CHAPTER ONE

BUSSINESS DESCRIPTION.

1.0 Business Name

MAMUKA PIPE FITTINGS STORES is to be a sole proprietorship business. The name of the

business comes from the owner and partner.

It will deal with plumbing products like pipes, fittings, and other products.

1.1 Business Location and Address.

The business is to be located at KARATINA town NYERI County. This is a small highway

town along

Nyeri-KARATINA highway. It is a densely populated and that’s why the owner considered it an

appropriate location for the business.

Location;

MAMUKA STORES AND SUPPLY SERVICES

P.O Box 100-100, NYERI

Tel phone: +254100200000

Email mamukaStores @[Link]

i) There are very few dealers in plumbing and water products in this area thus the

demand is high and the supply is low.

ii) The population of the area is high thus the market demand is high.

iii) The road network in the area is also good and most of it is tarmac thus it is easy to

deliver the products.

The business will cover the entire division as its trade area. According to the 2009 census, the

population of KARATINA district was 10,000 people. The areas are well developed with a good

road network and electricity supply. It will attract many people in the town. Also the business is

selling best products in the town.

1.2 Form of Ownership

The business is to be a sole proprietorship. The owner is to be the manager and will be the senior

most member of the staff.

1.3 Types of Business Operations

The business is to be wholesale shop. The owner will be selling products at wholesale and retail

prices. The owner will also be transporting the products to the customers.

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1.4 Products and Services

The business is to deal with plumbing products which will be used by customers in water

installation and other water projects.

The products are to be sold at affordable prices compared to the other near plumbing retail

shops.

other services are to install water services to residents who require such services.

1.5 Justification

The business is to be viable because the area has good infrastructure like the tarmac roads, power

supply and water.

The business location is a populated place and the potential customer base is big. The owner is a

qualified water technician and is to provide highly skilled services.

The business shall have qualified personnel who will be able to serve the customers in

appropriate ways.

1.7 The Industry

The business is to belong to the water industry. The industry has a high growth rate due to the

government’ policies to ensure clean water supply to most homes by the year 2027.

Due to the high demand for plumbing services and goods the industry is likely to be stable and

expand.

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1.7 Business Goals

Provide employment for the owner and other employees The business is geared towards

achieving its set objectives such as: Utilize the opportunity available in the water industry. Also

yearning to expand the business by expanding and opening other branches in Nyeri county

1.9 Entry and Growth Strategy

The business shall enter into the market through advertising use of posters, distributing to clients

some brochures. Fair pricing of the product and labour charges the sole proprietorship shall be

interested in ordering high quality products from the industry from the industry which last long.

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 CHAPTER TWO

2.0 MARKETING PLAN

2.1 Potential Customers

The plumbing technology retail shop shall target two major categories of customer these are local

customer within the area around the business location and regional customers who will travel in

search of the products. The customers shall make most of their payment on cash but also on

credit depending on the agreement.

2.2 MARKETING STRATEGY

The business shall utilize business tactic and skill to ensure that it has got the largest market

share out of the whole expected market share due to demand.

The business is to sell quality products and services according to the customers’ expectations;

this will increase the market share.

2.3 Market Share

The research conducted showed that the business shall gain a market share of 50% of the

market. The table below shows how the market shall be shared amongst the various players in

the same industry as the proposed business.

MAMUKA STORES 45%

Irrigation plumbing Stores 30%

Umoja plumbing enterprise 25%

2.4 Competition

The management made a market survey which enabled the owner to gain more knowledge and

skills to attract more customers and gain advantage over the existing competitors and their mode

business. The following table shows strengths, weakness, opportunities and threats (SWOT)

analysis. The business shall have to compare qualify personnel use of modern technology.

Table 2.1 Analysis for the Competition

NAME OF STRENGTHS WEAKNESS OPPORTUNITIES THREATS

BUSINESS for own business

MAMUKA -Give quality -Old technology -Offer a variety of - Lack of

products products security

strategic location

Umoja -Has skilled -Has no strong -Have a large area -High cost of

workers capital base -Has of expansion -Use power -

-Has large no skill labor modern technology Change in

market share workers -Provide good government

product is of poor -Low scales -

quality -Has a poor Bad weather

customer relation (drought).

-Customers

reduction

-High
Max -Has modern -Has no skill labor -Use modern taxation -
plumbers technology technology. Change in
-Located in a government
strategic policy -High
area. -Has a cost of power
good

distribution

channel -Has

a strong

capital base.

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2.5 Pricing Strategy

The main objective of pricing shall be to maximize profit improve market. Share and meet the

competitors in the market to attract more customers to purchase products the customers who will

be most frequent in purchasing the products will be sold the products sometimes on credit

depending on the agreement.

2.6 Sales Tactics

The business shall use the following sales tactics to maximize its profit. The entrepreneur shall

ensure that personal selling is used so that the customer can have a credit contact with sales

persons and this will give appropriate feedback about the products, and also encourage cash sales

in his business to avoid huge debt outside the business. The entrepreneur shall also ensure that

there is offer of discount to the customers who will buy large quantities and give free gifts and

samples of the products to attract customers to purchase more the entrepreneur shall offer shall

offer sales like free transport of its products if the distance is not long.

2.7 Advertising and Promotion

In order to create more awareness of the products that the business is to offer, the following

methods of advertising and promotion shall be used:

1. Advertising shall be done through poster and banners and online platforms ii. Advertising

shall a business be done through constructing sign boards at the main highways and

junctions.

2. Some of its products will also be rebranded to promote interest to the potential customers.

3. Shall be done through portraying various company products

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2.8 Distribution Strategy

The plumbing products shall be sold direct to the customer from the business unless request from

a customer for distribution some of the business products to other business

CHAPTER THREE

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3.0 ORGANIZATION AND MANAGEMENT PLAN

3.1 Organization Chart

The organization structure for the management of the enterprise has been structured to include all

the staff members to be employed. It gives clear lines of authority and responsibility for each

personnel in the organization.

Manager

Supervisor

Foreman Plumber Driver security

3.2 Management Team.

The following members will constitute the management team

He is to have the following qualifications.

a) A holder of diploma in water resources management.

b) Is to be a computer literate.

c) He must have knowledge on entrepreneurship education.

Duties and Responsibilities.

a) Overall head of enterprise

b) Conduct recruitment, selection and replacement of employment.

c) Delegating duties to other workers.

d) Conducting performance appraisal to the employees.

e) Planning and decision making.

Remuneration.

a) -The manager is to receive a net salary of Ksh 15000 per month

ii) Supervisors/Assistant Manager

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He is to have the following qualifications.

a) A holder diploma in business administration.

b) Is to be a computer literate

c) He must have a knowledge on mechanical engineering Duties and Responsibilities.

a) Be the assistant to the head of enterprise.

b) Help to conduct recruitment, selection and placement of employees.

iii) Foreman

Qualifications.

a) Be a holder in Diploma of plumbing and water services

b) He should be age between 28-32 years.

c) He should have worked in a busy procurement office for at least two years.

Duties and Responsibilities.

a) Negotiate the terms of purchase.

b) Maintain record of purchase

c) Place a contract for purchase of all necessary items in the organization.

Remuneration.

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The purchase manager is to receive a salary of Ksh. 8000 per month. He is to be provided with a

free house.

3.3 Other Personnel

The business is also to have other personnel as follows:

i) Plumber

Qualifications

a) Should have attained a minimum of D+ (plus) in KCSE.

b) Have a certificate in plumbing and water installation.

c) Have good communication skills.

d) Be at least 22 years of age.

Duties and Responsibilities.

a) Carry out water installation and repair services for clients of the business.

b) Assist in selling products when there is no servicing work to be done.

Remuneration

The plumber is to receive a monthly salary of Ksh 5000.

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3.4 Recruitment, Training and Promotion

a) Hiring and recruitment of employees shall be according to the job position and

qualifications of individuals who apply for the job.

b) The job vacancy shall be advertised through poster so that each person can see the

qualification required for application.

c) The training of the employees in the business shall be carried out to increase knowledge

and skills which improve the efficiency of the business.

3.5 Legal Requirements

The business is to fulfill the following legal requirements:

i) Business Registration.

The business shall submit the memorandum of association and article of association to the

registration of the name.

ii) Trading License.

Single business permit is to be issued by KARATINA Municipal Council.

3.6 Support Services

The business is to operate calling for other auxiliary service and support services includes.

i) Postal Services:

Postage services are to be offered by KARATINA Post

Office

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. ii) Banking Services:

These are to be offered by Equity Bank KARATINA

branch

iii) Health Insurance

The owner is to insure the business against fire and theft as well as the health of employer.

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 CHAPTER FOUR

4.0 PRODUCTION/ OPERATIONAL PLAN

4.1 Production Facilities and Capacity

Table 4.1 Production Facilities and Capacity

Items Number Total Cost

Required

Tool box 1 92000

PVC Pipes 100 24000

Irrigation 100 18000

sprinklers

Pipe cutting 50 200000

machines

Gutters 60 60000

Kitchen sinks 50 40000

Bath tubs 20 50000

TOTAL 90000

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4.2 Operations Strategy

The process of operations development is to be started by the owner conducting a survey to

determine the best products to be stocked in the business.

The owner shall be focused on decision making about planning capacity, premise layout, and

also inventory requirements.

Then the finance shall be set aside for the efficiency if the operation of production.

Then the product shall be taken to the market to determine the appropriate market for the

product and develop effective market mixing. Then the market decision shall be made to produce

no to produce the product.

4.3 Production Process.

The process shall be used in production of the various products is as follows:

There are some factors that are likely to affect the production process. These include:

i) Government Policies.

Unfavorable government policies like high license fees, high tax rates etc. can affect the

operations of the business.

ii) Competition.

This is to minimize by fair prices and offering products of high quality.

The following entails the regulations set by the government to be observed by the business:

i) Health regulation such as clean environment safety hazard should be observed.

ii) Trading license is to be obtained before the operations start.

4.5 Legal requirements for the proposed business.

License/permit Cost

Trading license 9200

Certificate of 7850

registration

Medical certificate 2580

Insurance cover 6000

certificate

Total 25630

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 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 Pre-Operation Costs

The pre-operational expenses for the proposed business are showed in table

Table 5.1 Pre-Operational Expenses.

Items Amount (Ksh)

Rent 3500

Wages 40,000

Furniture and fittings 7200

Water installation 1000

Advertising 2000

Research 1200

Trading license 3200

Tools and machinery 48400

Transport 2000

Telephone 750

Miscellaneous 6000

Total 0

5.2 Working Capital/Operation Costs Requirements

The working capital requirements for the proposed business are showed in table 5.2

Table 5.2. Working Capital/Operation Costs Requirements

Item Amount monthly (Ksh) Amount yearly(Ksh)

Rent 500 36,000

Telephone bill 320 3,400

Salaries and wages 24000 2,90,600

Water bills 250 1,000

Postage 400 4,500

Electricity bills 750 8,000

Advertisement 2000 18,000

Legal fees 36,00

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 Material/stock purchases 75000 484000

Personal/office expenses 3700 39,000

Transport 2000 20,000

Maintenance 1500 15,000

Miscellaneous 1800 32,000

Total 117,220 590000

5.3 Desired Financing

The desired financing for the proposed business is shown in table 5.3

Table 5.3. Desired Financing

Item Amount

Pre- Operation Costs 117220

Working Capital 1,142100

Fixed Assets 254,700

TOTAL 1,514,020

5.4 Proposed Capitalization

The proposed capitalization is shown in table 5.4

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Table 5.4. Proposed Capitalization

Item Amount

Bank loan 500,000

Family and friends 50,000

Personal contribution 300,000

TOTAL 850000

5.5 Pro-Forma Cash Flow Statement

The pro forma cash flow statement for the proposed business is showed in table 5.5.

Table 5.5. Pro-Forma Cash Flow Statement

Item As at start up As at end of As at end of

year 1 year 2

Cash inflows

Cash sales 3,000,000 3200000

Debtors 20000 40000

Capital introduced 60000

Other incomes 50000 30000 20000

Total inflows 110000 3050000 3260000

Cash outflows

Cash purchases 20000 700000 800000

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Payments to 40000 30000

creditors

Salaries and wages 2000 250000 250000

Rent 3500 38000 40000

Electricity bills 150 8500 6560

Water bills 250 4500 5000

Telephones 200 2400 2500

expenses

Advertisement 1500 18000 20000

Repair and 500 6000 5500

maintenance

Postage 400 4800 5000

Stationery 3800 43000 41000

Transport 2000 22000 23000

Taxes 3500 3500

Loans repay 50000 40000

Miscellaneous 2000 20000 20000

Total out flows 38520 1246300 1292460

Net cash 78020 1899300 1983460

Accumulative 3145600 3275920

cash

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5.6 Pro-Forma Balance Sheet

The pro forma balance sheet for the proposed business is shown in table 5.6

Table 5.6 Pro-Forma Balance Sheet

Item As at Star-Up As at the End Of As at End of

Year 1 Year 2

Assets

Fixed assets

Land and building 200000 220000 300000

Machinery 50000 60000 50000

Motor vehicle 250000 200000 150000

Current assets

Cash at hand 60000 30000 50000

Cash at bank 50000 120000 50000

Inventory 100000 50000 90000

Sundry debtors 30000 120000 30000

TOTAL ASSETS 740,000 800000 820000

LIABILITIES

Current liabilities
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 Sundry creditors 100000 200000 300000

Short term loan 200000 150000 100000

Long term liabilities

Long term loan 390000 250000 320000

Total Liabilities 690000 600000 720000

Owner’s equity (Capital) 500000 140000 100000

Total Liability Plus 740,000 800,000 820,000

Owner’s Equity

5.7 Break Even Analysis

ITEMS VARIABLE COST SALES (KSHS)

(KSHS)

Purchases 484,000

Electricity 12,000

Loan payment 6,000

Miscellaneous 450

Advertisement 12,000

Postage 300
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Transport 6,000

Repair and maintenance 4,000

Payment creditors
600

Telephone
12,000

Water
700

Licenses and permits

Interest on loan

Total 496000 550,250

5.8 Desired financing

DESCRIPTION KSHS

Pre –operational costs 190,250

Working capital 800,000

Total 190250190250

5.9 Proposed capitalization

DESCRIPTION KSHS
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Bank Loan 500,000

Owners’ equity 400,000

Bank overdraft 50,000

Creditors

Total 0 950,000

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