PROJECT TITLE: AVTECH MAINTENANCE SHOP

PRESENTOR: CLIFF KANYI

INDEX NUMBER: 4081020152

INSTITUTION: EAST AFRICAN SCHOOL OF AVIATION

SUPERVISOR: MR MWANIKI

SUBMITED TO: KENYA NATIONAL EXAMINATION COUNCIL

DATE: NOVEMBER SERIES

.
DECLARATION
I hereby submit this business proposal as my original idea and it has neither been produced
nor presented before for the award of certificate, diploma, degree, or masters in any other
course/field neither has it been used for any operation. It is purely for the award of my
diploma by Kenya national examinations council (KNEC)

SUPERVISOR

I hereby concur with the contents of the document as a whole, and though close monitoring, and
guidance I testify that this is an original document by CLIFF KANYI, and it has not been used any
how before, for any operation.

NAME OF SUPERVISOR:

SIGNATURE: …………………………………

DATE: …………………………………………..

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ACKNOWLEDGEMENT
I thank the almighty God for this honorable idea and enabling me to successfully complete
my project. I would also like to express my gratitude to the following individuals.

Mr. Mwaniki for his major role in supervising, editing, proofreading and final compilation of
this project and my course and my course mates for their support during the project writing
process.

My family as a whole the Kanyi's, for the financial support, encouragement and their prayers
all through. Captain Kariuki for great financial support and all the advice on investments. All
my close friends, Victor, Hans, and Brian.

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DEDICATION
This business project proposal is first dedicated to God for the idea, guidance, strength,
protection and good health.

I also dedicate this to my family, the Kanyi’s family, and friends, Captain Kariuki, Victor,
Hans and Brian.

Table of Contents
iii
 DECLARATION..................................................................................................................................... I
ACKNOWLEDGEMENT........................................................................................................................ II
DEDICATION...................................................................................................................................... III
1.0 BUSINESS DESCRIPTION.........................................................................................................1
1.1 SPONSOR...........................................................................................................................1
1.2. Business Location and address..........................................................................................1
1.2.1 Choice of Business Location...............................................................................................1
1.2.2 Features of the Location and Its Worthiness.....................................................................1
1.2.3 Choice of Premises and Suitability.....................................................................................2
1.2.4 Contract/Communication Modes......................................................................................2
1.3 TYPES OF BUSINESS...........................................................................................................3
1.3.1 Activities Involved and Nature of Products/Services..........................................................3
1.3.2 Principal Customers...........................................................................................................4
1.3.3 Operation Schedules..........................................................................................................4
1.4 PRODUCTS AND SERVICES.................................................................................................4
1.4.1 Services offered.................................................................................................................4
1.5 JUSTIFICATION FOR THE BUSINESS....................................................................................4
1.5.1 Justification of the Business Ventures................................................................................4
1.5.2 Swot Analysis versus Competitors.....................................................................................4
1.5.3 Specific Needs for Business to Satisfy................................................................................5
1.5.4 Contribution of the Business to the Economy....................................................................5
1.5.5 Personal Resource and Environmental Factors..................................................................5
1.5.6 Sustainability of the Business............................................................................................5
1.6 INDUSTRY..........................................................................................................................6
1.7 BUSINESS OBJECTIVES.......................................................................................................6
1.7.1 Short Term Objectives........................................................................................................6
1.7.2 Long-term objectives.........................................................................................................6
1.7.3 Achieving the set objectives (Task)....................................................................................6
1.8 ENTRY AND GROWTH STRATEGY.......................................................................................6
MARKETING PLAN..........................................................................................................................8
2.1 CUSTOMERS......................................................................................................................8
2.1.1 Individual Customers.........................................................................................................8
2.1.2 Institutions.........................................................................................................................8
2.2 MARKET SHARE.................................................................................................................8
2.3 COMPETITION....................................................................................................................8
2.4 PROMOTION & ADVERTISEMENT....................................................................................10
2.5 PRICING STRATEGY..........................................................................................................10
2.6 SALE TACTICS...................................................................................................................11
2.7 DISTRIBUTION STRATEGY................................................................................................11
ORGANIZATION AND MANAGEMENT...........................................................................................12
3.1 ORGANISATION STRUCTURE............................................................................................12
3.2 MANAGERS AND QUALIFICATIONS..................................................................................12
3.3 PERSONEL; NUMBER AND DUTIES...................................................................................13
3.4 RECRUITMENT, TRAINING AND PROMOTIONS................................................................15
3.5 REMUNERATION AND INCENTIVES..................................................................................15
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 3.6 LICENCES, PERMITS AND BY LAWS..................................................................................16
3.7 SUPPORT SERVICES..........................................................................................................17
OPERATIONAL PRODUCT PLAN.....................................................................................................19
4.1 PRODUCT OR SERVICES DESIGN AND DEVELOPMENT.....................................................19
We will make sure each consumer receives the service they want at our location. Depending on
what the customer wants, done, different needs and even comparable aircrafts may require
different methodologies. We will continue to train and brief our staff on how to provide
exceptional services and interact with customers. We will give our customers what they want if
we regularly review the bundles that are available.....................................................................19
4.2 LAYOUT THAT AVTECH MAINTENACE WILL ADOPT.........................................................19
4.3 PRODUCTION STRATEGY..................................................................................................19
4.3.1 Product Development......................................................................................................19
4.3.2 Changes in Technology....................................................................................................20
4.3.3 Production Skills...............................................................................................................20
4.3.4 Production Cost...............................................................................................................21
4.3.5 Evaluation........................................................................................................................21
4.4 PRODUCTION PROCESS....................................................................................................21
4.4.1 Production Stages and Methods......................................................................................21
4.4.2. Factors Affecting Production...........................................................................................22
4.5 REGULATIONS AFFECTING POPULATION.........................................................................22
4.6 EQUIPMENTS...................................................................................................................23
FINANCIAL PLAN...........................................................................................................................25
5.1 PRE-OPERATIONAL COST.................................................................................................25
5.2 ESTIMATION OF WORKING CAPITAL................................................................................26
5.3 PROJECTED CASH FLOW..................................................................................................26
5.4 PROFORMA INCOME STATEMENT & BALANCE SHEET.....................................................31
5.4.1 PROFORMA INCOME.......................................................................................................31
5.4.2 PROJECTED BALANCE SHEET............................................................................................32
5.6 BREAK EVEN ANNALYSIS GRAPH......................................................................................32
5.6 EXPECTED PROFITABILITY RATIOS....................................................................................35
5.7 DESIRED FINANCING........................................................................................................36
5.8 PROPOSED CAPITALISATION............................................................................................36
5.9 POSSIBLE RISKS AND SOLUTION.......................................................................................37
6.0 REFERENCES....................................................................................................................38
6.1 APPENDIX........................................................................................................................38
6.1.1 GLOSSARY OF BUSINESS AND FINANCIAL TERMS............................................................38

EXCECUTIVE SUMMARY

v
The business will operate under the name Av tech maintenance, which will be a sole
proprietorship, owned by Cliff Kanyi. Cliff is currently pursuing diploma in aeronautical
engineering, at the East African School of aviation. The commencing dates for the business
will be 10 January 2023, and it will be located at Wilson Airport – Langata, along Uhuru
highway. The business will major on servicing, maintenance of aircraft computers, desktop,
laptop repairs, Software design, and fabrication. The business will, insert modern methods
applicable in order to create diversity above already existing businesses of the same kind.

Plans for growth and expansion will include incorporating new ideas, strategies, and
professional opinion and advice from qualified entrepreneurs. Capital increment will in turn
attract the development of the business though opening of other branches across the country.

The motto of the business will be “better service, better performance”

The business will target a market of the potential customers, which include aircraft
maintenance companies, aviation colleges and public. Other business will also be providing
similar products, thus Av Tech Maintenance will be facing stiff competition. Under these
circumstances, the business will lay down concrete strategies in order to attract and maintain
customers.at the initial stages, the products of the business will be offered at fairly lower
prices. Promotions and advertisements will be appraised extensively. The management team
shall comprise a managing director, a Human resource manager, finance manager, marketing
manager and quality manager. An external company will be engaged in the hiring of
personnel excluding the managing director who will be the owner of the company. In the
event a new post is created, the position will be awarded to high-performing employees.
Licenses will be got from the registrar of companies for the company registration, KCAA and
KRA dealing with tax.

The operation of the firm will be based on specialization, and respective delegation, whereby
each personnel will be expected to give an output with service quality, and adhere to the
timetable and work at minimum supervision, but accepted consultation. Personnel will be
paid monthly since the recruitment will be permanent. The business will run on a 12hr basis
and have extensions when needed.Av Tech Maintenance Shop will require a starting capital
of Ksh. 5,000,000, which will be obtained from various sources. The raised money will be
used to pay the personnel, pay legal fees, pay bills, and buy equipment, stationery, pay rent
and employees.

Initial Capital Cash(Ksh)

Personal savings 1,500,000
Loan From bank 2,000,000
Parents and friends 1,500,000
TOTAL 5,000,000

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CHAPTER 1
1.0 BUSINESS DESCRIPTION

1.1 SPONSOR
The business will run by the name Av Tech Maintenance Shop. The owner chose this title
with respect to the initials of his legacy, ATM. As the legacy states, the owner with his
integrated principles will be able to give the best of his ability to outshine and become
successful business in the market.

The owner of the business, Cliff Kanyi will be the sponsor of the business. Currently, Cliff
Kanyi is in East African School of aviation pursuing Aeronautical Engineering. Having
studied business education in high school, attaining entrepreneurial skills from his
entrepreneurship course in current course, he will have the adequate skills to start and be in
position to keep the business on the run. He will deploy the financial management leadership
skills, among his skilled entrepreneurial traits to bring up the business to success.

He will be the soul financier to his business having contributed more than two-thirds of the
total capital to be invested into the business. He will also take keen control in the expenditure
of the business capital. He will put a total of KShs.5, 000,000 into the business having being
raised.

1.2. Business Location and address

1.2.1 Choice of Business Location
The business will be located at Wilson airport next to shell petro station. The owner chose
this location so that aviation companies, student and the public will have accessibility to the
business. The location is also well known for good security as it is one of the regions
guarded by Wilson airport Police. In addition, there is no any such business in the location
hence no competition. Location will be a perfect choice.

1.2.2 Features of the Location and Its Worthiness

Adequate Security
Langata area will be the best business location due to the tight security. Besides, a Police
Station is set to be established 30 meters away from the business. This will boost up the
investor’s decision to place the business in the location, due to the perfect security levels.
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Accessibility
The business will easily be reached by customers, as it is just along the Uhuru highway. The
public having ease of accessibility, they will be attracted more to this enterprise. The owner
will choose this location due to this fact.

Market
Having a residence of above 700,000 and more than 200 companies, the owner placing his
business into the location will be justification of the worthy wide market in which, they will
keep the business operating.

Infrastructure
Wilson airport has a well distributed tarmac roads. There will be ease of access to the
business premises by the potential customers. Since the operation will be smooth due to
accessibility to the clean energy, water and a good drainage system, our services will be
readily available all times, to be delivered to the consumers. Thus, the business will choose
this location due to the worthiness of operation.

1.2.3 Choice of Premises and Suitability

The owner will develop his business in his own premises in the area (region). It will be
suitable as the owner’s ideas and innovations in fields of design and art will be reflected in
the construction process. He will be at a position to make his business to the best of his
desires.

1.2.4 Contract/Communication Modes

Contracts to be entered with the enterprise will be specialty contracts enforceable at law. The
owner will choose this method mainly to overcome dangers of fraud and conmen. It will also
be assurance of his capital in hands of safe transactions. Communication modes will be
through the hot (mobile) numbers, email address and postal mail services.

Av Tech Maintenance will be located Wilson Airport – Langata, along Uhuru highway,
Kenya next to Next to SHELL petro station.

Av Tech Maintenance
P.O. Box 20541-00100
2
NAIROBI
Telephone: 0728825755 or 0773506855
E-mail Address: [email protected]
Website: www.avtechmaintenance.com

A MAP TO AV TECH MAINTENANCE LOCATION

1.3 TYPES OF BUSINESS

The business will be an independent repair shop, with the function of servicing and repairing
since it will be offering aircraft computer servicing and software design and fabrication. This
will be the greatest option, as the clients will require the services. Above all, incurred costs
are minimal. .

3
 1.3.1 Activities Involved and Nature of Products/Services
The services offered by the business will be servicing and repairing of aircraft computers,
desktop and laptop repairs and software design and fabrication. Main products the business
will servicing of aircraft computers.

1.3.2 Principal Customers

Crucial customers of the business will be aircraft maintenance companies and the public
occupying Wilson airport and surrounding areas.

1.3.3 Operation Schedules

The business will run daily from 7.00am to 8.00 pm from Sunday to to Friday, on Saturday, the
business will commence from 8.00pm and close as usual 4.00pm. Holidays, seasons will not affect
the operations; the business will run as usual.

1.4 PRODUCTS AND SERVICES

1.4.1 Services offered
Av Tech Maintenance Shop main deals with servicing and maintenance of aircraft computers
and Software design, fabrication and updates. The business will have a service bay for
desktop and laptop repairs.

1.5 JUSTIFICATION FOR THE BUSINESS

1.5.1 Justification of the Business Ventures
The aviation industry is growing every day. The increased number of travelers, the expansion
of most hangars and the entry of more airlines into the market can prove this. This
significantly affects the constant maintenance to be performed on the aircrafts hence the need
for better aircraft computers maintenance.

1.5.2 Swot Analysis versus Competitors

COMPETITOR STRENGHTS WEAKNESSES OPPORTUNITY THREATS
Base Two Avionis -Good location - Do not operate 24 hrs - Offier better computer -Stiff competition from other
inside wilson - Offer poor services in servicing businessess located along Langata
airport accessed computer servicing road
by customers
-Many years of
operation
Superior Aviation -Good location at - Focus on airframe and - Diversify to the -Poor sales as they deal with one
Services Ltd the heart of wilson engines repair avionics side product
- Out sourcing aircraft - Reduced pricing.
computers technicians - Increase products

4
 - High costing

AVTech Maintence -Only business - New business in market - Diversify into Avionics -Wilson airport being a new
offering aircraft face all constraints like equipment repair and residential area, it will be prone to
computer economic and legal and servicing demolitions
servicing and political
repair.
-Only business to
offer software
design and
fabrication.

1.5.3 Specific Needs for Business to Satisfy

The business will specifically satisfy the needs of better-quality products and services, which
will be readily available on establishment.

1.5.4 Contribution of the Business to the Economy

The business will provide employment opportunities to a good number of people in the
community. This will aid in eradicating poverty and idleness. The business will bring
reliable products close to community hence it will promote community development.

1.5.5 Personal Resource and Environmental Factors

Personal Factors
The owner of the business will do best in the business project as he is well skilled and has
maximum interest that he will employ in opening the business will be liable, that will bring
the business to success.

Resource Factors
Human resource will be widely available and in large amounts on the establishment area of
the business. Financial resources will be readily available thus, the business will be viable.
There will be available land resource in which the business will be established on.

Environmental Factors
The business will be environmentally acceptable, as it will not involve production of harmful
waste gases, fluids or noise, things that would pollute the environment. Therefore, the
business will be readily acceptable, thus it will be viable.

5
1.5.6 Sustainability of the Business
The business will be sustainable as it will be located in a good location; the market of the
business’ products will be maintained, as there will be customers willing and ready to acquire
the products. High quality and original products will also attract more customers loyal levels,
hence, maintain the business. This proves the business will be sustainable.

1.6 INDUSTRY
The business is in the aviation industry and the ICT industry is said to be in the tools and
equipment. Industry since it is involved in the distribution of aviation tools and equipment.
With only a few for companies in the business, market share is expected to be high. The
business will exploit the Competitor’s weakness to emerge to be the top distributor.

1.7 BUSINESS OBJECTIVES

1.7.1 Short Term Objectives
 To bring and introduce new products in the market
 To promote and develop the community
 To contribute to the country’s economy through paying of taxes
 To provide goods and services to meet customers’ needs and expectations.

1.7.2 Long-term objectives

 Reform on investment and be able to use the money to get licensing to maintain all
avionics equipments.
 Be one of prosperous entrepreneur in Wilson and still operate in years ahead
 Provide more employment for people in the constructed hotel in the future
 To have a good and corporate image
1.7.3 Achieving the set objectives (Task)
The owner will carefully plan on the objectives, lay down terms and strategize on the
operation. He will analyze the company’s strong and weak areas, opportunities, threats the
business will be exposed to. He will also measure the company’s performance competition.

1.8 ENTRY AND GROWTH STRATEGY

Pricing, Advertising, Promotion

The business will have a fair pricing as the owner will be interested to capture a large and
reliable business’ market. Products will also be priced in relation to current market
conditions. Products will be advertised to the public market via billboards and social media.

6
The business will also have qualified staff in product promotion and they will provide
workers with clothing (uniforms) bearing the business’ logo.

Measure to Sustain the Business in the Market

The owner will ensure proper management of the employees and he will also establish a good
relation with his employees to enhance communication and loyalty levels. This will enable
the business to easily identify the weaknesses and measures to solve them will be found with
ease. The business will also be frequently advertised; hence it will be well known to the
customers for the products it will be offering. The owner will also maintain and add stock to
the business by sacrificing some profit into the business to keep healthy flow. All these will
sustain the business in the market.

1.9 Growth Strategy

Taking Advantages of the Opportunities
The business will employ and make use of the skilled labor found in the area’s population.
The business will ensure that services provided will meet customers’ requirements. The
business will also operate for longer periods to curb a wide market. All other needs of the
customers will be catered for accordingly via oral means, customer services and suggestion
boxes.

7
CHAPTER 2

MARKETING PLAN
AVTECH MAINTENACE SHOP to be a successful venture, the owner will employ a wide
range of marketing strategies. He has already conducted market research and identified
potential target market for which its products will be tailored to match their needs. He will
employ all the ‘4 PSs’ of marketing – price, promotion, place and product.

2.1 CUSTOMERS
2.1.1 Individual Customers
Identified individual customers include individual business people , students and employees
in Wilson airport whose social economic status has justified the needs for these products.

2.1.2 Institutions
The identified institutions include Sky max flying school, Air traffic ltd, Renegade air etc. Av
tech maintenance shop will conduct deals with these institutions and will offer its services to
them.

2.2 MARKET SHARE

There are other businesses offering aircraft computers maintenance and other computer
repairs in Wilson airport. These businesses hold a large market share. However, ATM
intends to strive to hold even greater share, by diversifying its products in that, it will not
only be offering Aircraft computers repair and services, but we will also develop software’s
for our clients. This will be approximately 28% more compared to the other businesses.

2.3 COMPETITION
ATM competitors are Base 2 avionic and Superior aviation servicing ltd. Base two avionics is
located inside Wilson airport, Superior aviation servicing ltd as well is ahead of Base two
avionic in the collateral areas of Wilson airport. ATM though located in the Wilson airport
will have a fair competition, as it will service close households in the area.

8
 Sales

ATM

Base 2 avionics

Superior avia-
tion servicing
ltd

Competitor analysis;
Superior aviation servicing ltd + Base two avionics = 37%
ATM =63%
The business will have few competitors slightly competitive in the industry. The SWOT
Analysis table of the business is as follows;
NAME STRENGTH WEAKNESS
Base two avionics - Good location inside wilson - Do not operate 24 hrs
airport accessed by - Offer poor services in
customers computer servicing
- Many years of -
operation
Superior aviation servicing - Good location at the - Focus on airframe and
ltd heart of Wilson engines repair
- Out sourcing aircraft
computers technicians
- High costing

Av tech maintenance shop - Only business offering - New business in

aircraft computer servicing market face all
and repair. constraints like
-Only business to offer economic and legal

9
 software design and and political
fabrication.

2.4 PROMOTION & ADVERTISEMENT

In order to publicize the business, there will be advertisement and promotion of the business
through various ways in order to make ATM business known (awareness of the community),
the business will adopt advertising strategies like radio, newspapers, county magazines and
journals, television and sign posts. Business magazines will also be adopted with time. The
following table shows expenses of advertising and promotion.

MODE FREQUENCY MONTHLY COST ANNUAL COST

(KSH)
Newspaper Weekly 2,000 108,000
County magazine Monthly 1,000 12,000
Posters Weekly 2,000 108,000
Online promotions Weekly 5,000 270,000
Total 498,000

The business will mainly narrow down to the above modes due to be nature and products it
deals with. Effectiveness of the product promotions will be noted with product demand and
increased customers.

2.5 PRICING STRATEGY

To come up with price of a product or service, procurement costs, total production cost and
profit will be used as the basis of the pricing procedure. Demand of the product and
competitors will also be put into consideration to price the commodities i.e. PRICE OF A
PRODUCT/SERVICE = PROCUREMENT COST + TRANSPORT COST + PROFIT.

These factors will be used in calculating and determining cost of price:

Cost of stock (Servicing products)
Type of maintenance
Profits, at 45% of cost of product
Competitor’s prices
Demand

10
The business shall sell products at lower or actual price to compared to that of the
competitors. Credit sales shall be offered to frequent customers enforceable at law,
considering total incurred costs in the business.

2.6 SALE TACTICS

Products will be offered to the customers from the shop. Although the servicing of aircraft
computers is very difficult, the business will ensure good services are delivered and best
customer relations to maintain the available customers and even receive more by availing
high end products and services. The business to know whether customers are satisfied or not,
it will carry out customer interviews. When the business will have stabilized and receives
high returns, the business will adopt a sales team which will draw a great percentage from the
outside market. Gifts and bonuses will be given to the business’ workers to motivate them,
so that they give best of their efforts.

2.7 DISTRIBUTION STRATEGY

Due to the nature of the business, we will have a delivery system, which will be used for pick
up, and drop off the equipments.

CHAPTER 3

11
ORGANIZATION AND MANAGEMENT
This will be processes of organizing, planning, leading and control of resources within the
business to achieve the set objectives.

3.1 ORGANISATION STRUCTURE.

Av Tech Maintenance shop will be organized and managed as a sole proprietorship form of
business. The business will use the line and staff organization structure where authority will
be vested on the manager and flow down to the subordinates. The hierarchy of the
organization will be as shown below:-
Manager

Maintenance engineer Sales Person

Accountant

Storekeeper Maintenance team Sales team

Storekeeper SECURITY

3.2 MANAGERS AND QUALIFICATIONS

Information about the team, their qualifications and responsibilities are in the table below:-

POSITION RESPONSIBILITIES QUALIFICATION

Manager - Carry out management - A degree holder in
and co-ordination of administration, any
business activities certificate or diploma in
- Direct and participate in industrial organization
personal action such as management
evaluation, hiring - 3 years of experience of
termination and the same post
assigning duties - Should be computer
- Developing long term literate
and short term goals and - Should be a good team
plan for collection player
services and programs in - Should be aged between
keeping the business 25 to 40 years of age
towards its vision - Should have good
12
 - Ensure standard communication skills and
regulations and other leadership skills.
business activities are
followed to the later
- Make decision of the
business together with
the officials
- Overall supervisor of the
business

3.3 PERSONEL; NUMBER AND DUTIES

POSITION RESPONSIBILITIES QUALIFICATION

Maintenance Engineer - Assess team performance - Diploma holder in
and give reports to the aeronautical engineering
manager avionics courses
- Ensure that all operations - 5 year experience
are carried out in a - Should have good
smooth manner communication skills\
- Interact with other - Should be proficient in
departments to ensure computer skills and
good relations in the knowledge
business - Should be a team player
- Should be above to
supervise and support
complex material effort
for business growth.
Accountant - Manage account-client - Degree holder in
relations accounting from a
- Monitor and audit recognized body
expenditure of all - Should have 5 years of
departmental fund experience of the same
allocations job
- Prepare statutory and - Good communication
financial reports sills
- He/she will be in charge - Should be a team player
of all procurements - Must be 25 – 30 years of
- Verifying all cash flow age
records and signing of all - Able to work under
company records pressure and meet
- Co-ordinates with the deadlines if situations
sales team and store need so.
keeper and report to the
Manager
- Prepare all pay bills.
Sales Person - Negotiate the actual - Degree holder in sales
selling point with the and marketing or related
13
 customer course
- Participating and - Good communication
organizing marketing and skills
promoting events - Should be a team player
- Ensure that the product - Aged between 25 – 30
and services offered are years.
satisfying to the - Should have 3 years of
customers experience
- Come up with selling - Should be computer
methods that pleases the literate
customers more - Should be flexible in
terms of working
schedules.
Sales Team - Work under sales person - Must have a diploma in
and supervisor following sales and marketing from
all orders given to a known institution
him/her - Should be well
- Participate in marketing conversant in English and
and promoting events Kiswahili
- Sell product to the - Have good
customers and ensure communication skills
that they reach those in - Aged between 20 – 27
remote areas years.
- Ensure product and
services offered to
customers are satisfying
Store-keeper - Report to the accountant - Must have a diploma in
and supervisor and procurement or related
cashier on products to be course from a recognized
offered institution
- Take stock records and - Must be aged 25 – 35
report to the supervisor years
- Ensure security of the - Fluent in English and
store Kiswahili
- Must be a team player
- Should be computer
literate
Security - Safe-guard the premises - KCSE certificate D+
on a shift of 8 hours each - Any other valid
on 24 hours a day certificates shall be taken
- Record entry and exit of to consideration
visitors who enter the
administration block

This is an outline of employees conducts while working in the organization which includes
reporting time, off-duty, terms of employment and codes of conducts. All these will be
outlined for each employee on recruitment.

14
The main weekly operation will have two shifts daily based on 12 hours operation. During
the day shift, all departments will be active. On weekends, some departments will be affected
in response to time scheduling. Here is an outline of the business’s reporting time according
to the shifts.

DAY SHIFT
Reporting time for 0700hrs Departure time for 1700hrs
subordinates and sub-ordinates and
sales persons sales persons
Reporting time for 0800hrs Departure time for 1700hrs
Management team management te3am
and accounts office and account office

With all having, a lunch break of 1 hr. individually.

3.4 RECRUITMENT, TRAINING AND PROMOTIONS

This is the procedure for hiring, using, and keeping a large enough workforce to improve the
productivity of the company.

The company will create policies that it will use to examine and determine if it is necessary to
increase or decrease its staff. The hiring process will begin one month prior to the opening
dates.

Recruits will come from Wilson's neighborhood and the nearby commercial district. The
company will train its workforce through training careers, seminars, and workshops after
hiring employees. Promotion of employees will depend on their performance and work ethic,
which will increase productivity and foster good working relationships with customers.
Promotion may take the shape of benefits, awards, or evaluations.
3.5 REMUNERATION AND INCENTIVES
This will be the method of paying salaries and (or) wages to the employees. Below is a table
showing remuneration of staff members.
POST NO. OF STAFF MONTLY ANNUAL SALARY
SALARY (Ksh.) (Ksh.)
Manager One 100,000 1,200,000
Maintenance One 90,000 1,080,000
15
 Engineer
Accountant One 54,000 648,000
Sales Person One 45,000 540,000
Cashier One 30,000 360,000
Sales-team Five 20,000 each 1,200,00
Store-keeper One 25,000 300,000
Security Two 15,000 each 360,000
Total 13 444,000 5,688,000

Payment of the business will be done at the accountant’s office. The business will in addition
to basic salary give allowances to the employees. The allowances include house, transport
and risk allowances.

3.6 LICENCES, PERMITS AND BY LAWS

The business will be scrupulous in operation based on laid down rules and regulations. It will
also be governed in conjunction to the Kenyan Government Regulations. It will adhere to the
laid down rules.
The business will receive insurance procedure from CIC Insurance Group Ltd, insurance
company a requirement as at CAP 236. It will stand in for any damages that will/may
majorly affect the business financially.
The business will be registered according to CPA 497, obtained from the County Government
of Nairobi. The license will be renewed annually. Tax payment will be done by paying taxes
to the government as laid down in the Kenyan Constitution CAP 470.
Kenya Civil Aviation Authorities (KCAA) will license the business under the AMO of
Instrument maintenance and/or overhaul for other procedures.

Type of License Source Amount yearly

(Ksh.)
Business License County Government of 5,000
Nairobi
Health Regulation License CIC Insurance Group 5,000
Trade License County Government of 40,000
Nairobi

16
 Total 50,000

3.7 SUPPORT SERVICES

ATM will invite other firms that may have an interest in co-operation, to provide
professional, legal, financial support as well as fundamental support.

Banking Services
The Bank will provide financial support in terms of loans and advisor, advisories, an deports.
Av Tech Maintenance Shop will collaborate with -
Cooperative Bank of Kenya
Mlolongo Branch
P.O. Box 250 0519
Mlolongo
Tel. (020) 2366687

Auditing Services
The business auditor will communicate yearly to the business to evaluate business
performance and profit-making as well as growth.
Damien Kanga
Afya Centre, 3rd Floor
P.O. Box 6341 – 0010
Nairobi
Tel. No. +254 710 431662
Email: - [email protected]

Legal Services
A lawyer, who will also stand-in for whatever inconveniences experienced in accordance to
law, will provide the business’ legal advice. The Lawyer will be from:

Matcha Law Firm

Sameer Business Park Block II
P.O. Box 331105 00200
Nairobi
Telephone: +254 715 652 095
Email: [email protected]
17
Website: http://www. msetchalaw.co.ke

Insurance
The Company’s security will be safeguarded by an insurance company which will see the
company through drastic loses and calamities. The Insurance Company will be:
AIG Insurance Company
P.O. Box 4946
Nairobi
Tel: 020 3676000
Fax: 020 3676001/2

CHAPTER 4

18
OPERATIONAL PRODUCT PLAN
4.1 PRODUCT OR SERVICES DESIGN AND DEVELOPMENT

We will make sure each consumer receives the service they want at our location. Depending
on what the customer wants, done, different needs and even comparable aircrafts may require
different methodologies. We will continue to train and brief our staff on how to provide
exceptional services and interact with customers. We will give our customers what they want
if we regularly review the bundles that are available.

4.2 LAYOUT THAT AVTECH MAINTENACE WILL ADOPT

Less complex formation will be utilized to minimize excessive costs but with a view of future
expansions.

4.3 PRODUCTION STRATEGY

4.3.1 Product Development
Rapid population growth, particularly the emergence of new airlines, has resulted in an influx
of new visitors to the area. As a result, the requirement to perform such a variety of tasks
emerged. The service is ready for consumers that have a budget. Because of this, Av Tech
Maintenance Shop will guarantee that these lines will be quickly served in a professional
manner, conveniently, at the lowest cost.

19
ATM will sell to the needs of the consumers in the shop because it is a maintenance shop that
will offer its services based on customer want and competence. Delivery will be taken into
account based on the client's introduction.

The business will incur:

ACTIVITY COST
Security 9,000
Wages 10,000
Purchases 50,000
Maintenance 20,000

4.3.2 Changes in Technology

Since ATM will be a relatively medium-sized company, the technology used will be of a
medium level, ensuring that customer service costs are kept to a minimum. Additionally, it
will contribute to reducing maintenance and operation expenses because high-level
technology will draw attention from specialized workers, which will result in higher
compensation.

However, it is important to regularly monitor technology developments that may directly

affect the firm. The company will adapt to the change in technology by:
1. Educating employees about current and upcoming technologies
2. Set aside money for technological advancement
3. Consult equipment providers for advice.

4.3.3 Production Skills

ATM will be involved in offering maintenance services extensively at reasonable prices and
quality. This will be justified by highly trained employees in their field of operation.
Management team and staff will be requited on qualification basis as stated in Chapter 4 and
shall be required to deliver expected results.

20
4.3.4 Production Cost
The business will be offering petroleum related services at the station. Cost of delivery at the
station:
Items Cost
Electricity 1,000
Water 500
Salaries/wages 209,000
Purchases 50,000
Transport 120,000
Maintenance 20,000
Miscellaneous 2,000

4.3.5 Evaluation
The tap management team shall keenly monitor the service given to the customers. Relevant
information will be gathered from the customers and the workers, at a sitting each month.
This will help to evaluate, analyze information and progress of the business.

Any adjustments necessary shall be handled immediately to maintain the business status.

4.4 PRODUCTION PROCESS

4.4.1 Production Stages and Methods

Stage 1: Conception
On establishment of the necessary structure and procedures, the owner of the business will
sit, and draw a plan of operation and sequences.

Stage 2: Staffing
This will include setting up the management team alongside the rest of the staff members.
Management team will assist in formulating policies and operation procedures. Employees
shall be informed of the business goals and operations.

Stage 3: Dispatching

21
This will translate paper work into actual production. The business will put up enough stock
levels which will be acted upon effectively depending on the attention of customers’
preference.

Stage 4: Evaluation and Follow Up

This will be concerned with the services offered by the business to ensure quality is upheld.
Sales department will design ways of follow-up and evaluation to win customers confidence
and good will.

4.4.2. Factors Affecting Production

Due to the present nature of events at the operating region, some of the challenges the
business will directly encounter are as follows;

a) Economic down turn

This will bring about price fluctuations, which will affect the customer, turn up and also
the capital the business will invest. To minimize this effect, the business shall keep close
check on economic trend and make adjustments in good time, e.g., stock levels, service,
charges, salaries and wages.

b) Mobility
Population shifts shall be felt by the business due to the urbanization increment. This will
cause decreased population in some areas and increment in others. Since the area around
the business is rapidly growing, more customers shall be expected with the increased
population hence the business shall be flexible in operations to be able to change with
time.

4.5 REGULATIONS AFFECTING POPULATION

For smooth and legal operations, the business will comply with the following government
regulations and licenses.

Business Registration Act, CAP 242

The business will acquire a certificate from the District Registrar. This will ensure the
business will duly be registered as Av tech maintenance shop.

22
Income Tax Act CAP 470
Income under this act is remitted to Kenya Revenue Authority. The business will duly
register with KRA and keenly abide with the regulations.

Trade License and (or) Business Permit Act CAP 497

This is the legal authorization by the County Council to operate a business within its
jurisdiction. The business will be registered under Nairobi Municipal Council, Nairobi
County as Sole Proprietor – Single Business Permit, and shall be renewed annually.

Insurance Cover, ACT 236

The business will require insuring its premises and workers against loss or damages and
individual injuries. Increase premiums will be paid monthly.

Regulation Cost per year

Business registration 14,000
Trade license 5,000
Petroleum energy 5,000
Health Regulation 5,000
Insurance 60,000
Total 89,000

Approvals shall also be obtained from

i. Water and Sewerage Company, Nairobi
ii. Kenya Power and Lighting Company Ltd
iii. Kenya Civil aviation authorities.

4.6 EQUIPMENTS
Av Tech Maintenance Shop will adopt a number of equipment to keep the business running
efficiently. The facilities will aid in both production and administration purposes.
Equipment and Machinery
Machine/Equipment No. of Units Cost per Unit Total Cost
Office Computers 5 61,000 305,000
Developers Computers 4 110,000 440,000

SERVER RACK 2 50,000 100,000

Servers 4 80,970 323,880
Switches 6 40,000 240,000

23
 Main switch 1 465,000 465,000
Letter Changers 6 200 1,200
Avionics toolbox 2 78,000 156,000
Console Part Set 1 2,000 2,000
Furniture 4 6,000 24,000
Signs 3 500 1,500
Pressure lives 1 2,000 2,000
Pens 1 Pkt 300 300
Cash Book 20 100 2,000
Receipt Book 20 100 2,000
Total 2,064,880

Other Facilities
ITEM QUANTITY PRICE TOTAL
Signs 6 500 3,000
First Aid Kit 3 5,000 15,000
Fire Extinguishers 4 7,965 31,860
Total 49,860
The business will maintain the equipment and machines at least twice annually to keep them
in a smooth and highly reliable condition.

24
CHAPTER 5

FINANCIAL PLAN
5.1 PRE-OPERATIONAL COST

These are the initial costs and expenditures incurred on setting up the business. This will be
inclusive of legal and mandatory requirements for the business to kick off.

Item Amount

Equipment and installation 200,000

Trading License 89,000

Water Deposit 500

Electricity Deposit 1,000

Telephone Deposit 1,000

Renovations 20,000

Starting inventory 1,345,180

Professional Fees 20,000

Advertising information 10,000

Miscellaneous 2,000

25
5.2 ESTIMATION OF WORKING CAPITAL

Item Costs Months Total

Telephone 1000 12 12,000
Post 1000 12 12,000
Electricity 1000 12 12,000
Advertising 10,000 3 30,000
Remunerations 209,000 12 2,508,000
Legal fees 89,000 1 89,000
Professional fee 4,000 2 8,000
Purchases 100,000 12 1,200,000
Office supply 1,500 12 18,000
Maintenance 20,000 4 80,000
Total 3,969,000

5.3 PROJECTED CASH FLOW

ASSUMPTIONS

i. The cost of remuneration, legal, and professional fees, advertising, interest will be
constant.
ii. The cost of telephone, electricity, water, office supply, transport, maintenance,
miscellaneous, and taxes shall vary in rates.

ITEMS YEAR 1 YEAR 2 YEAR 3

INFLOWS
B/F
Credit sales 2,878,500 1,906,905 892,000
Cash sales 10,385,492 20,530,450 35,147,395,
OUTFLOWS
Purchases 725,700 911,809 1,248,155
Creditors 141,900 81,401 78,562
Salaries 2,508,000 2,508,000 2,508,000
Rent 60,000 60,000 60,000

26
Electricity 12,010 19,690 20,430
Water 10,250 15,200 17,184
Telephone 16,360 17,440 16,193
Postage 4,250 8,363 9,243
Advertisement 30,000 30,000 30,000
Transport 141,650 142,530 161,540
Stationary 19,700 22,113 23,182
Maintenance 46,650 66,840 94,785
Insurance 60,000 60,000 60,000
Taxes 57,150 60,370 67,626
Loan Payment 600,000 600,000 600,000
Legal fees 89,000 89,000 89,000
Professional fees 8,000 8,000 8,000
Miscellaneous 27,400 31,391 31,690
TOTAL 24,637,699 51,694,966 96,191,061

PROJECTED PERCENTAGE GROWTH

iii. YEAR2:
iv. 24,637,699 ⁄ 51,694,966 X 100= 47.6%
v. YEAR3:
vi. 51,694,966 /96,191,061 X 100 = 53.7%

27
 CASH FLOW STATEMENT YEAR 1

CASHFLOW FOR 2023

DESCRIPTION JAN FEB MARCH APR MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
B/F 119,800 387,300 687,500 1,034,100 1,424,430 1,825,120 2,311,270 2,851,002 3,567,762 4,495,462 5,525,902 6,725,687
Credit sales 275,000 260,000 255,000 250,000 241,000 240,500 240,000 230,500 225,000 221,000 220,500 220,000 2,878,500
Cash sales 560,000 590,000 610,500 650,500 690,590 700,500 796,000 830,460 1,000,060 1,200,350 1,290.990 1.465,000 10,385,492
Total flow 590,000 635,000 662,500 709,500 752,590 770,500 871,500 911,462 1,090,600 1,300,350 1,402,990 1,580,500 11,277,492
Out flow
Purchases 50,000 50,050 55,000 55,100 55,105 62,050 63,050 63,125 64,600 64,950 65,110 65,265 725,700
Creditors 25,000 24,000 13,000 11,000 9,555 9,550 9,500 9,405 9,390 7,550 7,000 6,950 141,900
Salaries 209,000 209,000 444,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 2,508,000
Rent 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Electricity 1,000 1,010 1,100 1,300 1,400 1,460 1,550 1,600 1,650 1,650 1,650 1650 17,020
Water 500 550 550 600 650 850 900 1000 1100 1150 1200 1200 10,250
Telephone 1000 1,100 1,150 1,200 1,250 1,250 1,300 1,350 1,350 1,350 1,350 1,360 16,360
Postage 200 200 250 250 300 300 300 350 350 500 550 600 4,250
Advertisement 10,000 10,000 10,000 30,000
Transport 10,000 10,000 10,000 12,000 12,100 12,300 12,450 12,450 12,500 12,550 12,600 12,700 141,650
Stationary 1,500 1,550 1,550 1,550 1,600 1,650 1,650 1,650 1,750 1,750 1,750 1,800 19,700
Maintenance 2,000 3,000 3,500 3,600 3,900 4,000 4,150 4,200 4,350 4,400 4,550 5,000 46,650
Insurance 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Taxes 5,000 5,000 5,050 5,100 5,150 5,150 5,200 5,250 5,300 5,350 5,350 5,400 57,150
Loan payment 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 600,000
Professional fees 4,000 4,000 8,000
Miscellaneous 2,000 2,100 2,150 2,200 2,250 2,250 2,300 2,350 2,400 2,450 2,450 2,500 27,700
Legal fees 89,000 89,000

Total Outflow 470,200 367,500 362,300 362,900 362,260 369,810 385,350 372,730 373,840 372,650 372,550 380,715 4,551,805
Net Cash 119,800 267,500 300,200 346,600 390,330 400,690 486,150 539,732 716,760 927,700 1,030,440 1,119,785 6,725,687
Accumulation 119,800 387,300 687,500 1,034,100 1,424,430 1,825,120 2,311,270 2,851,002 3,567,762 4,495,462 5,525,902 6,725,687

CASH FLOW STATEMENT

28
CASHFLOW FOR 2024

DESCRIPTION JAN FEB MARCH APR MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
B/F 6,725,678 7,844,116 9,053,980 10,379,60 11,763,53 13,156,15 14,550,78 16,023,17 17,518,00 19,112,820 20,746,93 22,456,35 24,471,461
4 1 0 1 9 0 4 4
Credit sales 201,000 189,900 189,000 180,200 179,800 172,000 160,000 155,000 150,500 146,505 125,000 120,000 1,960,905
Cash sales 1,470,000 1,475,500 1,560,500 1,615,000 1,620,000 1,630,000 1,690,500 1,701,500 1,796,550 1,850,000 1,910,600 2,210,300 20,530,450
Total Inflow 1,590,000 1,600,500 1,707,005 1,765,500 1,775,000 1,790,000 1,862,500 1,881,300 1,976,750 2,031,900 2,099,600 2,411,300 22,491,355
Out flow
Purchases 70,000 72,000 72,650 72,810 73,500 76,400 76,950 76,999 77,800 78,100 79,600 85,000 911,809
Creditors 6900 6880 6845 444,000 6799 6785 6771 6750 6725 6721 6715 6708 81401
Salaries 209,000 209,000 444,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 2,508,000
Rent 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Electricity 1600 1600 1605 1615 1620 1635 1641 1649 1650 1655 1580 1685 19,690
Water 1250 1255 1256 1269 1260 1261 1262 1263 1269 1275 1290 1300 15,200
Telephone 1400 1401 1420 1425 1450 1457 1460 1465 1480 1490 1495 1500 17,443
Postage 650 660 670 675 676 701 708 712 721 725 730 735 8,363
Advertisement 10,000 10,000 10,000 30,000
Transport 12,800 12850 12890 12905 12925 12935 12940 12950 12990 13000 13100 13150 142,350
Stationary 1810 1815 1820 1827 1830 1835 1840 1851 1855 1870 1875 1885 22,113
Maintenance 5100 5150 5190 5200 5250 5300 5390 5460 5500 5800 6500 7000 66,840
Insurance 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Taxes 5450 5455 5460 5465 5470 5475 5490 5495 5500 5505 5535 5540 60,370
Loan payment 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 600,000
Professional fees 4,000 4,000 8,000
Miscellaneous 2550 2570 2575 2590 2601 2615 2520 2635 2640 2645 2660 2690 21,391
Legal fees 89,000 89,000
Total Outflow 471,571 390,636 381,381 381,573 382,381 395,399 390,072 386,229 382,180 397,786 390,180 396,193 4,745,581
Net Cash 1,118,429 1,209,864 1,325,624 1,383,927 1,392,619 1,394,601 1,472,428 1,495,071 1,594,570 1,634,114 1,709,420 2,015,107 16,445,774
Accumulation 7,844,116 9,053,980 10,379,60 11,763,53 13,156,15 14,550,75 16,023,17 17,518,25 19,112,82 20,746,934 22,456,35 24,471,46
4 1 0 1 9 0 0 4 1

CASH FLOW STATEMENT YEAR

CASHFLOW FOR 2025

29
DESCRIPTION JAN FEB MARCH APR MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
B/F 24,471,461 26,448,237 28,627,321 30,890,657 33,163,810 35,499,184 37,912,302 40,381,573 42,904,744 45,633,953 48,450,353 51,511,764 54,776,951

Credit sales 115,500 112,000 100,000 90,000 81,000 75,500 70,000 62,000 59,000 52,000 45,000 30,000 892,000
Cash sales 2,250,000 2,360,000 2,415,000 2,450,500 2,510,000 2,580,000 2,650,500 2,690,550 2,895,000 2,975,500 3,265,000 3,475,000 32,517,050
Total Inflow 2,470,000 2,580,500 2,636,000 2,675,500 2,740,500 2,820,000 2,891,000 2,931,550 3,145,000 3,230,500 3,525,000 3,750,000 35,395,550
Out flow
Purchases 89,000 89,500 89,950 90,050 92,675 94,300 95,010 95,500 100,005 101,105 150,500 160,560 1,248,155
Creditors 6,700 6,695 6,689 6,685 6,680 6,678 6,670 6,650 6,335 6,285 6,350 6,245 78,560
Salaries 209,000 209,000 444,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 2,508,000
Rent 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Electricity 1689 1672 1675 1680 1685 1690 1705 1710 1720 1729 1935 1740 20,430
Water 1305 1319 1345 1360 1390 1450 1455 1470 1490 1500 1510 1590 17,184
Telephone 1505 1510 1550 1551 1565 1590 1600 1620 1635 1645 1690 1705 19,163
Postage 740 745 750 755 761 768 775 779 781 789 795 805 9,243
Advertisement 10,000 10,000 10,000 30,000
Transport 13200 13250 13300 13340 13390 13400 13450 13510 13560 13690 13700 13750 161,540
Stationary 1890 1895 1905 1910 1925 1931 1939 1945 1950 1960 1964 1968 23,182
Maintenance 7100 7700 7790 7795 7800 7810 7845 7890 8000 8050 8055 8950 74,785
Insurance 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 30,000
Taxes 5545 5560 5600 5601 5620 5625 5630 5635 5640 5670 5700 5800 67,626
Loan payment 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 600,000
Professional fees 4,000 4,000 8,000
Miscellaneous 2550 2570 2610 2620 2635 2640 2650 2670 2675 2680 2690 2700 31,690
Legal fees 89,000 89,000
Total Outflow 493,224 401,416 412,164 402,347 405,126 406,882 421,729 408,379 415,791 414,100 463,589 484,813 5,129,560
Net Cash 1,1976,776 2,179,084 2,263,336 2,273,153 2,335,374 2,413,118 2,469,271 2,523,171 2,729,209 2,816,400 3,061,411 3,265,187 30,305,490
Accumulation 26,448,237 28,627,321 30,890,657 33,163,810 35,499,184 37,912,302 40,381,573 42,904,744 45,633,953 48,450,353 51,511,764 54,776,951

30
5.4 PROFORMA INCOME STATEMENT & BALANCE SHEET

5.4.1 PROFORMA INCOME

Gross profit = total sales - purchases

Net profit =gross profit + expenses

Provision for tax

Item sales Year1 Year2 Year3
Cost of sales 13,263,992 22,491,355 33,409,050
Gross profit 12,538,292 21,579,546 32,160,895
Overhead
Expenses 12,010 19,690 20,430
Salaries 2,508,000 2,508,000 2,508,000
Rent 60,000 60,000 60,000
Water 10,250 15,200 17,184
Telephone 16,360 17,443 19,163
Advertising 30,000 30,000 30,000
Electricity 12,010 19,690 20,430
Postage 4,250 8,363 9,243,
Stationery 19,700 22,113 23,182
Transport 141,650 142,530 161,540
Maintenance 46,650 66,840 94,785
Legal fees 89,000 89,000 89,000
Depreciation 10,000 15,000 20,000
Professional fees 8,000 8,000 8,000
Interest 18,000 18,000 18,000
Total 2,975,880 3,039,869 3,098,957

TOTAL OVERHEADS
Year1 Year2 Year3
Net profit before 9,562,412 18,539,677 29,061,938
tax
Provision for tax 15% 20% 25%
Net income 8,128,050.2 14,831,741.6 21,796,453.5

31
 Bal b/f 6,725,687 24,471,461 54,776,951

5.4.2 PROJECTED BALANCE SHEET

ITEM As at Jan 2nd 2023 As at Jan 2nd 2024 As at Jan 2nd 2025
Cash at bank 1,311,320 5,500,000 6,100,000
Cash at hand 537,700 700,000 1,100,000
Inventory 725,700 911,809 1,248,155
Debtors 2,878,500 1,960,905 9,340,155
Total current assets 5,590,000 7,790,000 9,800,050
Fixed assets 1,688,680 1,688,680 1,688,680
Accumulated 0 10,000 15,000
depreciation
Total fixed assets 1,688,680 1,678,680 1,673,680
Total 7,141,900 11,309,585 11,013,835
Creditors 141,900 81,401 78,560
Total short-term 141,900 81,401 78,560
liabilities
Bank loan 2,000,000 1,400,000 800,000
Capital 5,000,000 9,828,184 10,431,025
Total 7,141,900 11,309,585 11,013,835

5.6 BREAK EVEN ANNALYSIS GRAPH

Breakeven analysis will be obtained by using use of the total revenue and the total coast. The point
of intersection will represent the break-even point, were by the business will neither be making
profit nor making losses, it will be in a state of balance.
The units represent fractions of the three computed years and on the y, axis are the total sales for
the three computed years.

32
FOR YEAR1
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

560,00 590,00 610,50 650,50 690,59 700,50 796,00 830,46 1,000,60 1,200,35 1,290,99 1,465,00
0 0 0 0 0 0 0 2 0 0 0 0

VARIABLE COSTS
ITEM YEAR1 YEAR2 YEAR3
Telephone 16,360 17,440 19,153
Postage 4,250 8,363 9,243
Electricity 12,010 19,690 20,430
Water 10,250 15,200 17,184
Stationery 19,700 22,113 23,182
Transport 141,650 142,530 161,540
Maintenance 46,650 66,840 94,785
Taxes 51,150 60,370 67,626
Purchases 725,700 911,809 1,248,155
Total 1,027,720 1,264,538 1,661,308

33
FIXED COSTS
ITEM YEAR1 YEAR2 YEAR3
Salaries 2.508,000 2.508,000 2.508,000
Advertising 30,000 30,000 30,000
Rent 60,000 60,000 60,000
Legal fees 89,000 89,000 89,000
Professional fees 8,000 8,000 8,000
Insurance 60,000 60,000 60,000
Loan payment 600,000 600,000 600,000
Total 3.355,000 3.355,000 3.355,000

CONTRIBUTION MARGIN
Total contribution margin = sales – total variable costs
YEAR1
Sales-13,263,992
Total variable costs- 1,027,720
Contribution margin= 12,236,272

YEAR2
Sales= 22,491,355
Total variable costs= 1,264,358
Contribution margin= 21,226,997

YEAR3
Sales =33,409,050
Total variable costs= 1,661,308
Contribution margin= 31,747,742

PERCENTAGE CONTRIBUTION MARGIN

contribution margin/ sales x 100
YEAR1
Contribution margin= 12,236,272
Sales= 13,263,992

34
Contribution = 92.3%

YEAR2
Contribution margin =21,226,997
Sales = 22,491,355
Contribution = 94.3%

YEAR3
Contribution margin = 31,747,742
Sales = 33,409,050
Contribution = 95.0 %

BREAK EVEN LEVEL

B.E.L = ¿ costs /contribution margin x 100

YEAR1
Fixed costs = 3,355,000
Contribution margin = 12,236,272
B.E.L = 27.4%

YEAR2
Fixed costs = 3,355,000
Contribution margin = 21,226,997
B.E.L = 15.8%

YEAR3
Fixed cost =3,355,000
Contribution margin = 31,747,742
B.E.L = 10.5%

5.6 EXPECTED PROFITABILITY RATIOS

i) Gross percentage = (gross profit)/(sales ¿)¿ x 100
YEAR1 YEAR2 YEAR3
12,538,292 21,579,546 32,160,895
X 100 = 94.5% X 100 = 95.9 % X 100 = 96.2 %
13,263,992 22,491,355 33,409,050
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ii) Return on equity = (net profit after tax)/(owners equity ) x 100
YEAR1 YEAR2 YEAR3
8,128,050.2 14,831,741.6 21,796,453.5
x 100 = 541.8 x 100 = 988.7 x 100 =
1,500,000 1,500,000 1,500,000
% % 1453.1 %

iii) Return on investment = (net profit after tax)/(total investment ) x 100

YEAR1 YEAR2 YEAR3
8,128,050.2 14,831,741.6 21,796,453.5
x 100 = 162.5 x 100 = 296.6 x 100 = 435.9
5,000,000 5,000,000 5.000,000
% % %

iv) Return on sales = (net profit after tax)/(net sales) x 100

YEAR1 YEAR2 YEAR3
8,128,050.2 14,831,741.6 21,796,453.5
x 100 = 61.2 % x 100 = 65.9 x 67.7 %
13,263,992 22,491,355 32,160,895
%

5.7 DESIRED FINANCING

ITEM AMOUNT
Pre-operational cost 1,500,000
Working capital 2,000,000
Fixed asset 1,345,180
Total 4,845,180

5.8 PROPOSED CAPITALISATION

ITEM AMOUNT
Savings 1,500,000
Contribution from family and friends 1,500,000
Loan from bank 2,000,000

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Total 5,000,000

5.9 POSSIBLE RISKS AND SOLUTION

RISK SOLUTION
Electrical fire Fire extinguishers will be placed at strategic
points, throughout the shop, with ease of
access.
Fire sensors will also be placed and all the
employees of Av tech maintenance shop
will be profoundly trained on fire fighting
and prevention points.
Escape routes shall also be established
Economic waste The business’ management team shall
account for all the usage by scanning all the
record books on a daily basis.
Resources like water, telephone, electricity
shall only be in use on requirement.
Poor planning Regular training of the employment
fraternity will aid in curbing poorly done
work. Attending these functions will assist
them in improving their skills, and also
minimize time wastage
Theft All money made but the business will be
banked on a daily basis

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6.0 REFERENCES

 Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World Class
Performers by Tim Ferriss.
 Good to Great: Why Some Companies Make the Leap and Others Don’t by Jim Collins
 Cash book by David J. Barnett Publishing
 Business world by McKinsey and company
 Financial management Forbes magazine

6.1 APPENDIX

6.1.1 GLOSSARY OF BUSINESS AND FINANCIAL TERMS

Break even analysis- a technique for analyzing how revenue expenses and profit vary with
changes in sales in volume
Cash flow - the total actual amount of cash in hand out of the business
Balance sheet- financial statement that summarizes the company’s assets and liabilities. It
also shows the financial position of the company at the date of issue
Capital- total sum of money available to start the business
Assets- any item of economic value owned by an individual or company, especially that
which could be converted into case
Current assets - it is the form of assets that could be converted into cash within a duration of
12 months
Current liabilities – money owned that is to be paid by the company within 12 months
Entrepreneur – a person who comes up with a business utilizes all available resources to
come up with a business and execute it.
Gross income – total income before deductions
Cash flow – actual movement of cash in and out of the business.

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