TITLE: BUSSINESS PLAN PROJECT

BOUTIQUE ENTERPRISE

LINET’S BOUTIQUE ENTERPRISE

BUSSINESS NAME: BOTIQUE ENTERPRISE.

PRESENTED BY:

SUPERVISOR:

ADMISSION NUMBER :

INDEX NUMBER:

CENTRE CODE :

COURSE CODE :

PRESENTED :KENYA NATIONAL EXAMINATION COUNCILIN PARTIAL FULLFILLMENT FOR

THE AWARD OF DIPLOMA IN HUMAN RESOURCE MANAGEMENT.

EXAMINATION SERIES:
ACKNOWLEDGEMENT.

I take this opportunity to thank my beloved parents Mr. and Mrs. MUKUNDI who supported me
financially to accomplish my business plan comfortably.

Secondly my special thanks go to my fellow trainees namely Elizebeth Wahome and Jacinta wafula for
their great encouragement for this study. In addition I thank the co-ordinator Mr. Michoki and mr
Magara for their admission in this institution. I too thank Mr. Magara for giving me the outline on how
to write my business plan.

Last but not least, I thank the non teaching staff especially nurse for her medical care which enabled me
be healthy up to this time of presenting my business plan.
DEDICATION

I dedicate this business plan to my beloved father Mr. Mukudi O Pascal for being responsible and caring
to me since I was young up to this particular level.
DECLARATION

I MUKUDI LINET do here by declare that this is my own true work and has never been presented by any
one before in any institution in a ward of certificate, diploma or degree whatsoever.

NAME: MUKUDI A LINET

SIGNATURE:

DATE :

WITH APPROVAL OF COURSE SUPERVISOR.

NAME :

SIGNATURE:

DATE :
TABLE OF CONTENTS

ACKNOWLEDGEMENT.………………………………………………………………………………………………………………………i

DEDICATION………………………………………………………………………………………………………………………………………ii

DECLARATION……………………………………………………..……………………………………………………………………………iii

TABLE OF CONTENTS…………………………………………………………………………………………………………….………….iv

EXECUTIVE SUMMERY……………………………………………………………………………………………………………………….v

CHAPTER TWO

1.0 Business description……………………………………………………………………………………………………………………1

2.1.0 The sponsor…………………………………………………………………………………………………………………………………1

2.1.1 The sponsors family background……………………………………………………………………………………………….…1

2.1.2 education background…………………………………………………………………………………………………………………1

2.1.3 Technical qualification…………………………………………………………………………………………………………………1

2.1.4 Limitation……………………………………………………………………………………………………………………………………1

2.1.5 Contribution towards the business……………………………………………………………………………………………..1

2.2 The business……………..…………………………………………………………………………………………………………………2

2.3 Justification of the business nature…………………………………………………………………………………………….2

2.3.1 Justification for choice of location……………………………………………………………………………………….………2

2.4 The industry…………………………………………………………………………………………………………………………………3

2.4.1 Size of the business………………………………….……………………………………………………………………………….3

2.4.2 The type of technology used…………………………………………………………………………………………………….…3

2.4.3 Treads in the industry…………………………………………………………….……………………………………………………4

2.5 Entry strategies……………………………………………………………………………………………………………………………4

CHAPTER THREE

3.0 Marketing plan…………………………………………………………………………………………………………………………………5

3.1 Introduction…………….……………………………………………………..……………………………………………………………….5

3.2 Customers………………………………………………………………………………………………………………………………………..5

3.2.1 Potential customers……………………………………………………..…………………………………………………………………5

3.2.2 Individual customers……………………………………………………………………………………………………………………….5

3.2.3 Institutional customers……………………………….………………………………………………………………………………….5

3.3 Competition…………………………………………………………………………………………………………………………………….6

3.3.1 Linet’s Boutique enterprise………………………………………………………………………………………………..…………..6

3.4 Pricing strategy………….……………………………………………………………………………………………………………………9

3.5 Sales tactics……………………………………………………………………………………………………………………………..……10

3.6 Advertising and promotion……………………………………………………………………………………………………………10

3.7 Distribution strategy………………………………………………………………………………………………………………………11

CHAPTER FOUR

4.0 Inroduction……………………………………………………………………………………………………………………………………13

4.1 management team……………………………………….………………………………………………………………………………13

4.1.1 Organisational structure………………………………………………………………………………………………………………

115

4.1.2 The key management team………………………………………………………………………………………………………….14

4.1.3 Compensation of the key management team………………………………………………………………………….. …15

4.1.4 Remuneration analysis…………………………………………………………………………………………………………………16

4.2 Supportive staff……………………………………………………………………………………………………………………….…..17

4.3 Legal requirement………………………………………………………………………………………………………………………18

4.4 support services…………………………………………………………………………………………………………………………19

CHAPTER FIVE

5.0 Production plan……………………………………………………………………………………………………………………………21

5.1 Introduction…………………………………………………………………………………………………………………………………21

5.2 Production strategy………………………………………………………………………………………………………………………21

5.2.1 Variable cost………………………………………………………………………………………………………………………………..21

5.3 Sales and revenue………………………………………………………………………………………………………………………..22

5.4 Business premise layout…………………………………………………………………………………..…………………………..22

5.5 Business tools and equipment……………………………………………………………………………………………………..23

5.5.1 Depreciation of tools and machinery…………………………………………………………………………………….……..23

5.6 Business materials……………………………………………………………………………..…………………………….…………..24

5.7 License………………………………………………………………………………………………………………………….………………24

CHAPTER SIX

6.0 Introduction ……………………….……………………………………………………………………………………………………….25

6.1 Pre-occupational cost…………………………………………………………………………………………………………………….26

6.2 Proforma income statement………………………………………………………………………………………………………….27

6.3 Proforma balance sheet……………………………………………………………………………………………………………….28

6.4 Cash flow statement……………………………………………………………………………….…………………………………..29

6.5.0 Break even analysis…………………………………………………………………………………………….………………………..29

6.5.1 Break even point…………………………………………………………………………………………………………………………29

6.6 Proposed capitalization………………………………………………………………………………………………………………..29

6.7 Calculation ratio…………………………………………………………………………………………………………………………..30

6.8 Location of
business……………………………………………………………………………………………………………………………………………..32
EXECUTIVE SUMMARY

This will include a summary of the six sactions that make the busisess plan.it include business
description marketing plan,organizationplan,production plan and finance plan.

2.1BACKGROUND INFORMATION

The business name shall be Linet’s boutique enterprice the sponsor shall be miss Jacinta Bungoma
county garments,suitstrousers,skirts bed cots,sweatersetc,the following shall be the contact address of
the business.

LINET’S BOUTIQUE ENTERPRISE.

P.O BOX 1928

BUNGOMA

TEL:0703874302

2.2 BUSINESS DESCRIPTION

The business is a sole proprietorship and shall be located a long BungomaWebuye road at general
Hospital.the starting capital shall be kshs 350000 of which 30% shall be come from the owners,managers
and 70% from bank loan. The business shall commence on January 2014.The business shall be under
building and construction industry.

2.3 MARKETING PLAN

Linet’s boutique enterprise shall target individual customers,institution customers and industrial
customers.Tthe competitor of the business shall include Jacinta enterprise and viv’s boutique.

The owner manager shall use various sales promotion and advertisement of the business like free gift
samples and posters,pricing strategies pricing policies,and sales tactics shall be mentioned in this
section.The business description strategy is to be under zero level and one level inititialywil adapt other
level as the business grows.

2.4 ORGANIZATION PLAN

The business director shall be the owner and the manager in this busisness the following are highlighted.

 Organization stracture.
 Qualification and remuneration.
 Recruitment, training and promotin
 Supportive services.
2.6 PRODUCTION PLAN

Under the plan there shall be product design and development operational facilities;

Material use production strategies and regulation of business operation.

2.6 FINANCIAL PLAN.

Linet’sboutique enterprise requires capital of ksh 350,000.Financial plan shall give a summary of the
following.

 Pre-ocupatioal cost
 Working capital
 Performance income statement
 Balance sheet statement
 Proposed capitalization
 Ratio
CHAPTER TWO

2.0 BUSINESS DESCRIPTION

2.1 THE SPONSOR

The sponsor of linets boutique enterprise shall be Makundi A linet.

2.1.1 THE SPONSORS FAMILY BACKGROUND.

The sponsers is 22 years from mabuyelocaton she is from monogamous family of four siblings one sister
and three brothers he is the first born.

The sponsors parents are Elijah O otieno a farmer and mrs is my role Ijiti who is my role model.

2.1.3 EDUCATIONAL BACKGROUND

The sponsor started his primary education at st.paulsMutua from 1997-2005.The sponsor got a credit in
Kenya certifcate of primary education and joined Lughokho girls secondary from 2006-2009 wherehe
attained a mean grade of D+ in the certificate of secondary education

2.1.3 TECHNICAL QUALIFICATION.

Adminisration for one year from 2012NOV-2013NOV Through his period of training he has gained
relevant experience which has preserve as an incerntive for him to start business.

The sponsor took his industrial attachment at Bungoma accountant treasury for three months.

2.1.4 LIMITATION

The sponser of linet’s boutique enterprise lacl a number of skills which include poor public relation with
the customers,language leading to missundersding between the sponserjand customers and also lacks
knowledge on pricing the products depending on the quality packed.

2.1.4 CONTRIBUTION TOWARDS THE BUSINESS

The sponser shall overcome the challenges of lacking experience through personal contact with
customers advertising the products and service of the business in order to attract customers and
attending location traininig to gain more experience which shall be useful to the business and
community.
2.2 THE BUSINESS

The business name shall be Linet’sBotique Enterprise located in Bungoma town near General Hospital of
Bungoma next to Sharrifscenter.The business shall be improving yarns and knitting them into various
items,the items shall be sold to customers all over the country.

The business address shall be:

Linet’s Boutique Enterprise,

P.O.BOX 1938,

BUNGOMA.

The business shall operate under sole proprietorship,the products quality shall be skirtssuits,men suits
and many more;servicesoffred are ;repair the garments,transport at a reduced cost and designed new
cloths to custom.

2.3 JUSTIFICATION OF THE BUSINESS VENTURE

The demand of linet’s business shall be of demand due to high population in Bungoma.

 The competition shall not be effectively serving community well due to their wishes.
 The sponsor has got enough capital that could enable him venture into this business.
 The manager will employ skilled labourers through training and textile and clothing
together with enterprenuer skills to ensure that the ladies fashion are well stored for
future

2.3.1 JUSTIFICATION FOR THE CHOICE OF THE LOCATION

The linet’s boutique is located at bungoma town due to the following reasons;

 Condusive environment with enough security

 Availability of water and electricity within the area that can help the business to run more easy
 The place has good communication network in that information reaches people more easy,
 There is good infrustracture system hence quick in running business.
2.4 THE INDUSTRY

The proposed business will be under the textile industry for it will be dealing with textile products such
as repairing .The business shall have more customers due high quality product produced and labour
intensive technology will be used in the business activities and recording maintained.Books keeping will
be availing themselves not in position to pay in cash will have to pay a deposit of agreed amount in
order to keep the business going.

2.4.1 SIZE OF THE BUSINESS.

There are several sizes under which the business can bet operated. These include : Small sizes which has
10-50 employees, medium sizes which have employees ranging from 60-80 in number and large size.
This type of business has all working capabilities with large number of employees which range between
80-120.Linet’s Boutique Enterprise falls under small size business because of the following reasons;
Availability of tools and equipment, Lack of premises and low starting capital. The business shall improve
after five years in operation to large size.

2.4.2 The type of technology used

There are several technologies used under which the business can be classified

1. Simple technology: In this type of technology there is use of only human labour.

2. Appropriate technology: This is where the business operates under the use of both machines
and human labour.

3. Advanced technology: there is the use of both human labour and machines

4. Sophisticated technology: The business operates under the use of machines only

Linet’s Boutique operates under the appropriate technology .This is whereby the business operates by
use of machines and human labour , which leads to high rate of production that meet the customers
demands. In future the business shall use sophisticated technology whereby only the machines shall be
used in operation thus improving the business.

2.4.3 Trends in the industry

In past boutique industries were not available due to lack of technology.

In the old ages people used skins of the animals to cover themselves due to lack of experience.

Currently the skills have been somehow improved due to discovery of miniskirts and sleeveless dress for
the adults.

In future products and services shall be offered at an improved and affordable price as technology shall
be deserved.
Products shall be exported to the other countries in order to earn foreign exchange as well as promote
harmony peace between different countries .

The sponsors shall decide to venture into this business mainly to ensure future health beauty by
covering their body from coldness.

2.5 ENTRY STRATEGIES

There are several sizes under which the business can bet operated. These include : Small sizes which has
10-50 employees, medium sizes which have employees ranging from 60-80 in number and large size.
This type of business has all working capabilities with large number of employees which range between
80-120.Linet’s Boutique Enterprise falls under small size business because of the following reasons;
Availability of tools and equipment, Lack of premises and low starting capital. The business shall improve
after five years in operation to large size.

2.4.2 The type of technology used

There are several technologies used under which the business can be classified

1. Simple technology: In this type of technology there is use of only human labour.
2. Appropriate technology: This is where the businessoperates under the use of both machines and
human labour.
3. Advanced technology: there is the use of both human labour and machines
4. Sophisticated technology: The business operates under the use of machines only
Linet’s Boutique operates under the appropriate technology .This is whereby the business
operates by use of machines and human labour , which leads to high rate of production that
meet the customers demands. In future the business shall use sophisticated technology
whereby only the machines shall be used in operation thus improving the business.
2.4.3 Trends in the industry
In past boutique industries were not available due to lack of technology.
In the old ages people used skins of the animals to cover themselves due to lack of experience.
Currently the skills have been somehow improved due to discovery of miniskirts and sleeveless dress for
the adults.
In future products and services shall be offered at an improved and affordable price as technology shall
be deserved.
Products shall be exported to the other countries in order to earn foreign exchange as well as promote
harmony peace between different countries .
The sponsors shall decide to venture into this business mainly to ensure future health beauty by
covering their body from coldness.
2.5 ENTRY STRATEGIES
 To create the awareness of the products produce Linet’s Boutique Enterprise , the sponsor shall
set up various strategies
 Advertisement shall be done on radios T.Vs
 Posters shall be placed on social places e.g markets, schools
 Publications of journals and magazines shall be done
Growth strategies

For the business to grow and attain stable market. It shall apply the following;

 Opening other branches after five years of operation

 Investing in the business
 Increasing production line
 Increasing the number of employees
 Motivating employees
 Expanding the business due to increase in stock
CHAPTER THREE
3.0 MARKETING PLAN

3.1 INTRODUCTION

The sponsors enterprise shall be producing quality goods and services to the customers all over the
country at affordable prices .The sponsors shall ensure that the product meet the customers’ demands .
The personnel employed shall have experience on the business so as to achieve targeted goals.

Business shall face less competition from competitors and aim at improving profits. The

customers shall be potential individual and industrial customers.

3.2 CUSTOMERS

3.2.1 Potential customers

Potential customers shall be individual customers and institutional customers who will buy quality
products at a fair and affordable price.

3.2.2 Individual customers

Linet’s Boutique Enterprise shall be;

 Nurses Doctors from Bungoma General Hospital.

 Commercial customers.
 Local people and civil customers.

3.2.3 INTITUTIONAL CUSTOMERS.

Several business surrounding will be availing themselves to buy the products.For the business shall be
selling school uniforms and casual wear.

DEMOGRATIC FACTORS OF INDIVIDUAL CUSTOMERS INCOME.

Linet’s boutique enterprise shall be offering goods and services to both male and female also
children.The business shall ensure that it does not suffer great loses but profits.Linet’s boutique serves
different customers of varied income.This include both regular and irregular customers.

 The lowest earner shall be a farmer who earns 4000 per month.
 The medium earners are primary school teachers who earn ksh 12000 per month.
 The highest earners are employees with masters degree who earn ksh 60000 for lecturers of
Sangalo institute.
 The products shall be packed in different qualities to serve all customers of different classes.
3.3competition.

Completion include the business that sell similar products and serve as well as that compete for the
customers.

ADVERTAGES

 It enable sponsors to determine the competitors weakness.

 Enable the sponsors to understand the key factorsfor success in the industry.
 It helps the sponsor determine the features to build into the new development.
 It help sponsors to understand how competitors product sastify customers.

DISADVERTAGES.

 Leads to over stocking or goods staying for long.

 It lowers the product quality an prices
 Leads to production rates being lowed

3.3.1 COMPETITORS

Linet’s enterprise competitors are as follows:

 General boutique enterprise

 Jacinta boutique enterprise
 Viv’s enterprise,

General boutique enterprise

it is situation along Bungomaitale road at bungomamaret

p.o box 154

Bungoma

Strengths

 High experience in the business

 Enough income
 Offering quality products
 High qualified staff members.

Weakness

 poor time management

  poor offering of quality products

VIV’S ENTERPRISE

it is situated along bungomakitale road near Deliverence church.

P.O BOX 181

BUNGOMA

STRENGTHS

 Products are offered at a fair price

 Opening time is regular
 Good relation with the customers

Weakness

 Lack of technical skills in operation

 Lack of other soucers of income
 Less starting capital
 Use of low technology in her operstion
 Employs people on family bacgroung.

ILLUSTRATION OF LINET’S BOUTIQUE ENTERPRISE COMPARED TO HER COMPETITORS

ITEM General boutique Jacinta boutique Viv;s boutique

PRICE 2 3 4
EXPERIENCE 2 3 4
SKILLED LABOUR 4 2 3
QUALITY 3 3 3
TOTAL 11 11 14

key

1 very poor

2 poor

3 fair

4 good
COPING WITH COMPETITION

Linet shall cope with competition through:

 Packaging
 Advertising
 Empowering skilled manpower
 Good display
 Good public
 Good channel of distribution of good

Linet’s boutique enterprise. She is the first competitor of fashion and design

P.O BOX 1938

BUNGOMA.

STRENGH

 High skilled manpower

 Good packaging system
 Good time management
 High quality products offered at an affordable price

WEAKNESS

 Difficulties in pricing the price

 Sponsor’s inability to learn different taste of customers that strenghted relationship

2.4 PRICINGSTRATEGY

Linet’s boutique shall include;

 Demand oriented
 Cost plus policy
 Competitor oriented policy
 Psychology pricing

Demand oriented policy

The owner shall use the demand policy to setup prices.i.e the higher the demand the higher the price

Cost plus policy

Shall consider cost of production plus profit margin

Selling price=cost of production +profit.

Competitors pricing policy

The owner shall consider the price of competitors and set her price.

Psychological pricing

These involves where the owner sets prices demanding on the psychology of customers.

Selling price formula;

Selling price =cost price +desired profit % objective e.g

Cost of one garment is sh.60

Therefore selling price =[50+10%]1000 =60+6 =66

Selling price = sh.66

3.5 SALES TACTICS

Linet’s Boutique Enterprise shall use various tactics to sale their goods, this include

 Displaying of the products

 Setting up competitive prices
 Employ beautiful employees who will attract customers
 Produce quality goods and services
 Have good customer relation [master frequent customer]
Credit facilities

The business shall not offer credit facilities at the start however it shall do so when the business pick up
and stock increases after six months .The sponsor shall be in a position to know the behavior of his
potential customers.

Consideration for credit

 Credit shall be offered to customers with stable source of income.

 Customers with the habit of refusing pay credit shall not be offered
 Those who pay cash promptly and credit agreement shall be given in order use the products as
he/she pays
 Customers whose way of payment is of good trend shall be given credit to enhance continuous
buying of the products
 Customers shall produce security before given credit
 Customers who buy goods in bulkiness shall be given discount

3.6 ADVERTISING AND PROMOTION

Linet’s Boutique Enterprise shall give out targets .This include;

 Contribution in harambee
 Providing 5bags of cement to primary schools
 Providing sportswear to schools
 Contribution in churches
 Taking money to ceremonies

3.7 DISTRIBUTION STRATEGIES

The channel shall depend upon the following factors which are nature of the product and competition.
The following are the channels;

Linet’s Boutique Enterprise Customers

Advantages

Full distribution in that the products are direct to the producers ;no intermediaries between

Direct contact between the producer and customers.

Disadvantages

It is quite involving because incase customers want to be served the producer need to explain to
satisfactory before he attends to another

No involvement of intermediaries to assist the producer thus it is quite strenuous.

One level channel.

The management sales to one or more retailers who in return sale to ultimate customers.

Linet’s boutique Retailer Customers

Advantages

 Liberal credit offered

 Immediate delivery

Disadvantages

 Handling of couse distribution

 It’s quit involving
 High cost customers

Second level strategy.

Ladies fashion enterprise Wholesaler Retailer ultimate customers.

Advantages

 There is use of advertisement and displaying of products

 Liberal credit shall be offered.

Disadvantages

 There is handling of couse distortion

 High cost customers

Linets enterprise shall make use of zero level,1st level 2nd level,3rd level.
CHAPTER FOUR

Organizational plan

4.0 Indroduction

This is the foundation on which the growth is built.it comprises the technical base which defines the
duties and responsibilities of each employee.it ensures all operations and task are worked out within a
given period of time.linetsboutique enterprise shall have an organization plan comprising a total number
of 6 employees at the initial stages but as the business its bounderies it shall have to increase the
number of its employees.

4.1 MANAGEMENT TEAM.

4.1.1 Organization stractures.

The following is proposed organization structure of the management team and other personal for linets
boutique enterprise.

Owner manager

Assistant maneger

Security officer Sales representative Technician

4.1.2THE KEY MANAGEMENT.

Miss otienoJosphine is to be the overall manager of the business.

Job title:Owner manager.

Section:Management

Answerable:

Authority: Overall
DUTIES.

 To fix the remuneration of the employees.

 Budgeting and financial control.
 Formulating policies and objectives of the employees.
 To set rules objectives of the employees.
 To set rules and regulation of the employees.
 To carry out research in the market.
 To meet the need of employees and able to solve them.
 To hire the employees.

Responsibilities.

 Planning and implementation of the plans to the business.

 Manages all personal at work and at business.
 Marketing and promoting the business in the market.
 Disciplinary action to the employees.
 Advices others personnel whenever required.

Qualification.

 Physical-not applicable.
 Academic-has certificate in business and administration.
 Has an attachment certificate from ken knit company.
 At least three years working experience.
 Should be computer literate.
 Be able to speak fluent English and Kiswahili.
 Must have experience in the same field at least 2-3years.

Remuneration-he/she is to be paid an amount ksh 7000 per month.

4.1.3 COMPENSATION OF KEY MANAGEMENT.

Linets boutique enterprise shall pay all employees through the manager herself in terms of cash as their
duty performance which will be an increase in salary and other awards as follows.

Sick leave-the business shall offer sick leave for sick employees to allow them to recover quickly.

Transportation allowance-to ensure employees who are to travel the business activities will be given
travelling allowance to cater for their travelling welfare.

Over time-there will be over time allowances 2 percent every hour to cater for hours performed off
duty.
Tea break-there will be a tea break to the members everyday at 10.30a.m

Other pesonnel.

Job: Technician

Section: Production

Answerable: assistant manager

Authority: Nil

DUTIES

 Type setting.
 Binding.
 Lamination of certificate and identification card.

Responsibilities

 Ensure that computers are in good working condition

 Encourage team work
 Ensure that there is good customer satisfaction
 Ensure accomplishment of duties

Qualification

Physical_ She/he a person of high integrity and well groomed

Academic _She/he should have at least certificate in Business Administration

Remuneration

Workers will earn salary of kshs 3000 at the start

Sales representative

Duties

 Market our quality products

 Customer interaction
 To carry out market research demand and supply
 Provide stiff competition on market

Responsibilities

 To ensure that quality product are informed to market

 To ensure that all customers get high quality product at an affordable price
  To ensure that all customers get high quality product

Qualification

 Should have experience of at least one year at busy organization

 Should be patient,honest,convenient and hard working
 Should have good communication skills in English and Swahili.

Remuneration

Ksh 3000

Security officer

Duties

 To inform assistant manager of any peculiar behavior

 To safeguard the compound against any illegal entrance
 To ensure that all fence are well fenced

Responsibility

 Ensure that he reported to the relevant authority any peculiar behavior

 Ensure that all business assets are safe
 Ensure that business name is used in a right manner

Qualifications

 Should have undergone a security training

 Should have in possestion of personal helmet
 Should be physicaly fit and sharp.
 Should have experience of atleast 1 year

Remuneration

kshs 2000

4.2 SUPPORTIVE STAFF

Linetenterprice shall have the following as shown in the table below as other staff

 JOB TITLE:Assistant manager

 SECTION: Management and supervision
 ANSWERABLE: To the owner manager
 AUTHORITY: Partial.

Duties
 Delegate duties to other employees on behalf of the manager
 Takes records of employees in the business
 Supervision of the duties to the employees
 Checking all facilities are in order
 Taking orders from the manager
 Giving out information from the above to the concern

Responsibility

 To organize business businessactivities

 To ensure that all employees are well remunerated at right time
 To attend to employees and other stakeholders are attended to
 Ensures that all cash transaction are well recorded
4.3 LEGAL REQUIREMENT

Linet’s boutique enterprise shall have Robin advocate in Bungoma hence he shall be advocating for
business in case of any inconvenience between business and customers

Electricity service- bungoma compromise of electricity which shall be able to supply power for
lighting of the business and for other commercial use.

Water service – the business shall be the next to security water places in the area,sponsor shall
clear that area to ease and improve the beauty of the land.

Transportation services-there are good tarmac roads in the area which shall be usefull in
transportation to potential customers

Medical service –there is a nearby bungoma District Hospital and dispensaries around the town
hence will provide the necessary needed medical attention

4.4 SUPPORTIVE SERVICES

Banking service-this will ensure that the business transaction are taken care of as as save keeping of
business funds are well safeguarded

Postal service-the business intends to obtain postal service in town to enhance communication
system is complete

Security service-it shall be ensured chances of risk and disaster this services will be provided by blue
shield insurance company

Trade lincenceact[ cap 516]-an act of parliament shall provide grouping of regulated trade which
include;

 Motor vehicle repair

 Hair dressing
  Transportation of material
Trade mark[ cap 608]- this provide for protection of trade marks thus regulates against the
copyright such protected marks.

BUSINESS RULES AND REGULATIONS

Linet’s boutique shall run with compliance to the the following rules and regulations;

Registration of business name [cap 377].the business shall register it’s name for recognition among
other business and to have a right over the business and have a right over other business name.

Public health act [cap 242] the business shall safeguard the public healthy by making sure that there
is proper disposal of wastage.

Employment act [cap 16] an act of parliament which amongst other things set in the contract of
service and provincial and such matters as summery dismissal motive termination service of an
employee and keeping their records.

This act states that an offence to fail paying an employee his/her wage and terminate benefit.

There address shall be;

Bungoma hospital.

P.O BOX 1938 BUNGOMA.

TEL;0712026733.

BUNGOMA CONSULTANT

Mr. peterruhya

P.O BOX 101

KAKAMEGA

TELL;0723967777

Who shall consult in times of difficulties in the business.

 CHAPTER FIVE

5.0 PRODUCTION

5.1 INDRODUCTION

Production plan is an important part of the business because it ensures proper utilization of sources
income to create goods and service.it also reduces income failure through risks to enhance creativity
and innovation and create jobs to people. The results of production is an end product that help to
sastify human wants

5.2PRODUCTION

5.2.1 VARIABLE COST

Are cost that change with the level of activity linet’s

item Type of variable cost Cost/per month

1 Direct material 30000
2 wages 5600
3 transport 200
4 advertisement 400
5 water 250
6 miscellaneous 500
7 Electricity 200
TOTAL 37150

5.2.2 FIXED COST

Are cost that remain unchanged deposit in level of activity

Linet’sboutique enterprise shall incur the following fixed cost

item Types of fixed cost Cost/per month

1 Salaries 19600
2 Administration expense 1000
3 rent 1000
4 insurance 500
5 Interest of loan 200
total 22300

5.3 sales/revenue
item quality Sales per unit amount amount amount
skirts 30 100 3000 12000 144000
garments 50 40 2000 80000 96000
bedcots 20 250 5000 20000 240000
shirts 48 10 480 1920 23040
trousers 20 30 600 2400 28800
total 11080 44220 531840

5.4 BUSINESS PREMISES LAYOUT.

O.M.O

A.M.O

GENTS LADI

ES

S.M.O S.R

GENTS LADIES

S.O

P.O.M P.V P.V

KEY;

S.O-SECURITY OFFICER
O.M.O-MANAGERS OFFICE

A.M.O-PRODUCTION MANAGER

P.MO-PRODUCTION MANAGER

P.U-PRODUCTION UNIT

S.M.O-SALES MANAGER

S.R-STORE ROOM

5.4 BUSINESS TOOLS AND EQUIPMENT.

TOOLS

ITEM QUALITY COST PER UNIT TOTAL COST SUPPLIERS

weighing 500 Bungoma town
machine 100
garments 1000
skirts 100
bedcots 400
trousers 800
sweaters
Transport lorries 700

total 3750

EQUIPMENT.

item quality Cost per unit Total cost suppliers

calculater 1 200 200 Linet’s boutique
stationary - 2000 2000 General boutique
faniture - 4000 4000
total 6200

Total cost of tools and equipment =3750+6200=9950

5.5.1 DEPRECIATION OF TOOL AND MACHINES.

Linets enterprise shall charge 2% of the total tools and machines in the second and third year of the
business operation.

5.5.2 REPAIR AND MAINTAINACE

Tools and equipment of the business shall be prepaired by expert from jacinta’s work’s limited.the
production manager shall carry out daily weekly and monthly maintenance practice and prepare
storage of machines after use. He shall also keep accurate records of the same.

5.6 BUSINESS MATERIALS/CONSUMABLE

ITEM UNIT COST ANNUAL COST MONTHLY COST SUPPLIERS

GARMENTS 200 200000 30000 GENERAL SIFA
HOUSE
CARTOUS 40 1600 400
TOTAL COST 201600 30400

5.7 LICENCE

LINET’S BOUTIQUE ENTERPRISE PERMIT AND LICENCE

ITEMS TYPE OF LICENCE ISSUED BY COST

1 Single business Kenya government 2600
occupation kebs 1000
miscellaneous County council of 200
bungoma
health Bungomadistric hospital 200

total 4000
CHAPTER SIX

6.0FINACIAL PLAN

The financial plan is the standpoint of a business financial plan shows the capacity of business financially
and it include the following preparation of pre-operational cost, working capital projected income
statement.

6.1 Projected cash inflow for three years profoma balance sheet, profoma trading profit and loss and
account.

Items cost per year

License………………………………………………………………………………………………….4000

Feasibility studies………………………………………………………………………………….3000

Cost of tools and equipment…………………………………………………………………3650

Office fitting and furniture…………………………………………………………………..6200

Labour…………………………………………………………………………………………………4000

Rent……………………………………………………………………………………………………5000

Advertisement……………………………………………………………………………………..1000

Miscellaneous……………………………………………………………………………………2000

Total…………………………………………………………………………………………………..28850

Contingency [10% total] …………………………………………………………………….31735.

Working capital
Item shs

Cash at hand………………………………………………………………………………….30000

Debtors…………………………………………………………………………………………3000

Cash at bank………………………………………………………………………………….200000

Stock of finished goods…………………………………………………………………2265

Stock of raw materials………………………………………………………………...30000

Work in progress………………………………………………………………………….25000

Miscellaneous……………………………………………………………………………..4951

Contingency………………………………………………………………………………….3152

Grant total……………………………………………………………………………………318265

Pre occupational total+Working capital=used capital

31865+31735=350000

6.2 profoma income statement for the year ended December 2014 2015 and 2016.

Item year 2014 2015 2016

Sale…………………………………..531840…………………….638208……………………744576

Cost…………………………….....201600……………………….241920………………..…282240

Gross profit…………………….330240………………………396288……………………462336

Expences

Salaries………………………..235200……………………..235200……………………….235200

Rent…………………………..12000………………………..12000…………………….……..12000

Electricity…………………2400……………………………3600………………………………4000

Transport ……………….2000……………………………2200……………………….…….23000

Tools……………………….9500

Insurance………………..6000……………………………6000……………….…………….6000

Lincese………………….4000…………………………….4000………………………………4000
Water…………………..2000…………………………….2200……………………………….23000

Advertisement……..6000…………………………..6000…………………………………6000

Interest on loan…….2000…………………………..2300………………………………24000

Admexpences………..8000…………………………8000………………………………8000

Miscellaneouse……..4000…………………………2000……………………………….2000

Total expences………..293550………………….283500……………………………..284136

Net profit before tax..36690……………..112788…………………………………178136

Provision for tax 16%......5870………………..15159……………….…………28502

Net profit after tax………30820…………………..97629…………………………149634

6.3 proforma

This is the sheet that shows different kind of liabilities and assets.it shall indicate the sponsor shall have
at hand and all that will needed.

Items Year1 (2014) Year 2(2015) Year 3(2015)

Assets
Cash at hand 30000 36000 432000
Debtors 3000 2364 3120
Cash at bank 200265 250000 300000
Stock of raw material 30000 36000 43200
Work in progress 25000 30000 36000
Stock of finished goods 21897 26276 31531
Prepayment 8103 10000 10000

Total current assets 318262 390640 467051

Fixed assets
Tools and equipments 9950 9950 9950
Less depreciation 10 (995) (995) (995)
percent
Total fixed assets 8955 8955 8955
Total assets 327220 399595 476006

Liabilities

Current liabilities 106958 193551 275112

Bank interest payable 32000 32000 30000
Bank interest occured 40000 48000 40000
Total current liabilities 178958 273551 345112

Longterm liabilities
Bank loan 105000 105000 105000
Owners equity 48262 26044 30694
Less drawings (5000) (5000) (4800)

Total liabilities 148262 126044 130894

Total liabilities +owners 327220 399595 476006
equity

CASH STATEMENT

6.4PROJECTED CASH FLOW STATEMENT FOR LINET’S BOUTIQUE ENTERPRISE FOR THE YEAR 2014.

Particula jan feb Mar april may june july Aug sept oct nov dec Total
rs ch ust
Balb/f - 670 270 196 205 3185 505 781 948 1159 274 398 11003
00 50 00 00 0 50 50 450 550 884 018 102
Sales 200 220 102 114 131 1454 190 155 160 1655 170 175 13791
00 00 150 350 700 900 00 000 000 00 000 000 00
Debtors 110 - - - - - - - - 1450 105 - 36070
700 00 000 0
130 890 129 133 152 1767 695 233 254 4299 549 573 29185
Total 700 0 200 950 500 50 50 150 850 50 884 018 02
cash
flow
Cash out
flow
Salaries 415 420 420 420 425 6250 425 425 425 4250 425 425 52720
00 50 50 50 00 0 00 00 00 0 00 00 0
Electricit 200 600 600 700 800 900 900 100 100 1500 100 200 11200
y 0 0 0 0
Banking 100 100 185 155 250 3000 350 350 420 4500 500 500 36100
0 0 0 0 0 0 0 0 0 0
Water 100 150 185 150 200 2500 310 300 370 4000 450 450 3200
0 0 0 0 0 0 0 0 0
Insuranc 500 500 500 500 500 500 500 500 500 500 500 500 6000
e
Loan - - 450 450 450 4500 450 450 450 4500 450 450 45000
prepaym 00 00 00 0 00 00 00 0 00 00 0
ent
Rent 100 100 100 100 100 1000 100 100 100 1000 100 100 1000
0 0 0 0 0 0 0 0 0 0
Material 130 140 150 200 250 3000 300 400 400 5000 500 600 36900
s 00 00 00 00 00 0 00 00 00 0 00 00 0
Transpor 200 200 200 200 200 200 200 200 350 400 700 900 3950
t
License 400 4000
0
Miscella 300 600 600 650 600 600 100 100 600 600 650 666 7600
neous 0 0
Advertis 100 - 100 - 100 - - 100 - 1000 100 - 6000
ement 0 0 0 0 0
Total 637 619 109 113 120 1262 147 138 138 1510 151 162 12134
cash out 00 50 600 150 650 00 700 300 300 66 866 068 434
Net cash 670 270 196 208 318 5055 781 948 115 2748 398 410 15146
00 50 00 00 50 0 50 50 950 84 018 950 52
6.6 BREAK EVEN ANALYSIS

VARIABLE AMOUNT
Direct material 200000
wages 5600
transport 39050
advertisement 6000
water 32100
electricity 11200
total 258850

Total contribution margin=sales-total variable cost

=137900-258850=1120250

Contribution magin *100%/sales per year

Fixed cost

item cost
salaries 527200
rent 12000
insurance 6000
Interest on loan 450000
total 995200

6.6 proposed capitalization

 item amount
Owner equity 105000
friends 140000
loan 105000
Total 350000

6.7 Ratios

Profitability ratios

=Gross profit *100/1379100

=1:1

Acid test ratio=current asset/current liabilities

6.7 illustration of breakeven point for linet’s boutique enterprice

Variable
Cost

Profit Margin
Fixed Cost
Break even point
Sales Ksh Loss Margin

Total production cost

APPENDICES

LOCATION OF THE BUSINESS

NAIROBI

NAKURU
BUSARA
ROAD
HOTEL KERICHO

BUNGOMA GENERAL HOSPITAL

BUNGOMA

NAKUMAT

SUPERMARKET

ELDORET