BUSINESS PLAN FOR

NYAMS ROAD PAVERS AND

CONSTRUCTION ENTERPRISES
PRESENTED BY : NYAMARI ONG'ERA
STEVE
INDEX NUMBER : 515101090
CENTER NAME : MASAI TECHNICAL
TRAINING INSTITUTE
SUPERVISER : MR JOEL NYAMATARI
PRESENTED TO : KENYA NATIONAL
EXAMINATION COUNCIL AS A PARTIALLY
FULFILLMENT OF CRAFT CERTIFICATE IN
BUILDING TECHNOLOGY
FORWARD TO : BUILDING CIVIL
ENGINEERING DEPARTMENT
DATE OF PRESENTATION : NOVEMBER

1
 RATIONALE
Due to new industrial development at Nyamache area entrepreneur desided to locate the
proposed business along the location since there will be a construction of a good road access
into and out of the area.
The area is recognized to be having security hence it will secure the business more than
mogonga where the security is of distance, even the availability of materials is consented. Hope
the proposed business is a successful business to everyone who is in need of learning.

2
 DECLARATION
I declare that this business plan are original and have not been seen by anyone nor supmited to
any institution. All information contained in this business plan is absolute and genuine all of
which low to my effort to survey and make a field research around kisii.

3
 ACKNOWLEDGEMENT
First and for most, I appreciate the assistance given by my teacher in this proposal, Mr Joel
Nyamatari. It would not have been possible without her help and encouragement. Her
professional guidance made it possible for me to walk this academic jojourney.
I wish to extend my gratitude to the co-ordinator school of distance learning, kisii, Mr Nashion
Mangerere who encouraged and kept me on tracks. I also thank my friends who stood with me
through this period. Their understanding and patience cannot be understood, glory be to God
for He has brought me, For the knowledge and opportunity to reach where I have reached.

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Table of Contents
Declaration................................................................................................................................. 2
Acknowledgement..................................................................................................................... 3
Dedication.................................................................................................................................. 4
CHAPTER 0NE........................................................................................................................... 6
EXECUTIVE SUMMARY......................................................................................................... 6
1.1 Business description................................................................................................... 7
1.2 Market plan................................................................................................................... 7
1.3 Organization plan......................................................................................................... 7
1.4 Operational plan........................................................................................................... 7
1.5 Financial plan................................................................................................................ 7
CHAPTER TWO.......................................................................................................................... 7
2.0 BUSINESS DESCRIPTION............................................................................................... 7
2.1 Owner’s background.................................................................................................... 7
2.2 Business name............................................................................................................. 8
2.3 Business location......................................................................................................... 8
2.4 Form of ownership....................................................................................................... 8
2.5 Type of the business.................................................................................................... 9
2.6 Products and services................................................................................................. 9
2.7 Justification of the opportunities.............................................................................. 10
2.8 Industry........................................................................................................................ 10
2.9 Goals and Objectives of the business...................................................................... 10
2.10 Entry strategy............................................................................................................ 10
2.11 Growth strategy........................................................................................................ 11
CHAPTER THREE.................................................................................................................... 11
3.0 MARKETING PLAN......................................................................................................... 11
3.1 Customers....................................................................................................................... 11
3.1.1 The government....................................................................................................... 11
3.1.2 Institutions................................................................................................................ 12
3.2 Market share................................................................................................................... 12
3.3 Competitors.................................................................................................................... 12
3.4 Promotion and advertising............................................................................................ 13
3.5 Production service strategy.......................................................................................... 13
3.6 Pricing strategy.............................................................................................................. 14

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 3.7 Sales tactics.................................................................................................................... 14
CHAPTER FOUR...................................................................................................................... 15
4.0 ORGANIZATION MANAGEMENT PLAN........................................................................ 15
4.1 MANAGEMENT TEAM................................................................................................. 15
4.2 OPERATIONAL CHART.............................................................................................. 16
4.3 RECRUITMENT, TRAINING AND PROMOTION..................................................... 17
4.4 Remuneration and incentives.................................................................................... 17
4.5 Licenses, permits and by-laws.............................................................................. 18
4.6 Business support services........................................................................................ 18
CHAPTER FIVE......................................................................................................................... 20
5.0 OPERATION PLAN..................................................................................................... 20
5.1 Production facilities and capacity............................................................................. 20
5.2 Production strategy.................................................................................................... 20
5.3 Production process.................................................................................................... 20
5.4 Factors affecting production..................................................................................... 21
CHAPTER SIX........................................................................................................................... 23
6.0 FINANCIAL PLAN........................................................................................................... 23
6.1 Pre-operational cost................................................................................................... 23
6.2 Pro-forma balance sheet for the year ending December 2018................................ 23
6.3 Working capital........................................................................................................... 24
6.4 Cash flow projection for the year December 2018................................................... 24
6.5 Pro-forma income statement for the year ending December 2017.......................... 24
6.6 Break even analysis.................................................................................................... 25
6.7 Desired financing........................................................................................................ 26
6.8 Proposed capitalization.............................................................................................. 26
6.9 Profitability ratio......................................................................................................... 26
1.1 BUSINESS DESRCRIPTION
The business name is NYAMS ROAD PAVERS AND CONSTRUCTION ENTERPRISE.
This business is located in Nyanza province, Nyamache district, at nyamache junction which is an
urban area. The business will be of manufacturing industry and services. The
start up capital will be ksh 750 000 and it is a sole proprietor type of ownership. The
entrepreneur will be manager of the business.

The business shall be registered under the manufacturing industry. The main business goal will
be to expand the field and employ youth who are unemployed in the community having skills
and making more profits out of the operating

1.2 MARKETING PLAN

Business customers will include domestic customers, institutional customers like school and
commercial customers like factories and industries. The total market share Wil be 100%of the
total number of customers. The price charged shall be fair and affordable so as to attract and
retain customers. The business competitors will be Kings road pavers and construction
enterprise. The business will use personal email, sign post, audio as a way of promoting and
advertising the business.

The work ship will use qualified personel to market the products and services offered and
recruitment of the personnel shal be done basing on academic excellence, ability to do work
aged between 19 to 50 years of age. The channel of distribution will be directe from
manufacturers to the customers.

1.3 ORGANIZATIONAL AND

MANAGEMENT PLAN
The entrepreneur will be the manager of the business and under him will be 12 employees.
Selection of the staff members for the will be curried basing on the work experience, presentatio
and academic excellence. This will be adivatised through magazines, internet, and public
meetings. promotion of employees will take place after a period of one and a half a year. This
will be done on a professional achievements,academic qualifications and high moral standards
and also work experience. Training of direct workers will take place twice a year tht is march and
September every year. Salaries will range from ksh 8000 to ksh 100 per month. The operation
license and permits shal be obtained from kisii County council office. The business will also have
support survices such as postal and legal services.

1.4 OPERATIONAL /PRODUCTION PLAN

The entrepreneur will have an industrial field which measures from 50m by 100m in which all the
operations by the machines will be curing out. The field will curry 3 machines each one curing
out different operations. The business will have a store for tools and machines that will cost
ksh100 000 for production and services to take place effectively.

The enterprise will ensure preventive maintenance is maintained. The total renumeration for the
employee per month will be ksh 150000. The external factors affecting production includes
economic stability, insecurity, environmental climatic and political instability.

1.5 FINANCIAL PLAN

The entrepreneurs pre-operational cost is ksh750000 The estimated working capital for the first
three year of operation will be ksh 80000 ksh 110000 and ksh 140000. The project cash flow
statement for the first three years balances wi be ksh 70000 ksh 80000 and ksh 90000. The net
proforma income statement gross profit for the first three years will be ksh 220000 ksh 240000
and ksh 260000.

The net profit in the proforma statement will be ksh 80000 ksh 105000 and ksh 125000
respectively for the first four years of operation. The proforma balance sheet net added profit
will be ksh 950000 ksh 10000000 and ksh 120000000 respectively. The break even point for the
first three years will be 30%, 40%, and 50%respectively return on equity for the four years will
be 8%, 15% and 25%.

hapter tow

1.0 BUSINESS DESRCRIPTION

The business will be allocated at nyamache town along nyamache kisii road which is 1km from
nyamache tea factory P. O. Box 144-40200 kisii Email
address: [email protected]
The business is to offer manufacture manufactured products such as curbros of different shapes
and sizes also it overs services such us paving those curbros and construction of calphats.

1.1 BUSINESS
NYAMS ROAD PAVERS AND CONSTRUCTION is the name proposed for the business in wich
NYAMS is the combination of my father's name and the business's location name hence the last
article S now become the fist letter of my sir name. Since the business is new there will be a good
quality of production and services.

1.2 LOCATION AND ADDRESS

The business is located within nyamache town, 200m from nyamache market opposite
Ogeturengi hotel along nyamache igare kisii road.
Emil adress: [email protected] Telephone
no: 0702981103. P. O. Box 20-2100
kisii.

1.3 FORMS AND TYPE OF OWNERSHIP

The proposed business will be a sole proprietorship as it will be owned by an individual. In this
business I own a seat of managing the business where by I sign contracts and make sure that the
manufacture of products needed or the service needed is being done on time.
The business will be started up with the range of ksh 400000 to 750000 that's ksh150000 from
my family's contribution, ksh 300000 from my personal and ksh 120000 from relatives and
friends.

1.4 PRODUCTS AND SERVICES

Products that will be offered in our small industry include: manufacture of curbros,calphats and
services of paving roads. Under paving
services there will be a team of roading products and arranging them on a manufacturing site
and also the expats of paving the products according to the client's preferences.

1.5 JUSTIFICATION AND OPOPPORTUNIT

The proposed business will be a successful business with more opportunities to the community
since the main aim of the business is to employ more youths in the community who are
unemployed and to over services of good quality including the products itself aiming
development of the community Iike other communities. More workers will be required for the
manufacturing process and instoration process including other services like loading sector's.
Since now technology have improved their will be some skilled workers to work on machines in
the industry. Through this the business will have a competitive advantage over potential
competitors since they do not have improved machines for manufacture and installation
services.
1.1 INDUSTRY
The business will fall under manufacturing industry since it is entirely involved manufacturing of
products. The proposed business shall manufacture their own products of quality to be
authorized dealers country wide. Workers in this business will be of skilled towards the project
since recruitment have to be done from the filled of building industry and some from the
community for other services.Due to research and introduction of good technology their will be
a business of successful goals with good quality products and services since thire will be
machines of quality to work towards the products and services.
Apart from the services of the business their is a selected bank for the savety of the business's
profits in which it will faver on any challenges that will come across the business by giving aout
loans which indicates that the business will never fall. For mantainance and growth of the
business the products to be manufactured will be given in time and service given of good quality
concerning the attractive of customers.

1.7 GOALS OF THE BUSINESS

The industry is set archiving the following goals:
1 SHORT TERM GOALS To create
jobs opportunity. To
be of the successful industry in the provision of higher quality.
To be the leading in the improvement of community status.
2 LONG TERM GOALS. Offering
standards and quality products and service in elastic way at affordable price.

1.8 ENTRY AND GROWTH

The business is to be started with the range of ksh400000 to ksh750000 that is ksh 150000 from
my family contributions, ksh 120000 from my relatives and friends and ksh 300000 from my
personal savings that have worked on in 6 years of my work.
The proposed business shall gain entry to the market through advertisement of both electric and
print media e.g television, radio and newspapers suitable for maiking the business growing my
industry and prosper and not limited to sales promotion, recruiting staff, improving services
derivery and output and availing availing a valiety of similar products

Chaptew tow
2.0 MARKETING PLAN
2.1 CUSTOMERS.
Since grouth and expansion in nyamache tow
n are increasing more and more has even led to an increase in population, the business will be
expecting a large number of customers. The business will be targeting the middle age and elderly
people in equal both genders. Due to development growth the products will be of high quality to
satisfy the customers need.
The product will be supplied at a normal cost to make sure that the service reaches everyone in
need off at a reasonable cost. The pachasing power of customers will be high during holy days
and much more in the end of the year that is on Christmas as compared to other Norma seasons
af the year

2.2 MARKETING SIZE AND SHOW

Due to industrial operation around the business location, more than a half of the population
intends to be of working slass and others operates in small business in the area. In which the
business is more focused on. The
business intend to have about 45% of the market share due to a well situated site for the
business premises. The market share is also expected to rise by 50% in 5 years time which leads
to expansion of the business while in 2 years expected to rise up to 20%.

2.3 COMPETITORS
Since the proposed business is not the only business in the town, it is likely have to face average
competition from other minor businesses competitions especially from Madister Road Pavers
and Construction. The competitors are located on a few kilometers from the location of the
proposed business we expect less competition to affect the business.
Better quality products and services are going to be offered in the proposed business compared
to other business around the place according to design shape and size required. Only the
qualified employees are going to be employed as compared to other competitors to ensure a
good quality services and products is given or produced that is morden shapes, size, design are
to be provided to snatch most of the customers and retain then by giving discount according to
the amount of products and service they will need.

2.4 METHODS OF ADVERTISING AND

PROMOTION
Through the following mode of advertisement all information about the business will reach each
and everyone in the area targeted
Through poster which is a most effective mode of advisement.
Throu audiovisual means ( radio and television)
Through a signboard which will be place near the road and also displaying the goods and services
on utube, Facebook, Twitter, and also ticktok to ensure that the information reaches to all
targeted people quickly.

2.5 PRICING STRATEGY

The selling price will be calculated after analyzing the expenses taxes and any other legal
charges. The following factor will be considered.
1. Buying price for each product
2. The price of competitors
3. Direct cost for assets and other goods
4. Marketing price for the competitors

The business will determine the total cost of material cost, ransport and the price at which the
competitors will be selling the products.
The proposed business will not be offering credit services but it will be giving purchased will
expect 35% profit per year. The selling price is veritable because if charges according to quantity
and quality of products.

2.6 SALE TACTICS The business will sell its products directly to customers
and that's why the business will be located in a strategic place where the customers will get each
access to the business and all samples will be offered for decision making of customers thus
making them to refer to other customers to come to the business or to come back again. And
also the business will make sure that the employees are promoted according to their
achievements and capabilities on their respective sectors

2.7 DISTRIBUTION STRATEGY

The proposed business is located on a big and improved town that's nyamache town with many
people surrounding. The business distribute the goods and services directly to the manufactures
since the goods are being manufactured ere ladily available at any time, it is clear and
transparency business.
The business will be expanded by starting small branches in the local areas in which the stock will
be distributed there for easy reachable of customers. Due to traffic jams and other various
reasons in transporting of goods, the goods will be free delivery to customers.

CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT
2.1 BUSINESS MANAGER AND
QUALIFICATIONS
The proposed business shall have the following organization and management body to run the business:

TITL Nam QUALIFICATION DUTIES

E e S
MANAGER Nyamari O Undertake a course in building  Supervising the
 Steve technology business
 Providing finance
 Seting the prices
of goods and
services to be
allocated
 Paying the
employee
 Taking contracts

ASISTANT Joshua Osea Undertake a course in building  Adivertisimeng

MANAGER technology  Ensuring good
public
relationship
between the
employees and
the curstomers
 Managing the
business in
absence of the
maneger
 Finding market
for the products
produced.

FORMAN Jared Oichoe Undergone any level in building  unsurering the

technology product to be of
good quality
 Asigning duties to
workers.

TECHNICIA Raphael Undergone electrical course  Ensuring supply of

N Machaka electricity in the
industry.

ENGINEERS Jofley Aosa Undergone plumbing course  Ensures supply of

water to the site.

3.2 RICRUITMENT TRAINING AND

PROMOTION
Through advertisement the vacancies will be advised and even posted in form of stickers along
the streets within the proposed business for easy access. Also there will be alink in which those
who need to be apply through online site will access where there will be an indication of
interview date.
Each and everyone will be allocated according to their qualifications of work and even shown
their responsibilities in the field of work. The company will reward the qualified workers by
increment of their salaries.

3.3 REMUNERATION AND INCENTIVES

The business will be operating through the week except surtaday and payment is done monthly.
The company has manegment in which when the income is high, the employee will have bonus
and outings to make them motiveted and work hard to uplift the business hence better
performance.

3.3.1 TABLE OF SALARY DATA

MAME SALARY ALLOWANCE TOTAL

SALARY
(KSH).
MANAGER

ASISTANT
MANAGER
FORMAN

TECHNICIAN

DRIVER

WATCHMAN

WORKERS

TOTAL
REMUNERATION

3.4 LICENSE PERMIT AND BY LAWS

Acording to the county council, in order to start a business the business have to acquire a trade
license in which it will be acquired by the business any time. This intends the total cost of ksh
2500 per year. The business will also aquire the business permit from the same office costing ksh
150 per trip, once the capacity made a supply. The business will lie with the government
authority in acordence of lows as per required.

3.5 SUPPORT SERVICES

 SECURITY

The business will lie with the police nearby to secure the business by offering sufficient security
for the business in case any attack.
 ELECTRICITY

The business will be operating in a good and organized electrical supply to ensure the running of
machines.
 LINCENSE

The business will aquire license from the municipal council and payments will be made annually
at all the time. while in a required laws and regulations set by the government to run the
business.
 BANKING SERVICES

The business will lie with co-operative bank in which the profits are to be deposited and the
earnings according to the owners preferences.
 INSURANCE SERVICES

The business will be save by insuring against theft, fire and breakages including the employees
who will be issued with insurance cover each of them against injuries in the field.

CHAPTER FOUR
4.0 ORGANIZATION MANAGEMENT PLAN
4.1 MANAGEMENT TEAM
4.1.1 Contractor
The business being a construction firm, the person in charge will be the contractor. In this
case, the contractor is the owner of the company and who is me. On the same note the
contractor will specialize in Civil Engineering in order to carry their duties accordingly. The
company will not be having a post surveyor in order to cut off expenses. Surveyor work will
be carried out by the contractor by the fact that he is a specialist in that field.
4.1.2 Secretary
The business will have a secretary whose work will be to keep employees record as
well as reception roles. The secretary will also be in charge of finance and payment, all
carried out from his/her office. The secretary roles will be therefore that of secretarial
and accountancy. The minimum qualification will be certificate holder in accountants.
4.1.3 Site foreman
Site foreman will be in-charge of the actual construction. He will be directing plant operators
as they carry out their work. It will be his mandate to ensure that earth works and levelling
are done appropriately. His qualification consideration will be based on experience gained
and a minimum of a diploma in civil and building engineering certificate.
4.1.4 Plants operator
Plants operators will be in charge of plants. The company shall possess various
construction plants such as grinders, track shovels among other machineries. Plants
operators will thus be required to highly skilled. Their qualification will be a holder of
certificate from an institute in-charge of construction plants
4.1.5 Operators
Operators will involve employees who are semi-skilled and casual laborers. Roles
played by these employees will be spreading of converts during stabilization. Chain-
men will be in this category. Qualification will not be taken into consideration by the fact
that no skills are needed for them.

Personnel, number, duties, qualification and experience summary table.

PERSONNEL QUALIFICATION ROLES/DUTIES EXPERIENCE
1. Contractor Bachelor degree Overall in-charge Three year

15
 holder in Civil of the company work
Engineering Carrying out experience in
survey work related firm
2. Secretary Diploma holder Maintain Two year
in accountants/ employees record work
secretarial Secretarial and experience
management or accountancy
any other work
relevant
qualification
3. Foreman Diploma holder In-charge of field Two year
in civil and construction experience in
building Directing plants similar field
engineering operator in field
operations
4. Plant Certificate or In-charge of One year
operators plant operation plants experience
license
5. Operators N/A Spreading of N/A
concrete during
stabilization

16
4.2 OPERATIONAL CHART
CONTRACTORS

SECRETARY

FOREMAN

PLANT OPERATORS

OPERATORS

17
RECRUITMENT, TRAINING AND PROMOTION.

4.3.1 Recruitment of workers

Recruitment of workers will be based on the best candidates from all applicants and
also based on the number of personnel required. Academic qualification will take 50%
of total mark to be awarded, experience will make 30% and the 20% will be based on
the candidate’s presentation during the interview.
4.3.2 Training
Training is a vital aspect to all employees from every firm. Once individuals have been
selected for a job especially the technical one, he will be entitled to a three months
orientation where he will familiarized with the construction plants and machineries, to
operations and the safety measures policies
4.3.3 Promotions
Promotion in the firm will be carried out as per the employee’s qualification or their
performance. Promotion based on performance will be a mode of motivating the
employees whereby as a result of that they will carry out their roles effectively.
There will also be creative contest among the employees, where the employees with the
best creative project will be financed to make them viable. There will also be recess
periods at least once a year to enable the employees interact with their family members.

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4.4 Remuneration and incentives

4.4.1 Remuneration
All employees will be paid on monthly basis whereby permanent employees will be paid
through their banks accounts while casual laborers will be paid in cash from the
secretarial offices. Permanent employees will also be entitled to pension on retirement
while casual workers will be awarded a gratuity on accomplishment of the contract.
Table showing salaries and allowances for each personnel
PERSONNEL SALARY PER ALLOWANCES TOTAL (Ksh)
MONTH (Ksh) PER MONTH
Contractor 70,0000 8,000 78,000
Secretary 20,000 7,500 27,500
Foreman 30,000 7,500 37,500
Plant operators 25,000 5,000 30,000
Operators 12,000 2,000 14,000
Total 157,000 30,000 187,000

4.4.2 Incentives
As far as incentives are concerned, permanent employees will be entitled to allowances.
On the same note, all employees will be issued with overtime payment whenever
normal working hours are exceeded.

4.5 Licenses, permits and by-laws.

4.5.1 Licenses
Government licenses, health licenses and tax licenses will be acquired since they approve
eligibility for carrying out work. Trading licenses will permit the company to the trade market
while health licenses shows that the company has no harm to the community and
environment. Government licenses shows that the company is operating legally.
Estimated cost for the licenses is about one hundred thousand Kenya shilling. (Ksh 100,000)

4.5.2 Permits
These are business permit which allows the company to venture into the business
market. They are issued by the county ministry of works. Estimated cost is Kenya
shilling seventy thousands. (Ksh 70,000)
4.5.3 By-laws
These are laws which will be used to govern the company such as no worker should be
late to work or no worker should leave the working premises before time. Workers
should also be in their safety clothing during the working hours.

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4.6 Business support services
The business shall have these services in order to curb any unseen inconveniences.
They shall include;
4.6.1 Bank account and partner
The bank will be financing the company and holding a company account with the bank.
The bank will be;
STANDARD CHARTED BANK,
P.O BOX 789-92000,
NAIROBI
4.6.2 Insurance
It shall provide insurance cover to the company assets and machinery, insurance cover
for the employees in case of accidents during the work.
The insurer shall be;
KENEDIA INSURANCE,
P.O BOX 120-90100,
MACHAKOS.

4.6.3 Lawyer
Services provided by the company lawyer shall include protecting and fighting for the
rights of the company, the service provider shall be;
KENYA LAW FIRM.
P.O BOX 36-9000,
KISUMU.

20
 CHAPTER FIVE
5.1 OPERATION PLAN
5.1 Production facilities and capacity
The business being a construction firm will be having machineries required for construction.
Such machines will include graders, truck shovels among others. On the same note the
company shall have various branches in order to be competitive in the market.
Plant Number Capacity Make Hiring cost Use
1. Grade 1 7 tones Japan 500,000 Cutting levels
2. Truck shovel 1 7 tones Japan 500,000 Clearing
3. Roller 1 20 tones Japan 500,000 Compacting

5.2 Production strategy

Before commencement of the actual construction, the manager will be ensuring that all
legal formalities are ascertained. Towards the kick off, of the project, reconnaissance
will be conducted in order to familiarize with the site.
Secondary assembly of machineries and equipment at area of work will be done on
time. Raw materials to be used will be; cement, ballast, sand, tar, bitumen, large stones,
medium stones and water.
Sources of raw materials.
Cement will be obtained from Simba Cement Company while other materials such as sand,
water, stones will be purchased from the local residents near the construction site.
5.3 Production process
All workers will be reporting to at thirty minutes past seven every morning. They shall
then begin their duties as from eight. The flow of work will be as follow:
During the earth work the first thing will be the establishment of bench mark, followed by
establishment of Centre line. Then cut fill process shall be carried out by use of construction
plant. During stabilization, the first thing shall be levelling followed by milling process. Water
will be poured on the area being worked on. It will serve the role of regulating soil plasticity
index. Finally levelling and compaction will be done. On the other hand, during layment of
Alcified Concrete (AC) the following process will take place;
All machines to be used will be taken to the field and ensured that they are lubricated.
The height and width of AC layment will be taken into consideration.

21
Production process chart
Survey work

Levelling

Milling process

Watering

Compaction

5.4 Factors affecting production

Regulations to affect operations are only from local authority. They include; failure to license
and permit number of operations to take place. On the same note, it is costly to keep
renewing document whenever the specified period elapses. The business will have to be
issued with license from the ministry of roads in order to carry its project legally.
5.4.1 Health regulation.
The company will insure its workers with a health insurance firm for their compensation
in case of an accident in course of the work. This insurance firm will be able to cater for
any hospital bill henceforth coming. A nurse will be employed by the company for giving
first aids to workers in case of minor injuries or illness in the working process.
5.4.2 Safety necessary measures
The company will give every worker on site safety clothes such as overall, safety boots,
helmets, googles and shoes for their safety during the working process on site. Those
found without those safety garments will be penalized or even lose their job.
5.4.3 Environmental regulations
The company shall have a permit from National Environmental Management Authority,
(NEMA). This will allow the company to carry out construction services. It is a must for
the company to acquire licenses and permits before commencing operation.

22
Document Source
License Obtained from the Ksh 100,000.
ministry of land.

Permit NEMA Ksh 70,000

23
 CHAPTER SIX
6.0 FINANCIAL PLAN
6.1 Pre-operational cost
Item Cost (Ksh)
Building 500,000
Machines and equipment 1,000,000
Business license 100,000
Insurance 350,000
Furniture 85,000
200,000
Total 1,800,000

24
6.2 Pro-forma balance sheet for the year ending December 2018
Fixed asset Amount (Ksh)
Machinery and equipment 340,700
Furniture 40,000
Building 47,100
Less depreciation 57,000

Total fixed asset 370,800

Current assets
Cash at hand 150,000
Cash at bank 250,000
Debtors 100,000
Stock of raw materials 850,000

Total current asset 1,350,000

Liabilities
Current liabilities
Creditors 50, 000

Total current liabilities 50,000

Long term liabilities
Bank loan 900,000
Owner 751,700

Total liabilities and Equity 1,820,000

6.3 Working capital

Current assets - current liabilities =
1,350,000 – 50,000 =1,300,000
 6.4 Cash flow projection for the year December 2013-2015

items 1st year 2013 2nd year 2014 3rd year 2015
Sales 7000 890 10000990 15000000
Cost of sales 3000043 6874992 4010735
Gross profit 4000847 3125998 10989265
Salary and wages 500000 600000 630000
Water 100000 100000 100000
Electricity 360000 360000 360000
Insurance 240000 240000 240000
Communication 84000 84000 84000
Repair and maintenance 228000 228000 228000
Transport 324000 200000 300000
Stationery 18000 180000 180000
Total overhead expenses 1516000 1392000 1492000

Net profit 2484847 1733998 9497265

6.5 Pro-forma income statement for the year ending December 2015.
ITEM AMOUNT (KSH)
Sales (work output) 11,075,000
Expenses
Purchases 900,000
Stationery 150,000
Rent 36,000
Advertising 20,000
Wages and Salaries 1,150,000
Electricity 50,000
Insurance 10,000
Maintenance 70,000
Net profit before tax provision at 10% 8,689,000

Net profit after paying tax 7,820,100

6.6 Break even analysis
VARIABLE AMOUNT (KSH) FIXED AMOUNT (KSH)
COST(YEAR 1) COST(YEAR 1)
Repair and 50,000 Rent 36,000
maintenance Insurance 200,000
Advertising 300,000 Licenses 10,000
Stationery 30,000 Salaries 1,850,000
Purchases 1,500,000
Electricity 150,000
Tax 300,000
Telephone 45,000
TOTAL 2,375,000 TOTAL 2,096,000

FIRST YEAR
Contribution margin = Sales – Total variables costs.
11,075,000 – 2,375,000 =8,700,000.
Contribution margin percentage;
Contribution margin percentage = Contribution margin
× 100 Sales
8,700,000 × 100 = 78.56%

11,075,000

Total fixed cost = Ksh 2, 096,000.

Break-even point = fixed cost______________

Contribution margin percentage.

2,096,000 = Ksh 26, 680.24

78.56
6.7 Desired financing.
Sources of fund Amount Loan security Terms of Payment
payment schedules
Personal saving 500,000 N/A N/A N/A
Relatives and 300,000 N/A N/A N/A
friends
KCB bank 500,000 Land Monthly for 10 Interest, 20% P.a
years
Rafiki micro- 200,000 Plot Monthly for 6 Interest, 15% P.a
finance bank years
Post bank 300,000 Plot Monthly for 5 Interest, 5% P.a
years
6.8 Proposed capitalization
SOURCES AMOUNT PERCENTAGE (%)
Owner’s contribution 500,000 27.78%
Loans (Banks) 1,000,000 55.56%
Relatives 220,000 12.22%
Friends 80,000 4.44%

TOTAL CAPITAL 1,800,000 100%

6.9 Profitability ratio.
Gross profit ratio = Gross profit
Sales

12,765,000 = 115.25%
11,075,000

Work profit ratio =N.P ×100%

Sales
7,820,100× 100 = 70.6%
11,075,000

Return on equity = 7,820,100.