TITLE : BUSINESS PLAN

PRESENTED BY : NICODEMUS MUEMA PETER

ADMISSION NO : 2521/19

INSTITUTION : KAREN TECHNICAL TRAINING INSTITUTE FOR

THE DEAF.
CENTRE NO :

PAPER NO : 2601/306B

SUPERVISOR. :MR. PAUL MAKOTA

PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL

FOR PARTIAL FULFILLMENT OF AWARD OF

DIPLOMA IN ELECTRICAL AND ELECTRONICS

ENGINEERING (POWER OPTION)

EXAM SERIES : JULY 2024

i
 DECLARATION
I declare that this project which am submitting to the KENYA NATIONAL EXAMINATION
COUNCIL is my original work and has not been copied or written by anybody and it has not been
presented to any examination body.
This project is a personal effort of NICODEMUS MUEMA.I have done it to the best of my
knowledge.
I therefore submit it to Kenya National Council for marking.
Signature …………………………………….
Date …………………………………….
This project was approved as the original by the supervisor.
Signature ……………………………………
Date ………………………………………

ii
 DEDICATION
This business plan project I would like to dedicate it to my beloved parents, brothers and sisters
for their tireless effort of supporting me financially and socially to see that I complete the course
of Diploma in Electrical and Electronics engineering.

iii
 ACKNOWLEDGEMENT
The success of coming up with this business plan is through the grace of the Almighty lord granting
me strength to write the project.

I extend my appreciation to the Karen Technical Training Institute For the Deaf fraternity for
enabling us to have a conducive environment for doing research to come up with this plan.
I cannot forget my classmates who played a major role in assisting me with materials such as pens,
foolscaps and other intelligence assistances to produce the plan.

iv
Table of Contents
DECLARATION ............................................................................................................................................... ii
DEDICATION ................................................................................................................................................. iii
ACKNOWLEDGEMENT .................................................................................................................................. iv
CHAPTER ONE ............................................................................................................................................... 9
BUSINESS DESCRIPTION ................................................................................................................................ 9
1.1: Name of the Business ........................................................................................................................ 9
1.2: Business Location ............................................................................................................................... 9
1.3: Form of Ownership ............................................................................................................................ 9
1.4: Type of Business................................................................................................................................. 9
1.5: Product and Services.......................................................................................................................... 9
1.6: Justification of The Business Opportunity. ...................................................................................... 10
1.7: Industry ............................................................................................................................................ 10
1.8: Business Goals and Objectives ......................................................................................................... 11
1.9: Entry and Growth Strategy .............................................................................................................. 11
1.9.1: Entry Strategy............................................................................................................................ 11
1.9.2: Growth Strategy ........................................................................................................................ 11
CHAPTER TWO ............................................................................................................................................ 12
MARKET PLAN ............................................................................................................................................. 12
2.1: Potential Customers: ....................................................................................................................... 12
2.1.1: Individual Customers: ............................................................................................................... 12
2.1.2: Institutions and Industries Customers ...................................................................................... 12
2.1.3: Agencies: ................................................................................................................................... 12
2.2: Market Share ................................................................................................................................... 12
2.3: Competitors ..................................................................................................................................... 12
2.4: Advertisement and Promotion ........................................................................................................ 14
2.4.1: Advertisement .......................................................................................................................... 14
2.5: Sales Tactics ..................................................................................................................................... 14
2.6: Distribution Strategy ........................................................................................................................ 15
CHAPTER THREE .......................................................................................................................................... 16
ORGANIZATION AND MANAGEMENT PLAN ............................................................................................... 16
3.1: Organizational Structure .............................................................................................................. 16
3.1.1: Manager .................................................................................................................................... 16

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 3.1.2: Technical Supervisor ................................................................................................................. 16
3.1.3: Secretary/ Personal Assistant ................................................................................................... 17
3.1.4: Sales Representative ................................................................................................................. 17
3.1.5: Store Keeper ............................................................................................................................. 18
3.1.6: Skilled Technician ...................................................................................................................... 18
3.1.7: Driver......................................................................................................................................... 18
3.1.8: Watchman ................................................................................................................................. 19
3.2: Recruitment, Training and Promotion ............................................................................................. 19
3.2.1: Recruitment .............................................................................................................................. 19
3.2.2: Training ..................................................................................................................................... 19
3.2.3: Promotion ................................................................................................................................. 20
3.3: Remuneration and Incentives .......................................................................................................... 20
3.3.1: Remuneration ........................................................................................................................... 20
3.3.2: Incentives .................................................................................................................................. 20
3.4: Licences and Permits........................................................................................................................ 21
3.4.1: License....................................................................................................................................... 21
3.4.2: By Laws:..................................................................................................................................... 21
3.5: Support Services .............................................................................................................................. 21
CHAPTER 4 .................................................................................................................................................. 23
OPERATIONAL/ PRODUCTION PLAN ........................................................................................................... 23
4.1: Production Facilities and Capacities ................................................................................................ 23
4.2: Workshop Layout ............................................................................................................................. 24
4.3: Production Strategy/ Operational Strategy ..................................................................................... 24
4.4: Production Process .......................................................................................................................... 24
4.5: Regulations Affecting Production/ Operation ................................................................................. 24
4.5.1: Government Regulations .......................................................................................................... 24
4.5.2 Health Regulation Act of 2010 ................................................................................................... 25
4.5.3 Workers Regulation Act of 2010 ................................................................................................ 25
4.5.4: Safety Regulations Act of 1997 ................................................................................................. 25
CHAPTER FIVE ............................................................................................................................................. 27
FINANCIAL PLANNING ................................................................................................................................. 27
5.1: Pre-Operational Cost ....................................................................................................................... 27
5.2: Estimated Working Capital .............................................................................................................. 27

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 5.3: Proforma Income Statement ........................................................................................................... 30
5.4: Proforma Balance Sheet .................................................................................................................. 31
5.5: Break Even Point .............................................................................................................................. 33
5.6: Profitability Ratios............................................................................................................................ 34
5.6.1: Gross Profit Margin (G.P.M)...................................................................................................... 34
5.6.2: Net Profit Margin (N.P.M) ......................................................................................................... 34
5.6.3: Return on Equity ....................................................................................................................... 34
5.7: Desired Financing ............................................................................................................................. 35
5.8: Proposed Financing .......................................................................................................................... 35
APPENDIX .................................................................................................................................................... 36
Appendix I: Location Map ....................................................................................................................... 36

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EXECUTIVE SUMMARY
The proposed business shall be known as NICOS ELECTRICAL AND ELECTRONICS SUPPLIES
ENTERPRISE and shall be located at mujuyunii along machakosi - wote highway and shall deal
with selling of green energy accessories such as solar cells, controllers, solar inverters, solar
batteries and other electrical accessories. It shall be solely owned by NICODEMUS MUEMA who
will also be the manager of the business. It shall target individuals, institutions, industries and
agencies etc. The focus of the business will be on increasing the market share by 20% every year.
It will also analyze the competitor’s strength and weakness and beats them using sophisticated
sales promotion and pricing of the products. It shall adopt a small-scale organization plan
consisting of the manager, technical supervisor, personal secretary and subordinate staff. It shall
have a secretariat for recruiting, training and promoting the employees. It shall also be linked
and given permit by the central government and local authorities. It shall deal with selling of
electrical accessories mostly for green energy. It will target the needs of all customers because
the people in the surrounding are looking for comparatively cheap sources of energy which are
renewable. In the recent past the cost of electrical energy has risen due to government levying
high tax on the cost of production of electrical energy. Due to this reason people have shifted to
green energy to substitute for their needs. This is because green energy is comparatively cheap
and requires little maintenance. It shall start with small amount of desired finance of about
2,902,200.00.The proposed financing required will be from personal saving, borrowing from
friends and Bank. The total proposed financing is 3,000,000.00. This shows that the business will
be managed and able to run without starting crisis.

viii
CHAPTER ONE
BUSINESS DESCRIPTION
1.1: Name of the Business
The name of my business will be NICOS ELECTRICALS AND ELECTRONIC SUPPLIERS ENTERPRISE.
I chose the name because NICOS is a short form of my name. The business deals with selling of
green energy accessories such as solar cells, controllers, solar inverters, solar batteries cables and
other electrical accessories. This is a sole proprietor form of business.
1.2: Business Location
Having done research, the business shall be located at Mukuyuni along machakos-wote Highway.
Its premises will be at wakulima building opposite to Ann's Agrovet.
The area surrounding is densely populated and the demand for green is high. There is also good
infrastructure, availability of banking services, good communication network and security.
The address of the business will be;

NICOS ELECTRICAL AND ELECTRONICS SUPPLIES,

P.O BOX 90-300,
Wote
EMAIL: [email protected]
1.3: Form of Ownership
The business will take a form of sole proprietorship to avoid unnecessariness in decision making,
which would hinder smooth running of business. The reason for having this of business is more
extended to realization of all profit by one-person, personal incentive for the business there will
be close supervision due to close contact.
1.4: Type of Business
The business will be dealing with selling of electrical accessories mostly for green energy. It will
target the needs of all customers because the people in the surrounding are looking for
comparatively cheap sources of energy which are renewable.
1.5: Product and Services
The business will be dealing with sell of electrical accessories mainly for green energy. This
includes solar modules, solar batteries, solar inverters, cables and controllers.
The services offered to the potential customers will be transport and installation. Maintenance
will be offered but at the cost of the customer. There will also be replacement of accessories
which fail to operate or function only if the terms and condition of guarantee have not been
interfered with.

9
 Products Description Source Amount (Kshs)
Cables 1.5mm Luka Electrical 2000
Sockets 240V Single Luka Electrical 500
Consumer unit 4x2 unit Sagana electrical 2,500
Solar panel 150 watts Sagana electrical 7,500
Solar controllers 5000mAH Sagana electrical 5,000
Ceiling roses Single Masimo electrical 200
Conduits Double Masimo electrical 3000
Energy saving bulbs 5watts Masimo electrical 2,000
Couplers 2inch Masimo electrical 1,000
Holders Straight Sagana electrical 800
Screws 3inch Sagana electrical 500
Draw wires Steel Sagana electrical 500
Solar batteries 12volts Sagana electrical 7,000
Cable 2.5mm Sagana electrical 4,000

1.6: Justification of The Business Opportunity.

In accordance to market survey in mukuyuni town area and Makueni county at large the cost of
electrical energy has been high especially during this hard economical period. Due to this reason,
people in the surrounding have choose to look for cheap sources of energy. The weather also in
the area favour solar energy due to high solar intensity received in the area. This favours
installation of solar modules.
After evaluating this situation well, I found out that I can comfortably carry out the proposed
business with ease and success since there is a ready market. The owner is fully qualified this will
automatically outdo the existing competitors who do not have qualified personnel
The business will be strategically situated hence will be able to serve a large number of
customers.
1.7: Industry
The business falls under electrical field in relation to business community. It’s a sole
proprietorship business since it will start off with few employees comprising of the manager,
private messengers, one driver and security guard. The number of personnel will increase per
business demand and expansion. The general growth trend of industry is increasing by 20% every
year as from the economic survey of Kenya carried out between year 2021 to 2024 0n renewable
energy.
The table below were arrived at after research from county engineering office at Mukuyuni town
on how people are shifting to green energy sources. The growth percentage between 2021 to
2024 is shown below;

10
Table 1.1 growth rate

YEAR GROWTH RATE IN %

2021 12
2022 15
2024 17
1.8: Business Goals and Objectives
The general objective of the business will be to generate income to the owner. The goal will be
categorized as:

i. Short term goals

 Maximization of the profit.
 Offering quality products and services at affordable charges.
 Provide employment since the government does not always offer immediate jobs to
fresh graduate technicians
ii. Long term goals
 To expand the customers premises so as to meet high demand for renewable source
of energy.
 Opening of other branches in neighbourhood market and employ more employees
within a period of 5 years
 Assisting the state in achieving the vision 2030 by ensuring that everybody is
employed.
1.9: Entry and Growth Strategy
1.9.1: Entry Strategy
Having carried strength weakness and ability test on my competitors, I will begin by introducing
products and services which do not offer.

I will create awareness of the existence of the business through advertising in the media
especially posters and communication in public places.
To attract more customers, I shall offer discounts on product sold.
1.9.2: Growth Strategy
After having captured a substantial market share, I will expand my business by selling quality
accessories and employ more staff to assist me. I will also open up more branches in the
neighbourhood town to widen my market scope.

11
CHAPTER TWO
MARKET PLAN
2.1: Potential Customers:
My business target individual, institutions, industries agencies etc.
2.1.1: Individual Customers:
These include the inhabitants of Mukuyuni town and the entire Makueni county who are looking
for alternative sources of energy cheap and easily available compared with the existing ones
2.1.2: Institutions and Industries Customers
This includes schools like ACK Mukuyuni primary school , Ukaatuni Technical Training Institute
and Mukuyuni secondary school . There are also churches like Mukuyuni Catholic church.

2.1.3: Agencies:
This includes the government and non-Governmental organization bodies e.g., local authorities
like County Government of Makueni and charitable organization such as world vision and
Mukuyuni mission agencies.
2.2: Market Share
Having identified potential customers, I hope to cover a large market scope as soon as the
business starts. That is within the first term of operation. As a matter of fact, I will have a small
percentage market share at first since my competitors are already established but by taking
advantage of their weakness, I hope my business will acquire a high market share rapidly.

2.3: Competitors
There is direct and indirect competition where same competitors offer rectified business
products and service or alternative products and service without location. This has caused me to
carry through research on my competitor’s weakness and strengths.
Table 2.1: Comparison

Name Location Products And Services

Ben’s Electronics Mukuyuni Electrical and electronics
Supply
Sanity Electronics Mukuyuni Electrical Installation And
Supply

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Table 2.2: SWOT Analysis

Name Strengths Weaknesses

Ben’s Electronics  It has an appropriate  It overlooks small
access to meet contracts
individuals who  It services are very
operate their business expensive
within same market  It works force is
stalls. composed of few
 It has been too workers who are
famous to most never rewarded for
factories and extra work they do.
institutions being the
first to enter the
market.
 It stable financially
since it was started
earlier when there
was no competition in
the market.
 High quality products.

Sanity Electronics  Offer after sales  The business is not

services e.g., financially sound.
transport  They do not keep
 The manager deadline of their
motivates the customers.
employees by  Recruitment is of
sponsoring them for cheap unskilled
part time courses to workers who are
advance in expensive to train.
knowledge.

The business will capitalize much on the competitor’s weakness by:

Ways of overcoming
 Lowering the price slightly.
 Providing technicians and advisory services to customers.
 Consistent pricing.
 Using modern technology for maximum efficiency.
 Maintaining high degree of quality and competence.
 Competitors’ analysis table

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2.4: Advertisement and Promotion
2.4.1: Advertisement
The advertisement will be carried as follows:

 Posters
This will use posters describing location services and sales offered by the business.

 Signboards
Signboard the exact of the business name and address will be excreted at the roundabout of the
market.

 Business card
This will print business card that will be given to customers to enhance more customers coming
for our services.

 Wall printing
The premises and the valuable of the business will be printed for identification of business
premises and good services offered.
 Calendars
It will contain the name, location of the business, commodities being sold and daily contacts and
working hours. They will be given freely to the customers after purchasing goods and services
from the business.
 Social media
It will advertise products sold through online shopping as the current trend
 Radio
It will be advertised over the radio Musyi FM so that the popularity of the business to reach many
people within the area and those from far.
2.5: Sales Tactics
At the beginning I will use direct method of selling where customers come and buy from the
business premises and technicians going to the customers to provide services like installation,
maintenance and repairs of solar module.

After expansion I will use indirect method e.g., through internet online selling. I will also keep a
close relationship with big potential customers by serving them by my journals, greeting cards
and even calling them through the phones occasionally. I will also exercise high degree of
integrity and politeness to maintain my customers.

14
2.6: Distribution Strategy
The customers are expected to visit business premises and make the purchase. The goods will be
purchased from the electrical enterprise and if in bulk transport services will be offered at a

PRODUCER SALESMEN CONSUMER

2.7: pricing strategy

 Price Skimming: It involves setting a higher price for a new product when it first enters the market
 Penetration Pricing: it’s a pricing strategy where the price of a product is initially set low to rapidly
reach a wide fraction of the market and initiate word of mouth.
 Competitive Pricing: it’s a process of selecting price points to best take advantage of a product or
service-based market relative to competition. It’s used once a price for a product or service has
reached a level of equilibrium
 Psychological Pricing: is a pricing and marketing strategy based on the theory that certain prices
have a psychological impact.
 Value Pricing: is customer focused pricing meaning companies base their pricing on how much
the customer believes a product is worth.
 Premium Pricing: the is the practice of keeping the price of one of the products or service
artificially high in order to encourage favourable perception among buyers, based solely on the
price

15
CHAPTER THREE
ORGANIZATION AND MANAGEMENT PLAN
3.1: Organizational Structure
NICOS ELECTRICAL SUPPLIES ENTERPRISE ORGANIZATIONAL LAYOUT

MANAGER

TECHNICAL SECRETARY/PERSONAL
SUPERVISOR ASSISTANT

SALES SKILLED SECURITY

STOREKEEPER DRIVER
REPRESENTATIVE TECHNICIAN PERSONEL

MESSENGER

Below is a brief description of job specification and requirements

3.1.1: Manager
Qualification and Requirements

 Holder of Diploma in electrical and electronics engineering

 Shall be at least 25 years old
 1 year working experience
 Must have outstanding leadership qualities.
Duties and responsibilities

 Overhead administration of the business i.e., control of all financial transactions in the
business and establishing market for the business.
 Employment/ recruitment of employees i.e., staffing.
 Making decision on matters arising in the business.
 Implementation and supervision of policy matters.
 Coordination of day-to-day operation of the business
3.1.2: Technical Supervisor
Qualification and Requirements

 Holder of higher national certificate in electrical or a diploma in electrical engineering

power option from recognized institution
 Must have at least 2 years working experience
16
  Must be able to work during old hours if need be
 Must have proven leadership qualities.
 Must be able to offer conducive working environment of workers to retail them.

Roles and responsibilities

 Direct supervision of workers
 Carrying out regular check-up of the job being done and quantity and quality of completed
job as a control measure
 Involvement of production development in conjunction with the management.
 Ensure proper produce design with workshop
 Employment/recruitment of unskilled workers

3.1.3: Secretary/ Personal Assistant

Qualification and Requirements
 Must have a diploma in secretarial duties .
 Must have at least 3 years working experience in a busy electrical firm
 Must be fully equipped in computer and accounting knowledge
 Must be courteous and friendly.
 Must be self-motivated
Duties and responsibilities

 Receiving customer calls

 Keeping the books of account
 Typing all business documents .
 Banking and withdrawals of finance
 Direct supervision of watchmen, messenger and driver
 Paying of salaries to workers

3.1.4: Sales Representative

Qualification and Requirements
 Holder of diploma in marketing from a recognized institution
 Must be computer literate
 Must have a valid driving license
 Must have at 2 years working experience in similar position
Duties and responsibilities

17
  Building on customer base
 Providing technical advice to customers
 Tendering
 Costing

3.1.5: Store Keeper

Qualification and Requirements
 Must have at least c plain in KCSE.
 Must be able to communicate in English and Kiswahili
 Should have at least a pass certificate in procurement and purchasing.
 Through knowledge in store keeping
Duties and responsibilities
 Keeping and store record of every item in and out of store
 Dispatching of materials to the technicians if they need from the store
 Give advice to the management on purchase of new materials

3.1.6: Skilled Technician

Qualification and Requirements

 A holder of ‘O’ level certificate with at least C minus and above

 Should have at least a pass certificate in craft installation
 Knowledge in drawing and interpretation of electrical circuits.
 Must be self-motivated and with a lot of initiative
Duties and responsibilities

 Carrying out actual work in site

 Ensuring all tools and equipment are safe custody and in good working condition
 Installing of solar modules
 Repair and effective maintenance of solar panels

3.1.7: Driver
Qualification and Requirements
 Must have a clean valid driving license
 Must have a certificate of good conduct

18
  Must have at least 5 years working experience
 Must be polite well-mannered and friendly
Duties and responsibilities
 Delivering of materials from suppliers and finished products to the client premises
 Transport workers to the site
3.1.8: Watchman
Qualification and Requirements

 Should have worked at the same capacity for at least 3 years

 Must not have been charged in a court of law
Duties and responsibilities
 Guarding the business property
 Allowing only the business workers in the business workshop
 Safeguarding customer bags and vehicles as they are in the business premises
 Seeking identification of customers to the business premises
The management will employ casual workers if need be.
Their payment will depend on the work done or the nature of work

3.2: Recruitment, Training and Promotion

3.2.1: Recruitment
It will advertise the available vacancies that are for key personnel including the secretary,
storekeeper, skilled technician, driver messenger and watchman.
The advert will be through posters which will be placed on strategic places for example busy
streets of the market and other market like kyamuthei and kyuasini.
The advert will be aired through the local radio like Musyi FM and Mbaitu FM.

The applicants will be required to submit their application accompanied by relevant academic
certificates and well detailed curriculum vitae together with a photocopy of national Id and
certificate of good conduct.

Means of delivering their applications is through the postal address to the manager NICOS
ELECTICAL SUPPLIES ENTERPISE P.O BOX 90-300, wote.

3.2.2: Training
The training will be based on each employee’s job experience.

19
Technician for instance will be expected to attend a coaching on how to interpret, manuals and
drawing of wiring circuits.
This will be done every Monday from 2pm to 4pm, this will help them to cope with any difficulty
posed by even increasing technology, advancement and hence improve the quality of work and
produce sophisticated product.

The business will sponsor some of the technician for short course duration in big institutions such
as polytechnics, seminars, workshops and trade exhibitions.
They will gain competence on technical knowledge and change the mode of product shape with
the phase of changing technology. They will also gain a lot interaction with other technicians. This
will assist them in their personal relationship with the firm management and finally know how to
serve customers well for the benefit of the enterprise.

3.2.3: Promotion
The promotion of employees will be based on performance and intelligence outer on delivering
outer price services to customers and the return from the employees. Also long serving
employees will be considered and the experience one has in particular department of operation.
3.3: Remuneration and Incentives
3.3.1: Remuneration
It will take the responsibility and the workers will have advance after every two weeks if one
demand salary advance
Table 3.1 Employee Salary per Year

Serial No No. of workers Title Salary per month Salary per Year
1 1 Manager 20,000.00 240,000.00
2 1 Skilled 15,000.00 180,000.00
technician
3 1 Secretary 12,000.00 144,000.00
4 1 Sales represent 9,500.00 114,000.00
5 1 Store keeper 5,000.00 60,000.00
6 1 Driver 5,000.00 60,000.00
7 1 Watchman 2,500.00 30,000.00
8 1 Messenger 2,000.00 24,000.00
Total 8 852,000.00

3.3.2: Incentives
The NICOS ELECTRICAL SUPPLIES ENTERPRISE employees will be entitled to the following
incentives. Overtime payment, medical schemes, if injured at work safety equipment like
protective boots, apron, helmets and dust coats. Also, ten o’clock tea will be available

20
However, key personnel together with manager will be entitled to more benefits such as
travelling allowances, National medical scheme and insurance cover against any accident that
may occur during business overtime.

Also, employees will be allowed to air their view on business development so that they also feel
that they are part and parcel of the business.

3.4: Licences and Permits

3.4.1: License
Below is a table showing the type of license or permit place of issue and amount
charged for each;
Table 3.2 Licences and permits
License Authority to issue Amount
Trade license Local authority 200.00
Registration of business Registration of 1000.00
license companies
Public health permit Ministry of public health 5,000.00
Total amount 10700.00

3.4.2: By Laws:
For the smooth running of the business the rules and regulations of the business operation will
be laid down as a control between the parties of the business involved in operation i.e., personal
safety, hygiene and many others to be observed strictly.

3.5: Support Services

These are services which are vital importance for my business since they work hard in hand to
make any business a success. They include bank, lawyer, insurance, telephone post office and
auditor.
Table 3.3 Support Services

SERVICE PROVIDER SERVICE Amount

Kenya commercial bank (KCB) Banking 1000.00
P.O Box 56-890 Money transfer
NUNGUNI Cashing
0723824786 Provision of in loan
Business account
Insurance broker Insure the business against theft and fire 500.00
P.O BOX 314-56800 Nairobi Cover against bad debts
0715485655 Workmanship compensation
0722565495
0723966167

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Sunday and sons’ advocates Act on the behalf of the business on legal matters. 2000.00
P.O BOX 45-205 NUNGUNI Sue on behalf of the business
0725873446
0702660440

22
CHAPTER 4
OPERATIONAL/ PRODUCTION PLAN
This includes the machinery and equipment that will be required for the production activities. To
ensure satisfaction of customers the management will ensure smooth and proper co-ordination
is maintained. The business is production and operational based.
4.1: Production Facilities and Capacities
Table 4.1 Production Facilities and Capacities

Equipment No. of Cost Per Total Source Date

Units Item Required
Ammeter 1 500.00 500.00 Kenya electronics Jan 2025
Voltmeter 1 500.00 500.00 Sky light Jan 2025
electronics
Solar modules 4 4,000.00 16,000.00 Tumaini electrical Jan 2025
shop
Solar batteries 4 8,000.00 24,000.00 Tumaini electrical Jan 2025
Controllers 4 6,000.00 24,000.00 Kenya electronics Jan 2025
Cables 2 Rolls 9,000.00 18,000.00 Kenya electronics Jan 2025
Accessories e.g., 200.00 200.00 Tumaini electrical Jan 2025
bulbs

Facility No. of units Cost per unit Total cost Supplier

Tools 8 625.00 5,000.00 Kenya Electronics
Cabinets 4 300.00 12,000.00 Dusit Ideal Furniture
Office desk 8 500.00 4,000.00 Smart Ideal Furniture
Stationary 1000.00 1000.00 Keli Stationaries
Fittings 10,000.00 10,000.00 Mugambi Fittings
Computers 50,000.00 50,000.00 Metro Computers
Mobile phone 1 5,000.00 5,000.00 Allies Computers
Total 87,000.00

23
4.2: Workshop Layout
The overall dimensions of the premises will be 30m by 35m.
4.3: Production Strategy/ Operational Strategy
To be fully operational the business will ensure adequate material and would be well equipped
with all the tools needed to make, install and service of all accessories and appliances.

Most components/equipment that will be employed in the production process will be acquired
from the main production plants since it is easier to deal with manufacturers. Directly avoiding
middlemen hence imposing the profit margin. For start, the business will set off with the above
listed materials and facilities but as financial base expands and profit occurred ploughed back
into the business in entry years of operations, more materials and facilities will be added and
improved. To ensure quick and efficient delivery of services, the business will ensure that it hires
a vehicle to be transportation of technicians.
On other hand, customers’ relation will be locked upon and any complains or cries will be settled
wisely and promptly, the manager and sales representative will look for tenders for relevant
projects from newspapers and journals. Business operating hours will be as follows:
Monday to Saturday 8:00 a.m. - 5:00 p.m.
Sunday and Public Holiday 2:00 p.m-5:00p.m
4.4: Production Process
The production process will be divided into two sections. One system will include displaying our
product for sale in our show rooms for customers. The other system will be based on order by
the customer. After the product and service are certified, the technician in charge will have to
write a report pertaining the accuracy of the product or any undertaken project to help in
evaluating the performance of the employees as far as production standard are concerned.
4.5: Regulations Affecting Production/ Operation
All the regulations that will affect the business directly or indirectly are as follows.
4.5.1: Government Regulations
These are government restriction to curb illegal business. The government lays down act by-laws
that will be observed by any individual/group running business.
The act include:
a. The trade licensing act:
The government emphasis that any enterprise must be registered and issued with trade
license before it embarks on its endeavours in order to avert eviction and disturbances.

24
 b. Employment acts
The main objective is to provide some protection to workers or employees. My business is
set to abide with the laws in the ‘employment act chapter 226’ which reinforces that the
following condition of employment must be fulfilled by every employer as far as employer-
employee relationship is concerned.

1. Salaries/ wages of service must be paid on monthly/ daily basis and on the procedure
agreed upon and must be in Kenyan currency.
2. The contract of service to a period of six months must be in writing if the contract is
terminated without giving a notice, then payment of wages must be made by the
party which is terminating the contract for the notice period.
3. The employer should keep proper record of the employees.
4. There must be at least one day rest every week for every employee.
5. The employer can deduct from the employees’ wages contribution like (NSSF) and
other amount of loss or damage done by any employee to the employer’s property
and should not be too high.

4.5.2 Health Regulation Act of 2010

As a requirement of the ministry and as provided for in the public health act, enterprise will offer
health and secure working conditions. The following conditions will be taken into account:

 Proper protective clothes will be provided.

 Proper sanitation will be encouraged i.e., toilets and workshop will be cleaned on daily
basis.
 Clean water will be supplied to the premises
 As a condition, staff will be subjected to health examination and health status certified.
 As long-term plan, all the staff will be insured with the national hospital insurance fund
(NHIF) on cost sharing.
4.5.3 Workers Regulation Act of 2010
The regulation helps the employee to relate well and also ensure their duties are strictly adhered
to. They include:
 Dressing well has to be strictly adhered.
 Cleanliness will have to be maintained in and round to premises all the time.
 Smoking and other behaviours such as fighting will not be entertained in the business
premises.
 Every staff member will be expected to observed punctuality and should always leave on
time unless state otherwise.
4.5.4: Safety Regulations Act of 1997
This ensures safety of the business and its staff;
For the staff, safety clothing will be:
25
 Overalls and dust coats, gloves. Goggles and first aid kid will also be installed in places to
facilitate quick first aid whenever needed.
 Workshop boots.
 Firefighting equipment’s will also be installed at appropriate points.
 The business premises will be well ventilated and specious offices will be provided with
air- conditioning gargets to ensure free circulation of air.

26
CHAPTER FIVE
FINANCIAL PLANNING
This is a setting of information about finance in order to produce and evaluate the firm’s ability
through accounting and auditing.
For the business growth and survival financial planning is vital and involves the following:

5.1: Pre-Operational Cost

These are expenses/costs incurred before the actual start of the business. The table below
summarizes the pre-operational cost incurred:
Table 5.1 Pre-operational Costs
ITEM COST IN KSHS
Purchase of machinery and equipment 632500.00
Purchase of furniture and fittings 566,360.00
Telephone and postage 6,000.00
Electricity installation 8,000.00
Registration of business and license 15,000.00
Insurance fire risk 5,000.00
Partitioning of workshop 16,000.00
Advertisement (radios, posters, signboards) 15,000.00
Transport and installation 18,000.00
Initial stock 152,000.00
Miscellaneous workers training seminars 30,000.00
Total pre- operational costs 1,463,860.00
5.2: Estimated Working Capital
This is the net current asset of the firm at a given period of time. It’s calculated as follows:
Working capital = Current assets − Current liabilities

Table 5.2 Working Capital

Item Amount in Kshs

Current assets
Cash in hand 640,000.00
Cash at bank 1,500,000.00
Stock of raw material 152,000.00
Debtors 40,000.00
Work in progress 56,000.00
Total current assets 2,388,000.00
Current liabilities

27
 Creditors 158,000.00
Electricity and water bills 10,000.00
Telephone and postage bills 36,000.00
Salaries and wages 840,000.00
Transport 20,000.00
Insurance premium 12,000.00
Advertisement 48,000.00
Stationary 24,000.00
Loan repayment 35,000.00
Tax paid 143,000.00
Miscellaneous 120,000.00
Total current liabilities 1,436,000.00
Working capital 952,000.00

NOCOS ELECTRICAL SUPPLIES ENTERPRISE CASH FLOW STATEMENT AS AT 31 DEC 2023

MA JUN
ITEM JAN FEB APR MAY JULY AUG SEPT OCT NOV DEC TOTAL
R E
CASH
INFLOW
Opening 940, 337, 315, 335, 342, 349, 356, 371, 385, 405, 423 442, 5,003,7
cash 000 095 390 035 312 253 028 029 045 928 607 981 03.00
Cash 100, 300, 350, 340, 341, 342 350, 352, 353, 355, 360, 365, 359180
sales 000 500 000 500 000 000 000 000 000 500 000 000 0.00
Bank 300, 300,00
loan 000 0.00
10,0 500 1,00 16,000.
Debtors
00 0 0 00
TOTAL
134, 647, 665, 675, 683, 691 706, 721, 743, 761, 784, 807, 9,277,5
CASH
000 593 690 535 312 253 028 029 045 607 607 981 03.00
INFLOW
CASH
OUTFLO
W
Cash
152, 150, 149, 151, 152, 153, 152, 153, 154, 155, 157, 158, 320530
purchas
000 00 000 000 000 000 500 500 300 000 000 000 0.00
es
Wages
70,0 70,0 70,0 70,0 70,0 70,0 70,0 70,0 70,0 70,0 70,0 70,0
and 70,000
00 00 00 00 00 00 0 00 00 00 00 00
salaries
Loan
25,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0 300,00
repaym
00 00 00 00 00 00 00 00 00 00 00 0 0
ent
Premise 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 120,00
s rent 00 00 00 00 00 00 00 00 00 00 00 00 0
Electricit 7,00 7,50 7,60 7,30 740 750 760 765 770 760 771 765 157,71
y 0 0 0 0 0 0 0 0 0 0 0 0 0.00
28
Telepho
2,50 2,80 2,60 2,70 250 240 250 260 250 265 270 271 53660.
ne and
0 0 0 0 0 0 0 0 0 0 0 0 00
postage
Water 2,200.0
200 100 250 200 150 200 180 200 150 180 200 190
bills 0
5,00 5,000.0
License
0 0
Insuranc 5,00 5,00 5,00 5,00 5,00 5,00 5,00 5,00 5,00 5,00 5,00 5,00 60,000.
e 0 0 0 0 0 0 0 0 0 0 0 0 00
Loan 125 125 125 125 125 125 125 125 125 125 125 125 15,000.
interest 0 0 0 0 0 0 0 0 0 0 0 0 00
Advertis 150 15,5 15,2 15,8 15,6 156 15,8 15,5 15,6 15,4 15,6 15,5 186,10
ement 00 00 00 00 00 00 00 00 00 00 00 00 0.00
Transpo 12,0 13,0 12,9 13,1 13,1 13,3 13,7 13,1 134 135 13,7 13,8 158,35
rt 00 00 00 00 00 00 50 50 50 00 00 00 0.00
Repairs
150 1,40 155 158 159 150 151 159 152 153 150 159 18360.
and
0 0 0 0 0 0 0 0 0 0 0 0 00
service
Miscella 306 306 30,0 30,2 30,3 30,4 30,4 30,5 30,6 30,7 30,9 31,0 4,030
neous 45 45 05 93 69 75 09 44 47 11 66 69 468.00
TOTAL
CASH 337, 332, 330, 333 334, 335, 334, 335, 337 337 340, 341, 4030,4
OUTFLO 095 205 355 223 059 225 99 984 117 821 626 759 68.00
W
NET
337, 315 330, 342, 349, 356, 371, 385, 405, 423, 443, 466, 453092
CASH
095 390 355 312 253 028 029 045 928 607 981 220 5.00
FLOW

29
5.3: Proforma Income Statement
This helps to determine whether the proposed business will make profit
Below is a proforma income statement for:
INCOME STATEMENT FOR NICOS ELECTRICAL ENTERPRISE AS AT 31 DEC 2022

PARTICULARS AMOUNT
Cash sales 3,925,500.00
Less purchases 1,837,300.00

Gross profit 2,088,200.00

Less expenses
Salaries 846,000.00
Premises rent 120,000.00
Insurance 60,000.00
Electricity bill 90210.00
Telephone and postage 30,160.00
Water bills 2,200.00
Advertisement 186,100.00
License 5,000.00
Interest paid on loan 15,000.00
Transport 158,350.00
Repairs and services 18,360.00
Workers training and seminars 366,788.00
Total expenses 1,892,168.00
Net profit before tax 196,032.00
Provision tax (30%) 58,809.60

NET PROFIT AFTER TAX 137,222.40

30
 PROFORMA INCOME STATEMENT AS AT 31ST DEC 2022

PARTICULARS AMOUNT
Cash sales 4,423,100.00
Debtors 10,000.00
Less purchases 1,920,000.00
Gross profit 2,513,100.00
Less expenses 851,000.00
Salaries 120,000.00
Premises rent 72,000.00
Insurance 72,000.00
Electricity bill 92,820.00
Telephone and postage 32,800.00
Water bill 2,090.00
Advertisement 190,000.00
License 7,000.00
Interest paid on load 18,000.00
Transport 161,200.00
Repair and service 20,740.00
Workers, training and seminars 383,245.00

Total expenses 1951895.00

Net profit before tax 56,205.00
Provision Tax (30%) 168,361.00
Net profit after tax 392,843.50
5.4: Proforma Balance Sheet
This helps in determining the financial position of an enterprise over aspects period of time.
PROFORMA BALANCE SHEET AS 31ST/03/2024

ASSETS LIABILITIES
Fixed assets Bank loan – 300,000.00
Machinery and equipment’s 566,360.00 Owners’ equity – 940,000.00
Furniture and fittings 20,000.00 Friends and relatives – 200,000.00
Total fixed assets 586,000.00 Prepaid earnings – 360,000.00
Total long-term liability – 1,800,000.00

Current assets Current liabilities

Cash in hand 640,000.00 Creditors 1,171,200.00
Cash at bank 1500,000.00 Bills and tax payable 290,042.00
Stock 152,000.00

31
 Pre-payments 92,846.00
Total current Assets 92,846.00 Total current liabilities 1,171,200.00
TOTAL ASSETS 2,971,206.00 TOTAL LIABILITIES 2,971,206.00

PROFORMA BALANCE SHEET AS AT 31ST DEC 2022

ASSETS LIABILITIES
Fixed assets Long term liabilities
Machinery and equipment’s 587,500.00 Bank loan 360,000.00
Furniture and fittings 25,000.00 Owners’ equity 990,500.00
Total fixed assets 612,500.00 Frauds and relatives 400,000.00
Prepaid earnings 380,000.00
Total long-term liabilities 2,130,500.00

Current assets Current liabilities

Cash in hand 940,000.00 Creditors 647354.00
Cash at bank 1200000.00 Bills and tax payable
325,492.00
Stock 252,000.00
Pre payments 98846.00
Total current assets 2490846.00 Total current liabilities 972846.00
TOTAL ASSETS 3103346.00 TOTAL LIABILITIES 3103346.00

Assumptions made in 3rd year (2024)

 Machinery and equipment depreciate by 10%
 Furniture and fittings depreciate by 1%
 Bank loan increases by 20%
 Stock increases by 20%
 Owners’ equity increases by 1%
PROFORMA BALANCE SHEET AS AT 31ST DEC 2024

ASSETS LIABILITIES
Fixed assets Long term liabilities
Machinery equipment’s 587,750.00 Bank loan 414,000.00
Furniture and fittings 24,750.00 Owners’ equity 1000405.00
Total fixed assets 553,500.00 Fixed and relatives 400,000.00
Prepaid earnings 390,500.00
Total long-term liabilities 2204905.00
CURRENT ASSETS CURRENT LIABILITIES
Cash in hand 95000.00
Cash at bank 1300000.00 Creditors 711918.00
Stock 353,000.00 Bills and tax payable 338512.00

32
 Prepayments 99835.00
Total current assets 2701835.00 Total current liabilities 1,050,430.00
TOTAL ASSETS 3255335.00 TOTAL LIABILITIES 3255335.00

5.5: Break Even Point

This is a part which the business starts making profit. Below this point the business will meet
losses. To know at which level the business will make profit it worked as follows:
BEP = Fixed cost + variable cost + profit
Where profit = zero (0)
B.E.P =FC+ V.C +Profit but profit = 0

YEAR 2022 YEAR 2023 YEAR 2024

SALES 3909500.00 4423100.00 4599200.00

VARIABLE COST
Electricity 90210.00 92820.00 93950.00
Water 2,200.00 2,090.00 2190.00
Telephone n postage 30160.00 32,800.00 34,000.00
Advertisement 186,100.00 190,000.00 191,692.00
Transport 158350.00 161,200.00 163,500.00
Creditors 881,164.00 647,354.00 710,350.00
Tax 160,960.00 162,232.00 164,000.00
Cash purchases 1837532.00 1,940,100.00 1,970,500.00
Training seminars 366,532.00 383,245.00 395,00.00
Total variable 3,712,976.00 3,611,941.00 3,725,182.00

FIXED COST
Salary 840,000.00 852,00.00 894,600.00
Rent 120,000.00 120,000.00 120,000.00
Insurance 60,000.00 72,000.00 84,000.00
Interest paid 15,000.00 18,000.00 18,000.00
Total fixed cost 1035000.00 1062000.00 1,111,600.00

Year 2022
3712976.00
103500.00
4,747,976.00
Year 2023
3611941.00

33
1062000.00
4673941.00
Year 2024
1116600.00
375183.00
4841782.00
5.6: Profitability Ratios
These calculations mark the introduction of the number of ratios in the analysis of financial
statement. They are used in evaluation of liquidity and credit error of profitability of business.
5.6.1: Gross Profit Margin (G.P.M)
This is a measure of profitability of the firm’s product. It’s given by the following expressions.
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
% 𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 = × 100
𝑆𝑎𝑙𝑒𝑠

2513100
𝐺. 𝑃. 𝑀 𝑌𝑒𝑎𝑟 2022 = × 100 = 56.6%
4423100

2088200
𝐺. 𝑃. 𝑀 𝑜𝑓 𝑌𝑒𝑎𝑟 2021 = × 100 = 53.4%
3909500
5.6.2: Net Profit Margin (N.P.M)
This margin indicates the management ability to control costs. It’s calculated as follows:
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 (𝑁𝑃𝑀0 = × 100
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠

137,222.00
𝑁𝑃𝑀 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟 2022 = × 100 = 3.51%
3909,500.00

392843.50
𝑁𝑃𝑀 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟 2023 = × 100 = 8.88%
4423,100.00

395856
𝑁𝑃𝑀 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 2024 = × 100 = 8.6%
4599,200.00
5.6.3: Return on Equity
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥
𝑇ℎ𝑖𝑠 𝑖𝑠 𝑔𝑖𝑣𝑒𝑛 𝑏𝑦 = × 100
𝑜𝑤𝑛𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦

34
 137222.00
𝑌𝑒𝑎𝑟 2024 = × 100 = 14.6%
940,000.00

392843.50
𝑦𝑒𝑎𝑟 2023 = × 100 = 39.66%
990,500.00

395856.00
𝑦𝑒𝑎𝑟 2022 = × 100 = 39.56%
1,000,405
5.7: Desired Financing
Pre operational cost - 2,050,220.00
Working capital cost - 852,000.00
Total - 2,902,220.00

5.8: Proposed Financing

Personal savings - 2,000,000.00
Borrowing from friends - 250,000.00
Bank loan - 750,000.00
Total - 3,000,000.00

35
APPENDIX
Appendix I: Location Map

TO
KYAMUTHEI

NICOS
ELECTRICAL
CATHOLIC
SUPPLIES
CHURCH

FROM
TO
MACHAKOS
WOTE
I

ANNS
AGROVET

TO
MBOONI

36