knowledge.

Thanks to my classmates for the ideas, advice and encouragement that we shared during the
business plan development.

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 TABLE OF CONTENTS

DECLARATION 1
DEDICATION 2
ACKNOWLEDGEMENT 3
CHAPTER ONE 6
1.1 BUSINESS DESCRIPTION. 6
1.2 MARKETING PLAN 6
1.3 MANAGEMENT PLAN 6
1.5 PRODUCTION PLAN. 6
1.6 FINANCIAL PLAN. 7
CHAPTER TWO 7
2.0 MARKETINF PLAN. 7
2.1 POTENCIAL CUSTOMERS. 7
2.2 SALES STRATEGIES 7
2.3 PRICING 8
2.4 ADVERTISEMENTS 8
CHAPTER THREE 10
3.0 MANAGEMENT PLAN 10
3.1 RECRUITMENT 10
3.2 TRAINING OF STAFF 11
3.3 JOB EVALUTION 11
3.4 RENUMERATION 12
3.5 INCENTIVES 12
CHAPTER FOUR 13
4.0. ORGANIZATIONAL PLAN 13
4.1 PROMOTION 15

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 4.2 LICENCES/ PERMIT 15
4.3 SUPPORT SERVICES 15
4.4 BUSINESS EXPANSION 16
4.5 FURTHER RECRUITMENT 16
CHAPTER FIVE 17
5.0. PRODUCTION PLAN 17
5.1. TECHNOLOGY ADVANCEMENT 17
5.2 PRODUCTION FACILITIES 17
5.3 MAINTENANCE 18
5.4 PRODUCTION STRATEGY 18
5.5 MONTHLY PRODUCTION OVERHEAD EXPENSES 18
5.2 MONTHLY PLUMBING COST 18
5.8 DISRIBUTION STRATEGY 19
CHAPTER SIX 19
6.0 FINANCIAL PLAN 19
6.1 PRE- OPERATIONAL COST 19
6.2 ESTIMATED WORKING CAPITAL FOR THE FIRST 3 YEARS 19
6.3 PROJECTED INCOME STATEMENT FOR THE FIRST THREE YEARS 21
6.4 PROJECTED BALANCE SHEET FOR THE FIRST 3 YEARS 22
6.5 PROJECTED CASH FLOW STATEMENTS 25
6.6 BREAK EVEN ANALYSIS 30
6.7 PROPOSED CAPITALIZATION 32
APPENDIX 33

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 CHAPTER ONE
Executive summary
1.1 BUSINESS DESCRIPTION.
The name of the business, in this chapter, to be started will be BUTTERFIELD PLUMBERS
which will be situated along Kakamega-Kisumu highway, 500 meters from Masinde Muliro
University of Science and Technology in Kakamega County. The business is a sole
proprietorship involved in selling of plumbing materials and equipments.

1.2 MARKETING PLAN

The aim of this business is to serve the neighboring learning institutions with various plumbing
equipments and materials. Also clinics and hospitals will be served with various plastic pipes
materials.

1.3 MANAGEMENT PLAN

The top management will consist of a manager and two directors, the middle management will
consist the cashier and a plumbing specialist to advice the customers accordingly, and the lower
management will consist of a supplier and a driver to offer carriage outwards services.

1.4 ORGANIZATIONAL PLAN.

This organization will be a profit based organization. The profit will be used to purchase
plumbing materials in bulk and also pay the employees. The organization will have to open other
sub branches so as to meet the high demand of plumbing equipments.

1.5 PRODUCTION PLAN.

After partitioning of the warehouse into shelves and various rooms, the business will begins
operation. The manager will order the plumbing equipments from Nairobi and Mombasa after

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which they will be delivered. The plumbing equipments will be on a display both physically and
in written form so as to attract potential buyers.

1.6 FINANCIAL PLAN.

Finance to commence this business will be inform of a loan of 350,000Ksh and the managers
equity of 250,000Ksh. The loan is to be paid within the first ten months of operation. The total
capital needed will be 600,000 Ksh of which 37,500 will be pre-operational cost and the
remaining 562, 500 will be used to buy stock and cater for other expenses of the business before
fully commencing.

CHAPTER TWO

2.0 MARKETINF PLAN.

The customers to Butterfield Company& Warehouse are:

- Construction companies.
- Sewer companies
- Greenhouse companies
- Water companies
- Individuals.

2.1 POTENCIAL CUSTOMERS.

These are the people who come to the products at an affordable market priceThe surrounding
Construction companieswill purchase various plumbing pipes. This high demand will lead to a
steady supply of plumbing equipments which in turn will sustain the business in the market.

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2.2 SALES STRATEGIES
This is an important tool in day operations. It will be done through employing experts with
expenses in the field. They will come up with a policy to implement in order to boost sales.

Sales strategies include:

i. Offering discounts
ii. Credit facilities to customers.
iii. Free sample
iv. Price tags on each product for good visualization.
v. Commission agents will move around with the products from institutional to institution.

2.3 PRICING
The lower the price, the higher the demand and higher the quality the demand which will in turn
lead to higher pricing if need be

PRODUCTS PRICES
100 per metre
90
1. Stainless steel pipes
250
2. Plastic Pipe.
700
3. Galvanized Iron Pipe
1200
4. Concrete Pipe
1,500

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 5. Asbestos Cement Pipe.
6. Copper Pipe
7.

The price will be slightly lower than the price of other competitors.

2.4 ADVERTISEMENTS
This will allow customers to be aware of the business. Various advertisement methods will be
used:

i. Local daily newspapers, magazine “Makhuria” which will circulate within the counts.
ii. Use of street Billboards.
iii. Branches and newsletters.
iv. Radio announcement mainly through “MrembeFm” which is the favorite.
v. Occasional TV announcement.

The Braches will contain on overall building of the business and sample pictures of various
plumbing wares.

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 CHAPTER THREE

3.0 MANAGEMENT PLAN

Management will form the basic structure of the business in terms of administrative chain of
command and responsibility. The management will include Top, Middle and lower management.

Top management

I. Manager
II. Supervisor – Administrative supervisor

-Financial supervisor

Middle Management

I. Cashier
II. 2 Plumbing Technicians

Lower Management

I. Driver

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 II. Sweepers
III. Security personnel

The management will consult before making decision. It will be inclusive of all the members
from top to lower management level.

3.1 RECRUITMENT
The staff will be recruited as for their qualification and experiences.

Recruitment procedures

I. Be a Kenyan citizen.
II. Minimum 3 years working experience.
III. Posses a diploma and an undergraduate degree in the field of interest.
IV. For drivers, should have 5 year working experience.
V. Security personnel should be good sound mind with a minimum 10 years experience.
VI. Be having a certificate of good conduct.

3.2 TRAINING OF STAFF

Training of staff members will be of 2 types.

After job interview the selected candidates will be trained for 1 month to familiarize him/her
with the job he/she required to do the following:

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This will be done by the top management with assistance from Non-governmental organization
i.ie. Vijanana Kazi Trust Foundation.

After 3 years, the security personnel and drivers will undergo a refresher test as to polish their
skills in their respective fields.

This will be implemented in order to improve quality services offered by the staff.

3.3 JOB EVALUTION

These will be an internal job evaluation committee and an external audit so as to check the
services offered by the staff members.

Redundant staff will be demoted or laid while hardworking staff will get promotion and
commission. The manager has the authority to send away employees who abscond from their
duties without consulting them.

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3.4 RENUMERATION
The salaries of employees will solely depend on the profitability of the business alongside the
type of job and qualification. The salaries will as follows:

Personnel Basin salary Allowances

20,000 5,000
15,000 4,500
I. Manager
15,000 4,500
II. Supervisor 1
8,000 2,000
III. Supervisor 2
8,000 2,500
IV. Cashier
6,000 2,000
V. Plumbers
4,000 1,500
technician
4,000 1,500
VI. Driver
VII. Sweepers
VIII. Watchman

TOTAL 80,000

Allowances will depend upon over time work done by each personnel.

3.5 INCENTIVES
Plumbingcompany will encourage its employees through the management by fallowing
incentives:

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a) Service offered by the personnel will determine their request for advance payment.
b) Access provided by the firm.

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 CHAPTER FOUR

4.0. ORGANIZATIONAL PLAN

Organization is the way of grouping similar activities together and dissimilar activities
separately. The atoll working the organization is divided into units to enhance smooth operation
of the business.

Organization chart

MANAGER

Supervisor 1 Supervisor 2
Administrative Finance

SWEEPER PLUMBERS DRIVER SECURITY CASHIER

R

MANAGER

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 I. Will control all activities with executive authority exercising all functions of
management
II. Will set standards and performance of the business
III. Give set standards and instructions

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SUPERVISOR 1[ADMINISRATIVE]

I. Supervise the employees as far as job performance is concerned

II. Will provide a frequent report to the manager on employees conduct
III. Will conduct job evaluation to the employees

SUPERVISIOUR 2 [FINANCE]

Handle money and oversee payment of employees

Sigh cheques when necessary, before any transactions

Provide financial guidance to the business when necessary

CASHIER

Recording each financial transaction and be answerable to the supervisor [finance]

Liaise with the supervisor [finance] to oversee payment of employees

PLUMBING TECHNICIAN

Offer necessary advice to customers concerning the type of products they desire. Handle the
plumbing pipe products and assist in packaging provide relevant information concerning the
products.

DRIVER

Transport products for customers to their respective destination carriage outwards services. After
stock purchase, the driver will bring the stock to the warehouse inward service.

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SWEEPER/CLEANER

In charge of general cleaning in the company

SECURITY PER PERSONNEL

Prevent unauthorized people from accessing the business premises. Lay down necessary security
measures to ensure safety the employees.

4.1 PROMOTION
Only the Top management will be in charge of promotion and giving allowance to employees.
Manager will consult with the supervisor and determine if one will get allowances for the
services offered.

4.2 LICENCES/ PERMIT

This is a legal requirement for the start of any business. The license will issued by the county
council offices in Kakamega at a cost 0f 5,000.

Permit from the National Environmental Agency [NEMA] is also required at a charge of 1,000.
Total fees for license will be 6,000 it will be renewable annually at a cost of 500.

4.3 SUPPORT SERVICES

The business will need external assist to secure it from any form of risks. This assistance will
mainly come from;

BANKERS

Plumbing companys major Bank will be Jumuiya Bank along Lurambi- Sichiragi road. It will
offer any loan to the business and also keep the business profits safe.

LAWYER

The business lawyer will be Edith Auma who is an advocate to the High court. She will represent
the business in to many legal proceeding against it.

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EXTERNAL AUDITOR

The business auditor will be Njoroge Mwau who is a certified public accountant. He will audit
the business financial transactions and monitor any misappropriation of funds.

INSURAZNCE SERVICES

The insurgence services will be offered by London Insurance Company. The business assets will
be insured incase of any future damages.

4.4 BUSINESS EXPANSION

The top management will be in charge of expanding the business so as to increase the services to
other potential customers. This is intended to be carried out as so to increase the stability of the
business in the consumer market.

4.5 FURTHER RECRUITMENT

This will be done after expanding the business. Recruitment will be providing extra personnel to
man the expanded business and lead to customer satisfaction.

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 CHAPTER FIVE

5.0. PRODUCTION PLAN

The production plan at Plumbingcompany will serve the following aims:

I. Identify new plumbing technology equipments

II. Determine the quality of various plumbing materials
III. Asses the expiry dates of various products

5.1. TECHNOLOGY ADVANCEMENT

Due to digitalization of science, this will intend to keep the business in line with the
technological advancements so as to have products that are relevant. Products like Atomic
Absorption Spectrometers are necessary due to the atomization. Also CCTv will be put in place
to enhance security measures.

5.2 PRODUCTION FACILITIES

The business requires various equipments for efficient supply.

Equipment Cost per unit

Copper pipes 250
Galvanized steel pipes 150
Cast iron 350
Polyvinyl chloride pipes 170
CPVC 500
Cross linked pipes 140

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Other fixed asset includes; Pickup track for transportation.

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5.3 MAINTENANCE
The manager will give instructions on how to use various equipments. Any destructions by the
employees they will be held liable. Maintenance for the equipments will be carried out monthly
at a total cost of 40,000 Ksh.

5.4 PRODUCTION STRATEGY

This will be provided by the professional experts who will give advice to the business. Products
will be made accessible to consumers through commission agents. This also will ensure there are
no shortage of products which may lead may lead to loss.

5.5 MONTHLY PRODUCTION OVERHEAD EXPENSES

This will be the projected factory overhead expenses and amount involved.

Particulars Cost
Electricity 2,000
Maintenance & Repair 4,000
Water Bill 200
Rent 2,000
Total 8,200

5.2 MONTHLY PLUMBING COST

The table below shows the total plumbing cost

Job title NO of Basic Salary Allowances Total Salary

Employees
Manager 1 20,000 5,000 25,000
Supervisor 2 30,000 9,000 39,000
Cashier 1 8,000 2,000 10,000
Plumbers 1 8,000 2,500 10,500
Technicians 1 6,000 2,000 8,000
Driver 1 4,000 1,500 5,500
Cleaner 1 4,000 1,500 5,500
Security
TOTAL GROSS SALARY PER MONTH 103,500

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5.8 DISRIBUTION STRATEGY
The business Pickup truck will offer carriage inward services after stock purchase and also offer
carriage outwards services at the customer expenses. The cost for carriage inwards for by the
business.2,000 per month for fuel for the truck.

CHAPTER SIX

6.0 FINANCIAL PLAN

The proposed business intends to prepare a financial plan as follows:

6.1 PRE- OPERATIONAL COST

The business intends to incur the following before the actual start of business operation.

Item Cost
Rent[ the first 3 month] 6,000
Equipment installations 5,000
Electricity [the first 3 month] 6,000
Permit 5,000
License 1,000
Furniture 2,000
Water 1,500
Telephone 1,000
CCTvs [high-tech] 10,000
TOTAL 37,500

6.2 ESTIMATED WORKING CAPITAL FOR THE FIRST 3 YEARS

ITEM YEAR 1 YEAR 2 YEAR 3
1 Stock 100000 150000 200000
2 Debtors 50000 60000 70000

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3 Cash at hand 250000 250000 250000
4 Cash at bank 350000 350000 350000
5 Creditors 20000 10000 50000

The estimated working capital will increase for the following 2 years.

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6.3 PROJECTED INCOME STATEMENT FOR THE FIRST THREE YEARS
ITEM YEAR 1 YEAR 2 YEAR 3
31.12.2021 31.12.2022 31.12.2023
Sales 1500000 2000000 3000000
Cost of goods sold 800000 170000 210000
Gross profit 1420000 1830000 2790000
Expenses
Salaries 960000 960000 1000000
Water 4000 4000 5000
Electricity 5000 5000 5000
Telephone 3000 3000 4000
Advertisement 1000 1000 1500
License 3000 3000 3000
Maintenance 3500 3500 4000
Transport 2000 2500 3000
Bank charges 800 800 1000
Total expenses 982300 982800 1025500
Profit before tax 437700 847200 1764500
Less tax 2% 52524 101664 211740
Net profit after tax 385176 745536 1552760

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6.4 PROJECTED BALANCE SHEET FOR THE FIRST 3 YEARS
ITEM YEAR 1 YEAR 2 YEAR 3
01.01.2021 01.12.2022 01.12.2023
Current assets
Cash in hand 250000 300000 350000
Cash at bank 350000 400000 400000
Debtors 50000 60000 70000
Stock 100000 150000 200000
Total 750000 910000 1020000

Fixed assets
Equipment 20000 20000 20000
Furniture 5000 500 500
Total 25000 2500 2500
Total assets 775000 912500 1025000

Current liabilities
Creditors 20000 10000 5000
Total 20000 10000 5000

Long term liabilities

Bank loans 350000 20000 --
Total liabilities 370000 30000 5000

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 6.5 PROJECTED CASH FLOW STATEMENTS
PROJECTED CASH FLOW STATEMENTS FOR THE YEAR 2018

Receipts Jan Feb March April May June July Aug Sept Oct Nov Dec
Cash b/f 60000 878100 116200 1524300 1742400 2404500 2632600 2860700 3078800 2296900 3485000 3663100
Cash Sales 350000 300000 320000 280000 310000 320000 320000 320000 320000 300000 290000 300000
Credit sales 100000 150000 200000 100000 100000 80000 70000 60000 60000 50000 50000 50000
Loan 46000 46000 46000 46000 46000 46000 46000 46000 46000 46000 46000 46000
Total inflow 1096000 1374100 1732200 1950300 2612400 2850500 3068600 3286700 3504800 3692900 3871000 4059100
Payment
Purchases 85400 85400 85400 85400 85400 85400 85400 85400 85400 85400 85400 85400
Salaries 103500 103500 103500 103500 103500 103500 103500 103500 103500 103500 103500 103500
Postage 500 500 500 500 500 500 500 500 500 500 500 500
Rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Electricity 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000
Advertisement 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
Maintenance 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500
Water 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000
Telephone 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
Insurance 10000 -- -- -- -- 10000 -- -- -- -- -- 10000
Total payment 217900 217900 217900 217900 217900 217900 217900 217900 217900 217900 217900 217900

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Nate cash flow 878100 116200 1524300 1742400 2404500 2632600 2860700 3078800 2296900 3485000 3663100 3841200

PROJECTED CASH FLOW STATEMENT FOR THE YEAR 2019

Receipts Jan Feb March April May June July Aug Sept Oct Nov Dec
Cash b/f 3841200 4119300 4337400 4535500 4673600 4911700 5109800 5307900 5536000 5774100 600000 6536000
Cash Sales 350000 300000 280000 250000 350000 300000 320000 330000 350000 320000 300000 300000
Credit sales 100000 80000 80000 50000 50000 60000 50000 60000 50000 50000 40000 40000
Loan 46000 46000 46000 46000 46000 46000 46000 46000 46000 46000 46000 46000
Total inflow 437200 4545300 4743400 4881500 5119600 5317700 5525800 5743900 5982000 6380200 6589200 6782600
Payment
Purchases 85400 85400 85400 85400 85400 85400 85400 85400 85400 85400 85400 85400
Salaries 103500 103500 103500 103500 103500 103500 103500 103500 103500 103500 103500 103500
Postage 500 500 500 500 500 500 500 500 500 500 500 500
Rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Electricity 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000
Advertisemen 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
t
Maintenance 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500

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Water 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000
Telephone 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
Insurance 10000 -- -- -- -- 10000 -- -- -- -- -- 10000
Total payment 217900 207900 207900 207900 207900 207900 207900 207900 207900 207900 207900 217900
Nate cash flow 4119300 4337400 4535500 4673600 4911700 5109800 5307900 5536000 5774100 600000 6536000 7000000

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 PROJECTED CASH FLOW STATEMENT FOR THE YEAR 2020

Receipts Jan Feb March April May June July Aug Sept Oct Nov Dec
Cash b/f 70000000 6863500 6887000 6830500 6764000 6667500 6461000 6514500 6598000 6731500 6855000 6958500
Cash Sales -- 50000 20000 10000 30000 -- 40000 10000 10000 50000 30000 --
Credit sales 100000 200000 150000 150000 100000 200000 250000 300000 350000 300000 300000 350000
Loan -- -- -- -- -- -- -- -- -- -- -- --
Total inflow 7100000 7113500 7057000 6990500 6894000 6687500 6751000 6824500 6958000 7081500 7185000 7308500
Payment -- -- -- -- -- -- -- -- -- -- -- --
Purchases 90000 90000 90000 90000 90000 90000 90000 90000 90000 90000 90000 90000
Salaries 120500 120500 120500 120500 120500 120500 120500 120500 120500 120500 120500 120500
Postage 500 500 500 500 500 500 500 500 500 500 500 500
Rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Electricity 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000
Advertisemen 500 500 500 500 500 500 500 500 500 500 500 500
t
Maintenance 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000
Water 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000
Insurance 10000 -- -- -- -- 10000 -- -- -- -- -- 10000
Total payment 217900 207900 207900 207900 207900 207900 207900 207900 207900 207900 207900 217900

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Nate cash flow 6863500 6887000 6830500 6764000 6667500 6461000 6514500 6598000 6731500 6855000 6958500 7072000

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6.6 BREAK EVEN ANALYSIS
a) Contributing margin for the first year 2021

Contribution = Total sales – Variable cost

= 1500000 - 200000

= 1300000

Contribution margin =

= 86.67%

Breakeven point for 2018

Fixed cost = 150000

Breakeven point =

= 1730.7

b) Contribution margin for the second year 2019

Contribution = Total sales – Variable cost

= 2000000 - 300000

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 = 1700000

Contribution margin =

= 85%

Breakeven point for 2019 in sales

Fixed cost = 100000

Breakeven point =

= 1176.47

c) Contribution margin for the year 2020

Contribution = Total sales – Variable cost

= 3000000 - 400000

= 2600000

Contribution margin =

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 =

= 86.6%

Breakeven point for 2018

Fixed cost = 400000

Breakeven point =

= 4618.937

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 6.7 PROPOSED CAPITALIZATION
The proposed business intends to acquire its capital from the following:

i) Managers equity 250000

ii) Bank loan 350000

Total 600000 (Cash at Bank + Cash at Hand)

6.8 EXPECTED PROFITABILITY RATIO

Ratio Type Working Formula 2021 2022 2023

Gross
capitalization

94.67% 91.5% 93%%

Return on
capital

19.25% 37.27% 77.638%

Return on
investment

9.62% 18.63% 38.8%

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 APPENDIX
Retail company layout overview

Reception CCTV WAREHOUSE CCTV SHELF 1

& (PRODUCTS)
Security STORE 1
(Chemical)
SHELF 2
Entrance Equipment Equipment
(PRODUCTS)

Cashier

SHELF 3
Exit (PRODUCTS)

Manager’s SHELF 4
office (PRODUCTS)

SHELF 5
Supervisor’s (PRODUCTS)
office

SHELF 6
(PRODUCTS)
Technician’s
office
SHELF 7
(PRODUCTS)
Wash rooms
Warehouse
SHELF 8
Exit (PRODUCTS)
Staff CCTV
Only

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