BUSINESS PLAN

MIKI ELECTRICAL SERVICES

PRESENTER : ELIZABETH KAMENE MBILA

INDEX : 403170

INSTITUTION : NAIROBI AVIATION COLLEGE

COURSE : DIPLOMA IN ELECTRICAL AND ELECTRONICS ENGINEERING

SUPERVISOR : MR. NDENJESHE O. LAMEK

SERIES : JULY 2025

PRESENTED TO THE KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULFILLMENT FOR THE AWARD OF DIPLOMA CERTIFICATE IN
ELECTRICAL AND ELECTRONICS ENGINEERING

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DECLARATION
I declare that this is my own work and has never been submitted to any Examination
body in material or copy for an award or any certificate whatsoever.
NAME : …………………………………………
SIGN :…………………………………………
DATE :……………………………………………

SUPERVISOR :…………………………………………….
SIGN :…………………………………………....
DATE :……………………………………………..

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PREFACE
This project plan has been prepared keenly as required by the Kenya national examination
council for award in Diploma certificate in Electrical and Electronics Engineering
The project gives a picture of how to establish and start a business, giving out the physical
location and the things required to make it a success. The business plan is a major reference
for a person who wants to apply for a loan from a bank or any other institution. It shows how
money can be raised and spent for maximum profit which reflects the success of the business,
thus avoiding losses and business failure.

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ACKNOWLEDGEMENT
I want to sincerely thank our heavenly father for giving me life and strength to come up with
such a piece. Special thanks to My Lectures and my fellow classmates who accorded me their
help both physically and mentally in ensuring am at a different standard, may God guide you
always to bring change in people's lives and nature them to be great men and women in this
world.
MAY GOD BLESS YOU ALL

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DEDICATION
I have the pleasure to dedicate this project to my parents, who have stood by me through ups
and downs. Ensuring I grow to be a great and determined man.

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 TABLE OF CONTENTS

PREFACE.....................................................................................iii
ACKNOWLEDGEMENT............................................................iv
DEDICATION..............................................................................v
TABLE OF CONTENTS..............................................................vi

CHAPTER ONE
1.1 BUSINESS PRESCRIPTION.................................................9
1.2 BUSINESS NAME ................................................................9
1.3 BUSINESS LOCATION AND ADDRESS............................9
1.4 FORM OF OWNERSHIP ......................................................9
1.5 TYPE OF BUSINESS.............................................................10
1.6 PRODUCTS/SERVICES........................................................10
1.7 JUSTIFICATION OF OPPORTUNITY.................................10
1.8 INDUSTRY ............................................................................11
1.9 BUSINESS GOALS................................................................11
CHAPTER TWO
2.1 MARKETING PLAN.............................................................13
2.2 POTENTIAL CUSTOMERS..................................................13
2.3 MARKET SHARE..................................................................14
2.4 COMPETITION...................................................... ...............14
2.5 TRADE PROMOTION...........................................................16
2.6 ADVERTISEMENT ...............................................................17
2.7 PRICING STRATEGY............................................................17
2.8 SALES TACTICS....................................................................17
2.9 DISTRIBUTION STRATEGY................................................19
CHAPTER THREE
3.1 ORGANIZATION PLAN .......................................................20
3.2 KEY MANAGEMENT PERSONNEL....................................20
3.3 OTHER PERSONNEL, DUTIES AND NUMBER.................21
3.4 RECRUITMENT, TRAINING, AND PROMOTION.............23
3.5 REMUNERATION AND INCENTIVES................................24
3.6 LICENSES, PERMITS AND BY-LAWS................................25

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3.7 SUPPORT SERVICE...............................................................26
CHAPTER FOUR
4.1 PRODUCTION/OPERATIVE PLAN………………….……....27
4.2 PRODUCTION FACILITIES AND CAPACITIES…...............27
4.3 ENTERPRISE LAYOUT............................................................27
4.4 REPAIR AND MAINTENANCE...............................................27
4.5 PRODUCTION, DESIGN AND DEVELOPMENT…..............28
4.6 MONTHLY MATERIAL REQUIREMENT..............................28
4.7 MONTHLY LABOUR REQUIREMENT..................................28
4.8 MONTHLY PRODUCTION COST ..........................................29
4.9 PRODUCTION PROCESS.........................................................30
REGULATION AFFECTING OPERATIONS

CHAPTER FIVE
5.1FINANCIAL PLAN....................................................................32
5.2 PRE-OPERATING COST..........................................................33
5.3 STARTING CASH.....................................................................34
5.4 ESTIMATION OF WORKING CAPITAL................................35
5.5 CASH FLOW PROJECTION FOR YEAR ONE………………36
5.6 PROFORMA INCOME STATEMENT.....................................37
5.7 PROFORMA BALANCE SHEET ............................................38
5.8 BREAK EVEN ANALYSIS.......................................................39
5.9 PROFITABILITY RATIO..........................................................42
DESIRED FINANCE........................................................................43
PROPOSED CAPITALIZATION
APPENDIX

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 EXECUTIVE SUMMARY

BUSINESS DESCRIPTION
MIKI ELECTRICAL SERVICES will be offering high quality products and services to
customers and ELIZABETH KAMENE MBILA will be the sole owner of the business
The Business will be a sole proprietorship type and will be located in Narok town in Narok
County; it will be registered under the Narok county government.

MARKETING PLAN
The business will target on utilizing the market within the locality most of the customers will
be targeted to come from the neighboring growing institutions and government organizations.
This targeted market share will be hoped to have an estimate population of 4000.the
business will target on a 60% market share within the first year of operation the business also
will have the strategies of coping up with the growing competition from the existing
businesses.
It will embark on advertisements and promotions to a greater deal

PEOPLE ORGANIZATION AND MANAGEMENT PLAN

The business will be made of four departments. The management department will be dealing
with the managing of the business production department in production, service department in
offering services and store department in storing of the produced goods.
The business will embark on a training program of its staff.
OPERATION/PRODUCTION PLAN
The business will need production and servicing technicians since it will be offering products
and services that correspond with the new era and digital generation technology.

FINANCIAL PLAN
The business will need an estimated capital of 900,000/= with which 400,000/= started as
owners’ equity. The business will require a loan from bank of 500,000/=.

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 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

The proposed business MIKI ELECTRICAL SERVICES will specifically deal with the sale

of electrical materials, tools and equipment offering different services like repair of electrical

equipment, installation and repair of industrial machines tools and gadgets, winding of motors

both A.C and D.C. and both industrial and domestic electrical installations.

1.1 BUSINESS NAME

MIKI ELECTRICAL SERVICES is the preferable name for the proposed business. MIKI

is a term artistically twisted from real name of the Entrepreneur ELIZABETH KAMENE

MBILA This makes it a trademark and brand of its own.

1.2 PHYSICAL LOCATION

The business will be located in Total area 1 kilometer from Narok town, Narok-North

constituency in Narok County. The place is favorable since the town is being expanded thus

the county government and the people within the vicinity engage in construction of buildings

and companies, hence creating a better platform for the business to strive, also in account is

the still ongoing upgrade of tourist camps within Narok county.

1.3 FORM & TYPE OWNERSHIP

This business will be a sole proprietorship kind of business as it will be run by one person.

This will be so because of the following reasons`: -

(a) He will be the boss allowing smooth running of the business.

(b) Easy decision making.

(c) He will enjoy all the profits as he will be the chief controller of the business.

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The business will engage mostly in the following:

 Selling of electrical materials like cables, switches, motors, lighting systems etc,

electrical tools like testers, iron boxes and any other electrical related tools or

equipment.

 Repairing of faulty electrical gadgets in different capacities

 Motor rewinding,

 Delivering electrical services to offices and domestic premises.

1.4 PRODUCTS / SERVICES

The products produced will be of high quality, convenient and cheap for customers to afford.

Also, the services will be affordable to people of different background. All these will be

achieved by having skillful personnel and having enough starting stock.

1.5 JUSTIFICATION OF OPPORTUNITY

The assurance that the success of this business will be profound because of the following,

 Availability of knowledge and skills required to run any business which was got

through two years in college, also from the experience got during attachment and lastly

the entrepreneurial skills.

 The business will be situated in an area reachable by many people enhancing the

business to grow. Also, transportation of materials and workers will be easy as the

business will be near the road.

 Research will be done and more consultations on how to grow in business

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1.6 INDUSTRY

This business will be both a commercial and service industry as it will base on purchasing

materials, tools equipment etc. to sell them to customers as well as doing services like

repairing of electrical machines, rewinding of motors etc. This industry is suitable because

transportation of these materials will be easy due to the access of road, there is market as the

business will be located in an area where there is less competition, availability of skilled

personnel and tools / equipment required hence quality products and services offered

1.7 BUSINESS GOALS

In this changing world, the business will be very resourceful to many people as it will have the

following goals.

1.7.1 SHORT TERM GOALS

(a) The business will create job opportunity to self and to others

(b) To establish a successful business this can win customers interest within a very short

period of time possible.

(c) To provide quality products and services.

(d) To employ qualified personnel to assist in running the business thus efficient production of

work.

1.7.2 LONG TERM GOALS

(a) To maximize profit

(b) To expand into a bigger business dealing with large quantity of stock hence increasing the

capacity of sales and services and workers.

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(c) To open other branches elsewhere so as to reach as many people as possible so as to

maximize profit.

(d) Creating a better brand for the business,

(e) To ensure all the personnel involved in the business get more knowledge and skills

considering new technologies.

1.8 ENTRY STRATEGY

The business will employ many tactics and ways of penetrating into the market e.g.

(a) offering low prices to some products and services

(b) Offering promotions like giving discounts

(c) Through advertisement through posters, radio, TVs, Road shows etc.

1.8.1 GROWTH STRATEGY

For the business to grow, some measures must be placed be put in place such as:

(a) Employment of dedicated and qualified personnel.

(b) Creating more space for expansion of the business e.g. buying land.

(c) Buying a vehicle to ease transportation of products and materials to and from the premise

to reduce the cost of transportation and also time wastage.

(d) Training the untrained staff so as to improve their production hence effective work
(e) Steady carrying out of advertisement and promotions

(f) Buying electronics devices like computer or laptop to help in storing information and other

necessary work.

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(g) Motivation of workers to increase the efficiency of the business.

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 CHAPTER TWO
2.0 MARKETING PLAN

MIKI ELECTRICAL SERVICES has many strategic plans to achieve its objectives and to

reach the market demands. These are like expanding its operation and space and also

employing skillful personnel to help in management. The business will be located in a central

place which can be reached by many customers. The business will do through advertisement

of its services and products, offer promotions, and discounts to win the interest of people. The

pricing of items and services will be relatively cheaper as compared to other competitors.

These products and services will always be readily available

2.1 POTENTIAL CUSTOMERS

The business targets to win both domestic and commercial customers. The domestic customers

will be general public especially people around Narok town who will buy as well bring their

items for service. The commercial customers will be the middlemen and hawkers who will buy

goods from the business and sell them to the market

2.2 MARKET SHARE

Through research done thoroughly on the market in Narok town, the business is expected to
reach and serve 2,800(Two thousand eight hundred) potential customers.

NAME OF BUINESS PERCENTAGE SHARE TOTAL NUMBER OF

(%) CUSTOMERS

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MAA Electrical shop 23 650

Nenkai distributors 21 600

Sidai electronics 19 520

MIKI electrical services 26 730

Others 11 300

Totals 100 2,800

2.3 COMPETITION

MIKI ELECTRICAL SERVICES will face stiff competition from other business like MAA,

NENKAI, SIDAI and others which were established 4 years ago. The business will base on

the competitor’s weakness to conquer the business ground. Despite these competitions, the

enterprise will have measures to cope and stay at the top of the game i.e.

 Developing Excellency in product and services provision

 Increase the size of the business by expanding its operations.

 Persuading more customers through promotions

 Improving the quality of goods and services each day

 Choosing the right and low-cost technology with high volume.

 Introducing up to date products to meet the changing technology

 2.3.1 SWOT ANALYSIS TABLE

BUSINESS NAME STRENGTH WEAKNESS

MAA ELECTRICALS • Its centrally located • Poor relation

SHOP • Long term experience • High prices

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 SIDAI ELECTRONICS • Readily available  No promotion offered

personnel

•
Quicker and better
services

NENKAI  Many employees  personnel not always

available
DISTRIBUTORS.

MIKI ELECTRICAL • Low prices  Little capital

SERVICES • Quality goods and

services

•
Technical expertise
•
Promotion
• Famous in the market
OTHERS  Famous in the market  Few workers

2.3.2 ANALYSIS TABLE

BUSINESS Produc Pricin Promotio Personne Locatio Siz Tota

t g n l n e l
NAME service

MAA 2 3 2 4 5 2 18

ELECTRICAL

SHOP

SIDAI 3 2 1 3 2 1 12

ELECTRONICS

NENKAI 2 2 1 3 4 3 15

DISTRIBUTOR
S

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MIKI 4 5 4 5 3 3 24

ELECTRICAL

SERVICES

Others 1 1 2 3 3 2 12

Total 6 6 6 6 6 6 36

2.4.1 PROMOTION

This will be done by the business through

(a) Offering discounts on goods and services.

(b) Employing good character and well-behaved employees who can attend to all customers

without favor or fear.

(c) Purchasing enough stock of materials or items required to make sure that customers don’t

miss anything

(d) Offering free samples on goods bought hence attracting more people

(e) Marketing the services and products through business exhibitions and shows.
(f) 2.4.2 ADVERTISEMENT

The enterprise will employ the following advertisement methods.

(a) Through posters where all the activities and location of the business will be written on

the posters and spread all over the Narok town.

(b) Through local F.M radio e.g. Nosim FM, which can pass information in local language

to many people.

(c) Use of sign post to show direction to MIKI ELECTRICAL SERVICES premise

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 (d) Through local newspaper which are locally written and do reach many people who

prefer local language.

(e) Through direct email to the middlemen who can be potential customers e.g.

University, hospitals and companies.

2.5 PRICING STRATEGY

The business will adopt different pricing strategies like:-

(a) Competitive pricing where competitors prices will be analyzed and compared then come

up with a suitable price which is relatively cheap for the products and services.

(b) Prices will be determined through the materials used, quality and the transportation cost.

(c) Psychological pricing where goods and services are blended to capture the customers’

psychology.

2.6 SALES TACTICS

There are many sale tactics that business is going to use e.g.

(a) Opening its doors for long hours to ensure that customers get what they want at any time.

(b) Having enough stock and offering the best quality products and services

(c) Adopting an attractive way of pricing where goods or services won’t be priced so high

hence affordable to everyone

(d) Advertise about the products and services offered through the radio, posters, newspaper

etc.

(e) Employing humble, friendly, net and educated workers who will attend to the customers in

a decent and professional way.

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2.7 DISTRIBUTION STRATEGY

The enterprise will employ both direct and indirect channels of distributing its goods and

services to customers. Goods and services will be sold to customers directly from the shop or

sending technicians to service or repair their items if need arises. Also goods may reach the

customers indirectly from the business through agents or distributors

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 CHAPTER THREE

3.0 ORGANIZATION PLAN / MANAGEMENT

3.1 KEY MANAGEMENT PERSONNEL

(A) MANAGER

QUALIFICATIONS

• A minimum of diploma in Electrical Engineering or Diploma in Business

Administration.

• Should be computer literate

• Should be 30 years and above

• Should have a five years’ experience in the field of Engineering

• Should be fluent in both English and Kiswahili

• Knowledge in Maa language is an added advantage

DUTIES AND RESPONSIBILITIES

• He will be the custodian of the business representing the owner.

• Supervise business transactions and operations

• Carrying out short term and long term planning of the business

• Recruit the required personnel or staff

• Paying salaries to employees

(B)SUPERVISOR

QUALIFICATION

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• Should have a diploma or crafty 2 in Electrical Engineering

• Should have enough experience in electrical field

• Should be above 25 years

• Ready to work with minimum supervision

DUTIES AND RESPONSIBILITIES

• To supervise all the operations of the business

• Analyze and report sales performance

• Generate new ideas on how to run the business

3.2 OTHER PERSONNEL, DUTIES AND NUMBER

(B) SECRETARY

The proposed business will have one secretary

Qualification

• Should be at least a stage II module and above with basic knowledge on book keeping and

office practices

• Should also be computer literate

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 MANAGER

SUPERVISOR

SECRETARY TECHNICIAN ARTISANS SECURITYOFFICER

DUTIES AND RESPONSIBILITIES

• Responsible for office records and book keeping

• To handle issues relating to customers i.e. acting as receptionist

• Receive and make calls on behalf of the firm.

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(C) TECHNICIAN (2)

The firm will employ two technicians

QUALIFICATION

• Should be a certificate holder or above in electrical engineering

• Should be computer literate

• One year experience in the field.

Duties and responsibilities

• Look for work contracts

• Design and cooperate all electrical projects.

(D) ARTISANS

• The proposed enterprise will have three Artisans

Qualifications

• They should have skills at least in determining any faults, and have sound knowledge on

electrical gadgets etc.

• Should be able to communicate either in Kiswahili or English

Duties and Responsibilities

• Diagnosing and servicing electrical machines

• Carrying out duties dedicated to them.

(D) SECURITY OFFICER

• The business will have one security officer

Qualification

• Should be a form four leaver and above

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• Should have a 5 years’ experience in security forces Duties and Responsibilities

• Maintain security during the night and day time

3.3 RECRUITMENT, TRAINING AND PROMOTION

3.3.1 RECRUITMENT

• The business will make advertisement of its job opportunities through local newspaper,

local F.M radio like Maa Radio and Nosim FM.

• There will be interviews for the recruits done by the manager, and questions asked

concerning the job. Individuals’ dignity will be considered so as reach to the satisfaction of

the customers.

• Employees will have at least a week to adopt and be familiarized with the business.

3.3.2 TRAINING

• The new employees will be trained according to their qualifications to improve their

efficiency and knowledge in the industry.

• They will be taught safety measures and their roles in the business etc. in the business

• They will also be attending seminars or workshop

3.3.3 PROMOTION

• The employees will be promoted according to their performance and ability working as

follows.

• Their level of performance

• Training and qualification individual

• Punctuality and accountability

• Good public relation

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• Loyalty to the enterprise

• Trust worthiness

• Diligence

• Creativity

3.3.4 REMUNERATION AND INCENTIVES

Remuneration will be done so that salaries set for employees can be realistic according to their

experience and level of education

Employees’ earnings will include salaries and allowances monthly.

3.3.5 INCENTIVES

(I) Financial incentives

Employees will be paid money according to their productivity and hours worked for. Also they

can earn overtime, bonus and interests

(ii) Non- Financial incentives

There will be safety at work place, free tea, and safety clothing.

REMUNERATION AND INCENTIVES TABLE

JOB TITLE NUMBER OF SALARIES MEDICAL OTHER TOTAL

PERSONNEL KSHS P.M ALLOWANCE SPECIFY (KSHS)

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Manager 1 20,000 4,000 2,000 26,000

Supervisor 1 12,800 3,200 1,000 17,000

Technician 2 9,000 2,500 500 24,000

Secretary 1 7,000 1,300 8,300

Artisans 3 5,500 1,100 19,800

Security 1 3,800 1,100 4,900

Total 100,000

3.5. LICENSES, PERMITS AND BY – LAWS

The business will require legal procedures for it to start its operations

These will include clearances, permissions, and licenses from the government ministries and

other agencies. Some of these legal documents are: -

(i) Trading license from the Ministry of Trade.

(ii) Certificate of ownership from the register of ownership

(iii) Labor laws governing the employees Insurance whereby employees will be insured by

the business

(iv) Public health license which deals with sanitation drainage, ventilation, hygiene.

3.6 SUPPORT SERVICE

The most vital services include: -

I. Banking services where the business will open a business account with Family Bank

II. Auditing books of account; auditors will be hired and be paid daily upon delivering an

auditing report

III.Medical services which will be provided by Narok referral hospital.

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 IV. Water will be provided by the pipe water from Ewuaso ng'iro water project.

V. Security will be provided by Clarks Security Company.

VI. Power will be supplied by Kenya power, with the help of a 3-Phase Diesel
generator.

VII. Postal services will be provided

VIII. Legal service which will be provided by

MBILA AND SONS ADVOCATE

PO BOX 54-03600

KAPENGURIA

CHAPTER FOUR.

5.0 PRODUCTION / OPERATION PLAN

5.1 PRODUCTION FACILITIES AND CAPACITY

MIKI ELECTRICAL SERVICES will require a premise to operate from. This premise will be
situated at Total area in Narok town. The firm will require offices for a manager, supervisor
and a secretary. There are other facilities that will be required as listed in the table below.

ITEMS QUANTITY UNIT COST TOTAL

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Computer system 3 16,000 48,000

Furniture cabinet 2 1,200 2,400

Cash book 1 600 600

Telephone 1 3,000 3,000

Chairs / tables 6 1,000 6,000

Electrical tool box 1 6,000 6,000

Electronics tool box 1 6,000 6,000

Totals 15 33,800 72,000

5.1.2 REPAIR AND MAINTENANCE

The following maintenance measures will be taken in maintaining the tools and equipments

used.

(a) Regular maintenance where tools and equipments will be checked for maintenance to

make sure they work effectively.

(b) Corrective maintenance where by tools shall be attended to when need arises

(c) Preventive maintenance where tools and equipments are kept clean
(d) This maintenance will be done because of the following reasons.

 To increase the efficiency of the tools of work

 The increase durability of tools or equipment

 To increase the accuracy of the tools

 To improve safety when working with tools

5.2 PRODUCTION

5.2.1 PRODUCTION DESIGN AND DEVELOPMENT

5.2.2. MONTHLY MATERIAL REQUIREMENT

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MATERIAL ITEMS COST

Insulating tape 400

Receipt book 6,000

Superglue 200

Solder wire 300

News paper 300

Pens 100

Totals 7,300

5.2.3 MONTHLY LABOUR REQUIREMENT

PERSONNEL AMOUNT

Manager 26,000

Supervisor 17,0009

Technicians 24,000

Secretary 8,300

Artisans 19,800

Security officer 4,900

Total 100,000

5.2.4 MONTHLY PRODUCTION COST

ITEMS AMOUNT

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Rent 12,000

Transport 6,000

Telephone 1,000

Labor 100,000

Insurance 2,000

Materials 7,300

Stationary 500

Water 400

Electricity 1,200

Repair and maintenance 6,000

Entertainment 1,000

Advertisement 3,000

Miscellaneous 1,000

Total 136,700

5.3.0 PRODUCTION PROCESS

MIKI ELECTRICAL SERVICES is a business that will deal with offering services like repair

of electrical accessories or gadgets, motor rewinding etc and also selling of electrical

equipment, materials, tools etc. therefore the following steps will be used in the production

process.

STEP ONE

Purchasing of the stock i.e. materials, tools and equipment to be sold and used in the business.

STEP TWO

Transportation of purchased goods to the business premise

STEP THREE

30
Unloading of the goods from the tracks and storing them in the store. Should

To be arranged in shelves ready for sale.

STEP FOUR

Customers will be welcomed warmly into the premises so as to make their choice on purchase

STEP FIVE

Transactions (legal) will be made if the customer wants to buy an item by use of a receipt

which consist of

I. Name of enterprise

II. Name of the customer

III. The item bought

IV. The date to which transaction was made

V. Signature of the salesman

STEP SIX

Replacing and purchasing of other items

 When offering the services of repairs then the following steps will be taken for

production

 Welcoming the customers to enjoy the services offered.

 To fault diagnose the gadget or equipment brought for service then advice accordingly.

 Initiate payment over the work and agree on how to be paid

 The customer to collect his / her item in good and working condition.

5.4 REGULATION AFFECTING OPERATIONS

31
MIKI ELECTRICAL SERVICES to run well as it is dealing with already made goods, it will

have to adhere to the following regulation measures.

(A). ENVIRONMENTAL PROTECTION

MIKI ELECTRICAL SERVICES will participate fully in cleaning and conserving the

environment. The premises and all its surrounding will be kept tidy the enterprise will make

sure that it does not do anything to contaminate the environmental.

(B) VENTILATION

The workshop and all offices will be well ventilated to allow free and fresh movement of air,

this is to create both comfortable working conditions for the workers and give better storage

conditions for the products and tools.

(C). SANITATION

MIKI ELECTRICAL SERVICES will provide sanitations like toilets and bathroom of good

standards both to the workers and customers.

(E). PROTECTION GARMENTS

The enterprise will purchase protection clothes for every worker in the premises. This includes

overalls or dust coats, helmets, boots gloves etc. these garments will protect the workers from

harm when working within the premises and also create uniformity among the workers.

(F). FIRST AID KIT

There will be a first aid kit in every room to help when there is an injury case or any other

problem. This kit will contain pain killers, bandages, disinfectants cottons wool etc.

(G)FIRE EXTINGUISHER

There will be fire extinguishers in each room to help in overcoming the menace of fire

outbreak. Every worker will be taught how to handle the situation and use the extinguishers.

32
(H)SAFETY PROTECTION

The enterprise will ensure that all workers are protected from oppressions and other harm.

They have to put on protective clothing.

(I) TRADE LICENSE

For legal operations of the business to take, the enterprise will obtain a trade license both from

Narok county government and the KRA.

33
 CHAPTER FIVE

FINANCIAL PLAN

Financial plan will be carried out keenly as it is an important part of the business. All business

transitions done will be shown in their specific record.

5.1 PRE – OPERATION COSTS

The pre –operations cost are the sum of money required to cater for the materials and the
equipment before business operates. The pre -operational cost for MIKI ELECTRICAL
SERVICES will be tabulated as follows.

Description Cost (kshs)

registration 3,000

Furniture and fittings 15,000

Machine tools and equipment 120,000

Stationary 8,000

Electrical installation 20,000

Water installation 12,000

Salaries and wages 100,000

Transport 10,000

Advertisement 5,000

Stock 50,000

Miscellaneous 4,000

Banking 10,000

Insurance 3,000

Total 360,000

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5.2. STARTING CASH

To start the business 900,000 /= will be required by MIKI ELECTRICAL SERVICES from

personal savings, family and Friends contribution and bank loan i.e. Equity Bank. This will be

as follows.

Sources Kshs

Personal savings 330,000

Bank loan 450,000

Family contribution 120,000

Total 900,000

The commencement cash will be = proposed capital – pre-operational cost. = 900,000

– 360,000 = 540,000 /=

5.2 ESTIMATION OF WORKING CAPITAL

ITEMS YEAR ONE YEAR 2 YEAR 3

Currents assets Kshs Kshs Kshs

Opening stock 80,000 100,000 120,000

Cash at bank 150,000 2,200,000 2,600,000

Cash at hand 300,000 450,000 600,000

Debtors 20,000 25,000 30,000

Closing stock 40,000 60,000 80,000

Totals 590,000 2,835,000 3,430,000

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CURRENT LIABILITIES KSHS KSHS KSHS

Creditors 50,000 20,000 40,000

Rent 18,000 18,000 18,000

Insurance 10,000 8,000 12,000

Totals 78,000 46,000 70,000

Working capital = Current Assets – Current liabilities

Working capital for year 1 = 590,000 – 78,000

= 512,000 /=

Working capital for year 2= 2,835,000 – 46,000

= 2,789,000 /=

Working capital for year 3 = 3,430,000 – 70,000

= 3,360,000 /=

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 5.3 CASH FLOW PROJECTION

DESCRIPTION JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Cash inflow

Capital 330,000 - - - - - - - - - - - 330,000

Loan 450,000 - - - - - - - - - - - 450,000

Friends’ donation 120,000 - - - - - - - - - - - 120,000

Cash sales 100,000 125,000 120,000 115,000 150,000 140,000 170,000 125,000 195,000 200,000 140,000 120,000 1,700,000

Debtors 70,000 20,000 15,000 18,000 12,000 20,000 18,000 22,000 15,000 12,000 20,000 18,000 260,000

Total inflow 1,270,000 145,000 135,000 133,300 162,000 160,000 188,000 147,000 210,000 212,000 160,000 138,000 2860,000

Cash out

flow

Rent 1,200 1,200 1,200 12,00 1,200 1,200 1,200 12,00 1,200 1,200 1,200 12,00 14,400

Salaries 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1200,000

Water 300 300 300 300 300 300 300 300 300 300 300 300 3,600

Electricity 2,000 2,500 2,450 2,200 2,000 2,500 2,000 2,200 7,500 2,400 2,500 2,000 27200

Interest Loan 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12000

Creditors 4,000 4,000 5,000 3,00 1,000 1,200 1,800 2,000 2,000 1,500 1,000 1,200 27,700

Advertisement 15,000 10,000 8,000 - 2,000 - 6,000 - 10,000 8,000 5,000 8,000 72,000

Telephone 1,000 1,000 800 600 500 900 500 1,000 500 800 900 1,000 9,600

License 8,000 - - - - - - - - - - - 8000

Promotion 10,000 - - - - - - - - - - - 10, 000

Loan payment 10,000 10,000 8,000 6,000 10,000 5,000 15,000 10,000 12,000 8,000 9,000 10,000 113 ,000

Insurance 8,000 - - - - - - - - - - - 8,000

Furniture 20,000 - - - - - - - - - - - 20,000

Miscellaneous 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12 ,000

Total out flow 181,500 131,000 127,700 115,300 119,000 113,100 138,800 118,700 130,600 124,200 121,900 125,700 1,547,500

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Surplus 888,500 14,000 7,300 17,700 43,000 46,900 49,200 28,300 79,400 87,800 38,100 12,300 1,312,500

Accumulated 888,500 902,500 909,800 927,500 970,500 1,017,400 1,066,600 1,094,900 1,174,300 1,262,100 1,300,200 1,312,500

5.4 PROFORMA CASHFLOW

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Cash sales 1,700,000 2,400,000 3,000,000

Discount received 175,000 180,000 220,000

Debtors 260,000 270,000 300,000

Totals 2,135,000 2,850,000 3,520,000

Less cost of sales 198,000 250,000 300,000

Gross profit 1,937,000 2,600,000 3,220,000

Less expenses
Electricity 27,200 30,000 40,000

License 8,000 8,500 10,000

Telephone 9,600 9,000 9,500

Insurance 8,000 9,000 12,000

Creditors 27,700 30,000 40,000

Travel 6,500 8,000 10,000

Rent 14,400 15,000 20,000

Advertisement 72,000 65,000 80,000

Water 3,600 4,500 6,000

Salaries 1,200,000 1,200,000 1,200,000

Total expenses 1,377,000 1,379,000 1,427,500

Net profit before tax 560,000 1,221,000 1,792,500

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Less provision of tax 89,600 195,360 286,800

@ 30%

Net profit after tax 470,400 1,025,640 1,505,700

5.5 PROFORMA BALANCE SHEET

DESCRIPTION YEAR 1 YEAR 2 YEAR 3

Fixed assets
Production 40,000 50,000 70,000

facilities 15,000 10,000 12,000

Furniture - - 200,0000

Vehicle 30,000 60,000 100,000

Computer

Totals 85,000 120,000 382,000

Less depreciation
5% production 2,000 2,500 3,500

facilities 750 500 600

5 % furniture - - 20,000

fittings 3,000 6,000 10,000

10 % vehicle

10 % computers

Totals 5,750 9,000 34,100

Total fixed assets 79,250 111,000 357,900

Current assets

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Cash at hand 300,000 400,000 500,000

Cash at bank 170,000 255,000 390,000

Stock 80,000 100,000 120,000

Debtors 260,000 270,000 300,000

Totals 810,000 1,025,000 1,310,000

Totals assets 889,250 1,136,000 1,667,900

Current liabilities
Creditors 300,000 400,000 480,000

Bank overdraft 200,000 350,000 550,000

Total 500,000 750,000 1,030,000

Long term
liabilities 300,000 400,000 480,000

Bank loan 89,250 350,000 550,000

Owners’ equity

Totals 389,250 386,000 637,900

Total liabilities 889,250 1,136,000 1,667,900

5.6 BREAK EVEN ANALYSIS

DESCRIPTION KSHS

Sales 1,700,000

Variable cost
Purchases 230,000

Telephone 9,600

40
Advertisement 72,000

Repair and maintenance 24,800

Water 3,600

Total variable cost 340,000

Contribution = Total sales – variable costs

= 1,700,000 – 340,000

= 1,360,000

(I) Contribution margin = Contribution x 100

Sales

= 1,360,000 x 100

1,700,000

= 80 %

ii) Breakeven level of sales

Fixed costs Kshs

Salaries 1,200,000

Licenses 8,000

Insurance 8,000

Loan Payment 113,000

Rent 14,400

Interest On Loan 12,000

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Total fixed cost 1,355,400

Breakeven level of sales = Fixed cost x 100

Contribution margin

= 1,355,400 x 100

80

= 1,694,250

5.7 PROFITABILITY RATIO

(a) Gross profit margin = Gross profit x 100

Sales

Year 1 – 1,937,000 x 100

1,700,000

= 113.94 %

Year 2= 2,600,000 x 100

1,700,000

= 152.94 %

Year 3 = 3,220,000 x 100

1,700,000

= 189.41 %

(b) Return on equity = Net profit after tax x 100

Equity contribution

42
Year 1 = 470,400 x 100

89,250

= 527.06 %

Year 2= 1,025,640 x 100

150,000

= 683.76 %

Year 3 = 1,505,700 x 100

237,900

= 632.91 %

(c) Return on investment = Net profit after tax x 100

Year 1 = 470,400 x 100

889,250

889,250

= 52.9 %

Years = 1,025,640 x 100

1,136,000

= 90.29 %

Year 3 = 1,505,700 x 100

1,667,900

43
 = 90.28 %

5.8 DESIRED FINANCE

DESCRIPTION AMOUNT (KSHS)

Pre – operational cost 360,000

Working capital for year 1 512,000

Desired Financing 872,000

5.9 PROPOSED CAPITALIZATION

DESCRIPTION KSHS

Bank loan 450,000

Owners’ equity 89,250

Total investment 539,250

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