BUSINESS PLAN

TITLE: BENEDICT’S POUTRY FARM

PRESENTED TO: THE KENYA NATIONAL EXAMINATION COUNCIL (KNEC) IN

PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF DIPLOMA IN
PETROLEUM GEOSCIENCE

PRESENTER: ASMAN KIPLAGAT

INDEX №: 295411010936

COURSE CODE: 2901

PAPER №: 306 B

CENTRE NAME: OL’LESSOS TECHNICAL TRAINING INSTITUTE

CENTER CODE: 541101

SUPERVISOR: MR. VINCET BET

EXAM SERIES: JULY 2023

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DECLARATION.
I hereby declare that this is an original copy from my hands and has never been presented forth
to KENYA NATIONAL EXAMINATION COUNCIL.I therefore present it to KNEC for partial
fulfillment of diploma in petroleum and geoscience and approved from the supervisor.

NAME ASMAN KIPLAGAT

SIGNATURE; ………………………………………….

DATE ; ………………………………………………

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STATEMENT OF APPROVAL.
After research and writing of this business plan, it was submitted to the KENYA NATIONAL
EXAMINATION COUNCIL for the award of diploma in petroleum and geoscience with my
approval as supervisor

NAME : MR.VINCENT BETT

SIGNATURE; ……………………………

DATE ; ……………………

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ACKNOWLEDGEMENT.
I would like to thank the almighty god for his grace and love that he has gave me and also good
health to undertake this project.

Secondly, I would like to acknowledge and give special regards to my supervisor MR.
VINCENT BET. For the general guidance and endless correction to ensure the coming up of a
good and successful plan.

Finally, is to my fellow classmates, it has been much pleasure working with them hand in hand
up to the end. Also, my special regards to my family members for the humble time they gave me
and necessary support throughout the project writing.

GOD BLESS YOU ALL.

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DEDICATION.
I dedicate this project to my parents MR & MRS KIETI, my brothers and sisters and finally to
my mentor Victor Wambua for their support that they gave me in terms of finances and advices
during the period of study.

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EXECUTIVE SUMMARY.
BUSINESS DESCRIPTION
The proposed BENEDICT’S POUTRY FARM will be registered as a sole proprietor business
and will be owned by Asman Kiplagat who is currently undertaking diploma in petroleum and
geoscience in Ol’lessos Technical Training Institute

BENEDICT’S POUTRY FARM will be located in kibwezi town next to SILVER LOUNGE
HOTEL

MARKETING PLAN.
The business will target hotels owners within the town and the entire county of MAKUENI.This
business will overcome its competitors by offering its customers with products at reasonable
price relatively lower than for its competitors

ORGANISATIONAL PLAN.
The proprietor acting as manager and taking control of every activity carried out in the business
will manage it with assistance of key managerial personnel and other employees who will ensure
that all duties and responsibilities are adhered to.

OPERATIONAL PLAN.
The business will be open as from 6am to its closure at 8pm making it available for the nearby
Hotel,schools and other ready customers.
There will be a 1 hour lunch break as from 1pm to 2pm.
The business will provide free delivery for bulky transportation to customers.
The business will provide lessons to people who want to start the same business hence
hence providing extra cash for the business.
Any requirements that allow smooth running of the business will be ordered weekly.
FINANCIAL PLAN.
The proposed Willie’s hens rearing farm has laid its financial plan where it will start with a
capital of KSH 400,000. This capital will be raised by owner contributing 50% from his
savings,friends contributing up to 15% and the remaining amount as a loan from bank to be paid
at an interest of 10% per annum.

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Table of Contents

DECLARATION.........................................................................................................................................ii
STATEMENT OF APPROVAL.................................................................................................................iii
ACKNOWLEDGEMENT..........................................................................................................................iv
DEDICATION.............................................................................................................................................v
EXECUTIVE SUMMARY........................................................................................................................vi
BUSINESS DESCRIPTION...................................................................................................................vi
MARKETING PLAN.............................................................................................................................vi
ORGANISATIONAL PLAN..................................................................................................................vi
OPERATIONAL PLAN.........................................................................................................................vi
FINANCIAL PLAN...............................................................................................................................vi
CHAPTER ONE..........................................................................................................................................1
1.1.1. BUSSINESS DESCRIPTION.......................................................................................................1
1.1.2. MISSION.......................................................................................................................................1
1.1.3. SPONSER.....................................................................................................................................1
1.1.4. EDUCATION BACKGROUND...................................................................................................1
1.1.5. PROFESSIONAL QUALIFICATION..........................................................................................1
1.2.0. BUSSINESS EXPERIENCE.........................................................................................................1
1.2.1. TECHNICAL SKILLS..............................................................................................................1
1.2.2. MANAGERIAL SKILLS..........................................................................................................1
1.2.3. ENTREPRENEURAL SKILLS.................................................................................................2
1.3. LEGAL FORM OF OWNERSHIP...................................................................................................2
1.3.1. ADVANTAGE OF SOLE PROPRIETORSHIP........................................................................2
BUSINESS LOCATION.........................................................................................................................2
1.4. BENEFITS OBTAINABLE.............................................................................................................3
1.5. COMPETITIVE ADVANTAGE......................................................................................................4
1.6. EXTERNAL MOTIVATION FACTORS........................................................................................4
1.6.1 OBJECTIVES.................................................................................................................................4
1.7. ENTRY STRATEGY......................................................................................................................5
CHAPTER TWO.........................................................................................................................................7

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 2.0 MARKETING PLAN........................................................................................................................7
2.1 IMPORTANCE OF MARKETING...................................................................................................7
2.2 POLITICAL ENVIRONMENT.........................................................................................................7
2.3 ECONOMIC ENVIRONMENT........................................................................................................8
2.4 CONSUMER ENVIRONMENT.......................................................................................................8
2.5 COMPETITIVE ENVIRONMENT...................................................................................................8
2.5.1 Direct competition......................................................................................................................8
2.5.2 Indirect competition....................................................................................................................8
2.5.3 COMPETITION ANALYSIS TABLE.......................................................................................8
2.5.4 COPING UP WITH COMPETITION........................................................................................9
2.6 CONSUMER BEHAVIOUR.............................................................................................................9
2.6.1 FACTORS THAT BRING CONSUMER BEHAVIOR.............................................................9
2.7 MARKETING STRATEGY............................................................................................................10
2.8 MARKET SHARE..........................................................................................................................10
2.8.1 METHODS OF DETERMINING MARKET SHARE.............................................................10
2.9 ADVERTISING AND PROMORTION STRATEGY....................................................................10
2.10 PRICING STRATEGY..................................................................................................................11
2.10.1 FACTORS CONSIDERED WHEN MAKING PRICING STRATEGY................................11
2.11 SALES STRATEGY.....................................................................................................................11
CHAPTER THREE...................................................................................................................................13
3.0 ORGANISATIONAL PLAN...........................................................................................................13
3.1 MANAGING DIRECTOR..............................................................................................................13
3.3 RECRUITMENT.............................................................................................................................14
3.4 TRAINING......................................................................................................................................14
3.5 REMUNERATION AND INCENTIVES........................................................................................14
3.6 LICENSE PERMIT AND BY LAWS.............................................................................................15
3.7 SURPPORTIVE SERVICES...........................................................................................................15
CHAPTER FOUR.....................................................................................................................................16
4.0 OPERATIONAL PLAN..................................................................................................................16
4.1 PRODUCTION...............................................................................................................................16
4.2 PRODUCTION FACILITIES AND CAPACITY...........................................................................16
4.3 PRODUCTION STRATEGY..........................................................................................................16
4.4 PRE-LIMINARY COST AND AMOUNT REQUIRED.................................................................17

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 4.5 TOTAL PRODUCTION COST.......................................................................................................18
4.6 PRODUCTION PROCESS.............................................................................................................18
4.6.1 PRODUCTION STEPS;...........................................................................................................18
4.6.2 FACTORS AFFECTING PRODUCTION PROCESS.............................................................18
4.7 REGULATIONS AFFECTING OPERATION...............................................................................19
CHAPTER FIVE.......................................................................................................................................19
5.0 FINANCIAL PLANNING..............................................................................................................19
5.1 CAPITAL INVESTMENT..............................................................................................................19
5.2 FINANCIAL PERFORMANCE......................................................................................................19
5.3 FINANCIAL STATEMENT...........................................................................................................19
5.4 PRE-OPERATIONAL COST..........................................................................................................20
5.5 WORKING CAPITAL REQUIREMENTS.....................................................................................20
5.6 PROFORMA INCOME STATEMENT..........................................................................................21
5.7 PROFORMA BALANCE SHEET..................................................................................................22
5.8 BREAK EVEN POINT...................................................................................................................23
5.9 PROFITABILITY RATIO..............................................................................................................23
5.10 DESIRED FINANCING................................................................................................................24
5.11 PROPOSED CAPITALIZATION.................................................................................................24
5.12 RETURN ON INVESTMENT......................................................................................................24
APPENDIX..................................................................................................................................................24

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CHAPTER ONE.
1.1.1. BUSSINESS DESCRIPTION.
BENEDICT’S POUTRY FARM is owned by Asman kiplagat holder of diploma in petroleum
and geoscience. The business will be located along Mombasa highway one kilometer from
Kibwezi town.

1.1.2. MISSION.
To be the best and reliable hens rearing farm in Kibwezi town and beyond in provision of quality
and readily available market for its customers

1.1.3. SPONSER.
The chief sponsor will be Asman kiplagat

1.1.4. EDUCATION BACKGROUND.

I enrolled my primary school in the year 2005-2014 at ITEN PRIMARY SCHOOL and awarded
KCPE certificate at the end. I later joined ST.PETERS HIGH SCHOOL IN THE YEAR 2015-
2018 and completed my secondary education with award of KCSE certificate and later joined :
OL’LESSOS TECHNICAL TRAINING INSTITUTE to pursue my diploma in peroleum and
geoscience.

1.1.5. PROFESSIONAL QUALIFICATION.

Currently pursuing diploma in petroleum and geoscience in OL’LESSOS TECHNICAL
TRAINING INSTITUTE .I do expect to complete the course in the year 2023.

1.2.0. BUSSINESS EXPERIENCE.

1.2.1. TECHNICAL SKILLS.
I acquired my skills from my mum’s rearing farm located at Kinyambu market, I have been
working there during my holidays while I was in high school and even after completion of my
secondary education where I gained experience more than before.

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1.2.2. MANAGERIAL SKILLS.
During those times, my mother used to leave the business under my control to run it and take a
good care of it where I acquired my managerial skills of handling the chicks and hens with care.
All that time the business used to run well and smoothly thus encouraging effectiveness

1.2.3. ENTREPRENEURAL SKILLS.

This is an area cover that makes one drive business to a successful destiny. The skills I have
from my background will place me in a better position to hold it to success, for instance I will
aggressively persuade people to purchase products from my rearing farm, be able to come up
with big ideas in business undertaking the needs of the society for the growth and development
of my business.

1.3. LEGAL FORM OF OWNERSHIP.

It will be a sole proprietorship type of business and I will be in charge of the entire business as
the directive manager.

1.3.1. ADVANTAGE OF SOLE PROPRIETORSHIP.

-The sole trader has all authority to make decisions on behalf of management.
- Profit generated from sales are not subjected to sharing since one person owns it and that the
owner can expand the business using such profit.
-The sole owner is able to maintain his top business secrets giving him business privacy since
ideas and profit are only in direct contact with the owner.

-It’s a simple business since its exempted from paying high level taxes as the business is
regarded to bring income to the economy and also less legal formalities required when starting
the business.

BUSINESS LOCATION.
MAKUENI COUNTY
MAKUE

KIBWEZI SUBCOUNTY KIBWEZI SUBCOUNTY

THANGE WARD THANGE WARD

KYUASINI VILLAGE
KYUASINI VILLAGE

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ADVANTAGE OF LOCATION SELECTED.

-This location is easily accessed since it will be located where everyone can access quickly.

-it has high maximum-security standards.

-Has more space around it catering for future expanding of the business.

-the level of competition is well solved because the business is located where there is few other
rearing farms.

-There is availability of market because the business will be located near silver lounge hotel and
also the population in the area is bit reasonable hence making it effective.

PRODUCTS AND SERVICES.

My business deals with eggs supply and meat supply. I will be offering free deliver to my
wholesale customers and the other customers within the Ukambani region /Makueni county.

FEATURE OF THE PRODUCT.

The products are high quality and of right quantity. The variety of products will be more
appealing to customers since they will enjoy after sales service and able to get all that they want
in the right time without delay.

1.4. BENEFITS OBTAINABLE.

This business will create employment opportunities to the young skilled persons to assist me in
seeing the success of the business. The customers will enjoy after sales services and also fair
prices to the business products.

COMPANY STRENGTH WEAKNESS

KWETU REARING FARM -The company offers -location area is small thus
P.O B.O.X 81-90137 supply services and have no extension can be made
KIBWEZI more customers buying
there
-Good pay to workers

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 and motivation
AMANI REARING FARM -Quite accessible to -it sells products at relatively
P.O B.O.X 81-90136 main road high prices
KIBWEZI -located on a strategic -has less managerial workers
place hence delayed in delivery
-its financially well- -lack of ready market
established since it
started earlier

1.5. COMPETITIVE ADVANTAGE.

The business having other competitors would face a bit of competition in terms of sales of
products and customers. Other rearing farms in the area dealing with the same products include:

1.6. EXTERNAL MOTIVATION FACTORS.

-The tremendous industrial work being carried out within the county will provide ready and
steady market to the products that could enhance growth of the business.
-the business is located at higher population place providing labour in terms of search of work
and job opportunity.
-infrastructure: there is good and improved tarmac road of Mombasa highway accessible to the
enterprise at it will be able to facilitate transportation service to customers.
-the surrounding environment being cool will be safe location in that there will be thriving of the
business and thus give the business higher chances of survival.

1.6.1 OBJECTIVES.
BENEDICT’S POUTRY FARM aspires; To be the best supplier of best hospitality served like
right quality and quantity of farm produces like eggs and chicks ready for sale and also hens
ready for consumption

To creat employment to the unemployed members in the region

To provide ready transport for bulky buyers to increase selling rate.

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1.7. ENTRY STRATEGY.
To create awareness to existence of my business, its location, products and services offered to
customer then;

- I will advertise my business via television and radio stations.

- Place billboards at specific points showing location and products offered.
- Giving business cards to my customer in aid of reaching more customers.
- Giving out offers on goods to attract more customers.

GROWTH STRATEGY.

These are trends that signals growth of the business.

Long term sustainability and increase of customers will be in an indication of growth taking
place, implying that business as whole is driven by customers’ demand.

Analysis of financial output over a period of time will help determine increase or decrease in
sales volume. An increase in sales volume indicates positive growth of business.

Analyzing financial record helps in knowing the business i.e., making profit or losses. Rising
profit margin will be clear indication that the business is growing steadily.

OPPORTUNITY ARISING FROM ABOVE.

- Increase in profit margin in the business will start on expansion measures by establishing
new branches within the county targeting large number of consumers.
- Increase in sales volume in the business shall help in making large orders of goods to ensure
steady flow also employing expertise to ensure growth in the business.
- As a result of increase in the number of customers, the business will have an assurance as
loyalty by the customers also the business will increase man power to increase service
delivery.
PLAN TO TAKE ADVANTAGE.
- Job creation for skilled and non-skilled labour.
- Constant and smooth deliver of goods due to increase in sales volume.
- Growth and expansion of the business will be huge due to increase in the number of
customers.
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- Increase in profits due to high increase of products which are of high quality at relative fair
prices in both peak and off-peak periods.

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CHAPTER TWO.
2.0 MARKETING PLAN.
In my business to be steered well, have its goals attained, the entrepreneur should have
guidelines that offer directives to be followed to achieve them and offer frequent goods supply to
its customers
Marketing- it’s a set of activities aimed at satisfying the customer’s needs and wants.

2.1 IMPORTANCE OF MARKETING.

1. Helps in exchange and goods movement. Marketing is helpful in transfer, exchange and
movement of goods. These goods will be made available to customers through wholesales who
will be buying in bulk to sell to final customers.

2. helpful in raising and maintaining the living standards of community. This will be made by
making goods and services available to customers at reasonable prices.

3. Marketing creates employment. The major marketing functions are buying, selling, financing,
transport, risk bearing and standardization. Thus, different activities are performed by different
groups of individuals thus creating employment to such individuals as the business continues to
grow.

4. Source of income and revenue. Through marketing the business generates more income and
yield out more profits.

5. Marketing acts as a basis for making decisions. Business people are confronted with many
problems in the form of what, how, when and for whom to produce. Marketing has emerged as a
new specialized activity along with production.

6. Marketing as a source of new ideas. Marketing changes altogether with passage of time. Such
changes have far reached effects on production and distribution with rapid change in taste and
preference of people.

2.2 POLITICAL ENVIRONMENT.

1. Government policy.

Implementation of government operations like infrastructure; good roads help in smooth

movements of products to and from the business operation area.

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2. Legal control.

Permits license; permits issued by government should be easily acquired. Acquisition promotes
business startup.

2.3 ECONOMIC ENVIRONMENT.

-Income levels. High rate of inflation leads to high rate of purchasing power resulting in low
income making business uncompetitive with locals and international market leading to low sales
to the business.

-Income distribution. Higher level of income disposal are good for business producing luxury
goods. Income distribution will promote business dealing with high products and services. High
tax rate lowers income distribution and contraction of demand.

-Pattern of consumption. This involves the period when customer buy more goods and also when
they buy fewer goods.

2.4 CONSUMER ENVIRONMENT.

The current situation in Kibwezi market, there is high demand of eggs supply and chicken meet
demand and for this reason there are number of customers requiring the products. Once an order
is made, a quickly response is given by delivering the required quantity and quality at the right
time.

2.5 COMPETITIVE ENVIRONMENT.

This is the presence or existence of other businesses offering same products as my business will
be.

2.5.1 Direct competition- this is whereby there is other businesses offering same products as
mine. In order to avoid this; my business will opt in selling high quality goods at relatively
average prices thus increasing number of customers.

2.5.2 Indirect competition- this is general competition of the region where the business is located
and depends on economic strength and exchange cash flows between the businesses around with
regards to my business. I would seek stability through increasing cash in either by loans.

2.5.3 COMPETITION ANALYSIS TABLE.

ITEM KWETU REARING AMANI REARING WILLIES REARING

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 FARM FARM FARM
Product 4 3 5
Quality 3 2 4
Location 3 3 5
Capital 5 4 5
Technology 3 2 4
Service 4 3 5

Ranking.

5- Excellent

4-very good

3-good

2-fair

1-poor

2.5.4 COPING UP WITH COMPETITION.

1- Use of good technology which is cost effective gives an assurance of quality products hence
business success.

2- Training of high standards is given to manpower to enable easy running of the business and
avoid losing customers.

3- Doing aggressive advertisement and promotion to create awareness as well as to increase sales
volume.

2.6 CONSUMER BEHAVIOUR.

These are attitudes by which customers use to select, secure use and dispose of products and
services to satisfy their needs and wants.

2.6.1 FACTORS THAT BRING CONSUMER BEHAVIOR.

Cultural factors- it’s a determinant of a person buying behavior. It influences considerably the
pattern of consumption and the pattern of decision making. Since culture is not permanent and

9
tends to change gradually with time, such changes are progressively assembled within the society
though they tend to be slow and so it’s easier to operate within given culture.

Personal factor- include age, occupation, lifestyle, wealth, greatly affect the buying behavior
and pattern of customers.
Social factors- Include family, friends and reference groups greatly affects the consumer
behavior. Consumers always tend to seek for confirmation from people around them before
making purchase decision.

Psychological factors- include motivation, perception, learning, beliefs and attitude also
influences the purchase decision.

2.7 MARKETING STRATEGY.

Premise- housing is one of factors considered before starting business. It should be conducive
and accommodative enough for the products and consumers.

Man-power- effects made to sustain customers services, delivery should not be a matter of
exception.

Technology- the need of identifying new and quality products on the market should be frontline
in business operation to reach high standards need of customers also marketing scheme used to
advertise products and services.

2.8 MARKET SHARE.

The business owns 25% of the market share but intent to extent the market share to 50% within
the first operating years.

2.8.1 METHODS OF DETERMINING MARKET SHARE.

Observation- by making wide range of observation, the marketing operational officer needs to
increase the optimum output. Assets own by business should be increased at a constant rate
through increasing sales volume, technology advancing and in return high customers thus
increased profits.

Interview- as general public will be interviewed to understand their views on the business
operation, this will help understand the market share and what to add to get more customers.

10
Questionnaire- the general public will be given questions to answer in form of questionnaires
and the answers given will be used to evaluate the will of customers and the level of competition
from other operations.

2.9 ADVERTISING AND PROMORTION STRATEGY.

My business will create awareness on the commodities and services offered under my business
through publishing adverting notices and even calendars and giving them freely to my potential
customers and the surrounding individuals thus creating awareness on existence of the business
within the area.

2.10 PRICING STRATEGY.

Selling price= buying price + cost of production + value added tax + profit.

SP= BP+ CP + VAT+ PROFIT.

Cost of production= cost of materials + cost of labour + cost incurred

2.10.1 FACTORS CONSIDERED WHEN MAKING PRICING STRATEGY.

Cost of production- it majority depends on the value of the making (rearing of chicken up to
its maturity to be ready for market). Includes the cost incurred like purchasing food for the hens,
vaccination and building their shelter.

Competitor price- if the prices of existing market are too high, thus my business will put
relatively average prices to products which are affordable to increase the sales volume and to
also dominate the market.

Market demand- the cost of goods are priced considerably with market demand. When the
demand is too high my business will take advantage of such e.g. during peak periods and also
during off peak periods through adjusting prices to meet the existing demand.

2.11 SALES STRATEGY.

In order to put more customers in my business, following measures will be taken into account
and laid down.

Personal selling- this will be achieved by delivering products at order to the customers at right
time.

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Discount facility- for the bulky buyers I will ensure that there is discount allowed to motivate
them to buy more. Also regular customers will be entitled to a discount at a certain rate during
peak and off peak periods to maintain customer relation and motivation.

Sales promotion- this will be achieved through offering free products to potential customers to
motivate and maintain them.

Distribution channels- my business will adopt direct selling method to avoid middlemen who
may enjoy the discount facility but put the burden to final consumer. This method will enable the
business to understand the final consumer and even can offer goods n credit in time of
difficulties.

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CHAPTER THREE.
3.0 ORGANISATIONAL PLAN.
Man power- human resource required by my company and working conditions.

MANAGING.

HUMAN RESOURCE.

ACCOUNTANT.

DRIVER.

SECURITY OFFICER.

3.1 MANAGING DIRECTOR.

1. Must have at least a 2-year experience in the same field.
2. Must have good public relation.
3. Must be 25 years and above.
4. Must be computer literate and have good communication skills.
5. Holder of qualified certificate.

Duties

1. Planning- deciding in advance the action to be taken and setting up attainable objectives
and goals.
2. Organizing- this involves work distribution to others since he cannot make it alone.
3. Directing- involves guiding, leading, supervising, motivation to achieve the set targets
and goals.
4. Controlling- checking the progress made toward the desired goals and evaluating the
work progress to ensure the workers are up to target.
5. Decision making- this involves making sound decisions for the smooth flow of the
business.

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OTHER PERS0NELL.

PERSONELL QUALIFICATION DUTIES

Human resource manager - Holder of human resource - informing manager on any
manager (diploma) shortage
- Must be of sound mind - record keeping of employees
- Must be 25 years and - employing the qualified
above personnel in need of new
worker

Accountant - Diploma in accounting - Keeping all financial

- Be 23 years and above records and statements
- Have no any criminal - Crediting employees
records accounts
Driver - 3 year experience in - Delivering products to
driving customers
- Have a valid license
Watchman - 3 year experience - Ensure high standards of
- Have a good behavior security
- Very courageous - Controlling entry and exit
of vehicles and individuals

3.3 RECRUITMENT.
The proposed business will recruit workers by interviewing them each employee so as to get
skilled and qualified personnel to run the business.

3.4 TRAINING.
All employees will undergo training after certain period such that they will be able to increase
the number of customers because it’s a motivating factor for them and also will gain new skills
in the operation.

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3.5 REMUNERATION AND INCENTIVES.
Remuneration- this is the payments made to employees of the work done.

Personnel Monthly salary Annual salary

Production manager 20,000 240,000
Human resource manager 15,000 180,000
Accountant 13,000 144,000
Driver 8,000 96,000
Security officer 5,000 60,000

INCENTIVES.

These are mainly the things that will enable employees work and encourage them do work with a
lot of morale. These incentives aims and purpose is for organizational success.

Includes;

1. Medical allowance- this will be given to cater for their health issues. In my business there
will be no use of extra money for medication because it’s catered for.
2. House allowance- this will be given per the rank of employees in various positions.
3. Overtime payment- those employees who will work past the scheduled time will be paid
their overtime at the end of the month.

3.6 LICENSE PERMIT AND BY LAWS.

Licensing- process of leasing a legally protected entity. My business will acquire certificate of
operation from the local authority which will be renewal annually.

3.7 SURPPORTIVE SERVICES.

Are services offered to public for business to operate without any difficulty?

Include;

1. Insurance- provides business with insurance cover against unforeseen calamities like fire
and theft.
2. Banking- financial institutions will offer soft loans for my business to ensure continuity of
the business smoothly.

15
CHAPTER FOUR.
4.0 OPERATIONAL PLAN.
This is part of the business which helps an enterprise to engage itself in the provision of all
equipment and machinery that are needed to run the business.

4.1 PRODUCTION.
Process by which products are manufactured. Helps in evaluating monthly products supplies to
the business.

4.2 PRODUCTION FACILITIES AND CAPACITY.

ITEM QUANTITY SUPPLIERS COST PER TOTAL
ITEM
DUSTBIN 2 Brilliant super 100 200
PENS 10 Amani bookshop 10 100
IRON SHEETS 20 Ulilinzi 700 14,000
hardware
BRICKS 1500 Owner 10 15,000
NAILS 4KG Ulilinzi 50 200
hardware
CEMENT 5 BAGS Ulilinzi 600 3000
hardware
CHAIRS 4 Ulilinzi 500 2000
hardware
WIRE MESH 20 METRES Ulilinzi 100 2000
hardware
TOTALS 36,500

4.3 PRODUCTION STRATEGY.

This is the designing and developing a mode of production, the products and services to be
offered to customers. In the production, materials are needed to come out with the products or
deliver the production.

ITEMS SUPPLIER AMOUNT UNIT COST TOTAL COST

16
 NEEDED IN KSH.
Chicken max Udwake 2 bags weakly 500 1,000
enterprises
Feeders and Udwake 4 each 150 600
drinkers enterprises
chicks Udwake 200 100 20,000
enterprises
Vaccination and Udwake - 1000 1000
deworming enterprises
Total 22,600

Transportation of materials to the business will be made by the business vehicle. The seller will
deliver other materials as an after sales service.

Total labour cost per month.

staff Number of staff Salary per month

Production manager 1 20,000
Human resource manager 1 15,000
Accountant 1 13,000
Driver 1 8,000
Security officer 1 5,000
Totals 5 61,000

4.4 PRE-LIMINARY COST AND AMOUNT REQUIRED.

Preliminary costs are initial costs incurred by the business such as labour cost, materials cost and
overheads.

Labour cost refers to all benefits employees enjoys like salaries and wages. Its cost will be ksh
61,000 per month.

Materials cost refers to all cost used in acquiring production materials. Its cost will be ksh
22,600.

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Overheads cost- are cost which are not directly related to the production activities and are there
in order to perform task effectively. They include;

OVERHEAD AMOUNT PER MONTH

Electricity 500
Water 2,000
Transport 3,000
Telephone 1,000
Insurance 1,500
License and permit 200
Total 8,200

4.5 TOTAL PRODUCTION COST.

Total production cost= labour cost + material cost + overhead cost.

COST AMOUNT
LABOUR COST 61,000
MATERIAL COST 22,600
OVERHEAD COST 8,200
TOTALS 91,800

4.6 PRODUCTION PROCESS.

They are the processes involved from the initial stage to the final stage.

4.6.1 PRODUCTION STEPS;

1. Purchasing – ordering of the required item from identified supplier before writing a
purchase order.
2. Receiving – delivering of goods by supplier and confirming if the ordering quality and
quantity has been delivered.
3. Storing and issuing – after from receiving from supplier the products are stored until the
time they are required for production.

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4.6.2 FACTORS AFFECTING PRODUCTION PROCESS.
1. Competitors from already existing market in Kibwezi sub-county.
2. Economic instability –unstable economy of the country will affect the smooth running of the
business.
3. Natural calamities like drought may affect the obtaining of raw materials to the business.

4.7 REGULATIONS AFFECTING OPERATION.

These are the government regulations, compliance with and approval that are likely to affect the
business. They include;

Trading license Where obtainable Cost

Health permits Ministry of health 1,000
Business permit Ministry of commerce 1,000

CHAPTER FIVE.
5.0 FINANCIAL PLANNING.
This is the method used by the business to accomplish its goals without losses. This will ensure
that all funds in the company are well and effectively managed to ensure success of the company
and avoid as much as possible all penetration of errors and frauds.

5.1 CAPITAL INVESTMENT.

1. Startup – amount of money needed to start and operate the business.
2. Running capital – amount set aside to maintain cash flow in the business. Also known as
working capital.
3. Financial position – money invested and the liquid cash in the business. It’s the liquidity
position of the business.

5.2 FINANCIAL PERFORMANCE.

This is the subjective measure of how well the business can use assets from it’s primarily mode
of business and generate revenue.

5.3 FINANCIAL STATEMENT.

Is a formal record of financial activities and position of business or other entity.

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They include;

1. Balance sheet.
2. Statement of cash flows.
3. Statement of retained earnings.

5.4 PRE-OPERATIONAL COST.

These are items required to start up and own the business for its success.

ITEMS AMOUNT
License fee 1,000
Transport 3,000
Telephone 1,000
Advertising 8,000
Furniture 7,000
Equipment 50,000
Electricity installation. 5,500
Totals 75,500

5.5 WORKING CAPITAL REQUIREMENTS.

ITEM AMOUNT
CURRENT ASSETS
- Cash in hand 500,000
- Cash at bank 400,000
- Total current assets 900,000
CURRENT LIABILITIES
- Loans 100,000
- Creditors 40,000
- total current liabilities 140,000

Working capital = current assets -current liabilities

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 =900,000 – 140,000

=760,000

5.6 PROFORMA INCOME STATEMENT.

ITEM AMOUNT KSH AMOUNT KSH
Sales 3,000,000
Less purchase 700,000
Gross profit 2,300,000
Less expenses
Salaries 61,000
Water 24,000
transportation 36,000
Electricity 6,000
Creditors 40,000
Loan interest 10% 10,000
insurance 1,500 178,500
Net profit before tax 2,121,500
Tax 16% 339,440
Net profit after tax 1,782,060

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5.7 PROFORMA BALANCE SHEET.
ITEMS AMOUNT KSH
FIXED ASSETS
MATERIALS\BUILDING 200,000
CAR 500,000
LAND 600,000
TOTAL 1,300,000
CURRENT ASSETS
CASH IN HAND 500,000
CASH AT BANK 400,000
TOTAL 900,000
TOTAL ASSETS 2,200,000
LONGTERM LIABILITIES
OWNERS CAPITAL 1,000,000
LOAN 100,000
FRIENDS CONTRIBUTION 50,000
TOTALS 1,150,000
SHORT TERM LIABILITIES
CREDITORS 40,000
TAX 16% 339,440
TOTALS 379,440
TOTAL LIABILITIES 1,529,440

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5.8 BREAK EVEN POINT.
ITEMS AMOUNT
FIXED COST
SALARIES 61,000
LOAN INTREST 10,000
TOTAL 71,000
VARIABLE COST
ELECTRICITY 2,000
WATER 2,000
TRANSPORTATION 3,000
COMMUNICATION 1,000
CREDITORS 40,000
PURCHASE 700,000
TOTAL 748,000

CONTRIBUTION MARGIN.

Margin = total sales - total variables

=3,000,000 - 748,000

=2,252,000

5.9 PROFITABILITY RATIO.

Net profit ratio = net profit after sales/total sales*100%

= 1,782,060/3,000,000*100%

=0.5940*100%

=59.4%

Gross profit ratio = gross profit/ sales*100%

= 2,300,000/3,000,000*100%

= 76.67%

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Return on equity = net profit after tax/ owners’ equity*100%

=1,782,060/2,200,000 *100%

=80.91%

5.10 DESIRED FINANCING.

ITEM AMOUNT
PRE-OPERATIONAL COST 75,500
WORKING CAPITAL 760,000
FIXED ASSET 1,300,000
TOTAL DESIRED FINANCING 2,135,500
5.11 PROPOSED CAPITALIZATION.
This is the amount of capital in the proposed business;

Total investment = 3,350,000

Owner contribution =1,000,000

Borrowed funds = 150,000

5.12 RETURN ON INVESTMENT.

=Net tax + investment/ total investment*100%

= 339,440+ 1,150,000/ 3350,000

= 1,489,440/3,350,000

=0.4446*100%

=44.86%

APPENDIX.
I generated the ideas from;

1. Entrepreneurship lesson.
2. Research and findings.
3. Trade magazines.

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