TELEPHONE: 0705683359

PAPER CODE:
CANDIDATE NAME: MILKAH WANJIKU KURIA
INDEX NUMBER:
CENTRE NAME: THIKA INSTITUTE OF BUSINESS STUDIES
CENTRE CODE:
PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL FOR PARTIAL
AWARD OF DIPLOMA IN TOURISM MANAGEMENT
SUPERVISOR NAME: MADAM PAMELA

1
 DECLARATION
I hereby declare that this is my original work that has never been submitted to any examination
body.
NAME MILKAH WANJIKU KURIA
SIGNATURE ................................
DATE .................................
SUPERVISOR NAME MADAM PAMELA
SIGNATURE ................................

2
DEDICATION
I dedicate this business plan to all the youth and any person of concern to doing business and
also Thika Institute of business studies to those who pursue to doing this course.

3
PREFACE
I found it a good idea to start this business in order to provide the best services to the people
around the town and educate them on importance of kitchen ware and also to provide job
opportunity to the jobless.

4
ACKNOWLEDGEMENT
I hereby thank the almighty God for giving me the strength and knowledge to start this business
plan. I also thank the institution for the provision of all the requirements that I needed when
writing my business plan. I won't forget my family members and relatives who have also been on
my side. I also thank my supervisor Md. Pamela for the best ideals for starting the business plan
and directing me the way forward and how to make the best out of the business.

5
Contents
DECLARATION......................................................................................................................2
DEDICATION..........................................................................................................................3
PREFACE.................................................................................................................................4
ACKNOWLEDGEMENT.......................................................................................................5
EXECUTIVE SUMMARY......................................................................................................8
CHAPTER ONE.....................................................................................................................11
1.BUSINESS DESCRIPTION...............................................................................................11
1.1Business name....................................................................................................................11
1.2Business location and address..........................................................................................11
1.3 form and type of ownership.............................................................................................12
1.4 products and services.......................................................................................................13
1.5. justification of opportunity.............................................................................................13
1.6Industry..............................................................................................................................14
1.7Goals of the business......................................................................................................... 14
1.8. Entry and growth strategies...........................................................................................15
CHAPTER TWO...................................................................................................................16
MARKETING PLAN............................................................................................................16
2.1 CUSTOMERS.................................................................................................................. 16
2.2. MARKET SHARE..........................................................................................................16
2.3 COMPETITION.............................................................................................................. 17
2.4 methods of promotion and advertising...........................................................................18
2.5.pricing strategy.................................................................................................................18
2.6 SALES TACTICS............................................................................................................ 19
2.7. Distribution strategy....................................................................................................... 19
CHAPTER THREE...............................................................................................................20
ORGANIZATIONAL PLAN................................................................................................20
3.1ORGANIZATIONAL STRUCTURE..............................................................................20
3.2 MANAGERS AND QUALIFICATIONS.......................................................................21
3.3 PERSONNEL NUMBER AND DUTIES........................................................................21
3.4 RECRUITMENT, TRAINING AND PROMOTION....................................................22

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3.5 RENUMARATION AND INCENTIVES.......................................................................22
3.6 LICENCE, PERMITS AND BY LAWS.........................................................................23
3.7 SUPPORT SERVICES.................................................................................................... 23
CHAPTER FOUR..................................................................................................................24
OPERATIONAL PLAN........................................................................................................24
4.1 product or services design and development..................................................................24
4.2 production or operational facilities and capacity...........................................................24
4.3 production or service strategy.........................................................................................26
4.4 production process........................................................................................................... 26
CHAPTER FIVE....................................................................................................................28
5.0 FINANCIAL PLAN.........................................................................................................28
5.1 PRE-OPERATINAL COST............................................................................................28
5.2 WORKING OPERATION REQUIREMENTS.............................................................28
5. 3 Projected cash flow statement for the year ending 31st Dec 2023...............................29
5.4. PROFORMA income statement of Milkah kitchenware..............................................30
5.5profomer balance sheet of MILKAH KITCHENWARE...............................................31
5.6 BREAK EVEN LEVEL...................................................................................................32
5.7. EXPECTED PROFITABILITY RATIOS....................................................................33
5.9 PROPOSED CAPITALIZATION..................................................................................33

7
EXECUTIVE SUMMARY
1.Business description
The name of the business is Milkah kitchenware. The business is a sole proprietorship kind of a
business. I as the entrepreneur choose the name milkah as it is the name of the entrepreneur that
will help customers to get easy acess to the entrepreneur. The business will be located in
Muran’ga county, kabati subcounty. I choose the location because there are not many similar
stores around,there is good transport network.
The business will sell products such as refrigerators,ovens, microwaves,blenders,cookers and
other kitchen utensils.
The aim of the business is to ensure that customers manage their bills by setting affordable
pricing of the products according to the economy at hand.
The customers will also save time for coming for products as they can order the products and the
distribution agents will deliver the goods to customers as fast as possible by using the best
channel in transporting the goods.
The business aims at purchasing the best brand of products by importing some products and
purchasing others from kitchen ware industries around. My mission as the entrepreneur is to
open my own kitchen ware company.
2.Marketin plan
Marketing plan describes how the business intends to sell it’s products . It identifies the potential
customers the proposed business is likely to have.
The business will design the products by coming up with a plan of attaching a business logo that
with show the exact kitchen ware stores that the customer purchased the good from.
The products will be sold to customers directly and use people such as wholesalers and
distribution agents.
The distribution agents will be recruited according to their skills and profession, they also must
have a driving license as they are the ones to transport goods to the customers destination.
The business products will be advertised by writing posters of goods sold,used of Whatsapp by
posting the goods in my store on WhatsApp status and posting on Instagram and Facebook. The
advertisement will be done daily.
The will be commission for the staff according to the number of goods sold.
There are a number of distribution problems which include poor services such that products may
not be delivered on time due traffic congestion. Another problem is customers expectations,many
customers want their goods to delivered faster, cheaper and better. This can be solved by getting
a better channel of distributing the goods.

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3. Organizational plan

The most important part of the business is the staff and the management. They are the highest
ongoing cost and without them behind my back as the proprietor am destined not to reach my
full potential.

For the success of the business I will offer more of training to my staff, mentoring, providing
great working space with the right equipment for them to perform their work more effectively.

I will also training them to get customers interaction knowledge for them to encourage customers
to the business.

The business structure will have the human resource manager under the director who is also the
sole proprietor of the business.
The manager will perform duties such as determining wages and salaries of the employees,help
in recruitment and selection by recruiting the best personnel, addressing employees grievances to
the director, help in manpower planning by establishing the number and skills of workforce
required by the business in future.
The business requires permits and licences such as the Kenya revenue authority, National
transport and safety authority. For the Kenya revenue authority the proprietor will be filing
returns monthly.
4. Operational plan
This outlines all planning related to daily operations and process required in running a successful
business. It outlines the key activities and target the business will undertake during a period of
time. The products design should be easy to learn and easy to use. The products designers
prioritize information according to users needs and user environment. The type of technology to
use in the business will be modern technology. It is the best alternative as it will help in
designing the products and manufacturing the best quality products. It is appropriate as it is cost
effective, flexible in production and available ideally in addition to maintenance frequencies.
Equipments such as refrigerant compressor, condenser, evaporator and expansion devices will be
needed for production. The machines and equipments will be maintained by cleaning after use
and repairing worn out parts. Several factors may affect the production process such as
dishonesty by employees and technological risks. By investing in long term assets such as
technology, the business can reduce the risk of falling behind competition. There are regulations

9
affecting operations that involves indicating the government regulations, compliances and
approvals that will affect the smooth operation of the business.
5. Financial plan
This is the plan on how the finance will be distributed and put inti work on aim of making profit.
PRE-OPERATIONAL COST
This are cost or expenses incurred before the start of the business operation.That include rent,
license from the government that will secure the business by allowing it to be operated in the
area.Advertisement and promotion – this is a way of selling the name of the business to various
people and organizations to enable the marketing of MILKAH KITCHENWARE.
Power/electricity- this is power bills that are taken down and paid because without power the
business won’t run but it will be going slowly hence contributing to loss in the business also with
power the records are able to be taken down by the use of computers and finally the security
personnel are able to monitor the working of the business through the CCTV
WORKING OPERATIONAL REQUIREMENTS
This is part of financial plan which the funds required for delay operational of the business.
The working capital of the business will be will be determined by the differences between
current liabilities.
The financial plan shows the objectives of the business sources of capital. Pre-operational cost,
capital investment and security of loans that shows the break-even analysis. The capital attained
by the business will cater the pre-operational cost also to ensure no shortages and delays on
supply of goods and services.
Also we should be having a pro-form balance sheet that will show the current assets and current
liabilities.
The statement of both profit and loss will be recorded in this financial statements

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CHAPTER ONE

1.BUSINESS DESCRIPTION
1.1Business name
The name of the business will be Milkah kitchenware. The business will be named Milkah
because it’s the name of the entrepreneur which will allow easy access of the customers to the
business. The entrepreneur of the business will be Milkah wanjiki who is twenty two years of
age.
The entreprenuer obtained skills from her father who was a former staff in one of the kitchen
appliance companies before his step down after he got an accident that led to a critical condition .
He was a proffesional business man that always encourages me to work to my perfection. The
owner of the business lives in Thika town.
1.2Business location and address
Business location and address gives exact information of where the business will be located.
Milkah kitchenware store will be located in murang'a county, kabati sub county, cyber one
building opposite Tivans Hotel along Thika kabati road .
I choose the location because there is no many similar stores around which would cause
problems when it comes to competition. The place is good so as to ignore such problems. The
area has good road network, easily accessible by clients and there is reliable power supply.
Milkah kitchenware will use the following addresses;
P.O BOX 368-01020 kenol
Telephone: 070705683359
CYBER ONE BUILDING

IVAS GARDEN

MILKAH KITCHENWARE

THIKA-KABATI ROAD KENOL

TIVANS HOTEL

GOVERNMENT OFFICES

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1.3 form and type of ownership
The legal form of ownership of the business is a sole proprietorship category.

The sources of Capital will be as follows;

LOAN KSH 50,000

FAMILY RAISED KSH 100,000

PERSONAL SAVINGS KSH 150,000

FRIENDS RAISED KSH 120,000

TOTAL KSH 420,000

I want it to be a sole proprietorship business for me to be able to effectively and efficiently

monitor how resources are utilized in the business.
ADVANTAGE

i) Milkah kitchenware is a sole proprietorship thus the profit is being enjoyed by the
owner.
ii) The secrets of the business is kept by one person who is the manager.
iii) And because of its management it requires less capital
iv) No disputes in Milkah kitchenware.
v) It requires less legal process to start the business hence managing it is easy.

DISADVANTAGES

i) Loss is incurred by one person that is the owner

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 ii) Poor decision making because there is no collective decision making.

The major activity of the business is to import kitchen products and supply them to hotels and
restraints. There will be home delivery for customer who buy in large quantities. The business
will supply products in areas around Muran’ga, Thika and Nairobi.

1.4 products and services

The main products will be refrigerator,gas cooker, microwaves,oven , and blenders. There will
also be minor products such as sufurias, pans, plates, cups etc.
The products have benefits as they can not be easily broken hence they are durable. The business
has benefits because no homestead can be without using kitchen appliances hence more
customers for the business. The products are sold according to the economy at hand. Customers
are allowed to burgain.
The products will be sold according to the quality and there are those made of heavy and light
materials whose prices will defer.

1.5. justification of opportunity

I believe the business venture will be a success as there are no many similar businesses around
the location where my business is situated.

The business will also be a success as I will offer cheap prices at the beginning of the business so
as to welcome many customers. The following are examples of justification of opportunity:

 MILKAH KITCHENWARE is located by the road side where customers can access
easily.
 Availability of hotels nearby which will be purchasing kitchen appliances
 Milkah kitchenware will employ the number of youth who are qualified to come and
work in the field.
 Lack of stiff competion which will enable the business to acquire and attract more
customers along the region. On daily basis increasing the sales of the product which will
lead tonthe profitability of the entire business.
 Good infrastructure. The is presence of good infrastructure such as roads that can make it
easy for transportation of our products to clients who are in different locations.

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1.6Industry
The size of the industry is medium as it grows as per the rate of population growth, and
economic growth rate in the region. The forms in the industry is also high as the industry is also
high since the industry expands on year basis depicting high profit turn over .

The business will use modern technology whereby there will be computers to record what goes
on in the business and any transactions made the customers will be provided with a receipt.

Strengths and weakness are things that affect the business internally. The entreprenuer will have
control over it and can change it for example: The location- the business is easily accessible for
all clients along the region.

I expect threats whereby other suppliers will be supplying their products near the location of my
business. There is also a threat of many similar stores coming up.

1.7Goals of the business

LONG TERM GOALS

i) Milkah kitchenware will maximize the profit in future

ii) It will have to increase number of sales
iii) To open branches in different counties

SHORT TERM GOALS

i) Milkah kitchenware will employ more workers.

ii) Have delivery services
iii) To provide high quality kitchen ware
iv) Provide quality kitchen appliances
v) Selling spare parts

1.8. Entry and growth strategies

Entry strategy

The owner would want the business to grow in the following ways against time.

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Within the first 6 months of the business to have tripled number of customers and also have a
quite number of regular customers

That, between the 2nd and 4th year, the business would have bought its premises and relocated
there to minimize the cost of rent.

Growth strategy

Within the 6th year, the business is expected to have customers from many areas of the region and
at the same time. Initiation of gradual expansion and design of the business is expected to open
branches all over the region.

After 15 years the owner is expecting to see the business being direct agent of publisher and be a
wholesale business. Milkah kitchenware will finally meet the legal requirement from the
government in order to run it well.

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CHAPTER TWO

MARKETING PLAN
Marketing plan describes how the business intends to sell it’s products.it identifies the potential
costomers the proposed business is likely to have.
2.1 CUSTOMERS
The potential costomers of my business will be individuals and people from nearby hotels and
restraints.
The age groups will be everybody regardless of the age.
The approximate number of customers I expect them to be purchasing my products is from more
than five hotels from nearby and people settling around the area.
2.2. MARKET SHARE
Hotels nearby need the kitchen products from my business with is concerned with kitchen ware
for their daily running as there are no many kitchen ware stores around the area.
I also expect people from around to be purchasing kitchen ware products from my shop.
Out of approximation thousands of people almost four hundred and fifty do come to my business
and the rest gonto the other stores around. The following are example of similar stores around;

i) Kazi poa kitchen appliances 200 customers

ii) Ivana kitchen ware store155 customers
iii) Mburus kitchen appliances 195 customers
iv) Milkah kitchenware 450 customers

SIMILAR STORES APPROXIMATE NO. OF NO. OF CUSTOMERS IN

CUSTOMERS PERCENTAGE
Kazi poa kitchen appliances 200 20%
Ivana kitchen ware store 155 15.5%
Mburus kitchen appliances 195 19.5%
Milkah kitchenware 450 45%

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 percentage

kazi poa kitchen appliances ivana kitchen ware stores

mburus kitchen appliances riziki kitchen appliances

2i.3 COMPETITION
BUSINESS STRENGTH WEAKNESS THREATS
Kazi poa kitchen Have many The employees Employees are not co operative
appliances employees who are not
are active cooperative
Ivana kitchen It is situated near Not financially They do not have adequate
ware store Town stable financial stability
Mburu’s kitchen Is partnership It is far from Less qualified employees who
appliances business hence it customers can speak English with people
gets support from outside the country
from different
people

The location is advantageous because there is no many similar stores around which could cause
problems when it comes to competition.I choose the place so as to ignore such problems.

17
The location is also advantageous since there are hotels and restraints around which would like
to be ordering products for their kitchen.

One of the disadvantages of the location is that many customers will take time to locate my
business and check the products available as they are going to purchase products from stores
they were used to.
The number of competitors is small compared to the brands of my products as I will get the best
quality products.
I will also bring variety of products so that I won’t run out of stock.

2.4 methods of promotion and advertising

I will make my goods and services known by potential costomers by writing posters of goods I
sell.
Advertisement is a method used to make your business or products known. I will use word of
mouth to advertise my business.I will also use channels such as WhatsApp, Facebook and
Instagram to advertise my business so as to get more customers. The used of radio adverys and
billboards will also work.
I will offer promotions such as buy five get one free. I will also offer affordable prices for the
products by selling according to the economy at hand.
I will advertise on Whatsapp by posting status about my products everyday. On Instagram and
Facebook I will post on my page.

2.5.pricing strategy
The method to use to calculate the selling prices will be through computers.
I will set low prices to enter the competitive market at first.i will use competitive pricing that is
setting price of the products according to the competitors charges.
I will offer credit facilities and offer discounts according to the amount of products the customers
buy.
I will offer sales services such as free delivery to customers who buy I large.
I will set terms for those who buy In credit such as setting a period of time that the customer is
required to finish the payment. Those who pay on time are the ones I will offer discounts.

2.6 SALES TACTICS

This describes the selling methods to employ to customers.

18
I will be selling products to customers directly and use people such as wholesalers and
distribution agents.
The distribution agents I will recruit them according to their skills and profession. First of all
they are supposed to have a driving license as they are the ones to transport the products to
customers.
I will offer them house allowance and there will be compensation for the work done so as to
motivate them while delivering the products. There will be commission for them according to the
number of goods sold.
The distribution will cover areas around Muran’ga county,Thika and Nairobi.

2.7. Distribution strategy

Distribution strategy are methods to use inorder the goods to reach the market.
Producer>distributer>customer
Producer> wholesalers>distributer>customers
Producer>wholesaler>customer.
The entrepreneur considers road transport in distribution because it is cheaper and fast compared
to other means of transport such as railway transport and air transport.
The business distribution will suffer some problems such as poor services such as the products
may not be delivered on time due to problems in traffic.
The entrepreneur will manage the problems by selecting the best best channel channel of
transport such as motorcycle that will not be held in traffic when there is traffic congestion.
Another distribution problem is employee retention,finding and keeping a qualified staff is one
of the most challenging task. Fewer people have skills and experience for a particular job.
Another problem is customer expectation.many customers want their goods to be delivered
faster, cheaper and better.This can be solved by getting a better channel to be used in distributing
the goods.The best way to solve the distribution strategy problems is by attracting many
customers.

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CHAPTER THREE

ORGANIZATIONAL PLAN
3.1ORGANIZATIONAL STRUCTURE

MANAGER

SUPERVISOR

CASHIER PURCHASING OFFICER SECURITY

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3.2 MANAGERS AND QUALIFICATIONS
The manager of the business will be the sole proprietor of the business. The manager will
have the following duties and responsibilities;

 Determining wages and salaries as the human resources manager.

 Help in man power planning by establishing the number and skills of work force
required by the business in future.
 Help in recruitment and selection by recruiting the best personnel in the organization.
 Reveal business policies and impact on motivation of employees.

The security personnel must be from security agencies like G4S or masterpiece security.

The cashier must have gone for an accounting course and having some knowledge on
computer.

The manager will be the overall boss of the company and the supervisors work will be to
supervise the job when the manager is not around and also take some business records.

The cashier is the treasurer who will be writing money records and the purchasing
officers work will be to transport commodities to and fro the business while the security
officer will be taking care of the properties.

The purchasing officer will also be concerned with acquiring goods and services for use
in the business.

3.3 PERSONNEL NUMBER AND DUTIES

Job tittle Qualifications responsibilities Salary
Manager Diploma holder Overall boss 25000
Supervisor Diploma holder To supervise the job 20000
and ensure
employees are
working in order.
Cashier Accounting officer Keeping money 15000

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 records
Purchasing officer Store keeping officer Purchasing and 10000
exporting
commodities
Security officer G4S security team Taking care of 10000
properties in the
business

Money drawn from end month will be worth two hundred thousand.

If the sales of the day meets manager’s expectations the ksh 500 incentive will be given
to each management team.

3.4 RECRUITMENT, TRAINING AND PROMOTION

Recruitment is the process of funding candidates for a post in an organization.

Types of recruitment used will be like; conduction interviews –the application will be done
and documents to be submitted to the Milkah kitchenware office. Those who have met
qualifications will be contacted and prepare for the interview will be working for the business
and they will be working for the business and they will have to be contacted on the day of
coming.

Training is the activity of imparting and acquiring skills. Types of training will be like; on
job training whereby employees will be trained while still working.

Promotion is an advancement in rank or position. it is going to take place if the business as

improved with biggest percentage and to the best performing employees.

Direct promotion is going to be applied where the company directly communicates with its
customers and see the area of improvement.

3.5 RENUMARATION AND INCENTIVES

JOB NUMBER OF MONTHLY OTHER TOTAL KSH
CATEGORY STAFF PAY RATES BENEFITS
Manager One 25000 3000 28000
Supervisor One 20000 2500 22500

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 Cashier One 15000 2000 17000
Purchasing Two 20000 3000 23000
officer
Security officer Two 20000 3000 23000
Rumenaration is a complete pay, benefits offered to an employee and incentives are what
motivates or encourages employees to continue working.

Milkah kitchenware business will give four incentives to its employees

 The boss who is the manager will be buying the employees lunch week days.
 They are going to be provided by uniform for free.
 After three months they have to be taken for a trip.
 They should not be working during holidays and Sundays

3.6 LICENCE, PERMITS AND BY LAWS

The business license will be issued by the county government of Murang'a

The business permit will be legal to the enterprise to operate the business. the cost of each
legal will be 1500 per month. The permit will enable the business hence provision of income
and revenue to the government.

By laws this are rules that govern how the business will run since it displays the key
regulations governing the day to day operations of the business.

By laws- the document will be issued from Kenya citizenship and immigration Act of 2011
of laws of Kenya.

3.7 SUPPORT SERVICES

Bank services- this is going to be one of the most support service that will be used in the
business and it is accessed in Muranga town.

The bank will help to save money and also keep records of the money in the business
accounts.

The bank will also help during the time of debt when the business account is bankrupt

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CHAPTER FOUR

OPERATIONAL PLAN
An operational plan is a strategic document that outlines all the planning related to a daily
operation and processes required for running a successful business. It outlines the key activities
and target an organization will undertake during a period of time.
4.1 product or services design and development.
The products design should be easy to learn and easy to use. The product designers prioritize
information according to users needs and user environment. The entrepreneur need to develop
products and services by getting ideas and start planning the perfect kitchen appliances logo that
will show the products are from the business.
The business will incur a cost of ksh 200000 in designing and developing the products and
services. The type of technology to use in manufacturing products and offering services will be
modern technology. Modern technology is the best alternative as it will help in designing the
products and manufacturing best quality products and providing the best services needed by the
customers.
Modern technology is appropriate as it is cost effective, flexible in production and available
ideally in addition to maintenance frequencies. The business will cope with technological
changes by having up to date information about changes in technology and updating the systems
in technology.

4.2 production or operational facilities and capacity.

For refrigerators, refrigeration system consists of several equipments like compressor,condenser,
evaporator, expansion devices e.t.c. A refrigerant compressor is a machine used to compress the
refrigerant from the evaporator and to raise it’s pressure so that the corresponding temperature is
higher than that of the cooling medium. For manufacturing of refrigerators it requires assembling
of exterior shell, the interior cabin and the cooling mechanism. For manufacturing of outer shell
it involves cutting and welding sheets of metal into appropriate sizes.
The machines and equipments will be acquired by hiring and buying the affordable ones. The
cost of hiring for example a refrigerant compressor machine is 50,000 to use for a week. For
purchased equipments they can be supplied in big firms and organisations that use them in
making kitchen appliances. Some will be supplied to jua Kali industries to make kitchen ware
products.
The machines will be maintained by cleaning them after use and repairing worn out parts. There
will also be recycling of the products to avoid wastage. The business will also consider
importation of spares from other countries. The cost of the machinery and equipment spares will
cost 200000 Kenyan shillings. The ground plan is as follows.

24
 RECEPTION OFFICE

PROCUREMENT
AREA

PRODUCTION
ROOM
STORAGE

I need to expand the business because as time by the business will continue growing

25
4.3 production or service strategy.
In designing and developing the business production strategy the following has to be considered;
The list of monthly material requirements where the entrepreneur has to ensure that the business
has enough materials required throughout the month, the entrepreneur also has to know who are
the suppliers and the quality of their products.
The entrepreneur will have to consider the cost of materials as there is need to purchase the most
affordable and efficient materials for the business. The entrepreneur will have to consider the
best channel of transportation of materials from the suppliers to my business. The channel of
transportation should be quick and cheap.
The workers of the business should be form four leavers and others should be graduates
depending on the kind of work they are required to perform in the business. Total labour cost per
month should be a minimum of Ksh 300000. The following is a list of products and their costs;
Deep fryer. 15,000
Microwave 20,000
Mixer 5000
Ice maker 15000
Refrigerator 50,000
Electric oven 6,000
Freezer 15,000
Type of material Quantity Cost per unit ksh Total cost

Refrigerant 5 5000 25000

compressor
Sheets of metal 20 3000 60000

Expansion devices 5 6000 30000

4.4 production process

To describe the process of the business the following will be considered:
 Planning the business that is the kitchen appliances store
 Register the business for taxes
 Open a business bank account
 Set up accounting for the business
 Get necessary permits and licences for the business
 Get the business insurance
26
  Create a business website
There are several factors that may affect the production process of the business both internal and
external. Internal factors include dishonesty by employees, technological risks such as changes in
delivery, manufacturing or distribution of a business’s products. This can be minimized by doing
research and development which involves keeping current with new technologies. By investing
in long term assets such as technology, businesses can reduce the risk of falling behind
competition.

CHAPTER FIVE

5.0 FINANCIAL PLAN.

This is the plan on how the finances will be distributed and put into work on aim of making
profit.

27
 5.1 PRE-OPERATINAL COST.

This are cost or expenses incurred before the start of the business operation.

PARTICULARS AMOUNT
Rent Ksh 12,000
Licenses Ksh 5,000
Advertisement and promotion Ksh 2,500
Permit Ksh 5,000
Power /electricity Ksh 2,500
Total Ksh 27,000

5.2 WORKING OPERATION REQUIREMENTS

This is part or the financial plan, which the funds required for delay operation of the business.
The working capital of the business will be determined by the difference between current
liabilities.
The estimated capital required for three years of operation
Assumptions
There is increase in working capital

Item Year in 2nd year 3rd year

amount

stock of raw materials 200,000 300,000 500,000

work in progress 100,000 400,000 300,000
stock of finished 300,000 200,000 100,000
debtors 500,000 200,000 100,000
cash in hand 100,000 200,000 100,000
cash at bank 500,000 300,000 300,000

5. 3 Projected cash flow statement for the year ending 31st Dec 2023
Items Jan Feb Mar Apr May Jun Jul Aug Sept Oct

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Cash inflows 31000 330000 395000 470000 580000 550000 400000 380000 380000 4900
0
Debtors 8000 1100 7000 6000 14000 12000 1000 15000 1700
Cash at hand 20000 15000 12000 17000 16000 13000 16000 17000 20000 1300
Cash at bank 22000 21000 15000 20000 25000 24000 20000 24000 35000 2700
Total cash inflows 55000 374000 433000 514000 627000 601000 448000 428000 450000 5470
0
Cash outflows
Purchases 2500 2800 3200 4000 4800 4900 5200 5800 6200 7000
Creditors 30000 20000 21000 8000 17000 18000 15000 29000 20300 3200
Salaries and wages 29000 29000 29000 29000 29000 29000 29000 29000 29000 2900
Telephone 2000 800 16000 8000 1000 1700 1300 1300 11000 1000
Electricity 3000 1500 1200 1000 900 1700 1000 1500 100 1700
Repairs and 1500 1300 800 700 1000 1200 1400 1500 800 500
installation
Water bill 400 500 550 420 350 430 380 470 500 300
Transport 21000 21000 21000 21000 21000 21000 21000 21000 21000 2100
Insurance 8200
License 2400
Total cash outflow 10000 76900 78350 72120 75050 77930 74280 89570 89800 9250
0
Net cash 45000 297100 354650 441880 551950 523070 373720 338430 360200 4545
0
Balance b/f 450100 747100 1101750 1543630 2095580 2618650 2992370 3330800 3691
Accumulated cash 45010 747100 1101750 1543630 2095580 2618650 2992370 3330800 3691000 4145
0

5.4. PROFORMA income statement of Milkah kitchenware

Items 1 st year 2rd year 3 rd year
Sales 39500 400000 450000

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Less of cost of sale
Opening stock
Purchases 275000 350000 380000
Less closing stock 62100 700000 720000
Cost of sale 37500 450000 460000
Gross profit 221000 150000 156000
Less expenses
Salaries and wages 680000 80000 100000
Power house 6000 10000 150000
Telephone 11230 15000 16000
Advertisement 27600 10000 12000
Stationery / printing 21600 30000 32000
Transport 20500 32000 35000
Total expenses 284000 230000 232000
Net profit before 200000 407000 442000
taxation
Less 15% 20000 250000 28000
225000

Assumptions

Salaries will remain constant for the first three years

Rent payment will remain constant for the first three year

5.5profomer balance sheet of MILKAH KITCHENWARE

Fixed assets As at 1st Jan 2023 As at 1st Jan 2024 As at 31st Dec.2024
Furniture and fitting 300000 300000 200000
Less acc.dep 12.5% 37000 25000
Net book value 100000 294000 197000

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Motor vehicle 100000 100000 190000
Less dep. 7% 7000 13000
Net book value 100000 97000 176000

Total fixed assets 400000 746000 725000

Current assets
Stock 150000 30000 95000
Debtors 90000 7000 105000
Cash at bank 300000 75000 110000
Cash at hand 100000 100000 90000
Total current assets 640000 212000 400000
Total assets 1020500 985300 1125400
Less current liabities 30000 60000 65000
creditors 370000 700000 700000
Total 400000 760000 765000
Total current 225000 210000 120000
liabilities
Networking capital 425000 900000
Owners equity 1190000 1500000
Borrowing 45000 200000
Loan from bank 70000 100000
total 21355000 3585000

5.6 BREAK EVEN LEVEL

Tells of how many units of products must be sold to cover fixed and variable cost of products.
When the business reaches the breakeven analysis any extra sale that makes gives profit.
Fixed assets As at 1st Jan 2023 As at 1st Jan 2024 As at 31st Dec 2025
Plant and machinery 100000 300000 200000
Less acc dep 12.5% 37000 25000
Net book value 100000 294000 197000

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Motor vehicle 100000 100000 190000
Less dep7% 7000 13000
Net book value 100000 93000 176000

Total fixed assets 400000 746000 725000

Current assets
stock 150000 30000 95000
debtors 90000 7000 105000
Cash at bank 300000 75000 110000
Cash at hand 100000 100000 90000
Total current assets 640000 212000 400000
Total assets 1020500 985300 1125400
Less current 30000 60000 65000
liabilities
Creditors 370000 700000 700000
Total 400000 760000 765000
Total current 225000 210000 120000
liabilities
Net working capital 425000 800000 900000
Owners equity 1190000 1140000 1500000
borrowings 45000 200000 200000
Loan from bank 70000 100000 100000
total 21355000 3210000 3585000

Total contribution margin =sales-total variable

=1510000-215000

=Kshs 129500

The Total contribution x 100/sales

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Total fixed assets=947000

Breakeven level= total fixed cost/contribution margin %

=947000/85.73

=11,046.3 units

5.7. EXPECTED PROFITABILITY RATIOS

Gross profit percentage =gross profit x 100/sales

=1330000 x 100/1510000

=88.1%

5.8 DESIRED FINANCING

Is the amount of money desired by MILKAH KITCHENWARE to use in its business for three
years.
Item description Year 1 Year 2 Year 3
Pre-operational cost
Working capital 425000 800000 900000
Fixed assets 400000 746000 725000
Total

5.9 PROPOSED CAPITALIZATION

This is total of MILKAH KITCHENWARE depts.
Item description Amount
Owners’ equity 1500000
Long term loan 100000
Short term loan 70000
Total 1670000

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