BUSINESS NAME: FRETECH ELECTRICALS AND ELECTRONICS ENTERPRISE   

 .

NAME:                  OTIENO FREDRICK OKUKU

INDEX NUMBER: 5151020015

CENTER NAME: MASAI    TECHNICAL TRAINING INSTITUTE.

COURSE: DIPLOMA IN ELECTRICAL AND ELECTRICS ENGINEERING    .

SUPERVISOR:

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL FOR THE

PARTIAL FULFILMENT FOR THE AWARD OF DIPLOMA IN ELECTRICAL AND

ELECTRONICS ENGINEERING.

SERIES: JULY SERIES 2023

DECLARATION BY CANDIDATE

I hereby declare that this BUSINEESS PLAN is my own original work and has never been

submitted to any college or University for the award of certificate, diploma or degree.

Signature________________________

Date______________________         

OTIENO FREDRICK OKUKU.

DECLATION BY SUPERVISOR

This proposal has been submitted for examination with my approval as the college supervisor.

Signature_____________________________                                  Date______________________
ACKNOWLEDGEMENTS

First, I would like to give my sincere gratitude to the Almighty God who Grant me the, strength

knowledge and taking me through the work.

I would like to thank my supervisor,    whose credible guidance, encouragement and effort that

made this work possible. I would also like to acknowledge the support and generosity of my

lecturers throughout my studies at Masai Technical Training Institute and to those exceptional

individuals with whom I've had the privilege of working with.

Finally, thanks to my family for supporting and sponsoring my education and inspiring me to

pursue a Diploma course in electrical engineering.

DEDICATION

This work is dedicated to my family members and all well-wishers for their moral and financial

support. Above all thanks are to the almighty God for great care that he has given me throughout

this exercise.
Contents

DECLARATION BY CANDIDATE...............................................................................................ii

ACKNOWLEDGEMENTS...........................................................................................................iii

DEDICATION................................................................................................................................iv

1.0 EXECUTIVE SUMMARY....................................................................................................1

1.1 BUSINESS DESCRIPTION..................................................................................................1

1.2 MARKETING PLAN............................................................................................................1

1.3 ORGANIZATIONAL AND MANAGEMENT PLAN..........................................................1

1.4 OPERATIONAL AND PRODUCTION PLAN.....................................................................2

1.5 FINANCIAL PLAN...............................................................................................................2

CHAPTER ONE..............................................................................................................................3

1.0 BUSINESS DESCRIPTION..................................................................................................3

1.1 MISSION STATEMENT.......................................................................................................3

1.2 BUSINESS NAME, LOCATION, ADDRESS AND LOGO................................................3

1.2.3 Business Address.............................................................................................................4

1.3 FORM OF BUSINESS OWNERSHIP..................................................................................4

1.4TYPE OF BUSINESS.............................................................................................................5
 1.5PRODUCT/SERVICES..........................................................................................................5

1.5.1 Products...........................................................................................................................5

1.5.2 Services...........................................................................................................................6

1.6 JUSTIFICATION OF OPPORTUNITY................................................................................6

1.7INDUSTRY.............................................................................................................................7

1.7.1Industry Characteristics....................................................................................................7

1.7.2 Industry Outlook..............................................................................................................8

1..8 BUSINESS GOALS AND OBJECTIVES...........................................................................8

1.8.1 Short Term Goals.............................................................................................................8

1.8.2Long Term Goals..............................................................................................................9

1.9 ENTRY AND GROWTH STRATEGY.................................................................................9

1.9.1 Pre-Start up Stage..........................................................................................................10

1.9.2 Start Up Stage................................................................................................................10

1.9.3 Growth Stage.................................................................................................................10

1.9.4 Maturity Stage...............................................................................................................10

CHAPTER TWO...........................................................................................................................11

2.0 MARKETING    PLAN........................................................................................................11

2.1 CUSTOMER’S PROFILE...................................................................................................11

2.2 CUSTOMERS......................................................................................................................11

2.2.1 Individual Customers.....................................................................................................11

 2.2.2 Institutional Customers..................................................................................................12

2.2.3 Non –Governmental Organization................................................................................12

2.2.4 Parastatals and County Government.............................................................................12

2.3 MARKET SHARE...............................................................................................................12

2.3.1 Market Share Variations Table......................................................................................13

2.4 COMPETITION...................................................................................................................13

2.4.1 Coping With Competiton...............................................................................................15

2.5 METHODS OF PROMOTIONS AND ADVERTISEMENT..............................................16

2.5.1 Advertisement................................................................................................................16

2.5.2 Promotions methods......................................................................................................17

2.6 PRICING STRATEGY........................................................................................................17

2.6.1 Production Cost.............................................................................................................17

2.6.2 Competitors Prices........................................................................................................17

2.6.3 Penetrating Pricing........................................................................................................17

2.6.4 Expected profits.............................................................................................................18

2.6.5 Government policy on pricing.......................................................................................18

2.7 SALES TACTICS................................................................................................................18

2.8 DISTRIBUTION STRATEGY............................................................................................18

2.8.1 Distribution Strategy Flow Chart..................................................................................19

CHAPTER THREE.......................................................................................................................20
3.0 ORGANISATION AND MANAGEMENT PLAN.............................................................20

3.1 ORGANIZATION STRUCTURE.......................................................................................20

3.2 BUSINESS MANAGER......................................................................................................20

3.3 MANAGERS QULIFICATION, DUTIES AND WORK EXPERIENCE..........................20

3.3.1 Qualification..................................................................................................................21

3.3.2 Work Experience...........................................................................................................21

3.3.3 Duties and Responsibilities...........................................................................................21

3.4 KEY PERSONNEL, NUMBER, QUALIFICATION AND DUTIES.................................21

3.5 RECRUITMENT, TRAINING AND PROMOTION..........................................................24

3.5.1 Recruitment...................................................................................................................24

3.5.2 Recruitment process......................................................................................................24

3.5.3 Training.........................................................................................................................25

3.5.4 Promotion......................................................................................................................26

3.6 REMUNERATION AND INCENTIVES............................................................................27

3.6.1 Remuneration................................................................................................................27

3.6.2 Incentives.......................................................................................................................27

3.7 LICENSING, PERMITS AND BY-LAWS..........................................................................28

3.7.1 Licenses.........................................................................................................................28

3.7.2 Permits...........................................................................................................................28

3.7.3 By-laws..........................................................................................................................29
 3.8 SUPPORT AND PROFFESSIONAL SERVICES...............................................................29

3.8.1 Banking Services...........................................................................................................29

3.8.2 Postal services...............................................................................................................30

3.8.3 Security Services...........................................................................................................30

3.8.4 Legal services................................................................................................................30

3.8.5 Auditing services...........................................................................................................30

CHAPTER FOUR.........................................................................................................................31

4.0 OPERATIONAL AND PRODUCTION PLAN...................................................................31

4.1 PRODUCTION FACILITIES AND CAPACITY................................................................31

4.2 OPERATIONAL /PRODUCTION STRATEGY.................................................................32

4.2.1 Cost Of Labor................................................................................................................33

4.2.2 Overhead Expenses.......................................................................................................34

4.2.3 Total Monthly Requirements.........................................................................................34

4.2.4 Proposed Workshop Layout...........................................................................................35

4.2.5 Working schedule..........................................................................................................35

4.3 OPERATIONAL/PRODUCTION PROCESS.....................................................................35

4.3.1 Product Process.............................................................................................................35

4.3.2 Service Process..............................................................................................................37

4.4 REGULATIONS AFFECTING PRODUCTS /OPERATION.............................................37

CHAPTER FIVE...........................................................................................................................39

5.0 FINANCIAL PLAN.............................................................................................................39

5.1 PRE-OPERATIONAL COSTS............................................................................................39

5.2 WORKING CAPITAL ESTIMATION................................................................................40

5.3 CASH FLOW PROJECTIONS............................................................................................41

5.3.1United electrical and electronics enterprise    cash flow for the year ending 30st Dec

2024........................................................................................................................................41

5.3.2 United electrical and electronics enterprise    cash flow projection for the year Ending

31st dec 2025...........................................................................................................................43

5.3.3 United electricals and electronics enterprise    cash flow projection for theyear ending

30th dec 2026...........................................................................................................................46

5.4 PROFORMA INCOME STATEMENT FOR THREE YEARS...........................................48

5.5 PROFORMA BALANCE SHEET FOR THREE YEAR ENDING December 31..............49

5.6 BREAK EVEN POINT........................................................................................................51

5.7 BREAK EVEN CALCULATION FOR THE YEAR 2024.................................................52

5.8 DESIRED FINANCING......................................................................................................52

5.9 PROPOSED CAPITALIZATION........................................................................................53

5.10 PROFITABILITY RATIO..................................................................................................53

EXECUTIVE SUMMARY

The executive summary summarizes the whole of the business plan and what it contains

inside it.

1.1. BUSINESS DESCRIPTION

The name of the proposed business will be Fretech electrical and electronics enterprise    .

The enterprise will be located in Oyugis Town and will be offering electrical services

and goods with an objective of providing quality services /products that satisfy customers

demand at affordable prices. It will commence its operation in the year 2024.

MARKETING PLAN

Fretech electrical and electronics enterprise    intends to capture a market share of 30%

during its entry to the market. The enterprise shall target high and low income earners

customers that are commercial, institutional and individual customers. Though it will face

competition from already existing competitors it shall use advertisement and promotions

to cope with this in addition to offering of satisfactory services and quality goods to

customers.
ORGANIZATIONAL AND MANAGEMENT PLAN

The enterprise shall be managed    by the owner with a number of 16 employees who will

be recruited on the basis of their qualifications, experience and age. The enterprise will

adopt a line organizational structure and will acquire its trading license and permits in

order to abide to the stipulated regulations by the local authorities. Its employees shall be

trained for effective services delivery and be paid on the basis of their merits.

OPERATIONAL AND PRODUCTION PLAN

For effective and smooth running of the company, the required materials and facilities

shall be provided on time. The enterprise shall abide with rules and regulations affecting

the business and will try as much as possible to reduce overhead expenses and pay labor

cost on time to avoid inconveniences. Easy and cheap production process shall be

adopted.

FINANCIAL PLAN

The enterprise shall incur a pre-operational cost of Kshs. 200, 000, working capital of

Kshs 420,500; desired financing of Kshs 62,150 and proposed capital of Kshs 700,350 a

bank loan of kshs 200,000 will be acquired from the co-operative bank of Kenya Oyugis

branch.
                                           CHAPTER ONE

1.0 ENTERPRISE DESCRIPTION.

1.1 MISSION STATEMENT

To provide quality services /products that satisfies customers demand at affordable prices.

1.2 ENTERPRISE    NAME, LOCATION, ADDRESS AND LOGO

1.2.1Enterprise Name

The name of the enterprise    will be Fretech electrical and electronics enterprise . Fretech
is a two word phrase,the prhase FRE is an initial of the ownwership name Fredrick while

TECH is the short form of the word technologized which means the services /products to

be provided will be friendly, high quality, satisfactory and appreciable. The owner chose

the word Fretech because it is simple, easy to recall and it spread out /portray a good

image /information of the enterprise    to the public.

1.2.2 Enterprise    Location.

The enterprise    will be located in Oyugis town next to Imperial driving school,opposite

court road. The owners chooses the location because:

-The location is easily accessible to many people, to customers and suppliers and is

located along the highway.

-There is availability of security as it is situated next to the police station and spacious

space for expansion

-It is next to the main bus stations and along the street which is used by many people

hence customers will purchase and transport their products easily.

-Easily reliable since it is along the tarmac road and there is availability of electricity

which will assist in the running of the business.

1.2.3 Business Address

The enterprise will operate under the following address

United electrical and electronics enterprise

PO BOX 143-40309

HOMA BAY -KENYA

MOBILE PHONE: 0712109521

Email:[email protected]

1.2.4 Business Logo

The enterprise logo will bear the motto of the business and some product symbols which

will be offered in order to make the public aware

1.3 FORM OF BUSINESS OWNERSHIP

The form of business ownership will be sole propriatorship

The owner will be the key role player in the company. The reason for adopting this form of

business ownership is that:

-The owner is the boss of the enterprise    and will be entitled to all profit.

-Creates self-employment which enables one to earn a living, requires minimum legal

requirements to start.

-The owner has direct access to the customers hence easier to get customers’ needs and

satisfy them in time.

 Besides the above merits this form of ownership has got also demerits which requires

special attention in favor of the company:

-Like incase of loss,the owner bears it alone.

1.4TYPE OF BUSINESS

Fretech electrical and electronics enterprise    will be both wholesale and retail trade

electrical enterprise    which will be selling and offering of electrical products /services to

its customers at affordable prices and high quality. It will be a sole business and will cater

for different customers with different purchasing ability in order to capture a wide range

of the market share.

1.5PRODUCT/SERVICES

The enterprise    will provide different types of products/services of high quality which

meets the customer’s expectations affordable prices on time

1.5.1 Products

The enterprise    will offer the following products at affordable prices to its customers

with an explanation on how to use it unlike other business enterprise    in the same field

- Conduits and switches

- Cables and earth math

- Meter box and solar panels

- Sockets and relays

 - Bulbs and starters

- Capacitors, diodes, transformers, sensors, and testers

-Wire cutters, pliers, cutouts, electric meters and many such like products

- Water heaters

1.5.2 Services

The enterprise    will offer different types of services to its customers which are

satisfactory at reduced prices and guarantee unlike its competitors the services to be

offered includes

-Repair and maintenance of electrical equipment’s like generators, refrigerators, electric

cookers, motors and air conditioners

-Electrical installation and labor services

- Construction and maintenance of overhead and unground electrical lines for

transmission and distribution of electricity for high and low voltages

- Electrical contracts and tenders for the supply of electrical materials, installation and

maintenance/servicing

- Costing and estimation of electrical tenders and contracts

- Battery charging and solar panel installation

The enterprise    will offer free transport to customers, who will purchase in large

quantity and instructions on how to use purchased products unlike its competitors, will
 not charge before finishing rendering its services. Services and products should be

delivered on time without partiality of economic status, the factor that will boost the

motives of the customers hence enabling the enterprise    to capture a wide market

share unlike its competitors.

1.6 JUSTIFICATION OF OPPORTUNITY

The owner decided to start this type of a enterprise    because he has background

information,skills and knowledge acquired    during the thrree years of study and

industrial attachment period,as a result of enterprise    being strategically positioned,

easily accessible, good infrastructure and security of high level, its growth will be easier

as it will attract many customers. The availability of banks in the region will also boost

the enterprise with funds/loans in order to expand its operations without failure and

provides necessary business ideas/information and advice. The enterprise will also

employ qualified and skilled labor to offer its services and products and part of its profits

to be used for enterprise expansion and adequate utilization of available resources.

increased development in the region has lead to the need /demand of electrical

services/products as a result of increased electricity use hence giving the enterprise a

better growth position.

1.7 INDUSTRY

The enterprise fall under the energy industry in the power sector .The industry has shown

great improvement in the past years due to its steady growth and changes in technology.

Due to great demand of energy in the production sectors and economic growth the

industry has received great support from the government    and external donors for
 expansion in order to cater for the fast growing demand ,hence the industry has grown in

size for the past years and now it dominates most of    country economy, that is it

comprises about 45% of the economy .Due to this the enterprise is at a stable state of

growth as its products/services demand is constantly growing with an increase in

competitors due to it is profitability growth hence the industry size is enlarging rapidly.

1.7.1 Industry Characteristics

Fretech electrical and electronics enterprise    as    an energy industry shall include the following

industry characteristics

-Technology, the industry has shown continuous technology changes on product

improvement and production. The enterprise shall therefore seek the appropriate

technology in order to ensure high quality standards of products are offered to customers

so as to increase its profit margin.

-Capital, The enterprise shall require high entry cost. The enterprise shall therefore

acquire bank loans and owners savings to continue with its operation without operational

financial strains.

-Competition, though the enterprise /industry has shown steady growth, this industry

have lacked enough qualified personnel, appropriate technology and marketing skills.

The enterprise    shall strive to win a larger market share by overcoming its competitors.

-Market, The enterprise shall have great potential customers by attracting both low and

medium income earners in order to widen its market share due to constant demand of

energy.
1.7.2 Industry Outlook

In future the industry will be at    a stable growth since most of the economic activities

demands on the industry due to its reliability and satisfactory services /products to the

customers in    the economic development .As a result of its steady growth the    sales are

likely to increase but will not affect the business enterprise    since it has experienced

personnels. The owner has done a lot of preparation for the start up of the business by

acquiring all legal requirement and saving enough capital for its start up.

1.8 ENTERPRISE    GOALS AND OBJECTIVES.

Having studied the strength and weaknesses of prevailing competition the enterprise has

set up its goals and objectives to be achieved which are short term,      long term and

objectives.

1.8.1 Short Term Goals

-To provide effective, efficient, quality services/products to customers at affordable

prices.

-To advertise the business in order to create public awareness.

-To increase sales through proper utilization of available resources

-To create employment opportunities to the skilled and unskilled people.

 -To create reliable market and expand the business through ploughing back profit

generated into the business

-To enhance good public relationship with customers and the public through practicing

the skills acquired and encourage people to enter into business.

1.8.2 Long Term Goals

-To open three branches of the enterprise within three years time

-To purchase enterprise    lorry after six years time

-To purchase land within the town within eight years time.

-To construct the enterprise premises of its own within three years after the purchase of

the land.

-To acquire at least 40% of the market share after five years

-Employ    qualified personnel in marketing sector in order to boost its sales

In order to achieve the above mentioned goals the enterprise will employ skilled,

experienced and qualified people to manage and run the enterprise by offering quality and

satisfactory services/products that will attract many customers. Also the enterprise will

encourage offering of credit services/products in order to capture more customers and

retain them.

1.9 ENTRY AND GROWTH STRATEGY

The owners has set up the following business growth strategies for the success of the
 enterprise .

1.9.1 Pre-Start up Stage

For the effective and efficient running of the enterprise the owners will ensure that the

enterprise premises is well organized ,stocked and all the necessary requirements are

obtained on time for smooth operation. Also better quality products/services, effective

marketing strategies are employed to make the public aware of the enterprise to start to

cope with competition on time so as to secure better market share.

1.9.2 Start Up Stage

The enterprise will start its operation once it attains all the necessary requirements    and

maximize on the available opportunities to create awareness through advertisement and

make wise use of available resources for its favor.

1.9.3 Growth Stage

At this stage the enterprise will ensure that there is constant and ready product /services

that are available to capture more customers and retain them, use new sales techniques to

increase sales like advising customers to buy in bulky so as to expand the business to

widen its market share for steady growth in future

1.9.4 Maturity Stage

At this stage the enterprise will have a stable market and its services /products attain

satisfactory climax state. The enterprise will strive to maintain its customers and capture
 more through promotions and advertisement and utilize its strength against competitors to

ensure stable turnover and profit for its future operation in the market expansion.

CHAPTER TWO

2.0 MARKETING    PLAN

Fretech electrical and electronics enterprise will analyze all the ways that will enable it to enter

into market and prosper .some of the ways that will be employed will include ,creating better

tactics, ensuring that all the customers’ demands are met on time and provision of quality

services/products to the market to capture more customers.

2.1 CUSTOMER’S PROFILE

Fretech enterprise customers will be from the surrounding area who will be both low and high

income earners .The enterprise will serve both young and adult customers despite their

gender/age .Generally the enterprise will cater for all customers despite their educational

background to widen its market share through provision of quality services and products

2.2 CUSTOMERS

Due to tremendous increase in development growth both commercially and domestically, there is

a steady continuous demand for electrical services and products. This will enable the enterprise

to get a ready market for it is services and products from customers within and the surrounding

area. The enterprise will have around 3000 customers within radii of 80 kilometers, this

customers will include:

2.2.1 Individual Customers

This will include customers who will be buying in small and large quantities. Their demands for

services will not be regular. They will include both low and high income earner with or without

education background with different ages/gender

2.2.2 Institutional Customers

This will include the learning institutions and churches within the region some of this institutions

include universities, colleges, polytechniques, secondary schools and primary schools among

others. They will be buying in bulky and give tenders or contracts for supply, installation,labour

and maintenance services.

2.2.3 Non –Governmental Organization

The enterprise will acquire contracts/tenders from the non-governmental organization within the

area for the maintenance of offices and premises also for supply of electrical products. This

organizations includes, banks, hospitals, japan international cooperation and merlin healthy care

2.2.4 Parastatals and County Government

This will include National government offices, factories, industries and county offices within the

area. The enterprise will be selling and offering services/products either in terms of cash or

credit. The enterprise will acquire tenders/contracts for the supply, installation, maintenance and

servicing of electrical machines/equipment’s.

2.3 MARKET SHARE

The enterprise anticipates to get a market share of 30% within the period of    two years and the

other share of 70% to be controlled by its competitors. It's competitors who will control the
market share of 70% will include,

I) Jamaa Electricals company,will control a market share of 25% since it has been in the

market for last six years and has opened up four branches within the region.

Ii) Mwanga Electricals enterprise will control 20% of the market share .it has been in business

for the last four years.

Iii) Jakinda Electricals company,will control a market share of 15% has they have been in

business for the last three years.

The 30% market share to be acquired by Fretech    Electrical Enterprise    will be achieved

through by offering quality services and products,advertisement,sales promotions ,after sales

services, discounts and fair affordable prices to capture many customers.

2.3.1 Market Share Variations Table.

ENTERPRISE DEGREES(O) PERCENTAGE %

Jamaa Electricals company 80 25

Mwanga Electricals company 62 20

Jakinda Electricals company 80 20

Fretech Electricals and 98 25

electronics enterprise

Other Competitors 10 10

Total 360 100

2.4 COMPETITION

Healthy competition is important and    in any business because it avoid over exploitation of

customers and enables better goods and services to be rend to prospective customers . The

enterprise will face competition from its competitors who had been in the business for a period of

time. Will use various ways to outweigh them. Fretech Electricals and electronics enterprise

major competitors include:

A) Jamaa    Electricals enterprise

Po box 115-30000

Oyugis

Jamaa Electrical enterprise has been in the market for some years within oyugis town and is

located 400 meters west from Fretech Electricals and electronics enterprise .

A) Mwanga Electrical enterprise

Po box 300 -30030

oyugis

It is located within the town center; 6oometres from Fretech Electricals and electronics enterprise

,it has been in the market for the last three years and offers a variety of products and services .its

situated at KWFT plaza which is on the south from Fretech    Electricals and electronics

enterprise .

A) Jakinda Electricals enterprise.

Po box 256 -30045

oyugis

It has been in the market for the last four years and is located within the town center 500 meters

east from Fretech Electricals and electronics enterprise . It offers a wide variety of electrical

products and services.

-To overcome the possibility of risky competition Fretech Electricals and electronics enterprise

carried out further analysis on its competitors strength, weaknesses, opportunity and treats in the

market in order to use it as guidelines towards success in business .The analysis is shown in the

table of the strength, weaknesses, opportunity and threats

COMPETITORS STREGTH WEAKNESSESS OPPORTUNITY THREATS

Jamaa electricals -Well equipped -Untrained -Can offer many - insecurity

and electronics -Located in town workers services -High prices

enterprise center -Poor customers -Can acquire

-Financially relationship loans

stable

Mwanga -strategically -Managerial -Room for future -Hostile workers

Electricals Positioned problems expansion -insecurity

enterprise -Good customer Poor services -Ready market

relationship for products

Jakinda -good -Financial -Can reach many -Competition

Electricals management management customers from other

company -Fast experience problems -can secure loans competitors

and trained -Less working from banks -High rental

 workers hours charges

2.4.1 Coping With Competitions analyses, it will capitalize on the competitors weaknesses in

order to gain a big market share by coming up with the following strategies:

-By offering excellent products

-Employ mordent technology

-Improve on its managerial skills by employing skilled workers

-Train its workers and increase the working hours

-Provide after sales services

-Offering of quality products and satisfactory services at affordable prices

2.5 METHODS OF PROMOTIONS AND ADVERTISEMENT

Fretech Electricals and electronics enterprise will be a startup type of business; hence

advertisement and sales promotion activities will play a major role because will introduce the

coming up of the new business into the market by making the customers aware of its starting up.

Will also give clear information about what the enterprise shall be providing in the market with

the intention of capturing customers.

2.5.1 Advertisement

This is the stimulation of a market and maintenance of a strong market response since it is for the

upcoming business which will help to create a clear image of the business in the market. The

following shall be employed to carry out the business advertisement:

I) Signposts, -which describe products and services to be offered and will describe the

enterprise name, address, contacts and where it is located. Will be located at strategic points like

round about.

II) Printing of leaflets containing the information about the company.

III) Posters and calendars will also be made using the enterprise logo which will be freely

issued and posters put in places like market centers, bus stations and along busy streets.

IV) Printing of’ T’ SHIRTS written on the back and front ‘Fretech Electricals and electronics

enterprise’ which will be given workers and to customers who purchase from the enterprise or

those who come for the enterprise services will be given out for free.

V) Broadcasting through local radio stations will be done once per week because of financial

reasons

2.5.2 Promotions methods

These are tools to stimulate or offer a stronger impact to the customers so as to attract, retain and

so as to make high sales in order to achieve this, the enterprise will use the following methods,

- Offer credit goods//services to potential customers to maintain them.

- Offer after sales services, transport and advice on new technology in the market.

- Offering of discounts to customers who regular give tenders /contracts in order to maintain

them
2.6 PRICING STRATEGY

This will enables the owners to come up with standard prices of products /services in order to

make profits.Fretech Electricals and electronics enterprise to come up with standard prices the

following factors will be considered.

2.6.1 Production Cost

The amount of electricity spent, transport cost of goods/products, all incurrences over salaries,

and rent and advertising cost should be taken into consideration.

2.6.2 Competitors Prices

The company's products and services prices should not exceed or be too low to that of its

competitors, but should range in between to enable it make a profit and attract more customers to

increase sales.

2.6.3 Penetrating Pricing

At the start of the operations of the enterprise will sell its product /services at reduced prices to

capture more customers and make more profits.

2.6.4 Expected profits

This is the main aim of entering into business and therefore the enterprise should be in position

of making profits over the invested amount.

2.6.5 Government policy on pricing

The enterprise will be paying taxes to the government of which must be taken into consideration

for the selling prices of its products /services. Also the enterprise should be in a position to cope
with the set up prices by bodies which protects consumers from exploitations

2.7 SALES TACTICS

This are selling techniques used in order to ensure that products /services are delivered to the

intended customers in the market. The enterprise will employ various ways for sales, which

includes:

A) Personal selling, the owners will attend to the customers and handle them, they will be in

position to persuade the customers to buy more from the enterprise hence increase in sales

B) Salesmen

The enterprise will employ salesmen whose duties will be selling of products from the enterprise

to reach many customers.

2.8 DISTRIBUTION STRATEGY

The enterprise main target is to cover a wide market so as to increase its sales with profits .in

order to achieve this, it will employ a good distribution strategy. The products from the producer

will reach the enterprise which is the wholesale/retailer and then distribute to the agents who are

salesmen and finally to the customers. the whole process will involve transportation by means of

Lorries. The enterprise may also sell its products direct to the customers in both large and small

scale quantity in order to reduce the transportation costs involved. the salesmen will be using

matatus and lorries to transport the products to customers.

The anticipated distribution problems for the above process will include:

-Rise in fuel prices which will lead to rise in transportation costs. This problem will be solved by
purchasing in bulky to have enough stock which will last for longer period.

-strikes in the transportation industry which will delay the delivery of the products, this will also

be catered for by purchasing in bulky and buy motorbikes to supply to customers.

-Attack from thieves during transportation process, this will be solved by delivering goods

during the day time

2.8.1 Distribution Strategy Flow Chart

                          MANUFACTURER/PRODUCER

UNITED ELECTRICALS AND ELECTRONICS ENTERPRISE

CUSTOMERS

                

CHAPTER THREE

3.0 ORGANISATION AND MANAGEMENT PLAN

Organization is the process of coordinating manpower, money and machines in a firm for high

and effective production at a low cost, while management is the process which refers to the use

of all available resources of the firm including people as well as physical and financial resources
to achieve the desired goals .hence this will ensure smooth running and maximum utilization of

the firm available resources for quality production /services in order to meet customers demand.

3.1 ORGANIZATION STRUCTURE

This is the framework within which a business operate and varies with the nature of the

organization, type of the business unit, size of the business operation, level of responsibility and

nature of interpersonal relationship Fretech Electricals and electronics enterpriseshall adopt a

line organization structure which will show the hierarchy of authority from the manager to the

workers for effective and convenient operation of the enterprise as shown below.

                                                                                                                  MANAGER

                                                                                                          ASSISTANT MANAGER

      ACCOUNTANT                                                            SECRETARY                          SUPERVISOR

            TECHNICIANS                                                       SALESMEN                                  GUARD

3.2 BUSINESS MANAGER

The enterprise will be managed by the owner who is Mr. Okuku.

MANAGER’S QULIFICATION, DUTIES AND WORK EXPERIENCE.

3.3.1 Qualification

-Diploma holder in electrical engineering (power option)

-Diploma in sales and marketing

-Diploma in computer application

-Diploma in solar installation

3.3.2 Work Experience

-Worked for 5 year as a technical machine operator in the maintenance and operation department

in the manufacturing industry

-One 4 years’ experience in the construction industry in charge of installation and maintenance of

electrical work.

3.3.3 Duties and Responsibilities

- Planning and controlling all enterprise activities

-Delegating duties to workers

- Recruitment of workers

-Receiving of tenders /contracts from clients

- Coordinating the enterprise projects and authorizing any form of payments to be made.
3.4 KEY PERSONNEL, NUMBER, QUALIFICATION AND DUTIES

The enterprise shall ensures that it has the best personnel for the better services and smooth

operation of the business in order to prosper and achieve its goals and objectives on time. The

following are key personnel’s, number, qualifications and duties.

PERSONNEL NUMBER QUALIFICATION DUTIES

ASSISTANT 1 -Diploma in electrical -Coordinating all the

MANAGER engineering departments

-Diploma in project -Reporting to the

management manager

-Above 30 years of -Planning and

age with 4 years of controlling day to day

experience operations

-Computer literate

-Good communication

skills

ACCOUNTANT 1 CPA section II holder -Pay workers

-Computer literate -Receiving cash

-25 years and above -Keeping all

with 2 years working accounting records

experience -Costing and

estimations of

tenders/contracts.

SECRETARY 1 -Diploma in -Receiving customers

 secretarial studies and orders

-Computer literate -Receiving and

-25 years and above sending of mails

with 2 years working -Minute taking during

experience. meeting.

- Ready to work for -Cleaning and

long hours. arranging of the office

SUPERVISOR 1 Diploma in electrical -Delegating of duties

engineering to workers

-Diploma in project -Reporting to the

management assistant manager

-Computer literate -In charge of days

-Good interpersonal activities

relationship -To ensure that

desired output is

attained

TECHNICIANS 2 -Diploma in electrical -Maintenance of

engineering electrical machines,

-Computer literate,24 installation of

years and above with electrical works.

4 years working -Servicing of

experience electrical equipment’s

SALESMEN 2 Good communication -Selling and

marketing of electrical
 skills products/services of

Computer literate the enterprise.

-diploma or artisan II -distributing

-25 years of age and /supplying of

above with 3 years electrical goods to

experience in customers.

electrical installation

and machines

maintenance.

3.5 RECRUITMENT, TRAINING AND PROMOTION

3.5.1 Recruitment

This refers to a process of identifying/selecting qualified and reliable personnel for a specific job

in an organization for effective and efficient operation.

3.5.2 Recruitment process

The enterprise Shall employ the following procedures during the recruitment process

I) Identification of the vacant post

Due to the increase in service demand, resigning of an employee or death, there exist a vacant

post which may need an agent replacement for convenient business operation. This vacant post

may be identified by the manager, assistant manager or supervisor.

Ii) Advertisement of the vacant post.

As a result of the need to fill a vacant post in the enterprise it raises a need for recruitment of

qualified and interested personnel in order to make those interested with qualification, Fretech

Electricals and electronics enterprise shall advertise through the local radio stations and by use of

posters within the area.

Iii)Receiving of application letters

After advertisement, application letters shall be received through the poster office or personal

presentation to the enterprise offices.

1v) Shortlisting of successful candidates

After receiving the applications letters the letters are sorted out by the secretary and the

applicants who meet the qualifications will be selected and shortlisted.

I) Sending of invitation letters and interviews

The selected and shortlisted applicants will be invited for an interview at the specified date and

time. Will be interviewed by the assistant manager and the supervisor in order to gauge their

capability and potential whether they will be able to deliver effectively.

VI) Appointment letters

Appointment letters will be given to successful applicants who meet the requirements with terms

of services and payments.

II) Orientation

Brief introduction to the new employees shall be conducted by the supervisor in order to make

them familiar with the enterprise operation processes.

3.5.3 Training

Fretech Electricals and electronics enterprise shall train its workers in order to acquire the

basic dynamic techniques for improved services and smooth operations of the business. The

following methods will be employed to carry out the training of workers who will be

selected.

I,) Attending of Seminars/Workshops

The enterprise workers will be allowed to attend seminars /workshops in order to improve on

their basic techniques on the change of technologies/market demand and improve on customer

relationship for better business operations.

II) On job training

Fretech Electricals and electronics enterprise employees shall be trained by experts while at work

in order to acquire skills and knowledge in their relevant field for better work performance

Iii)Off job training

Employees will be allowed to attend training schools to acquire new skills which will improve

their standard of work performance.

3.5.4 Promotion

This is the way in which ones effort and ability towards performance of work is recognized and

appreciated by motivating him/her through various ways like increase in salary and rank. The

enterprise shall promote its workers by considering the following:

- Working experience
 - Qualification

- Performance

- Displine

3.6 REMUNERATION AND INCENTIVES

3.6.1 Remuneration

This is the mode of making payment in accordance with the terms of agreement. The company's

employees will be paid salary depending on their experience and qualifications .the table below

indicate the employees salaries.

Personnel Number Basic salary House allowance Total

Manager 1 18000 5000 23000

Assistant 1 15000 40000 19000

manager

Supervisor 1 13000 35000 16500

Technician 2 12000 3000 15000

Salesmen 2 9000 2500 11500

Secretary 1 10000 3000 13000

Guard 1 7000 2000 9000

Accountant 1 12000 3000 15000

3.6.2 Incentives

These are rewards that are given to workers in order to motivate them on their service delivery to

customers. The following will be used by the enterprise as the incentives to its employees

-Improved working conditions

The enterprise shall ensure that it working premises are ever clean for conducive operating

business environment in order to secure workers from health hazards during working

-Overtime allowances

Workers shall be paid allowances on top of their salary for working extra time if need arises to

do so due to customer demand.

-Provision of lunch

lunch shall be provided to workers during working days without payments

-Annual parties

The enterprise shall conducts annual parties at the end of every year to it workers and reward

their performance to boost their morale.

- Staff prices and provision of loans

The workers shall be allowed to buy goods and get services of the enterprise at reduced prices

and be given loans at affordable interest rates.

3.7 LICENSING, PERMITS AND BY-LAWS

3.7.1 Licenses

Fretech Electricals and electronics enterprise shall acquire it's business trade license from

Homabay county at a cost of kshs 10000 per year.

3.7.2 Permits

Registration permits shall be obtained also from Homabay county government offices for

business transaction.

3.7.3 By-laws

The industry requires that some laws shall be adhered to for effective operation. Some of these

laws include:

I) , Employment act

This stipulates terms of employment between the employer and employees in relationship to

payment, allowances and other benefits. This is in chapter 226 of the Kenyan laws.

Ii), Workmen compensation scheme

For an accident incurred by the worker during working , the worker is entitled to compensation.

IiI), Health act

Workers shall be provided with safety attires, good working conditions, proper ventilation and

high standard of hygiene.

IV), Trademark act

It states that no business shall be allowed to use a logo which is entitled to another firm.The

enterprise shall respect the act and use its own logo to transact the business.

3.8 SUPPORT AND PROFFESSIONAL SERVICES

This are services that will enable the enterprise to carry out it's obligations effectively in order to

achieve it is expected goals and objectives in it is day to day operations. These services include:

3.8.1 Banking Services

The enterprise will open an account with the cooperative bank for effective and safe financial

transaction for business transaction.

3.8.2 Postal services

For effective communication when dealing with transaction the enterprise shall get the postal

services from oyugis postal offices under the following address.

3.8.3 Security Services

The enterprise shall need the security services for the protection of the enterprise from theft.

These services shall be provided by:

3.8.4 Legal services

The enterprise shall need a legal officer to represent and protect it in court when dealing with

cases and shall hire the services of,

3.8.5 Auditing services

The enterprise shall need auditing services of the books of account in order to determine its

growth and credibility which shall be provided by,

 CHAPTER FOUR

4.0 OPERATIONAL AND PRODUCTION PLAN.

In order for the enterprise to achieve its objectives and goals on time it shall ensure that all the

required operational and production facilities /equipment’s are put in place, well arranged and

effectively utilized for smooth running of the company.

4.1 PRODUCTION FACILITIES AND CAPACITY

Fretech Electricals and electronics enterprise shall ensure that it acquires the best production

facilities /equipment’s at affordable prices for effective and convenient provision of services and

products. Tithe following are some of the facilities the enterprise will acquire to enable it starts

its operations,

Facility Quantity Required Unit cost(kshs) Total cost(khs)

Tables 4 6000 20000

Chairs 10 2000 10000

Computers 3 14 45000

Cabinets 3 4500 13500

Shelves 6 2000 12000

Pliers 4 150 600

Testers 5 100 500

Screws drivers 4 150 600

Hacksaw 3 350 1050

Reception counters 1 2400 2400

Total cost 105650

 4.2 OPERATIONAL /PRODUCTION STRATEGY

For better and smooth running of the enterprise the enterprise shall acquire the monthly operating

materials on time at affordable prices. The materials will be of good standards and high quality

that suite the market demand. The following are the materials that will be acquired for the

operation of the company.

Type of Materials Source Quantity Unit cost(kshs) Total cost(khs)

Receipt    books Mwema supplies 4 120 280

Stationery Mwema supplies 5 packets 180 900

Tape measure Kodiko supplies 4pieces 500 2000

Conduits Pipeman 100 pieces 70 7000

supplies

Cables Westy    cables 5 rolls 4000 20000

Nails/clips Westy cables 10kgs 120 1200

Screws Westy    cables 4packets 90 360

Insulating Tape Toda    supplies 4 pieces 180 720

Climbers Amran supplies 4 sets 1500 6000

Earth rods Westy    cables 10 400 4000

Dustcoats/ Mwembe 6pairs 750 4500

overalls suppliers

Testers Westy cables 10 50 500

Hammers Kodiko 4 250 1000

 hardware

Ropes Westy    cables 5 350 1750

total 50210

4.2.1 Cost of Labor

This is the amount of money that employees are going to be paid for their services according to

their job performance and qualification .The monthly labor costs that the enterprise shall incur is

as shown in the table below,

Personnel Number Basic House Total(kshs)

salary(kshs) allowance(kshs)

Manager 1 18000 5000 23000

Assistant 1 15000 4000 19000

Manager

Supervisor 1 13000 3500 16500

Accountant 1 12000 3000 15000

Technician 2 12000 3000 15000

Salesmen 2 9000 2500 11500

Secretary 1 10000 3000 13000

Guard 1 7000 2000 9000

122000
 4.2.2 Overhead Expenses

The enterprise shall incur additional expenses related to it is operations for efficient and smooth

running. The monthly overhead expense that shall be incurred is as shown below.

ITEM COST(kshs)

Postal charges 660

Insurance 1200

Electricity bills 2500

Travelling expenses 6000

Advertisement 8000

Rent 10000

Maintenance 3000

Total cost 31360

4.2.3 Total Monthly Requirements

In order for the enterprise to carry out it is operations effectively .It shall incur the following

monthly requirements

Item Cost(kshs)

Material 50210

Labor 122000

Overhead 31360

Total(kshs) 203570
 4.2.4 Proposed Workshop Layout

Fretech Electricals and electronics enterprise shall operate under the following workshop layout

in it is business premises.

4.2.5 Working schedule

For effective and smooth operations of the enterprise    shall have a well arranged working

schedule to ensure better utilization and management of the available recourse’s to avoid

unnecessary time wastage which may lead to losses. Below is the working schedule that the

enterprise shall adopt.

Days 7:00am- 8:00am- 10:30am- 11:00am- 1:00pm:- 130pm- 5:20pm-

And 8:00am 10:30am 11:00am 1:00pm 1:30pm 5:20pm 5:30pm

Time

Mond Reporting Normal Tea break Normal Lunch Normal closing

ay - to work operations operation break operation

Satur s

day

4.3 OPERATIONAL/PRODUCTION PROCESS

This is the path followed by the enterprise in the conversion of raw materials to finished

products, channels through which are followed before final product is obtained. Therefore,

Fretech Electricals and electronics enterprise shall adopt convenient channels for

product/services delivery.
4.3.1 Product Process

For complete product process the enterprise shall use the best channel to ensure that the final

product is of good quality that satisfy the customer demand.thefore the enterprise shall adopt the

following sequence for product process

     

I) Buying from the manufacture

Ii) Inspection

                                     Iii) Packaging

                                                                            Iv) Inspection

                                                                              V) Storage

                                          Vi) Selling

I) The enterprise shall purchase products from the manufacture in large quantities at affordable

prices for sale.

Ii) The product bought shall be inspected by the staff to ensure that they meet the required

specifications.
Iii) After the products have been inspected and approved they packed according to the type, size

and use.

IV) The packed products are inspected again by the supervisor and the manager to ensure that

they are well packaged.

V) After inspection and approval of the packed products they are stored and others are put on

shelves display for sale.

Vi) The packed and stored products are ready for sell and distribution to customers at affordable

prices.

4.3.2 Service Process

The enterprise shall also offer quality and affordable services which shall require certain

sequence to be followed in order to obtain satisfactory output; the sequence to be followed for

service delivery is as follows:

Receiving of the item- costing-workshop- fault diagnosis -inspection/testing- store- collection

i) The product to be serviced is received by the secretary or supervisor from the

customer during normal working hours.

ii) The item received is evaluated on the services to be done and the cost to be incurred

during the process and the owner is informed about the cost, if he/she accepts the item

is handed over to the workshop.

iii) Faulty diagnosis is carried out at the workshop and the required services/repairs are

done to rectify the item.

 iv) The supervisor will inspect the item after completing servicing by the technicians in

order to prove whether it's on good condition as required by the owner/customers.

v) If the item is found to be ready according to the required standards of operation it is

taken to the store while waiting for collection by the owner after making required

payments.

vi) The item will be ready for collection by the customer at the normal working hours

/days from the enterprise office.

4.4 REGULATIONS AFFECTING PRODUCTS /OPERATION

The enterprise shall ensure that it abides to the stipulated government regulations and laws

which may affect its operations in order to ensure smooth and effective running of the

business. Some of the regulations that affect the enterprise includes:

i) Employment Act

It states that all employees are entitled to wages/salaries and benefits .the enterprise

shall ensure that all it is employees are paid their salaries, given their benefits and

work in good conditions.

ii) Workmen compensation scheme

It states that all employees deserve compensation for any injuries/accident incurred

during working at the work place. Therefore the enterprise shall compensate any

worker who may incur accident /injury during the working time.

iii) Trademark Act

 Every enterprise is entitled to hold one trade mark for its operations. Fretech

Electricals and electronics enterprise shall operate on it's own trade mark to avoid

confusion with other companies.

iv) Trade license/permits

Every enterprise is subjected to have a trade license and permit before commencing

its operation .therefore the enterprise acquire the trade license and permit from the

local authority involved before commencing its operation.

v) Government policy

Every enterprise is required to pay tax to the government; the enterprise shall pay tax

on time as requirement by the government for smooth operations.

Vi)                  Health Act

Local authorities are empowered to make regulations related to the maintained of

health standards .therefore the enterprise    shall ensure that the working conditions for

its workers and the surrounding environment is kept conducive for the benefit of

everybody.

CHAPTER FIVE

5.0 FINANCIAL PLAN

This is the process of arranging all the available resources for smooth running of the company. It

involves on how finance will be obtained and used in the enterprise. Fretech Electricals and

electronics enterprise shall be financed through owner’s equity, savings, and bank loans. The

objectives of this financial plan are to:

 i) Ensure maximum return on the invested capital

5.1 PRE-OPERATIONAL COSTS

These is the costs which the enterprise shall incur before under taking any profitable

transactions. Its operations shall incur the following costs before starting its operations as shown

in the table.

Item Description Amount(kshs)

1 Tools and equipment’s 105650

2 materials 50210

3 rent 10000

4 Advertisement 8000

5 transport 6000

6 insurance 1200

7 Trading license and permit 2400

8 Electricity bill 2500

9 Postal charges 660

10 maintenance 3000

11 Water deposit 1200

Total cost(kshs) 190820

Assumptions

 Market rates shall remain constant

 Rent shall remain constant for the first one year of operation and then vary thereafter.

 Depreciation of equipment’s shall vary

 5.2 WORKING CAPITAL ESTIMATION

These is the total fund invested in a enterprise after financing the purchase of fixed assets.

Fretech Electricals and electronics enterprise’s working capital estimation is as shown below and

is given by the equation:

Working capital = current assets - current liabilities

5.2.1 Working Capital Estimation Table

PARTICULARS YEAR 1 YEAR 2 YEAR 3

AMOUNT(KSHS) AMOUNT(KSHS) AMOUNT(KSHS)

Current Assets

Starting capital 74330 60000 90000

Cash at hand 130000 70000 80000

Cash at bank 18000 200000 11000

Debtors - 30000 50000

Total Current Assets

384000 360000 3330000

Less

Creditors 13500 146000 156000

Provision for tax 12%

16200 17520 18720

TotaCurrentLiabilitieS 118800 128400 137200

Working Capital 265530 231600 192800

 5.3 CASH FLOW PROJECTIONS

Is the amount of cash coming /going out of the enterprise in a particular period. It shows how

much cash the enterprise needs to carry on trading. The following is the cash flow projections for

the 1ST 2ND AND 3RD Year respectively.

5.3.1 Fretech Electricals and electronics enterprise 's cash flow projection for the year 2.

Particulars Jan Feb march Apri may Jun Jul aug sep oct nov dec tota

Opening - 1808 10560 7686 64763 7316 7896 8196 7386 71584 6866 7226 948

balance 00 0 8 4 4 4 4 3 4 3

Cash from - - 46000 6973 25237 4083 5933 6213 9743 70916 7563 7353 621

sales 7 6 6 6 6 7 6 7

00 00

Owners equity 3840 - - - - - - - - - - - 384

00 0

Bank loan 1500 - - - - - - - - - - - 150

00 0

Debtors - - - - - - - 4000 - - 3000 - 700

Total cash in 6274 2808 27640 2666 27000 2740 2783 2681 2713 27250 2673 2698 362

flow 00 00 0 00 0 00 00 00 00 0 00 00 00

Purchases 7433 7000 76000 7400 70000 7500 7600 7000 7300 76000 7400 7000 878
 0 0 0 0 0 0 0 0 0 0

Pre-operating 1792 - - - - - - - - - - - 179

cost 00 0

Salaries 8760 8760 87600 8760 87600 8760 8760 8760 8760 87600 8760 8760 105

0 0 0 0 0 0 0 0 0 00

Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 780

Adve 2500 2000 1800 1500 1000 1000 1800 1200 1000 1400 1000 1000 18000

rtise

ment

Loan - - 1363 1363 1363 1363 1363 1363 1363 1363 1363 1363 136363

repay 7 7 6 7 6 6 7 6 7 7

ment

Intere - - 4800 4800 4800 4800 4800 4800 4800 4800 4800 4800 48000

st on

loan

3.2%

Elect 2500 2000 1800 1500 1000 1200 1000 1800 1780 1900 2100 2000 23780

ricity

bill

Trans 3000 2500 2000 2800 2000 2200 2200 2800 3000 2600 2400 2000 305000

port

Insur 4000 - - - 4000 - - - - 4000 - 3000 12000

ance
Depr - - - - - - - - - - - - 3600

eciati

on

@2.5

Audit 2000 - - - - - - - - - - 3600 2000

ing

fee

Main - 1400 1600 1500 1800 1400 1200 2000 2200 1600 1200- - 17500

tenan 1

ce

Tools and 7700 - - - - - - ---- 770

equipment 0 1600

Water bill 1500 1200 1000 1200 1300 900 1000 1200 800 1000 - - 133

Posta 2640 - - - - - - 1200 800 1000 1000 1200 2640

charg

es

Credi - - - 4000 - - - - 3000 - - 2000 9000

tors

Licen 3220 - - - - - - - - - - - 3230

se

Misc 3000 - 2400 2200 2000 - - 2700 2400 2800 - 2500 20000

ellan
eous

Total 4466 1752 1995 2018 1968 1950 1963 1942 1997 2038 1950 1994 260364

cash 00 00 36 37 36 36 36 36 16 37 36 37

outfl

ow

End 1808 1056 7686 6476 7316 7896 8196 7386 7158 6866 7226 7036 101885

balan 00 00 8 3 4 4 4 4 4 3 4 4

ce

6.3.2 Fretech electricals and electronics enterprise 's cash flow projection for the 2nd    year

Ending .

Particulars Jan Feb. mar Apr. may Jun. Jul. Aug. sep Oct. nov Dec To

Opening 7036 155 1550 1656 1466 1451 1497 1545 155 145720 146780 144340 173

balance 761 61 01 81 01 61 21 760

Cash 1400 100 1200 1000 1300 1200 1300 1000 120 130000 100000 120000 141

from 00 000 00 00 00 00 00 00 000

sales

Owners - - - - - - - - - - - - 0

Equity

Bank loan - - - - - - - - - - - - 0

Debtors - 250 - 2000 - 2000 - 3000 280 3000 2800 3000 219

0 0
Cash 1600 800 7800 6000 5372 6830 6054 7967 554 53280 78020 71060 898

from 00 00 0 0 0 0 0 9 40

services

Total 3703 338 3530 3276 3304 3362 3403 3372 334 332000 327600 338400 406

cash in 64 261 61 01 01 01 01 00 000

flow

Purchases 7500 720 7350 7000 7400 7200 7500 7000 735 74000 72000 75000 876

0 00 0 0 0 0 0 0 00

Salaries 8760 876 8760 8760 8760 8760 8760 8760 876 87600 87600 87600 105

0 00 0 0 0 0 0 0 00

Rent 7000 700 7000 7000 7000 7000 7000 700 7000 7000 7000 840

0 0

Advertise 2000 180 2200 1800 2000 2200 1800 2000 220 1800 2000 2200 240

ment 0 0

Loan 1363 - - - - - - - - - - - 136

repayment 3

Interest on 4800 - - - - - - - - - - - 480

loan 3.2%

Electricity 2400 220 2380 2440 2300 2460 2350 2440 230 2440 2460 2380 285

bill 0 0

Transport 2800 320 3000 2800 3200 3000 3200 3000 280 3200 3000 3200 364

0 0
Auditing 2200 - - - - - - - - - - - 220

fee

Maintenan 1800 200 1600 1800 2000 1600 1800 2000 160 1800 2000 1800 218

ce 0 0

Tool and - - - - - - - - - - - - 0

equipment

Water bill 1600 140 1580 1480 1600 1580 1400 1600 148 1580 1600 1480 183

0 0

Postal 1200 - - - - - - - - - - - 120

charges

Creditors 2500 300 2000 3000 2800 2000 3000 2800 300 2800 3000 2500 324

0 0

License 3270 - - - - - - - - - - - 327

miscellane 2800 300 2600 3000 2800 3000 2600 3000 280 3000 2600 3000 342

ous 0 0

Total cash 2146 183 1874 1809 1853 1864 1857 1814 188 185220 183260 186160 224

out flow 03 200 60 20 30 40 80 40 280

End 1557 155 1656 1466 1451 1497 1545 1557 145 146780 144340 152240 181

cash(kshs) 61 061 01 81 01 61 21 60 720

 5.3.3 Fretech electricals and electronics enterprise 's cash flow projection for the 3rd year

ending .

Particulars jan feb mar apr may jun jul aug sep oct nov dec Total(kshs)

Opening 1522 2448 2814 2952 2923 29115 2893 2976 2940 2876 2937 2963 3316167

balance 40 57 57 57 57 7 57 57 57 57 57 57

Cashfrom 1300 1200 1100 1000 11000 1000 1200 1000 1100 1200 1000 11000 1320000

sales 00 00 00 00 0 00 00 00 00 00 00 0

Cashfrom 1800 1000 9000 8000 7000 8000 7000 7500 7000 7000 8000 7000 1035000

services 00 00 0 0 0 0 0 0 0 0 0 0

Debtors - - 3000 - 3000 2000 - 2000 - 2000 3000 - 150000

Owners - - - - - - - - - - - -

equity

Total cash 4622 4648 4744 4752 4753 4731 4793 4746 4740 4796 4767 4763 5686167

in flow 40 57 57 57 57 57 57 57 57 07 57 57

Purchases 7400 7200 7000 7100 7200 7300 7300 7200 7100 7400 7200 7100 865000

0 0 0 0 0 0 0 0 0 0 0 0

Salaries 8760 8760 8760 8760 8760 8760 8760 8760 8760 8760 8760 8760 1051200

0 0 0 0 0 0 0 0 0 0 0 0

Rent 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 84000

Advertise 2000 1800 1800 1800 2000 1800 2000 1800 2000 1800 2000 1800 22800

ment

Loan 1363 - - - - - - - - - - - 13633

repayment 3

Interest on 4800 - - - - - - - - - - - 4800

loan 3.2%

Electricity 2400 2200 2300 2300 2200 2400 2300 2200 2400 2300 2200 2300 27600

bill

Transport 3200 3000 3000 3000 3000 3200 3000 3000 3200 3000 3000 3000 36800

Insurance 4000 - - - - - 4000 - - - - 4000 12000

Depreciati 3600 - - - - - - - - - - - 3600

on @2.5

Auditing 2500 - - - - - - - - - - - 2500

fee

Maintenan 1600 1800 2000 2000 1800 1600 2000 1800 1600 2000 1800 2000 22000

ce

Water bill 1800 2000 2200 2200 1800 2200 2000 2200 2000 2200 2000 2200 24800

Postal 1200 - - - - - - - - - - - 1200

charges

Creditors 2000 3000 - 3000 - 2000 - - 2000 3000 - - 15000

License 3250 - - - - - - - - - - - 3250

Miscellane 2800 3000 2800 3000 2800 3000 2800 3000 2800 3000 2800 3000 34800

ous

Total cash 2126 1834 1792 1829 1842 1838 1817 1806 1864 1859 1804 1838 2224983

out flow 83 00 00 00 00 00 00 00 00 00 00 00

End 2448 2814 2952 2923 29115 2893 2976 2940 2876 2937 2963 2674 3461184

cash(kshs) 57 57 57 57 7 57 57 57 57 57 57 74
     ASSUMPTIONS

-Rent is expected to remain constant for the first year and vary for the following years

-Loan and interest repayment shall start on March during the 5th month of operation.

-Market shares are expected to remain constant and salary for three years of operation.

5.4 PROFORMA INCOME STATEMENT FOR THREE YEARS

The proforma income statement is based on accurate data and forecast on the realistic

expectation which stipulate whether the enterprise is running at profit or loss, it also shows the

tax payable per year. Fretech electricals and electronics enterprise 's Proforma income statement

is as shown in the below.

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

AMOUNT KSHS AMOUNT KSHS AMOUNT KSHS

Sales 2133007 2308089 23555000

Cost of goods 878330 876000 865000

Gross    profit 1254677 1432039 1490000

Pre-operational cost 179200 - -

Salaries 1051200 1051200 1051200

Rent 78000 84000 84000

Advertisement 18000 24000 22800

Loan repayment 13636 13633 13633

Interest on loan 4800 4800 4800

Electricity 23780 28580 27600

Transport 30500 36400 36800

insurance 12000 16000 12000

Depreciation 3600 - -

Auditing fee 2000 2200 2500

Maintenance 17500 21800 22000

Tools and equipment 77000 - -

Water bill 13300 18300 24800

Postal charges 2640 1200 1200

Creditors 9000 32400 15000

License 3230 3270 3250

miscellaneous 20000 34200 34800

TOTAL EXPENSES 1725313 1372063 1359983

NET PROFIT

BEFORE TAX 470636 59976 130017

TAX 16200 17520 18720

Net profit after tax 454436 424567 111297

5.5 PROFORMA BALANCE SHEET FOR 3rd YEAR ENDING

It shows the financial structure at the end of the year .it contains assets, liabilities and owner’s

equity .it shows what you own and owe at any given day.

ASSETS= Liabilities + Owners equity

Particulars Year 1 Year 2 YEAR 3

Amount (kshs) Amount (KSHS) AMOUNT(kshs)

CURRENT ASSETS

Cash at bank 180000 200000 110000

Cash at hand 130000 70000 80000

Stock 74330 60000 90000

Debtors - 30000 50000

FIXED ASSETS

Tools and equipment’s 77000 - -

Depreciation 3600 - 3600

Others 82070 - -

TOTAL ASSETS 547000 360000 330600

CURRENT

LIABILITIES

Creditors 9000 32400 15000

Other liabilities - 322800 310600

Long term liabilities

Loan 150000 - -

Interest on loan 48000 4800 4800

Owners equity 384000 - -

TOTAL 547000 360000 330600

LIABILITIES

5.6 BREAK EVEN POINT

This will indicate whether the enterprise is operating at a loss or profit. Below is the break-even

point analysis of Fretech electricals and electronics enterprise.

Determination of variable and fixed costs of Fretech electricals and electronics enterprise table.

particular Year 1 Year 2 Year 3

Amount( kshs) Amount (kshs) Amount( kshs)
Fixed costs
Salary 1051200 1051200 1051200
License 3270 3250 3250
Insurance 12000 76000 12000
Rent 78000 84000 84000
Loan repayment 136363 13633 13633
Interest on loan 4800 4800 4800
T0tal costs
Variable costs
Advertisement 18000 24000 22800
Electricity bill 23780 28580 27600
Transport 30000 36400 36800
Auditing fee 2000 2200 2500
Maintenance fee 17500 21800 22000
Water bill 13300 18380 24800
Postal charges 2640 1200 1200

Total costs 107720 132560 112800

 5.7 BREAK EVEN CALCULATION FOR THE 1st    YEAR ENDING

                                        Total contribution margin =        sales –Total variable costs

Contribution margin % = contribution margin / sales*10

Break even level = fixed costs / contribution margin

Total contribution margin = 2133007 – 1077200 = 1055807

Contribution margin %      =      1055807 / 2133007*100

Break-even level            =          1328833      / 49.5      =        26846

5.8 DESIRED FINANCING

For Fretech electricals and electronics enterprise to start it's operation, it requires the following

amount as shown    in the table.

ITEM AMOUNT(KSHS)

Pre-operation costs 179200

Working capital 362330

TOTAL (KSHS) 541530

 5.9 PROPOSED CAPITALIZATION

This is the funds required to start the enterprise. The table below shows Fretech electricals and

electronics enterprise 's PROPOSED capitalization.

ITEM AMOUNT(KSHS)

OWNERS EQUITY 384000

LOAN 150000

SAVINGS 40000

TOTAL (KSHS) 674000

5.10 PROFITABILITY RATIO

It relates to the amount of funds used to make the profit. The enterprise shall calculate it is

profitability ratios as shown below in order to determine it is performance

Ratio Formula Year 1 Year 2 Year 3

i) Gros Gross 1254677/2133007* 1432039/2308039* 1490000/2355000*

s profit 100 =58.22% 100 =62.1% 100 =63.27%

profi /sales*100

marg Current 384000/135000* 360000/146000*10 330000/156000*10

in asset/curre 100 =284.4% 0 = 246% 0 = 211%

nt
 liabilities 59976/2308089*10

ii) Curr * 100 470636/2133007*1 0 =32.6%

ent 00 = 22.1% 130017/2355000*1

ratio Net profit 00 = 55.52%

iii) Net before

profi tax/sales*1

t 00

marg

in

Net profit 42456/384000*100

after 454436/38400*100 = 11.1%

tax/owners = 118.3% 111297/384000*10

iv) Rati equity 0 = 28.98%

o on *100

equit

y
 APPENDIX

Court road
Kisii_ Oyugis road

Fretech electrical
and electronics
enterprise