BUSINESS NAME: LILIAN PHOTOGRAPHY STUDIO AND CREATION

BUSINESS ADDRESS: P.O BOX 447-30100

ELDORET.

TEL NO:
Email: [email protected]

TITLE : BUSSINESS PLAN.

PRESENTED BY : LILIAN ADHIAMBO

INSTITUTE NAME: EAST AFRICA INSTITUTE OF CERTIFIED STUDIES

PRESENTED TO : INSTITUTE OF COMMERCIAL MANAGEMENT FOR

AWARD OF CERTIFICATE IN JOURNALISM

SUPERVISOR : JUSTUS DINGILI

EXAM SERIES : DECEMBER 2021.

 DECLARATION
I LILIAN ADHIAMBO declare that this business plan is my original work and it has never
been presented before the Kenya National Examination Counsel {KNEC} or any other
examination body.

NAME : LILIAN ADHIAMBO

SIGNATURE:

DATE :

The business plan has been submitted to the Kenya national examination council by approval
of my supervisor

NAME : JUSTUS DINGILI

SIGNATURE:

DATE :

i
 DEDICATION
I dedicate this business plan to my parents and the whole family at large for the support they
have offered in this business plan.

ii
 ACKNOWLEDGEMENT
I acknowledge my Father for the financial and moral also my brother, uncle and friends for
their idea support and guidance throughout the business plan

iii
 Table of Contents
DECLARATION........................................................................................................................................i
DEDICATION..........................................................................................................................................ii
ACKNOWLEDGEMENT..........................................................................................................................iii
EXECUTIVE SURMARY.........................................................................................................................viii
BUSINESS DESCRIPTION......................................................................................................................viii
CHAPTER ONE.......................................................................................................................................1
1.0: BUSINESS DESCRIPTION.............................................................................................................1
1.1: BUSINESS NAME.........................................................................................................................1
BACKGROUND OF THE OWNER.........................................................................................................1
NATURE OF THE BUSINESS................................................................................................................2
BUSINESS LOCATION AND ADDRESSS...............................................................................................2
FORMS OF OWNERSHIP....................................................................................................................2
TYPE OF BUSSINES.............................................................................................................................3
PRODUCTS AND SERVICES.................................................................................................................3
JUSTIFICATION OF THE OPPORTUNITY..............................................................................................3
THE INDUSTRY...................................................................................................................................3
ENTRY AND GROWTH STRATEGY......................................................................................................4
CHAPTER TWO......................................................................................................................................5
MARKET PLAN...................................................................................................................................5
CUSTOMER IDENTIFICATION.............................................................................................................5
Individual customers.....................................................................................................................5
Institutional customer...................................................................................................................6
MARKET SHARE AND DETERMINATION............................................................................................6
COMPETITOR ANALYSIS....................................................................................................................7
Onchangwa studios.......................................................................................................................7
KODAK STUDIO..............................................................................................................................7
BARAKA PHOTOGRAPHY...............................................................................................................8
STRENGTHS...................................................................................................................................8
WEAKNESSES.................................................................................................................................8

iv
 CAPITALIZING ON COMPETITORS WEAKNESSES...............................................................................9
PROMOTION AND ADVERTISING METHOD.......................................................................................9
Business journals.........................................................................................................................10
Radios..........................................................................................................................................10
Poster and flyers.........................................................................................................................10
Social sites and media.................................................................................................................10
Giving free samples and gifts......................................................................................................10
Trade fares and exhibitions.........................................................................................................10
Attractive packaging....................................................................................................................11
Use of sales personnel................................................................................................................11
PRICING STRATEGY..........................................................................................................................11
Psychological pricing...................................................................................................................11
Maximum price scheming...........................................................................................................11
Giving offers................................................................................................................................11
SETTING SALES TARGET CAPITAL.....................................................................................................11
SALES TACTICS.................................................................................................................................12
DISTRIBUTION STRATEGY................................................................................................................12
DISTRIBUTION CHANNEL.................................................................................................................12
CHAPTER THREE..................................................................................................................................14
ORGANIZATION AND MANAGEMENT PLAN....................................................................................14
ORGANISATION...............................................................................................................................14
BUSINESS MANAGER...................................................................................................................14
Photographer..................................................................................................................................15
Duties..........................................................................................................................................15
Videographer..................................................................................................................................15
Duties:.........................................................................................................................................15
Editor..............................................................................................................................................15
Duties..........................................................................................................................................16
Professional and advisory support..................................................................................................16
RENUMIRATION AND INCENTIVES..................................................................................................16
LICENCE PERMIT..............................................................................................................................17

v
 SUPPORT SERVICE...........................................................................................................................17
Banking services..........................................................................................................................17
Postage and communication.......................................................................................................18
Insurance services.......................................................................................................................18
CHAPTER FOUR...................................................................................................................................19
OPERATIONAL AND PRODUCTION PLAN.........................................................................................19
PRODUCTION DESIGN AND DEVELOPMENT................................................................................19
PRODUCTION FACILITIES AND CAPACITY....................................................................................19
PROPOSED GROUND FOR THE BUSINESS PREMISES.......................................................................19
PRODUCTION STRATEGY.................................................................................................................20
MONTHLY LABOUR REQUIREMENTS...........................................................................................21
COST OF PRODUCTION................................................................................................................21
PRODUCTION PROCESS...................................................................................................................21
Internal factors............................................................................................................................23
Solutions to these factors............................................................................................................23
GOVERNMENT REGULATIONS.........................................................................................................23
Health regulations.......................................................................................................................23
TRADE LICENSE............................................................................................................................23
INSURANCE.................................................................................................................................24
CHAPTER FIVE.....................................................................................................................................24
FINANCIAL PLAN..............................................................................................................................24
PRE-OCCUPATIONAL COST..............................................................................................................24
WORKING CAPITAL REQUIREMENTS...............................................................................................25
CASH FLOW SATEMENT...................................................................................................................26
5.4: PRO-FORMA INCOME STATEMENT..........................................................................................32
PROFORMA BALANCE SHEET...........................................................................................................33
BREAKEVEN ANALYSIS CHART.........................................................................................................33
EXPECTED PROFITABILTY RATIO......................................................................................................34
ESTIMATED WORKING CAPITAL......................................................................................................35
DISIRED FINANCING........................................................................................................................35
PROPOSED CAPITALIZATION.......................................................................................................36

vi
APPENDICES........................................................................................................................................37
APPENDIX I: BUSINESS LOCATION..................................................................................................37

vii
 EXECUTIVE SURMARY

BUSINESS DESCRIPTION
The business is a sole proprietorship kind of business. The potential customers of the
business will be from the local community and foreigners. The qualified personnel who are
working will ensure that the customers meet their expectations and services and be satisfied.
The opportunity of the business is justified by availability of good roads and competition
from various firms. There is also competitive marketing to improve the standard of the
business and create job opportunities and profit making. The entry strategy of the business is
to provide a lower price on the products so as to expand and meet the competition among the
surrounding firms.
MARKETING PLAN
This is a plan the business has targeted in order to make profits and achieve what they are
participating. Customers will be residents of various classes of economic institutions. The
customers include: those living around, in and outside Eldoret in general. The business will
be diversified after being financially stable.
ORGANIZATIONAL AND MANAGEMENT
The business will employ a number of staff including the manager who will be the overall
controller of the business; hence he will be managing all the business activities. The work of
the manager will be managing the resources and recruitment of new personnel. There will be
training of the existing and new personnel to equip them with the sufficient knowledge and
skills on the modern system of technology advanced on media.
FINANCIAL PLAN
This is part of the business plan that reflects the financial position of the business. It
comprises of balance sheet, income statement and business performance action.

viii
 CHAPTER ONE

1.0: BUSINESS DESCRIPTION

1.1: BUSINESS NAME

The business name will be LILIAN PHOTOGRAPHY STUDIO AND CREATION. The

name fits the business well since we will offer services such as birthday shoots, wedding

photographs, Baby Showers, Videography for weddings and music video for artists and also

product photography and videography. And will be located in Eldoret, pioneer Estate near

CMC MOTORS on Eldoret Kisumu Highway where lots of people will have access to it

and also purchase what they all want.

LILIAN
PHOTOGR
APHY
STUDIO
AND
CREATION
BACKGROUND OF THE OWNER
The entrepreneurs name is LILIAN Adhiambo she is 20 years old born in Bondo, Kisumu
P.O BOX 447-
County. She is currently in Eldoret town. She is a student of East Africa institute of certified
30100
studies, Taking a Certificate in journalism .She joined the college the year 2021 January so
ELDORET.
as to increase her skill on Journalism.
TELL:
She acquired some of her skills from her parents.

1
NATURE OF THE BUSINESS
The proposed business will be opened in the year 2021 after full settlement of all required
recourses to start a business.
Major activity of proposed business is offering discount creating employment to youths and
also making people attractive and presentable.

BUSINESS LOCATION AND ADDRESSS

The entrepreneur decided to locate the business in the urban since there are lots of customers
willing to buy and the environment is also favorable
The entrepreneurs choose this place since transport and communication network are
favorable.
Transportation of goods will easier and quick
LILIAN ADHIAMBO
P.O BOX 447
ELDORET.
TEL NO:

FORMS OF OWNERSHIP
The form of this business is sole proprietorship; this is because the entrepreneur will have to
be responsible for all that happens in the business.

The entrepreneur will contribute half the amount to start up the business while the rest of the
capital will be contribution from the business and the loan from a bank.

CONTRIBUTOR AMOUNT PERCENTAGE%

Savings 400000 50%

Family members 200000 15%

friends 100000 10%

Financial institution 250000 25%

2
TYPE OF BUSSINES
The type of business will be under media, trade, and business industry. The business is

also in its startup stage and is aiming at reaching all potential customers. Birthday shoots,

wedding photographs, Baby Showers, Videography for weddings and music video for artists and

also product photography and videography.

PRODUCTS AND SERVICES

The proposed business aims at being unique amongst its competitors and due to this it will be
purchasing high quality products imported from outside countries well known to produce
high quality services.

Also so as to reach a bigger and a larger number of customers. There will be online
advertisement of services offered in the proposed business.

JUSTIFICATION OF THE OPPORTUNITY

The business is located in the central business center where maximum security of the
business, customers and workers is looked upon. So as to be fair and bring equality different
products which include those locally produced will be available.

Creation of employment to the youths will be among the goals set by the business and also
utilization of all available resources so that the community will be included in the business.
Continuous provision of goods will be available so as to cater for all the potential customers
in the market.

The economy of the area will increase because of high sales of, improves standard of living,
job opportunities in the business which will in turn reduce the rate of crimes and good health
from products.

THE INDUSTRY
The business will be a service industry to cater for all the needs of the customers. There will
be also increase of the business as time goes due to the ongoing development and growth of

3
the area. The number of employees will be according to the size and growth of the business
in particular.

There is stiff competition from other businesses around it but due to the formulated strategies
and plans it will be easy to curb the competition.

This incoming trend is applied in the businesses going hand in hand with the modern
technology electronic gadgets are being modified in the smallest manner where everything is
changing analogue to digital world. This modern technology has to go hand in hand with the
amount of capital to be invested.

ENTRY AND GROWTH STRATEGY

The market team management and finances will be ensured that they alliance and work
together so as to ensure that marketing teams have made customers fully aware of the
business products

The finance department has to make sure that maximum utilization of funds is enhanced. The
business manager will introduce tender and quotations as a channel of acquiring accessories
or even the customer who will demand bulky good will use quotation as way of acquiring
goods

The business promotions will be done so as to create customers in which customers will
enjoy cash discounts offered; this will ensure that the sales level has gone higher. The
marketing team management and finances will be assured, lease and work together so as to
ensure that marketing teams must make customers to be aware of the business products
finance resources department has to make sure that maximum utilization of funds as
enhanced.

Business promotion will be done so as to crate customer s will enjoy the cash discount
quantity and the size product that they have purchased however this ensure the sales will go
high. There are customers who will not come to buy goods regularly to pass by from the
windows display. The business regards them as temporary customers where their mode of
pay is cash and they occupy 15% of the sales.

4
 CHAPTER TWO

MARKET PLAN
The business will be located in a suitable and strategic location where individuals,
companies and all other potential customers in the business will have access easily.

The environment where the business will be located has different classes of people who will

contribute positively to the development and growth of the business.

They include: -

(i) University and college students

(ii) Families

(iii) Professionals

(iv) Companies which need advertisement

The business location is in a densely populated area surrounded by offices, banks, schools and hotels.

The population of the town is estimated to be about 300,000 people with potential customers of about

1,000,000 in a month.

CUSTOMER IDENTIFICATION
Near the proposed business there will be other firms such as companies and learning
institutions. These institutions will be the major target for student and workers institutions
will have the opportunities to purchase because the business is located nearer and prices are
affordable.

The business will also target all other customers without despising their desire to purchase
goods they want

Individual customers
Individual customers will be reached through adverts and sales personnel who will approach
them in person. The main role of these sales personnel is to create awareness among
individual customers of individual customers about the existence what the business is

5
offering in terms of products and services. The business intends to cater for the need of
individual customers in term of efficiency and satisfaction in order to increase the business
cliental bases.

Institutional customer
These are customers whose membership is known under common group institutional or
corporate societies. The proposed business will target institutional customers such as
schools, hospitals university Sacco’s and industries. This institutional customers targeted
shall be those who use specified dressing attires including work hours. The business shall
also establish a competent team of aggressive and customer oriented personnel who will
stimulate demand for services some of these institutional customers the business will target
include university, secondary and primary schools around the county.

MARKET SHARE AND DETERMINATION

The number of potential customer expected will be about 1500 in the county the business
will be target about 35%of the market share.

Market share =targeted market * 100

Total population

The market share will be confirmed after a period of about 12(twelve months) after the
business has started and brand its services since its main aim is at offering high and greater
quality services.

Around the business there are three competitors operating the same business these are;
onchangwa studios, Kodak studio, Baraka photography.

The service will depend on how the business is going to relate with its customers and
business around it which will include promotions and given discounts so as to reduce
competitions.

6
 Sales
45%

40%

35%

30%

25% Sales

20% 40% 38%

15%

10% 22%

5%

0%
Kodak Onchangwa Baraka

COMPETITOR ANALYSIS
There are quite a number of competitors but the major competitor is onchangwa studios,
Kodak studio, and Baraka photography

Onchangwa studios
P.O. BOX 54
Eldoret
It is located 500 meter away from the business along Haile Salasie Street. They offer services
like photo-shoots. However they don’t offer services such as repairing of any media
equipments errors thus making it a weak point and it is located in an area hard to find.

KODAK STUDIO
P.O. BOX 89
Eldoret

7
It is situated in Ulinzi Street, 1km away from the proposed business. They offer services like selling
cameras and try to repair where they can but I incase it is difficult they ship it to the capital
for repair. This is because they lack some of the spares to fix some difficult problems there
workers are not mostly exposed to the field.

BARAKA PHOTOGRAPHY
P.O. BOX 401
ELDORET.
It is located along moi street 1.5 km from the proposed business. They offer services like
selling some media related equipments don’t repair that much but are mostly known around
the area because of their services and how they have been in the market. But the services are
somehow fair according to how they serve due to lack of proper equipments and machine and
spare parts.

STRENGTHS
i. They are already known by their customers; therefore the proposed business will have
to advertise extensively for people to know of its existence.
ii. They have established a market since they stared long time ago, therefore the
proposed business will have to offer best services to attract many clients and establish
itself in a proper way.
iii. Good advertising methods to convince customers
iv. Has a good public image.
v. Have many years of experience.

WEAKNESSES
 Charges high prices therefore, not everyone can afford.
 Averagely good products and services.
 The building is small in size.
 Customers do not easily locate where it is situated
 Operates from 8.30 am to 5.00 pm.

8
  Does not operate on weekends and public holidays.

CAPITALIZING ON COMPETITORS WEAKNESSES

 The business will employ professional employees who will be able to offer services
without any unnecessary delays.
 There will be variety of products and services that will give the customers freedom to
choose what they want
 There would be an online website where one can order and be reached at their door
step and they can call if incase of repair we will fix at home level.
 The business will retain its customers by ensuring best quality services are offered.
 The business as it grows will start offering learning facilities to those who can’t go
further with their studies but have passion in MEDIA.

PROMOTION AND ADVERTISING METHOD

The business due to high competition will come up with various methods of advertising the
products and services to their customers so as to create growth of the business and increase
number of sales
The business has engaged in the modern technology and it will use it in advertising its
product and services and social media.
Bill boards, magazine newspaper and sales men are some of the method to be used in
advertising products and services of the proposed business so as to reach a wider market.

Advertising shall be done continuously by a competent team of aggressive marketers. In

addition exhibition should be carried out in order to remind the customers of the existence of
products and services in the proposed business in both electronic and printed forms.

The advert shall be carried out in both formal languages and vernacular to ensure that it
reaches a wider number of clients. Regular promotional campaigns will be carried out
through road shows and trade exhibitions to remind customers of existing products in the
market.

9
Business journals
The entrepreneur shall advertise the business in a number of leading business journals in the
country eg daily business journal and biashara journal.

Radios
The entrepreneur shall advertise the business in a number of radio station which are popular
in the county both Kiswahili and vernacular. This will help in reaching a wider market and
create awareness of proposed business

Poster and flyers

The entrepreneur shall print attractive and well-designed posters and flyers. The posters will
be strategically positioned in areas such as junctions, schools and shopping Centre to target
the passers by.
Flyers will also be distributed by a competent team of aggressive sales personnel who will
move from place to place targeting large number of customers.

Social sites and media

The entrepreneur will launch a number of social media platforms which include Facebook,
Integra olx where products and services shall be captured with an aim of targeting large
number of online customers.

Attractive pictures shall be captured and posted in the social media sites showing all the
products and services offered in the business.

Giving free samples and gifts

The entrepreneur shall give out a number of free samples of the products with an intention of
reaching potential buyers. This will have a greater effect of creating customers in the market.

Trade fares and exhibitions

The entrepreneur will attend a number of trade fares and exhibitions held where the products
and services will be attractively displayed and attracted to customers.

The entrepreneur shall utilize the opportunity to explain all about the products features to the
customers who will attend the trade farers.

10
Attractive packaging
Packaging of products in well designed and attractive packages with an aim of appealing to
the customers.

Use of sales personnel

The proposed business shall employ competent and aggressive personnel. They will all be
concerned in reaching for customers and also finding market for the services.

PRICING STRATEGY
Prices will be arrived at after considering cost of raw materials, production cost, market,
demand and supply of goods, Labor output and transportation cost.
Prices will also be determined as per the quality and quantity of the products.

Psychological pricing
The entrepreneur shall technically lower prices to create an impression of the reduced prices
and sooth the psychology of buyers in a skimming strategy.
This is meant to communicate the lowered prices and influence customer’s decision.

Maximum price scheming

The entrepreneur shall enter the market with a competitive high price in a scheming strategy.
This is meant to identify the high quality of product and highlighting the brand as a quality in
the whole market.

Giving offers
The entrepreneur shall give seasonal offer to entice customers to buy more goods and
services. He may give free samples and gifts to customers who buy a specified quantity of a
product. Offers will have advantage of stimulating sales to increase the sales volume.

SETTING SALES TARGET CAPITAL

The entrepreneur shall target a sales volume that will ensure the return of capital used and to
avoid the business operating under its capacity.
A break even analysis chart to determine sales targets as shown below.

11
SALES TACTICS
The entrepreneur will be taking orders from learning institutions and other firms within the
business location and deliver the services with a better discount to create good image of the
proposed business.
The business shall hire competent team of sales personnel who will be paid a commission on
product or services sold. The proprietor shall pay a commission of 3% (percent) on all sales
made. The sales personnel shall carry fliers, handouts and even business card bearing the
business identity and a list of products and services offered.
The business shall also improve the image of the product to ensure a good display of its
product in the market world. Due to attraction and retention of customers the business shall
offer discounts on its products. The business shall also encourage bulk buying and
consumption of services
The business shall create shows and exhibitions to hype its products and services thus
probing a demand of its products and services in the mind of undecided customers.

DISTRIBUTION STRATEGY
The entrepreneur will work on means through which service will be delivered to all
customers at the right time in right condition and also offer installation as a service.

The proposed business realizes that its strength will be derived from an effective customer
service strategy. The business shall come up with an assessment of high products which are
made to suit the needs of customers.

Before coming up with new products, the business shall assign a team which will go explore
the needs of customers with respect to our products in order to offer relevant products which
satisfy customers. A customer service team will be employed responsible for making
communications through emails face to face and telephone calls that will leave customers
with a positive impression about the business. The business shall also survey to access the
level of satisfaction of its customers.

DISTRIBUTION CHANNEL
Distributional channels through which products and services will flow until they reach the
targeted consumers at the right place and time. Owing the sensitive nature of the business

12
 using the agents in distributing its products and services to the customers will be the main
activity. The business shall identify trust worthy and reliable agents in every Sub county
under its main catchment area and fully brand these out lets.

Direct selling to customers will also be used this will be accomplished by opening branches
to meet the needs of customers directly.

AGENTS

LILIAN PHOTOGRAPHY CONSUMERS

STUDIO AND CREATION

LILIAN PHOTOGRAPHY STUDIO

AND CREATION

13
 CHAPTER THREE

ORGANIZATION AND MANAGEMENT PLAN

The management of the business is essential for its success therefor employment of different
staff each assigned different duties is looked upon.

There will be the need for proper management of these personnel to ensure efficiency in
delivery of service. In order for the business to achieve this goal the organization needs a
proper plan which will act as a guide.

ORGANISATION

BUSINESS MANAGER.
The manager is currently taking a certificate in certificate in Broadcast Journalism and Mass
Communication and with the entrepreneurship skills acquired from the college he is sure that
he can run the business smoothly. The business promoter is the manager, he is to establish
and generate the business volume, debt management and customer care. All the records are to
be checked by the manager before the business closes for the day. The manager salary will
depend on the business success made within the 1st three months of the starting. As the
business makes profit and expands, the salary will also increase.

DUTIES
 Supervising and assisting the personnel.
 Hiring and firing of workers.
 Promote and demote the personnel.
 The main duties should be the proper recording and storing the evidences of any
business transaction made in the business.
 Being in-charge of salaries and wages

As the business starts it will need at most five to six employee’s mostly one technician and
two photographers, videographer and an editor.

14
Photographer
– Who will ensure day to day activities run smoothly.

 Must have certificate or diploma in Journalism

 Must be able to operate all types of digital cameras

Duties
 Setting up and operating photographic equipment

 Researching and making contracts

 Taking pictures

 Editing and retouching images

Videographer
 Must have a certificate on a recognized institution

 Must have new ideas that will aid growth of business

 Must be of 18 and above age.

Duties:
 Perform candid coverage of special events as assigned

 Work with chief operation officer to plan and coordinate shoots.

 Make international and domestic travels for assigned shoots.

 Come up with creative ideas for customer satisfaction

15
Editor
 Must have a good mastery of all aspects of Photoshop

 Must be creative

 Proven work experience as a photo editor.

Duties
 Assigning projects to photographers and keeping track of deadlines.

 Reviewing photos, editing and making necessary changes

 Manipulate photos to achieve highest quality using appropriate tools.

Professional and advisory support

Our business will forge relationships with outside parties who can provide advice and

services to the business. The professional advisor will be:

(i) Accountant - Will ensure entity formation, business compliance and

tax strategy

(ii) Insurance Agent - Will enable us to acquire several insurance

required in our business

(iii) Board of Advisors -They will guide us through the process of starting,

managing and growing our business

(iv) Lawyer - will represent us in any legal challenges, signing of

contracts, employment law and business compliance and governance.

PROMOTION OF EMPLOYEES

16
Promotion of employees will be determined by the Labor output and also merit. Qualified
employees stand a higher opportunity of promotion to higher levels.

RENUMIRATION AND INCENTIVES

Enumerations are the payment of employees for the duties performed in the organization.
A well-structured renumiration policy will be formed by the organization.
Incentives are a way of attracting competent personnel in the firm.
LILIAN PHOTOGRAPHY STUDIO AND CREATION shall offer the following incentives;

BY-LAWS
There are laws that govern specific affairs of the people in certain localities. The business
shall comply with all the by-laws applicable in the county.

HEAITH AND INSURANCE

The business shall acquire all medical cover for all its employees to secure their welfare in
the business. The business shall also require that all employees be subjected to medical tests
and a health certificate issued.

LICENCE PERMIT.
The proprietor shall comply with all the legal requirements of the government by obtaining a
trade license from the registrar’s office. Also a health permits from the ministry of public
health offices so as to ascertain that all regulatory conditions have been met.
The business is also going to ensure that the health status of all employees within the
organization have been worked upon for proper Labor output.

SUPPORT SERVICE.
Banking services.
The business financial department will open an account with the Kenya Cooperative Bank
Eldoret Branch.

Matters concerning all financial status such as loans business savings credits and all other
expenses will be agreed upon by the firm in collaboration with the bank through the trading
period.

17
COOPERATIVE BANK ELDORET BRANCH.
ACCOUNT NUMBER 01109264535600
P.O. BOX 447-30100,
ELDORET.

Postage and communication.

The firm will obtain a postal service within the business with the Kenya postal and
telecommunication services which shall be used in sending and receiving mails, parcels, and
other important documents pertaining with the business.
Kenya postal and telecommunication services
P.O BOX 367-30100,
Eldora
Telephone: +254 746 562828

Insurance services
The business will acquire insurance services from a well-known insurance company that is
the Brita insurance company ltd. It will obtain all medical covers for all its employees.
Brita insurance company limited
P.O. BOX 20..001
Eldora Kenya
Telephone 0720274719

18
 CHAPTER FOUR

OPERATIONAL AND PRODUCTION PLAN

These chapter summaries all the facilities to be used in the running of the proposed business
effectively and to reach the standard production level required. Also it explains how the
services will be offered in the whole firm.

PRODUCTION DESIGN AND DEVELOPMENT.

The business will acquire state of art facilities that will be used in operational activities. This
capacity will be used in operation which will include; storage of goods that is in warehouses
and marketing equipment’s. The owner of the business will hire all those quality equipment’s
at an initial cost of purchasing them after attaining full capacity the owner shall also be
engaged in services of a qualified expertise’s who will install and regularly service
equipment’s to ensure efficiency in the production process.

PRODUCTION FACILITIES AND CAPACITY.

The business will require telecommunication devices so as to keep in line with the trends of
the modern technology and also boost the business.

The business will also require an assorted range of computer software such as windows
operating system and network operating systems.

PROPOSED GROUND FOR THE BUSINESS PREMISES

As the business expands the owner plans to acquire a plot and bring up facilities so as to cut
out all the expenses on rent.

This will create smooth flow of work and monitoring of workers will be much easier.

19
 SECURITY

WASH ROOM

PARKING
RECEPTION

STUDIO

SECURITY

PRODUCTION STRATEGY
The proposed business will undertake steps to establish the various requirements of
production and their costs. This will ease the business to compute the total production costs
and use the cost as a basic paper pricing to ensure profitability.

This are all the materials that the proposed business will need as indicated in the table below;

Speed Lights 5 5,000 25000

Camera 4 65,000 260000

Reflector 3 6,000 18000

Computers 2 33000 66000

Furniture 5 5000 25000

20
 Network cables 2 6000 12000

Tripods stands 4 5000 20000

SD cards 3 3000 9000

Backdrops 4 4025 16100

Total 32 132025 451100

MONTHLY LABOUR REQUIREMENTS

The labor required will be offered by all the members of staff and will include all the skilled
and the semi-skilled workers.

The business will also include professional workers who will be hired to help in the
maintenance process.

Occasionally there will be increase in the number of workers as the pick season approaches
who will work temporarily where the sales level will be higher than the normal seasons.

COST OF PRODUCTION.
The total cost of production is comprised of summing up the total cost of materials required,
total labor and the total expenses.

Monthly Labor Requirements 98000

Monthly Material Requirements 99000
Other expenses 19500
Total Cost of Production 216000

PRODUCTION PROCESS
The proposed business will be involved in providing services to our clients. The services that will

be offered are as follows:

(a) Baby pictures

21
 Our Specialty is baby pictures we have a unique combination of props and a passion for

babies. Babies are also our prime get away product for entering families into our ongoing

programs.

(b) Individual portraits

Individual portraits are commonly needed for individual and business websites, business

cards, brochures and annual reports.

(c) Wedding Album

Wedding are one of the most special events in life. Our wedding album will include up to 7

hours of wedding photography, with displayed prints on custom paper and digital images on

cds

(d) Family Portraits

We will be taking portraits of families. This is because family portraits are mostly needed for

display.

(e) Product Photography

We will be involved in a lot of product photography.

This package will involve taking photos and videos of certain products and making them

suitable for advertisement.

For the production to be complete, the manpower, equipment, control function and service
activities are needed to be coordinated properly. Controlled activities ensure that the
production process is implemented. For the business to do well, the cost of production must
always be less than the sales for profit making. Good attractive wages and motivation of
employees, security and conducive vary depending on customers income. The price will be

22
charged in comparison to the prices environment is essential to the products. Coordination
and communication will be emphasized between the workers in order to make the business a
success. If the above qualities are observed the business will be able to meet the needs of the
client at the shortest time possible.
Every business has external and internal factors which include

Internal factors
 Power blackout
 Non-productive workforce
 Breakdown of machines
 Lack of communication and co-ordination between workers leading to quarrels
between them

Solutions to these factors

Repair and maintenance should be done regularly to ensure efficiency of the business.
Power backup should be installed to prevent the unnecessary inconvenience

GOVERNMENT REGULATIONS
It is a special legal requirement that a business is supposed to meet legal procedures before
starting up their activities which include health regulations

Health regulations
The business will adhere to the health regulations of stipulated in the public health Act. The
business will ensure that its facilities are regularly inspected. The business management will
ensure that all employees acquire certificates in compliance with the health act.

TRADE LICENSE
The business shall obtain a trading license from Nakuru County Licensing Offices before
commencing the business operations within Nakuru County and its environs.

INSURANCE
The business shall insure its assets against the risk of fire and theft. It will also insure
employees with a personal accident cover. The employees handling cash will be insured

23
through fidelity guarantee policy to cover proprietor from loss due to dishonesty of such
employees. All employees shall be covered under NHIF scheme under Workmen’s
compensation scheme.

CHAPTER FIVE

FINANCIAL PLAN
This is a financial calculation of the business, whereby it assist the organization in
determining its net profit after deducting all the expenses and tax, however a financial plan is
also a tool of control. In the business this is because it ensures proper allocation and
utilization of money is enhanced in a particular activity. However, the financial plan also
shows cash flow of the business. Finally financial plan consist of the following pre-
operational cost, warning capital requirements projected cash flow statement, pro-forma
income statement, proforma balance sheet, break -even level, expected profitability ratios
desired financing and proposed capitalization.

PRE-OCCUPATIONAL COST
This is all the amount of money required to purchase items to conduct services and facilities
required before a start up of a business.

Speed Lights 5 5,000 25000

Camera 4 65,000 260000

24
 Reflector 3 6,000 18000

Computers 2 33000 66000

Furniture 5 5000 25000

Network cables 2 6000 12000

Tripods stands 4 5000 20000

SD cards 3 3000 9000

Backdrops 4 4025 16100

Total 32 132025 451100

WORKING CAPITAL REQUIREMENTS

The amount the business will require facilitating its day to day operation s

This will include cash and items that can be converted into cash.

ITEMS AMOUNT

STOCK OF RAW MATERIALS 20000

WORK ON PROGRESS 80000

STOCK OF FINISHED GOODS 100000

DEBTORS 70000

CASH IN HAND 20000

CASH AT BANK 30000

25
 TOTALS 320000

CASH FLOW SATEMENT

This is a stament indicating the cash in flow and out flow of the bussiness for the twelve
months

Details Jan Feb Mar Apr May Jun Jul Aug sep Oct Nov Dec Total
CASH INFLOW

Cash sales 63000 56000 68000 73000 83000 93750 98250 73000 83500 95000 73500 93000 958000

Cash at bank 93000 98000 83000 93000 88000 103000 73000 58000 83000 918000
68000 78000

Owner’s equity 850000 850000

Bank loan 150000 150000
Debtors collection 4000 4000 4000 4000 14000 5000 10000 10000 5000 60000

Total cash inflow 1063000 151000 166000 160000 180000 165750 190250 19000 161500 166000 161500 181000 2936000

Cash outflow

26
Cash purchases 50000 45000 45000 45000 50000 40000 50000 30000 30000 50000 35000 40000 510000

Payment to creditors 2000 2000 2000 1000 500 2000 3000 1000 1000 15000

Rent 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000

Salaries 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 924000
Telephone 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000

Water 350 350 350 350 350 350 350 350 350 350 350 350 4200
Electricity 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400

Postage 550 550 550 550 550 550 550 550 550 550 550 550 6600
Total & cash flow 140100 135100 135100 137100 142100 132600 14100 120600 122100 143100 126100 131100 1606200
Net cash balance 922900 15900 30900 22900 37900 33150 49150 69400 39400 22900 35400 49900 1329800

27
Details Jan Feb Mar Apr May Jun Jul Aug sep Oct Nov Dec Total
CASH
INFLO
W
Cash 63000 56000 68000 73000 83000 93750 98250 73000 83500 95000 73500 93000 95800
sales 0
Cash at 93000 98000 83000 93000 88000 10300 73000 58000 83000 91800
68000 78000
bank 0 0
Owner’s 85000 85000
equity 0 0
Bank 15000 15000
loan 0 0
Debtors 4000 4000 4000 4000 14000 5000 10000 10000 5000 60000
collectio
n
Total 10630 15100 16600 16000 18000 16575 19025 19000 16150 16600 16150 18100 29360
cash 00 0 0 0 0 0 0 0 0 0 0 00
inflow
Cash
outflow
Cash 50000 45000 45000 45000 50000 40000 50000 30000 30000 50000 35000 40000 51000
purchase 0
s
Payment 2000 2000 2000 1000 500 2000 3000 1000 1000 15000
to
creditors
Rent 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 12000
0
Salaries 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 92400
0
Telepho 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
ne
Water 350 350 350 350 350 350 350 350 350 350 350 350 4200

28
 Electrici 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400
ty
Postage 550 550 550 550 550 550 550 550 550 550 550 550 6600
Total & 14010 13510 13510 13710 14210 13260 14100 12060 12210 14310 12610 13110 16062
cash 0 0 0 0 0 0 0 0 0 0 0 00
flow
Net cash 92290 15900 30900 22900 37900 33150 49150 69400 39400 22900 35400 49900 13298
balance 0 00

Details Jan Feb Mar Apr May Jun Jul Aug sep Oct Nov Dec Total
CASH
INFLOW
Cash 63000 56000 68000 73000 83000 93750 98250 73000 83500 95000 73500 93000 958000
sales

Cash at 93000 98000 83000 93000 88000 103000 73000 58000 83000 918000
bank 68000 78000

Owner’s 850000 850000

equity
Bank 150000 150000
loan
Debtors 4000 4000 4000 4000 14000 5000 10000 10000 5000 60000
collection
Total 106300 151000 166000 160000 180000 165750 19025 19000 161500 166000 161500 181000 2936000
cash 0 0
inflow
Cash
outflow

29
Cash 50000 45000 45000 45000 50000 40000 50000 30000 30000 50000 35000 40000 510000
purchases
Payment 2000 2000 2000 1000 500 2000 3000 1000 1000 15000
to
creditors
Rent 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000

Salaries 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 77000 924000
Telephon 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
e
Water 350 350 350 350 350 350 350 350 350 350 350 350 4200
Electricit 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400
y
Postage 550 550 550 550 550 550 550 550 550 550 550 550 6600
Total & 140100 13510 13510 13710 14210 13260 14100 12060 12210 14310 12610 13110 160620
cash 0 0 0 0 0 0 0 0 0 0 0
flow
Net cash 922900 15900 30900 22900 37900 33150 49150 69400 39400 22900 35400 49900 132980
balance 0

Details Jan Feb Mar Apr May Jun Jul Aug sep Oct Nov Dec Total
CASH
INFLO
W
Cash 63000 5600 6800 7300 8300 9375 9825 7300 8350 9500 7350 9300 95800
sales 0 0 0 0 0 0 0 0 0 0 0 0
Cash at 9300 9800 8300 9300 6800 8800 1030 7300 5800 7800 8300 91800
bank 0 0 0 0 0 0 00 0 0 0 0 0
Owner’ 85000 85000

30
s equity 0 0
Bank 15000 15000
loan 0 0
Debtor 4000 4000 4000 4000 1400 5000 1000 1000 5000 60000
s 0 0 0
collecti
on
Total 10630 1510 1660 1600 1800 1657 1902 1900 1615 1660 1615 1810 29360
cash 00 00 00 00 00 50 50 0 00 00 00 00 00
inflow
Cash
outflow
Cash 50000 4500 4500 4500 5000 4000 5000 3000 3000 5000 3500 4000 51000
purchas 0 0 0 0 0 0 0 0 0 0 0 0
es
Payme 2000 2000 2000 1000 500 2000 3000 1000 1000 15000
nt to
creditor
s
Rent 10000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
0 0 0 0 0 0 0 0 0 0 0 0
Salarie 77000 7700 7700 7700 7700 7700 7700 7700 7700 7700 7700 7700 92400
s 0 0 0 0 0 0 0 0 0 0 0 0
Teleph 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
one
Water 350 350 350 350 350 350 350 350 350 350 350 350 4200
Electric 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400
ity
Postage 550 550 550 550 550 550 550 550 550 550 550 550 6600
Total & 14010 1351 1351 1371 1421 1326 1410 1206 1221 1431 1261 1311 16062

31
cash 0 00 00 00 00 00 0 00 00 00 00 00 00
flow
Net 92290 1590 3090 2290 3790 3315 4915 6940 3940 2290 3540 4990 13298
cash 0 0 0 0 0 0 0 0 0 0 0 0 00
balance

32
5.4: PRO-FORMA INCOME STATEMENT
PRO-FORMA INCOME STATEMENT FOR
YEAR ENDING 31/12/2018
OPENING STOCK 100000 SALES 290000
PURCHASES 30000 COST OF GOODS SOLD 90000
COST OF GOODS 130000 200000
CLOSING STOCK 40000
COST OF GOODS SOLD 90000
GROSS PROFIT 110000
200000
EXPENSES
RENT 8000
SALARY 9000
ADVERTISEMENT 3000
INSUARANCE 5000
MAINTENANCE 4500
TOTAL 29500

33
PROFORMA BALANCE SHEET
PROFORMA BALANCE SHEET
OF THE YEAR ENDED 2018
FIXED ASSETS CAPITAL + LIABILITIES
MACHINERY 264000 CAPITAL 1760000
BUILDINGS 1391000
1655000 CURRENT LIABILITIES
CREDITORS 35000
CURRENT ASSETS

STOCK 20000
CASH IN HAND 20000
CASH AT BANK 30000
1795000
DEBTORS 70000
140000

1795000

BREAKEVEN ANALYSIS CHART

It is carried to determine the break-even unit of sales, contribution margin and the
contribution margin percentage.

VARIABLE COST AMOUNT KSH

ELECTRICTY 2000
ADVERTISEMENT 3000
TELEPHONE 10000
WATER 20000
TAX 5000
TOTAL 40000

CONTRIBUTION MARGIN= SALES – TOTAL VARIABLE COST

290000 - 40000
=250000

34
CONTRIBUTION MARGIN PERCENTAGE = CONTRIBUTION MARGIN *100%
SALES
250000 *100%
290000
= 86.21%

EXPECTED PROFITABILTY RATIO

The business will calculate mark up and margin as a way of accessing its profitability ratio.

MARK UP= GROSS PROFIT *100%

COST OF SALES

119000 *100%
90000
=122.22%

MARGIN= GROSS PROFIT *100%

SALES

110000 *100%
290000
=37.73%

GROSS PROFIT= SALES – COST OF GOODS SOLD

290000-200000
=90000

RETURN ON CAPITAL= NET PROFIT AFTER TAX *100

OWNERS EQUITY

35
ESTIMATED WORKING CAPITAL
ITEM CASH(KSH)
CASH IN HAND 20000
DEBTORS 70000
CASH AT BANK 30000
TOTAL 120000

CURRENT LIABILITIES
CREDITORS 35000
BANK OVER DRAFT 40000
TOTAL 75000

DISIRED FINANCING
ITEM AMOUNT

PRE-OPERATIONAL COST 600000

WORKING CAPITAL 500000

FIXED ASSETS 280000

TOTALS 1380000

36
PROPOSED CAPITALIZATION
ITEMS KSHS

OWNERS CONTRIBUTION 400000

BANK LOAN 250000

RELATIVES AND FRIENDS 300000

TOTALS 950000

37
 APPENDICES

APPENDIX I: BUSINESS LOCATION

RIVERTEX COMPANY LTD

Pioneer
Estate

LILIAN PHOTOGRAPHY
STUDIO AND CREATION

38
 DISTRIBUTION CHANNEL

AGENTS

LILIAN PHOTOGRAPHY CONSUMERS

STUDIO AND CREATION LILIAN PHOTOGRAPHY
STUDIO AND CREATION

39
BREAK EVEN ANALYSIS

Total Cost

Total
Revenue

Variable
Cost

Fixed Cost

Units of Sales

40
BUSSINESS PREMISES
SECURITY

WASH ROOM

PARKING
RECEPTION

BOUTIQUE

SECURITY

41