EMAIL : chrislankinghz@gmail.

com

BUSINESS PLAN

PRESENTED BY : MARTIN KINGORI

INDEX NUMBER :KICT/109/22A

COURSE : DIPLOMA IN INFORMATION COMMUNICATION

TECHNOLOGY

DEPARTMENT : INFORMATION COMMUNICATION TECHNOLOGY

COURSE CODE : 1920/1

SUPERVISOR : PROFESSOR KENNETH WEKESA

CENTRE : CAMBRIDGE UNIVERSAL COLLEGE

PRESENTED TO : THE KENYA NATIONAL EXAMINATIONS COUNCIL IN PARTIAL FULFILLMENT

FOR THE AWARD OF DIPLOMA IN INFORMATION COMMUNICATION TECHNOLOGY.

SERIES : JULY SERIES 2023

DATE OF SUBMISSION:

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 DECLARATION

I MARTIN KINGORI I by hereby declare that the business plan is my original work and has
never been submitted to any institution.

Student’s Name : MARTIN KINGORI

Signature :

Date :23/06/2023

This business plan has been submitted with the prior approval of the lecturer

Supervisor Name : MR KEN

Signature :

Date :23/06/2023

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 DEDICATION

I dedicate this project to my beloved mum, dad, friends, relatives and all teachers for their
unconditional and moral support throughout my life.

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 ACKNOLWEDGEMENT

I wish to acknowledge God for giving me good health and opportunity to write this business
plan, second to my beloved mom and dad for financial and moral support through the course,
especially when writing the business plan. Thirdly to my teachers for what they have taught
me. Lastly to my classmates for their support in some areas which where challenging to me.

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 PREFACE

In compiling the, project business skills have been dispersed to the students to be fully
competent equipped with necessary skills for starting and running a business. This is essential
due to limited employment opportunities. The business plan is written touching on various
faces of the business.

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EXECUTIVE SUMMARY

Business Description

The proposed business will be operated as a sole proprietorship form of a business which will
electrical and electronic services to the expectation of its customers. The services will reach
out to offices and residential areas to the convenience and fulfillment of considerable
customer requirement. The owner of the proposed business is MARTIN KINGORI. The
business name is proposed to be KINGH ELECTRICALS AND ELECTRONICS.

MARKET PLAN

KINGH ELECTRICALS AND ELECTRONICS will be targeting potential customers

residing in KITALE. The enterprise intends to capture10% of the market share at start up
having considered the existing businesses in the area. To compete effectively the enterprise
will employ qualified workers and use effective technology for efficient services to its
customers.

ORGANIZATION AND MANAGEMENT PLAN

Enterprise will use line organization whereby there is direct line of authority following from
the top to the bottom of the organization hierarchy. The enterprise will start with two
employees. The enterprise will advertise through the media or poster, which will perform
recruitment of the workers. Promotion of employees will depend upon individual hard work
and the capacity of performing duties with a self-driven esteem.

OPERATION AND PRODUCTION PLAN

Machine and tools will be purchased by the owner of the business at a cost of ksh 150 000,
the business premises will have different rooms for different purposes of operation. The
monthly cost of production required including salaries will be180 000. The rules set by the
organization committee will be strictly followed.

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FINANCIAL PLAN

This section discusses the financial projection of the business and the profits within the first
three years. An income statement has also been covered effectively. The enterprise will
require 150, 000 to start .

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Contents

DECLARATION........................................................................................................................................ii

DEDICATION..........................................................................................................................................iii

ACKNOLWEDGEMENT...........................................................................................................................iv

PREFACE.................................................................................................................................................v

EXECUTIVE SUMMARY..........................................................................................................................vi

CHAPTER ONE......................................................................................................................................11

1.0 INTRODUCTION..........................................................................................................................11

1.1 BACKGROUND OF THE OWNER.................................................................................................11

1.1.3 WORK EXPERIENCE.............................................................................................................11

1.2 NATURE OF THE BUSINESS.........................................................................................................11

1.2.1 BUSINESS NAME.................................................................................................................11

1.2.2 BUSINESS LOCATION...........................................................................................................11

1.2.3 BUSINESS ADDRESS.............................................................................................................12

1.3 TYPE OF THE BUSINESS..............................................................................................................12

1.3.1 ADVANTAGES OF STARTUP BUSINESS.................................................................................12

1.3.2 DISADVANTAGES OF STARTUP BUSINESS...........................................................................12

1.4 PRODUCTS AND SERVICES.........................................................................................................13

1.4.1 PRODUCTS..........................................................................................................................13

1.4.2 SERVICES.............................................................................................................................13

1.5 FORM OF OWNERSHIP...............................................................................................................13

1.5.1 ADVANTAGES OF CHOOSING THE FORM OF OWNERSHIP..................................................13

1.5.2 DISADVANTAGES OF CHOOSING THE FORM OF OWNERSHIP.............................................14

1.5.3 JUSTIFICATION OF THE OPPORTUNITY................................................................................14

1.6 BUSINESS GOALS AND OBJECTIVES................................................................................................14

1.6.1 OBJECTIVES.........................................................................................................................15

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 1.7 ENTRY AND GROWTH STRATEGY...............................................................................................15

1.7.1 GROWTH STRATEGY............................................................................................................15

CHAPTER TWO.....................................................................................................................................15

2.0 MARKETING PLAN......................................................................................................................15

2.0.1 MARKETING OBJECTIVES....................................................................................................15

2.1 POTENTIAL CUSTOMERS............................................................................................................16

2.1.1 CUSTOMER PROFILE...........................................................................................................16

2.2MARKET SIZE AND MARKET SHARE............................................................................................17

2.3COMPETITION.............................................................................................................................17

2.3.1coping with competition......................................................................................................18

2.4METHODS OF PROMOTION AND INVESTMENT..........................................................................19

2.4.1PROMOTION........................................................................................................................19

2.4.2ADVERTISEMENT.................................................................................................................19

2.5 PRICING STRATEGY....................................................................................................................20

2.6 SALES TACTICS...........................................................................................................................20

2.7 DISTRIBUTION STRATEGY...........................................................................................................20

2.7.1 ANTICIPATED DISTRIBUTION PROBLEMS AND THEIR SOLUTIONS......................................20

CHAPTER THREE...................................................................................................................................21

3.0 ORGANIZATION AND MANAGEMENT PLAN...............................................................................21

3.1organization structure................................................................................................................21

3.2 BUSINESS MANAGER.................................................................................................................21

3.2.1 MANAGERS QUALIFICATIONS.............................................................................................21

3.2.2 MANAGERS DUTIES.............................................................................................................22

3.2.3 MANAGERS WORKING EXPERIENCE....................................................................................22

3.3 OTHER KEY PERSONNEL.............................................................................................................22

3.4 RECRUITMENT, TRAINING AND PROMOTION............................................................................23

3.4.1recruitment..........................................................................................................................23

3.4.2 TRAINING............................................................................................................................24

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 3.4.3 PROMOTION.......................................................................................................................24

3.5 REMUNERATION AND INCENTIVES............................................................................................25

3.5.1remuneration.......................................................................................................................25

3.5.2INCENTIVES..........................................................................................................................25

3.6 LICENSE, PERMITS AND BY LAWS...........................................................................................26

2. 6.2 permits...........................................................................................................................26

3.6.3BUSINESS LICENSE AND PERMITS........................................................................................26

3.7SUPPORT AND PROFESSIONAL SERVICES....................................................................................26

CHAPTER FOUR....................................................................................................................................29

4.0 OPERATIONAL AND PRODUCTION PLAN....................................................................................29

4.1 PRODUCTION FACILITIES AND CAPACITIES................................................................................29

4.2OPERATION/PRODUCTION STRATEGIES.....................................................................................30

4.2.1MONTHLY MATERIAL REQUIREMENTS....................................................................................30

4.2.2COST OF LABOUR.................................................................................................................31

4.2.3 OVERHEAD EXPENSES.........................................................................................................31

4.2.4MONTLY REQUIREMENT COST.............................................................................................32

4.2.5 PROPOSED WORKSHOP/BUSINESS LAYOUT.......................................................................32

4.3 OPERATION PRODUCTION PROCESS..........................................................................................33

4.4RULES AND REGULATIONS GOVERNING THE OPERATION..........................................................33

4.4.1 INTERNAL RULES.................................................................................................................33

CHAPTER FIVE......................................................................................................................................35

5.0 FINANCIAL PLAN........................................................................................................................35

5.1 INTRODUCTION..........................................................................................................................35

5.1.1OBJECTIVES OF A GOOD FINANCIAL PLAN...........................................................................35

5.2PRE-OPERATIONAL COST............................................................................................................35

5.3 WORKING CAPITAL REQUIREMENTS..........................................................................................36

5.4 CASH FLOW PROJECTIONS.........................................................................................................38

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 5.4.1 KINGH ELECTRICALS AND ELECTRONICS PROJECTED CASH FLOE FOR YEAR ENDING 31 DEC
2020.............................................................................................................................................38

5.4.2 CASH FLOW FOR THE YEAR ENDING 31st DEC 2012...........................................................39

5.5 PROFORMA INVOICE STATEMENT.............................................................................................39

5.5.1 PROFORMA INCOME FOR THE YEARS ENDING 31st DEC 2011,2012,2013...........................39

5.6BREAKING EVEN ANALYSIS.........................................................................................................40

5.7BREAKING EVEN CALCULATIONS................................................................................................41

5.8 DESIRED FINANCNG...................................................................................................................42

5.9PROFITABILITY RATIOS................................................................................................................43

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CHAPTER ONE

BUSINESS DESCRIPTION

1.0 INTRODUCTION
The proposed business will be operated as a sole proprietorship form of a business which will
offer general electrical and electronics equipment to the expectation of its customers. The
services will reach out to offices and residential area to the convenience and fulfillment of
considerable customer requirements.

1.1BACKGROUND OF THE OWNER

The owner of the proposed business is MARTIN KINGORI who is currently a student at
CAMBRIDGE UNIVERSAL COLLEGE

1.1.3WORK EXPERIENCE
The proposer of the business has no experience to this kind of business.

1.2 NATURE OF THE BUSINESS

1.2.1BUSINESS NAME
The anticipated business will operate under KINGH ELECTRICALS AND ELECTRONICS.
The name KINGH is derived from the proprietor’s second name name. The proposed name is
the appropriator since it is short and easy to recall thus the customers will appreciate it for its
simplicity.

1.2.2BUSINESS LOCATION
The business will be located in KITALE along suam-endebess road because of the following
reason.

 Market-in view of the need to close to potential customers from surrounding business
enterprise, the location is more advantaged. The surrounding building will need
electronic services for continued operation under hygienic surrounding.
 Security-since the building is located in uptown side of Kit ale, security is tight due to
surveillance from the police department. This is prime side of town hence security is
unquestionably uncompromised and beefed up.

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  Infrastructure –the town is heavily networked with good transport and
communication network. The roads are well connected, planned and maintained by
the town council as well as the communication services by the communication
commission of Kenya.
 Labor-being a high populated town because it is metropolitan thus ready manpower
is available anywhere. Due to the scarcity of a secure job opportunity, people will be
more than willing and ready to apply in a job application for a chance to work under
the proposed business.

1.2.3BUSINESS ADDRESS
The proposed business will run under the address given bellow
KINGH ELECTRICALS AND ELECTRONICS,
P.O. BOX 123,
KIMILILI, KENYA.
CELL PHONE:0723780545
E-MAIL:CHRISLANKINGHZ@ GMAIL.COM
The reason for choosing the above postal address is because the business will be located in
the town thus making mail collection easy and time is saved compared to the postal offices.

1.3TYPE OF THE BUSINESS

The proposed business will be a startup kind of a business because the owner will be
undertaking it for the first time

1.3.1 ADVANTAGES OF STARTUP BUSINESS

 Monitored growth-the proprietor will have the privilege of monitoring the growth of
the business from its initial stages to the maturity level hence enable the owner know
more about the business
 No debts:-the enterprise will have no debts since it will be fresh and new at startup the
business will not have bad debts which might render it insolvent. The will increase its
viability for loans from financial institutions.

1.3.2 DISADVANTAGES OF STARTUP BUSINESS

 Insufficient funds-the proprietor might encounter setback due to insufficient capital
which could cripple startup. Without sufficient funds the venture might fail to take off
and the business will have been a failure.

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  Lack of enough experience-the owner might not have enough experience about the
business thus get crushed by the competitors. lack of experienced operations leads to
losses which if not foreseen and stopped might lead to come serious drawbacks

1.4PRODUCTS AND SERVICES

1.4. PRODUCTS
The business will be offering the following products
 Electronic detergents at a fairer price. The detergents will be bought at wholesale
prices and be sold at competitive retail prices.
 Second hand electronic machines from the business. The machines which will be
exchanged for better machines will be sold at fair prices to interested parties spare
parts of the machines will also be available
 Repairing of malfunctioning electronic gadgets such as phones, laptops and
televisions.

1.4.2 SERVICES
The business will offer the following services
 Office electronic using latest and impressive methods of electronic for instance using
of perfumed detergents which don’t irritate the sense of smell and using high-tech
machine to give awesome results.
 Garbage collection on business premises and residential area to be dumped on
certified dumpsites using state the garbage trucks
 Repairing of electronic machines at considerable fee
 House electronic services for instance swimming pools, washroom, floors and
furniture using advanced technology machine like automated floor cleaner
 Fumigation of offices and houses by using user friendly chemicals which do not
pollute the environment

1.5 FORM OF OWNERSHIP

The proposed business will be a sole proprietorship form of business, the proprietor being
The manager of the business. The reason behind preference of the owner to this form of
ownership is that the proprietor wants to be the boss and not taking orders from others.

1.5.1 ADVANTAGES OF CHOOSING THE FORM OF OWNERSHIP

 The proprietor will be enjoying maximum profits since there will be no sharing

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  There will be quick decision making since there will be no consultation from other
parties
 The proprietor will have an easy time in knowing the customer needs since there will
be direct feedback from personalized services
 The proprietor will be governing the business and also be the boss of the business

1.5.2 DISADVANTAGES OF CHOOSING THE FORM OF OWNERSHIP

 The owner may sometimes get over-worked with the business work
 The owner may face some bottle-neck situations in raising more capital for the
business expansion
 Limited capital may hinder the proprietor from carrying out market research which
may result into the owner not to know full information about the market

1.5.3 JUSTIFICATION OF THE OPPORTUNITY

The main reason for coming up with the business is to make profit and sustain the income
from the business. The proprietor of the business also decided to put up the enterprise in the
proposed location because of the beefed up security system. This will curb cases of brake in
and theft of machines and other important assets.
There is also presence of several building in the neighborhood which will need electronic
services. The city council require high levels of hygiene maintained in the town thus the need
for companies offering electronic services
The owner of the business has entrepreneurial knowledge from learning entrepreneurship in
college which will enable the proprietor to smoothly run the business. The owner also
experience from working under electronic services company managed by the father who
equipped the proprietor with necessary skills and requirement of the industry.

1.6 BUSINESS GOALS AND OBJECTIVES

 Short term goals

The major goal of any business is to make profit and for this business it is not an
exception .therefore the proposed business is looking forward to make good profit from good
sales
To be the source of the best general electronic services to the customers in the region within a
year of being in business

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  Long term goals
To establish new branches in other places to help in diversification of goods within the first
three years
To provide customers with quality goods and services after a thorough market research
within the first five months

1.6.1OBJECTIVES
SHORT TERM OBJECTIVES
 To enhance good employee relations to go along with good customers relations hence
improving business status
 To increase number of employees from three to five to ease work in the premises
LONG TERM OBJECTIVES
 To take a business course to enhance the entrepreneur business management skills
 To introduce new product within first five years to enhance growth in the business

1.7 ENTRY AND GROWTH STRATEGY

The entrepreneur intends to make a surprising entry into the market with wide range of
promotions prior to start up
The main interest of the entrepreneur is to capture as much percentage of the market share as
possible. This require strategic plan into overcoming the main competitors .Thorough market
research and consultations are to be done prior to the main startup date and advertisement
boards to be planned for in advance

1.7.1GROWTH STRATEGY
As a market will be growing due to population growth, the entrepreneur sees potential growth
in the business by:-
 Capturing the new potential customers arriving into the market by advertisement
 Monitoring customers needs and changes of preference and taste to keep up with them

CHAPTER TWO

2.0MARKETING PLAN
A marketing plan is a strategy used in business to help define its goals, objectives and also
develop a series of activities in order to achieve the goals. Relatively it involves the study of

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customers and how to create an impact in the market. The owner is determined to use
available marketing elements to realize its potential.

2.0.1MARKETING OBJECTIVES
KINGH ELECTRICALS AND ELECTRONICS will have the following marketing
objectives;

1. To maximize profits
2. to venture into new market places like in Nairobi after one year of operation
3. To be persistence in offering better services to customers in the dynamic industry
requirements.

2.1 POTENTIAL CUSTOMERS

This is an entity that receives or consumes products (goods and services) and has the ability
to choose between different products and suppliers. The following are targeted customers

2.1.1 CUSTOMER PROFILE

Customers are very big assets to any business. The business will target a wide range of
customers in view of age, income level, gender, educational level, religion and size of firm.
The targeted customers include:,

I. INDIVIDUALS CUSTOMERS

These include income earners of different classes who find the value and quality of services
offered as being considerable to them. Kitale has a diverse range of job offering an income to
the employees and employers for instance teaching, engineering drivers and even
doctors .Kitale has been endured with a large percentage of working class who are socially
and financially stable and the business target this group heavily individual customer require
residential electronic services. These services will include disinfection of the swimming
pools, fumigation of the store, electronic of glass windows and doors.

II. INSTITUTIONAL CUSTOMERS

These classes of customers include primary schools, secondary schools, colleges, hospitals
and even churches;

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 a. College-A research conducted by the proprietor shows that institutions will need floor
electronic, electronic of curtains ,wiping of window blinds and electricity in hostels
and toilets
b. Secondary schools-These institutions will need garbage collection, electronic of staff
rooms ,electronic of washrooms and floors, electronic of dining halls and fumigation
of will also be required
c. Primary schools- Research by the proprietor show that these primary schools will
need garbage collection from the compound, fumigation of stores, electronic of
swimming pools, electronic of washrooms and staffrooms
d. Churches-targeted churches include Anglican Church of Kenya, redeemed gospel
church of Kenya and Pentecostal churches these will need electronic of church floors,
washrooms and roofs.
e. Hospitals-. These will need electronic of windows, window blinds floors washrooms,
offices, garbage collection

2.2MARKET SIZE AND MARKET SHARE

KINGH ELECTICALS AND ELECTRONICS look forward to conquer and serve a
market area of 50km square business in Kitale. The location of the business being in
Kitale town with a population 30000people, the proprietor anticipates having 10%of the
population who make potential customers.

2.3COMPETITION
For every entrepreneur who wants to make it begin their business, they must keep their
customers close and their competitors even closer. It is advisable to know and understand
ones competitor very well because ignorance of their existence can put out of business
overnight competitors.

 The owner closely supervises the business using his agents

Victor cleaner

 This electronic service has been in existence in the industry for the past 4years. it
has the lowest market share in the industry the business is owned by victor who
got their start up business their inheritance from their late grand mom and decided
to start up a business of their own. The following are the strength and weakness of
the business

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 Strength

 The owners r dedicated to their business hence they pool their finance towards the
prosperity of their business
 The proprietors has a family support in terms of finance hence its hard for their
business to go unsolved because of the lack of operational funds

Weakness

 Slow decision making since a lot of consultation is required to satisfy both the
proprietors on the way forward
 Lack of interpersonal skills of one of the proprietors

KINGH ELECTRICALS AND ELECTRONICS will have the following competitive

advantages

 The enterprise will have personnel qualified in the field

 Expansion oriented
 Fair pricing of services and consistent operation

2.3.1coping with competition

Good communication and relations between the owner, employees and customers will be
upheld. These will help to create loyal network of customers

Good and healthy supervision of workers will be done by the owner to ensure that
employees are doing their best. This will however not be done to intimidate them or make
them feel less efficient

2.4METHODS OF PROMOTION AND INVESTMENT

This will be done in an effort to create awareness on the potential customers and the
residents as a whole on the existence the goods and services offered

2.4.1PROMOTION
 Publicity- this will be done by the word of mouth. The owner will require close
family and friends to tell others the existence of the business
 Participation in social activities – this will include involvement in sponsoring
gifts during festive seasons like chrismas. During the occasion, posters bearing the
business name, shall be available for people

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  Offering discount and credit facilities-up to 8%discount of the total cost shall be
offered for any customer who buys more than 4(four) products. 4% discount of the
total price shall be offered to the first buyers each day. To promote the business ,
there shall also be credit facilities to potential customers who are reliable and
financially stable.

2.4.2ADVERTISEMENT
This will be the means in which consumers will be information the availabity of products
that shall be offered. It shall be done in the following ways

I. Use of posters-medium sized posters will be printed, bearing the business

name and the location of the business. These posters will be put up along street
and outside busy streets
II. Window display- this will be done at the premises where electronic services
items shall be posed at a display windows window display will be done at no
cost since it will be done at business premises this will attract customers to
come over and have an opportunity to purchase the products and make use of
the services available.

2.5PRICING STRATEGY
This is deciding the best price at which to sell ones products. It should always be done in
a way that the proprietor will make a profit

 Cost oriented pricing – the proprietor will sale the goods and services based on
the cost of production so as to make maximum profits
 Demand and supply oriented pricing- the price of goods and services will also
vary according to the demand in the market a higher price in a product in the
market will call for a higher price of products in the enterprise and vise-verse
 Quality of products- when the quality of products is extremely good because of
the equipment used is if good quality then a higher price will be demanded for
products

2.6SALES TACTICS
The business will have direct link to customers thus the employees will have enough
knowledge and will also learn more tactics on how to treat customers this will mean talking
to them humbly and handling them in a way that will make them feel always

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welcomed.Regular customers will be charged lower prices for goods bought and services
offered

2.7DISTRIBUTION STRATEGY
This will be the channel that will be used to get goods and services to the customer’s one
of the channel to be used that customers will buy products directly from enterprises. This
will be at the retail level the customer will be allowed to view products with the help of
professional employees as well as the customers preferences the customer will settle on
what suits them best

2.7.1 ANTICIPATED DISTRIBUTION PROBLEMS AND THEIR SOLUTIONS

Anticipated problem will include DISRIBUTED VEHICLE breakdown. This will be the challenge
when immediate delivery is required. To overcome this delivery vehicle will be serviced
required and the driver instructed to strictly drive carefully.

CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

The organization and the management will involve operating of the enterprise professionally
to plough back maximum profit. Roles and obligations of various personnel will be clearly
defined and explained to each of them to ensure proper management of the business

3.1organization structure
An organization structure is a framework within which an organization operates

. it shows different levels of staff, division of work, grouping of functions into the
departments with related activities, allocating responsibilities and authority, delegation and
coordination. KINGH ELECTRICALS AND ELECTRONICS will use line organization
whereby there is direct line of authority flowing from top to bottom of the organization
hierarchy. The line of responsibilities flow in an opposite direction but equally direction
manner line organization has several advantages since it is very easy and simple to structure
and implement. In its implementation no mix up regarding duties, responsibly and authority
occurs. The employees are answerable to only one Lecturer and thus there is a clear cut
relation between authority, responsibility.

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3.2 BUSINESS MANAGER
The manager is a hardworking, strong willed, goals oriented, profit oriented, highly
perceptive and future oriented individuals. This will assist in professional running of the
business. Being a risk taker, the managers will lack up calculated risks that will fuel to greater
heights. The manager will work shoulder to shoulder with the employees to realize the goals
and objectives of the enterprise. The manager’s qualifications, duties and working experience
have been clearly outlined below.

3.2.1MANAGERS QUALIFICATIONS
The outstanding qualifications of the manager have been attained from the exceptional
academic background. Besides having numerous managerial skills, the proprietor has had the
opportunity to acquire other qualities required in the running of an enterprise.

3.2.2MANAGERS DUTIES
The manager will have several managerial duties. The duties are;

1. Planning- the manager will formulate the future course of action by making well
though our decision that will lead to the success of Kingh electrical and electronics
2. Motivation- the manager will have individual employees pursuing collective
objectives by satisfying needs
3. Controlling-the manager will compare the desired quality of products and services
with the actual quality produced and take necessary corrective action
4. Coordination- this will ensure that all efforts are bent towards a common objectives
and that there is no duplication of duties
5. Payment of employees
6. Delegation of duties to other employees

3.2.3MANAGERS WORKING EXPERIENCE

The manager has had an opportunity to work In related to electronic services as well as other
fields. This has enabled the manager to acquire necessary skills that can propel the business
to its success story.

3.3 OTHER KEY PERSONNEL

Apart from the manager, Martin Kingori will enroll other personnel who will execute various
duties and responsibilities,a driver and consultant. Below are the required qualifications of
each of the employees as well as their duties;-

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Duties of electronic

I.DRIVER
The driver will double-up as a cleaner. He must have a driving license from a recognized
driving school. He must also have a working experience of at one year .the driver should
be between the age of 50 years and 65 years since it is believed that old people handle
motor vehicles with intense caution compared to youngsters thus increase the life span of
the vehicle the driver will earn a basic salary of ksh5600/=
Duties of driver
Electronic
Transporting of waste to disposal points
Delivering of sanitary requirement to different required points

3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1recruitment
Refers to discovery and development of the sources of potential personnel. It is the
process of searching for prospective employees and encourages them to apply for jobs in
the enterprise.
Recruitment requires pooling of ex-candidate to enable the management to have a wide
variety for short listing thus probabilities of getting the right people for employees is
high. The recruitment procedure shall be as follows-
I. Advertisement shall be done to create awareness about the probability of the
vacancies. This shall be done by pasting of posters along street and outside busy
streets Interested potential employees will then be require to apply for the jobs
through the postal address and attach their credentials.
II. Despondences will be made to shortlisted applicants inviting them for interviews
III. Interview on the shortlisted applicants shall be undertaken at the business
premises which is 14 interviews shall be done by the manager

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3.4.2 TRAINING
The proprietor is undertaking a course in ICT which includes some units such as
entrepreneurship, will equip the entrepreneur with relevant skills of training
employees owing it all to the knowledge attained in college. The manager will
inform induction on new employees about various aspects of electronic services S
in the first three days. The manager will ensure that employees take refresher
courses at various times. They will attend locally organized trade-fares and trade
shows to acquire knowledge on the latest trends in electronic services. The
manager will put up team building exercises where employees will be trained on
safety rules and regulations to avoid injuries.

3.4.3 PROMOTION
Promotion is the movement to higher position by greater authority and
responsibility. The rise may go along with increment in salary by infinite presents
either through negotiation or solemnly by the employer ascent. The employees
will be promoted solely on commendable worthiness of reward it will be based on
high productivity, responsibility and discipline. The expected increase in market
will collaterally create more employment positions which consequently to a large
degree mean credible employees on the opinion of the employer will be promoted
to a higher posts available.

3.5 REMUNERATION AND INCENTIVES

3.5.1remuneration
This involves reward for services rendered which is mostly in monetary terms.
The employer pays fees and wages to the employees which is an underlying
effective way of motivating employees reasonably and sustainable remunerations
has been known to retain competent employees who might transpire for better
prospects in other enterprises to obtain the best mean of remuneration, the
business will have the following planned salary scale and structure based on the
position of the employees in the enterprises

PERSONNEL NO. OF EMPLOYEES BASIC SALARY HOUSE ALLOWANCES NET SALARY

24
 (KSH) (KSH)
MANAGER 1 1 0 O O O 3 , 0 0 0 1 3 , 0 0 0
D R I V E R 1 5 6 0 0 1 , 0 0 0 6 , 6 0 0
T O T A L 2 1 5 6 0 0 4 0 0 0 1 8 6 0 0

3.5.2INCENTIVES
Incentives imply monetary or non-monetary methods of morale boosting of the employees. In
cohesion, it capitalizes on high productivity to their job description. Consequently, the
proprietor gets to drive the business towards greater achievements due to less supervision on
employee. The proprietor will offer various incentives to its employees to increasing their
purchasing power on the goods and services produced by the enterprises. The employees will
get to purchase electronic services product at asusdised price with a 10% discount.

3.6 LICENSE, PERMITS AND BY LAWS

Its recommendation by the county council that the proprietor of an enterprise is required to
acquire a license and legal permits bore commencing operation.

Trade license – this will be obtain from the registrar of business

Operational license this will be obtained from local authority Kitale county council

1. 6.2permits
R e q u i r e m e n t s S o u r c e c o s t
T r a d e l i c e n s e Ministry of trade 2 0 0 0 - p e r m o n t h
Signboards and billboards Kitalei city council offic e 1 2 0 0
Operational license Kitale city council offic e 4 0 0 0
7 2 0 0 / =

3.6.3BUSINESS LICENSE AND PERMITS

The proprietor will be obliged to familiarize with several business act for effective operation
of the business enterprises

a) Labor law of Kenya

b) Employment act
c) Minimum wages act

25
 d) Workers compensation act

3.7SUPPORT AND PROFESSIONAL SERVICES

To make enterprise operations easy and flawless it will require support and professional
services to ensure a smooth runway for their success flight in the electronic services industry.
These services will enhance smooth operations to improve on the business credibility. The
support services will include postal services, banking services, insurance cover, electricity
supply, advertisement, legal services and even water supply. Further details of these services
have been highlighted below-

a) Insurance cover-:the insurance cover will be issued by INSUARANCE Brokers

under the century blue shield insurance company which operates owner the following
address Blue shield insurance company

P.O. BOX 397-00200

b) Bank services. The manager will open an account for the business with the
Cooperative bank of Kenya in Bomb Blast building

The address of the bank is as shown below

Cooperative bank of Kenya

P.O. BOX 21843-000400,

Kitale

Postal services for the correspondence will use the following address

KINGH ELECTICALS AND ELECTRONICS

P.O. BOX 2137-00200

Kitale

For legal services, will need a law KINGH ELECTICALS AND ELECTRONICS

c) firm that will advice on all legal matters The firm will be

Kilns’ and suns advocates

P.O. BOX 550-90100,

26
Kitale

d) Electrical supply – in order to operate all electricity powered machines. The

proprietor will need to have a supply of electricity from the Kenya power and
Lighting Company which will operate under the following address

Kenya Power and Lighting Company

P.O. BOX 32712,

KITALE.

e) ADVERTISEMENT- in order to keep the community informed the proprietor will

have to advertise the business products and services widely. This will be done through
billboards, signboards and poster.
f) The posters will be designed and printed by-;
Nelly printers and stationeries,
P.O. BOX 1332-00200,
Kitale

The owner will have to familiarize herself with the following act for effective running
of the business
 Employment act
 Workers compensation act
 Labour laws of Kenya
 Minimum wages act

27
CHAPTER FOUR

4.0OPERATIONAL AND PRODUCTION PLAN

A production plan is a description of how core assets are to be used to develop a
product in a product line. A production plan is a necessity for enterprises for the
provision of the business necessary information in running of the business. The
production plan will essentially be a monitoring tool for the progress of the
enterprises on a daily basis. This ensures satisfactory realization of goals and
objectives.

4.1PRODUCTION FACILITIES AND CAPACITIES

 In implementation of the services, factors of production and their
economic prices apply in planning of finance and operational requirement.
All production facilities that will be used are listed below with the prices
of each commodity clearly stated.

F A C I L I T QUANTIT UNIT COST TOTAL S O U R C E

Y Y (KSH) COST S
(KSH)
Machine 5 2 0 1 0 0 River
pads 0 0 roa d
Rotary electronic 3 2 0 0 0 6 0 0 0 River
machine 0 0 roa d
Lawn 2 8 0 0 1 4 0 U p p e r
mower 0 0 h i l l
t o t a 8 4 0
l 0

4.2OPERATION/PRODUCTION STRATEGIES
A production strategy is the condition of choice of operation to be attempted in the
production operation. The proprietor will employ systems to make certain that its production
qualities are fostered remarkably. This will intern escalate profits to a far much greater and
better sustainable level. The techniques to be employed will include:-

28
Total quality management
To quality management is a way of managing an organization so that every job or process is
carried out precisely first time and every time. This insinuates that each level of manufacture
has to attain a considerable high efficiency before proceeding to the next level it aims at
harnessing the human and material resources of the enterprises in the most effective way to
achieve the objectives of the organization
MANAGEMENT BY OBJECTIVES
It aims to distinguish the aspirations that a manager should be anticipating to accomplish
within a given time period at the end of which the actual performance will be matched up to
the ideal results. The two comparisons will manifest the efficiency of the strategies
undertaken. The manager will brainstorm the objectives with the subordinates and issue out
the verdict on the pool of opinions one approach to the management by objectives known as
key the results analysis will be employed whereby the manager will ascertain the key tasks,
performance standards and control information with a view to suggesting how individual
performance of employees can be enhanced

4.2.COST OF LABOUR
Labor universally refers to the human input required for an operation to be undertaken with
rewards eventually expected labor can either be skilled, semi-skilled or unskilled. will
require the services of skilled and unskilled labor for efficient operations. The basic salary,
house allowances and net salary is as shown below

PERSONNE MEMBERS OF BASIC SALARY HOUSE NETSALARY(KSH

L EMBLOYEES (KSH) ALLOWANCES(KSH) )
MANAGE 1 10,OO 3 , 0 0 1 3 , 0 0
R O 0 0
D R I V E 1 5 , 6 0 1 , 0 0 6 , 6 0
R 0 0 0
T O T A 1 5 6 0 4 0 0 1 8 6 0
L 0 0 0

29
4.2.3OVERHEAD EXPENSES
Overhead expenses are those that are not directly correlated with production. They are
incurred irrespective of ongoing or halt in production. KINGH ELECTRICALS AND
ELECTRONICS anticipates incurring the subsequent expenses in starting out. Some of the
overheads will be on an annual basic such as insurance, license and permits. The rest will be
on a monthly basic. The table below depicts the anticipated expenses.

O V E R H E A D AMOUNT (KSH)MONTHLY EXCEPT

E X P E N S E WHENINDICATED
R E N 1 0 , 0 0
T 0
I N S U R A N C 2 , 5 0 0 P
E A
E L E C T R I C I T 3 , 0 0
Y 0
L I C E N S E 7 , 2 0 0 P
S a
T R A N S P O R 1 , 5 0
T 0
A D V E R T I S E M E N 1 , 0 0
T 0
M A I N T A I N A N C 4 , 0 0
E 0
T O T A 4 0 0 0
L 0

4.2.4MONTLY REQUIREMENT COST

The manager of KINGH ELECTRICALS AND ELECTRONICS will definitely incur
numerous operating costs. This is because utilization of factors of production will demand
remuneration since they are usually scarce and have a high demand. The various expenses
have been cleared delineated in the table below

30
 I T E A M O U N T ( K S H
M )
M A T E R I A 1 8 2 5
L 0
L A B O U 3 7 0 0
R 0
O V E R H E A D 3 0 7 0
S 0
T O T A L 8 5 9 5
S 0

4.2.5PROPOSED WORKSHOP/BUSINESS LAYOUT

Layout of the business is essential for easy movement within the premises due to proper
planning of space to be utilized by the of production. in order to fully utilize the entire
available space of KINGH ELECTRICALS AND ELECTRONICS premises, there will be a
chronological arrangement of items on the ground. Equipment will be arranged to ensure ease
in accessibility and documents will be allocated a specific corner.

4.3OPERATION PRODUCTION PROCESS

Production process is the procedures undertaken to accomplish the objectives and goals of the
business enterprises. This helps outline definite a specific way of production to avoid
mistakes caused due to misinterpretation of different production procedures or brand mix-up.

4.4RULES AND REGULATIONS GOVERNING THE OPERATION

In operation an enterprise, there are external and internal regulations, conformances and
endorsements which will affect the business organization. The rules and regulations will be
pursued under very stringent scrutiny to adherence by the manager of KINGH
ELECTRICALS AND ELECTRONICS. To an enormous extent, the conformance to their
rules and regulations will avert superfluous mix-up of ULIE ENTEPRISES, management and
government the rules and regulations are stipulated below.

31
4.4.1INTERNAL RULES
This refers to rules that will be laid down by the business board of directors. The manager
will anticipate noting short of devotion to the rules, failure to which proper punitive action
will be taken against the employees, the rules includes;-

a) Ineptitude at work will lead to suspension or relegation and in case the employees
does not improve on performance , it will lead to retrenchment
b) Mishandling of customers will lead to automatic suspension or termination
c) Harassment at work place of any manner is intolerable and disciplinary action will be
taken against anyone found guilty of the same
d) Zero tolerance will be inserted to theft cases and any employees entangled in such an
act will be suspended
e) All employees must follow orders from the management while incardination may lead
to work late.
f) Every employee must be punctual in coming to work at 8:00 a.m. and living at
6:00pm however, in case of a huge work load, the management reserves the right to
ask employees to work late.

4.1.2 EXTERNAL RULES

This refers to the rules that have been set by the government to protect the consumers,
workers and the environment. Failure to adhere to these laws leads to legal actions being
taken against the owner or manager of the business. KINGH ELECTRICALS AND
ELECTRONICS will have to work under the following rules and regulations;-

1. Licensing Act:-it is a requirement for every business in Kenya to be registered and

obtain a trade license in order to start operating. The renewable licenses will also be
renewed in time to avoid legal tussles with the business registrar. this will ensure that
KINGH ELECTRICALS AND ELECTRONICS does not evade taxation and that it
fulfills its legal requirements
2. Health regulations. Cap 242:- it is legal requirement that employees should work in a
secure and safe place. This means that the area of work should be clean to the public
health standards. The employees of KINGH ELECTRICALS AND ELECTRONICS
will be provided with personal protective equipment. The manager will ensure that
high levels of hygiene are observed at work place to avoid unnecessary health
problems.

32
 3. Environmental regulations:-a peaceful environment greatly improves the
effectiveness of the business. An in conducive environment makes workers enable to
work efficiently and hence will have a negative impact on the business. Cleanliness
around the enterprise shall be ensured by disposing all waste responsibly
4. Compensation Act cap 386:- the Kenyan law provides that the employer should
compensate the employees for any accidents incurred during working activities.
KINGH ELECTRICALS AND ELECTRONICS will fulfill this by buying insurance
premiums and even introducing the comprehensive insurance policy.
5. Employment Act, cap;- from the Kenyan constitution under employment, it is
required that every employee be paid his/her salary depending on the category of this
job group KINGH ELECTRICALS AND ELECTRONICS will ensure that no
employee is underpaid and incase an employee is required to work extra time, a
special allowance scheme shall be put in place to ensure the employee is rewarded
accordingly

CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 INTRODUCTION
A financial plan is a comprehensive evaluation of an investor’s current and future financial
state by using currently known variables to predict future cash flows, assets values and
withdrawal plans. The financial plan identifies the project finance (i.e. money) needed to
meet specific objectives. The financial plan defines all of the various types of expenses that a
project will incur (labor , equipment, materials and administration cost)along with an
estimation of the value of each expense. The financial plan also summarizes the total expense
to be incurred across the project and this total expense becomes the project budget. As part of
the financial planning exercise, a schedule is provided which states the amount of money
needed during each stage of the project.

5.1.1OBJECTIVES OF A GOOD FINANCIAL PLAN

To ensure maximum utilization of the scarce financial resources in the best possible manner
at least cost in order to get maximum return on investment in order to achieve the objectives,
the manager of KINGH ELECTRICALS AND ELECTRONICS will do the following;-

33
 i. Avoid having creditors of more than ksh300,000 a year
ii. Keep clear records on all money coming and leaving the business
iii. Account for all money used to purchase and obtained from sales. The
proprietor of KINGH ELECTRICALS AND ELECTRONICS will invest
ksh300, 000 which will be acquired as follows.

S O U R C A M O U N T ( K S H
E )
O W N E R S 1 5 0 0 0
E Q U I T Y 0
RELATIVES AND 5 0 0 0
FRIENDS 0
B A N K 1 0 0 0 0
L O A N S 0
T O T A 3 0 0 0 0
L 0

5.2PRE-OPERATIONAL COST
These are expenses that the proprietor will incur before opening the business. Pre-
operational cost enables the proprietor to forecast or plan for the expected that the
business may incur during the preparation process before startup. The value of the pre
operational cost has been tabulated as follow

I T E M C O S T ( K S H )
T o o l s a n d e q u i p m e n t 1 3 4 7 5 0
C o m p o n e n t s 1 5 4 5 0
L i c e n s e s a n d p e r m i t s 7 2 0 0
A d v e r t i s e m e n t 1 0 0 0
D e p o s i t f o r r e n t 6 0 0 0 0
F e a s i b i l i t y s t u d y 1 5 0 0
I n s u r a n c e 2 5 0 0
t o t a l 2 2 2 4 0 0

ASSUMPTION

34
 It has been assumed that rent will remain constant for six months

I T E M C O S T ( K S H )
t o o l s a n d e q u i p m e n t 1 3 4 7 5 0
l i c e n s e s a n d p e r m i t s 7 2 0 0
b e g i n n i n g s t o c k 1 5 4 5 0
a d v e r t i s e m e n t 1 0 0 0
t r a n s p o r t 1 0 0 0
e l e c t r i c i t y b i l l 3 0 0 0
t e l e p h o n e b i l l s 1 7 0 0
w a t e r b i l l 1 5 0 0
i n s u r a n c e 2 5 0 0
m i s c e l l a n e o u s e x p e n s e s 2 1 0 0 0
t o t a l 1 8 9 , 1 0 0

5.3 WORKING CAPITAL REQUIREMENTS

Working capital requirement refers to the total funds invested in a business after
financing the purchasing of fixed assets. It is the excess of business current assets less the
current liabilities. The following is an illustration of the same

I T E M A M O U N T
C u r r e n t a s s e t s
S t o c k ( r a w m a t e r i a l s ) 6 1 1 6 0
C a s h b a l a n c e 8 9 4 0 0
T O T A L 1 5 0 5 6 0
C u r r e n t l i a b i l i t i e s
P r o v i s i o n o f t a x ( 1 0 % ) 3 0 9 6 0
c r e d i t o r s 4 0 0 0
S a l a r i e s a n d w a g e s 3 7 0 0 0
t r a n s p o r t 1 0 0 0
T O T A L 7 2 9 6 0
NET WORKING CAPITAL 7 7 6 0 0

35
36
5.4CASH FLOW PROJECTIONS
It is the amount of cash coming in and going out of a business in a particular period. It shows how a business needs to carry out trading

5.4.1 KINGH ELECTRICALS AND ELECTRONICS PROJECTED CASH FLOW FOR YEAR ENDING 31 DEC 2024
J a n F e b M a r April M a y June J u l y August September October November D e c Total
Balancing B/F - 8940 0 132750 170700 190150 216700 235450 260550 284650 301700 321200 335850 2539100
Friends Contribution 5000 0 - - - - - - - - - - - 50000
Owners Equity 150000 - - - - - - - - - - - 150000
L o a n 100000 - - - - - - - - - - - 100000
D e b t o r s - - - - - - - - - - - - 0
Cash Sales 7000 0 120000 110000 9700 0 9900 0 106000 112000 111000 103000 105000 100000 107000 1239000
Total Cash flow 370000 209400 242750 267700 289150 322700 347450 370550 387650 406700 421200 442850 4078100
Cash Outflow - - - - - - - - - - - -
P u r c h a s e 150200
R e n t 6000 0 - - - - 1000 0 1000 0 1000 0 1 0 0 0 0 10000 1 0 0 0 0 1000 0 130000
Water Bill 1500 1400
S a l a r i e s 3700 0 3700 0 3700 0 3700 0 3700 0 3700 0 3700 0 3700 0 3 7 0 0 0 37000 3 7 0 0 0 3700 0 444000
Loan Payment 8000 8000 8000 8000 8000 8000 8000 8000 8 0 0 0 8000 8 0 0 0 8000 96000
Loan Interest 2000 2000 2000 2000 2000 2000 2000 2000 2 0 0 0 2000 2 0 0 0 2000 24000
Telephone Bills 1700 1200 1300 1500 1700 1600 1200 1750 1 3 0 0 1600 1 5 0 0 1000 17300
Electricity Bil l 3000 2500 2300 2100 2400 2200 2350 2100 2 2 5 0 2100 2 5 0 0 2900 28700
Advertisement 1000 8 0 0 6 0 0 1000 3 0 0 3 0 0 - - - - - - 4 0 0 0
Transport Bill s 1000 1100 1300 1200 1500 1100 1000 1200 1 2 5 0 1350 1 4 0 0 1150 14550

37
C r e d i t o r s 4000 4400 - 5000 - 5500 6000 4400 4 5 0 0 4100 3 7 0 0 4600 45700
Feasibility Study 1500 - - - - 3 0 0 1 8 0 0
L i c e n s e 7200 - - - - - - - - - - - 7 2 0 0
I n s u r a n c e 2500 - - - - - - - - - - - 2 5 0 0
Total Cash outflow 280600 760650 7205 0 7755 0 7248 0 8725 0 8690 0 8590 0 8 5 9 5 0 85500 8 5 3 5 0 8590 0 1182050
Cash Balance 8940 0 132750 170700 190150 216700 235450 260000 284650 301700 321200 335800 356950 2896050
Balancing C/F

38
5.4KINGH ELECTRICALS AND ELECTRONICS CASH FLOW FOR THE YEAR
ENDING 31st DEC 2024

5.5PROFORMA INVOICE STATEMENT

An income statement is a financial statement showing revenues earned by a business,
expenses incurred in earning those revenues and the resulting net profit or loss. It also
shows how far business has achieved or failed to achieve its primarily objectives of
earning a profit. Performa income statement has been outlined clearly

5.5.1PROFORMA INCOME FOR THE YEARS ENDING 31st DEC 2024,2025,2026

PARTICULAR 2 0 1 1 ( K S H ) 2 0 1 2 ( K S H ) 2 0 1 3 ( K S H )
Cash from sales 1 , 2 3 9 , 0 0 0 1 , 4 9 0 . 0 0 0 1 , 1 7 7 0 , 0 0 0
p u r c h a s e s 3 5 0 , 9 5 0 2 1 9 , 0 0 0 2 1 9 . 0 0 0
Gross profit 8 8 8 , 0 5 0 1 , 2 7 1 , 0 0 0 1 , 5 5 1 , 0 0 0

E X P E N S E S
r e n t 1 3 0 , 0 0 0 1 2 0 , 0 0 0 1 2 0 , 0 0 0
W a t e r b i l l 1 5 , 3 0 0 1 5 , 3 0 0 1 5 , 3 0 0
s a l a r i e s 4 4 4 , 0 0 0 4 4 4 , 0 0 0 4 4 4 , 0 0 0
Loan repayment 9 6 , 0 0 0
Loan interest 2 4 , 0 0 0
Electricity bill 2 8 , 7 0 0 2 8 , 7 0 0 2 8 , 7 0 0
Telephone bill 1 7 , 3 5 0 1 7 , 3 5 0 1 7 , 3 5 0
advertisement 4 , 0 0 0 4 , 0 0 0 3 , 7 0 0
t r a n s p o r t 1 4 , 5 5 0 1 4 , 5 5 0 1 4 , 5 5 0
c r e d i t o r s 4 5 , 7 0 0 1 3 , 0 0 0 1 6 , 0 0 0
Feasibility study 1 , 8 0 0 1 , 2 0 0 1 , 3 0 0
l i c e n s e 7 , 2 0 0 3 5 0 0 3 , 5 0 0
i n s u r a n c e 2 , 5 0 0 2 , 5 0 0 2 , 5 0 0
TOTAL EXPENSE 8 3 1 , 1 0 0 6 6 4 , 1 0 0 6 6 6 , 9 0 0
Net profit before tax 5 6 , 9 5 0 6 0 6 , 9 0 0 8 8 4 , 1 0 0
Tax provision10% 5 , 6 9 5 6 0 , 6 9 0 8 8 , 4 1 0
Net tax after tax 5 1 , 2 5 5 5 4 6 , 2 1 0 7 9 5 , 6 9 0

39
40
 BALANCE SHEET PROJECTIONS

Balance sheet projections indicate what the firm owns and how the assets are financed in
form of liabilities and ownership interests

BALANCE SHEET FOR THE YEAR ENDING ON 31st DEC 2024

s t
FIXED ITEMS 3 1 2 0 1 1 31st DEC 2012 31st DEC 2013
Ma c hine and tool s 1 3 1 , 9 5 0 1 3 1 , 9 5 0 1 3 1 , 9 5 0
Less depreciation 4% 1 2 6 , 6 7 2 1 2 6 , 6 7 2 1 2 6 , 6 7 2
f u r n i t u r e 3 , 0 0 0 3 , 0 0 0 3 , 0 0 0
TOTAL FIXED ASSETS 1 2 9 , 6 7 2 1 2 9 , 6 7 2 1 2 9 , 6 7 2
CURRENT ASSETS
C a s h s a l e s 1 , 2 3 9 , 0 0 0 1 , 4 9 0 , 0 0 0 1 , 7 7 0 , 0 0 0
d e b t o r s 5 , 0 0 0 5 , 0 0 0
Less purchases 3 5 0 , 9 5 0 2 1 9 , 0 0 0 2 1 9 , 0 0 0
Total current assets 8 8 8 , 0 5 0 1 , 2 7 6 , 0 0 0 1 , 5 5 6 , 0 0 0
TOTAL ASSETS 1 , 0 1 7 , 7 2 2 1 , 4 0 5 , 6 7 2 1 , 6 8 5 , 6 7 2
LIABILITIES
r e n t 1 3 0 , 0 0 0 1 2 0 , 0 0 0 1 2 0 , 0 0 0
W a t e r b i l l 1 5 , 3 0 0 1 5 , 3 0 0 1 5 , 3 0 0
s a l a r i e s 4 4 4 , 0 0 0 4 4 0 , 0 0 0 4 4 4 , 0 0 0
Loan repayment 9 6 , 0 0 0 - -
Loan interest 2 4 , 0 0 0 - -
Electricity bill 2 8 , 7 0 0 2 8 , 7 0 0 2 8 , 7 0 0
Telephone bill 1 7 , 3 5 0 1 7 , 3 5 0 1 7 , 3 5 0
advertisement 4 , 0 0 0 4 , 0 0 0 3 , 7 0 0
t r a n s p o r t 1 4 , 5 5 0 1 4 , 5 5 0 1 4 , 5 5 0
c r e d i t o r s 4 5 , 7 0 0 1 3 , 0 0 0 1 6 , 0 0 0
Feasibility study 1 , 8 0 0 1 , 2 0 0 1 , 3 0 0
l i c e n s e 7 , 2 0 0 3 , 5 0 0 3 , 5 0 0
i n s u r a n c e 2 , 5 0 0 2 , 5 0 0 2 , 5 0 0
TOTAL LIABILITIES 8 3 1 , 1 0 0 6 6 4 , 1 0 0 6 6 6 , 9 0 0

41
5.6BREAKING EVEN ANALYSIS
Breaking point refers to the level where the business is neither making a profit nor loss. It
is a careful planning tool since it shows how change in sales affects the income
generations. KINGH ELECTRICALS AND ELECTRONICS breaks even analysis has
been calculated bellow

FIXED AND VARIABLE COSTS TABLE

Y E A R 2 0 2 0 2 0 2 1 2 0 2 2
FIXED COSTS(KSH)
S A L A R I E S 4 4 4 , 0 0 0 4 4 4 , 0 0 0 4 4 4 , 0 0 0
R E N T 1 3 0 , 0 0 0 1 2 0 , 0 0 0 1 2 0 , 0 0 0
LOAN RPAYMENT 9 6 , 0 0 0 - -
INTEREST ON LOAN 2 4 , 0 0 0 - -
TOTAL FIXED COSTS(KSH) 6 9 4 , 0 0 0 5 6 4 , 0 0 0 5 6 4 , 0 0 0
VARIABLE COSTS
ELECTRICITY BILL 2 8 , 7 0 0 2 8 , 7 0 0 2 8 , 7 0 0
TELEPHONE BILL 1 7 , 3 5 0 1 7 , 3 5 0 1 7 , 3 5 0
ADVERTISEMENT 4 , 0 0 0 4 , 0 0 0 3 , 7 0 0
TRANSPOR T 1 4 , 5 5 0 1 4 , 5 5 0 1 4 , 5 5 0
TOTAL VARIABLE COSTS(KSH) 6 4 , 6 0 0 6 4 , 6 0 0 6 4 , 6 0 0

5.7BREAKING EVEN CALCULATIONS

a) Total contribution margin for 2024,2025,2026
b) TCM=SALES – TOTAL VARIABLE COST
2024=1239000-64600
=1174400
2025=1490000-64600
=1425400
2026=1770000- 64600
=1705400
c) Contribution margin percentage for 2024,2025,2026
d) CMP=contribution margin*100
Sales

42
 2024 CMP=1174400*100
1239000\
=94.8%

2025 CMP = 1425400*100

1490000
=96.4%

1770000
Breaking level for 2010 20
=fixed cost
Contribution margin
2024=694000
94.8%
=732 067
2011=564000
589,342
2026=56400
96.43%
Ksh.585 062
ASSUPTIONS
No alternation of fitted item
Demand will determine the amount spend on variable

5.8 DESIRED FINANCNG

I T E M A M O U N T
W o r k i n g c a p i t a l 7 7 6 0 0
P r e o p e r a t i o n a l c a p i t a l 2 2 2 4 0 0
T O T A L 3 0 0 0 0 0

43
 5.9PROFITABILITY RATIOS
The profitability ratios for the business will be calculated as follows

no r a t i o R a t i o f o r m u l a e Year 2022 Year 2025 Year 2026

1 Gross profit ratio Gross profit*100 888,050 * 100 1271000 *100 1551000 *10 0
sales 1239000 1490000 1770000
=71.7% =85.3% =87.6%
2 Net profit ratio Ne t profi t * 1 0 0 56,950 *100 606900 *100 795,690 %100
sales 1239000 1490000 1770000
=4.6% =40.7% =49.9%
3 Return on equality Net profit after tax *100 51,255 *100 546210 *100 795690 * 100
Owners equity 150000 150000 150000
=34.2% =364.1% =530.5%

44