Embed Size (px)
Citation preview
BUSINESS PLAN
P.O BOX 3717 – 20100
NAKURU
PHONE: 0718964870
E-MAIL: [email protected]
NAME: VERONICA N MUGATHA
SUPERVISOR: MISS EVERLYNE
PRESENTED TO: THE KENYA NATIONAL EXAMINATIONAL COUNCIL
INPARTIAL FULFILLMENT FOR THE A WARD OF
CERTIFICATE IN BUSINESS MANAGEMENT
CENTER: REGION GROUPS INTERNATIONAL COLLEGE
SERIES NOVEMBER 2013
1
DECLARATION
I declare that this is my original work and has not been submitted in any college in an award for
certificate/diploma or otherwise. Neither can it be found in textbooks, magazines or any other
articles
NAME: VERONICA N MUGATHA
SIGN:
The business has been submitted to Kenya National Examination Council with the approval of
my supervisor
SUPERVISOR:
SIGN: ___________________
DATE: __________________
2
DEDICATION
I would like to dedicate this project to the Joram’s family for their financial support and
encouragement during this project. They gave me all I needed to complete my project.
3
ACKNOWLEDGMENT
I would like to thank my brothers, friends all the class of certificate in Business Management
November 2013 for the encouragement and the peace of mind they gave me all through.
I will also like to thank my supervisor Miss Everlyne for the teachings, encouragement and more
so the time she spent guiding me on this work hence enabling me to finish it successfully. God
bless you all.
4
TABLE OF CONTENTS
Contents
5
CHAPTER ONE
1.0 EXECUTIVE SUMMARY
1.1 BUSINESS DESCRIPTION
The proposed business will be a services industry and will be aside type of business that will deal
with dress making of the highest quantity.
The name of the proposed business will be; smart looks enterprise located at Lanet center in
Nakuru County. Its address will be:-
SMARTLOOKS TAILORY AND OUTFITTERS ENTEPRISE
P.O BOX 3717– 20100 `
NAKURU
PHONE: 0718964870
The business will be owned by Veronica Mugatha who will contribute to the capital intended to
run the proposed business successfully.
1.2 MARKETING PLAN
The proposed business will have customers from its surrounding including orders from the
surrounding schools and also the community at large
Smart looks tailor will have several competitors including vision tailor and Lanet tailor
The business intends to enter into the market through advertisement and placing of posters in all
around.
6
1.3 ORGANISATIONAL AND MANAGEMENT PLAN
The proposed business will be managed and organized by the owner Veronica Mugatha . It will
employ ten employees including, a manager, sales and marketing officer, designer, tailors, a
watchman and a driver. The salary will start at Ksh. 10, 000 per month then an increment as time
goes by.
1.4 PRODUCTION AND ORGANISATIONAL PLAN
The proposed business is to run on the owner premises and not on a rental premise hence not
increasing much costs on rent payment.
The business will be intended to pay only taxes and license fee.
1.5 FINANCIAL PLAN
The proposed business will begin with a capital of Sh. 600, 000 of which Sh. 100, 000 will be
contributed from friends, Sh. 150, 000 from family Sh. 300, 000 from owner contribution then
the remaining Sh. 250, 000 will be at bank loan from Kenya commercial Bank which will be
paid back in installment under a bank interest of 12% per annum.
7
CHAPTER TWO
2.0. INTRODUCTION
This chapter entails the business name and logo and the business location
2.1 BUSINESS NAME
The business name which was acquired through a market research and the demand in the
environment hence will operate under the following name:
SMART LOOKS TAILORY AND OUTITTERS ENTERPRISE
P.O BOX 3717-20100
NAKURU
PHONE: 0718964870
2.0 BUSINESS LOCATION AND ADDRESS
The business will be located at Nakuru County,Lanet trading centers along Ndundori –Gilgil
Road, opposite Lanetmatt supermarket. It will be on the owners form. The area is well populated
with a good number of potential outcomes. The area is well secured since it’s close to the police
station and there exists a good infrastructure, enough water and there is electricity which will be
much essential for the running of the business. The materials used will also be acquired easily as
they are available
8
A SKETCH MAP OF THE BUSINESS WHICH WILL BE LOCATED AT LANET
CENTER.
TO GILGIL
Smart look tailor
Lanet supermarket
Post office
TO NDUNDORI
2.3 OWNERS PROFILE
The owner of the proposed business will be VERONICA MUGATHA. She did her primary level
exams at All Saints and later moved to Naivasha Mixed for her secondary education and she is
currently a Certificate student in Business Management at the Region Group International
College. She is a twenty two years old girl and recently at Langalanga as her residential area.
2.4 FORM OF OWNERSHIP
The business will be a side type of business owned by Veronica Mugatha, certificate student in
Business Management in Regions Group International College. The skills and knowledge
acquired during the training will allow the proper running of the business. The business will be
advantageous as:-
9
Decision making will be easy
Will be easy to manage
There will be no leakage of the business secrets
All the profits will be enjoyed only by the owner
It will be easy to start because of its requirements
2.5 BUSINESS PRODUCT
The business will deal with dress making of all varieties that’s different materials and also varied
colour with appropriate size, shape and of high quality.
The products that will be produced will be economical and durable thus will enable the
customers to long for the products. Dress making will be of high quality.
2.8 INDUSTRY
The business will be a service industry. It will be a small firm of about ten employees. The
products and services provided will satisfy the market demand. The technology that is intended
to be used in the industry is expected to bring about growth and stability to the business which
will in turn improve the product innovation and this overcoming the weakness f the competitors
in the market.
2.7 JUSTIFICATION OF THE OPPORTUNITY
The prime objectives of starting the business will be:-
Market- market for the product produced already exists in various schools, factories, colleges
and some individual customers hence a good indication of already market
Demand – There is a high demand of cloths as it’s a basic uniform for their pupils as well as the
support staff hence the business will be able to meet their needs.
Security – The place is well secured as it’s next to a police station
10
Resources – Materials and machines are available in the market hence will smoothen the
running of the tailor kind of business.
Capital with the existing bank loans, starting the business will be relatively cheap.
Entry requirements – The requirement to enter is simple and does not need a lot of paper work
since there is a healthy environment.
2.8 ENTRY AND GROWTH STRATEGY
The intended business is expected to enter into the market through focusing on informing
customers as a whole on the establishment of the product and services through advertising, use of
poster and standing on a high point by employing experienced and qualified personnel. The
business intends to promote sales in the firm by offering cash discount to customers. However
for the market the business will provide the best goods and services that are attainable and
affordable in the area. The owner will also capitalize on the opportunities so as to acquire and
retain customers.
The business is expected to enter into the market through public posters, when enough capital is
made. This will enable the business expand a great deal hence the realization of marginal profit,
thus the accomplishment of the set targets.
11
CHAPTER THREE
3.0 MARKET PLAN
Market plan includes identifying the potential competitors and pricing tactics of the market. It
also involves sales tactics, promotion and creativity skills. This will help get and retain
customers and being able to fully satisfy them. The business will therefore target individual
persons and organization of all financial states as potential customers of the enterprise produce.
3.1 CUSTOMERS
Potential customers- The business will try its level best to meet the requirements of their
potential customers of all races and levels without discrimination who are:-
Institutional customers- They will offer a large market to the business, since it shall be supplying
to different schools which include various school and even hospitals. In each case each person
has to get a pair of uniform to wear in each intake. The pattern of purchase is at the beginning of
the year and may be mid year.
Wholesalers – They are customers who will be buying the products in bulky. These are the
regular customers. They include uniforms wholesalers, companies, retailers and even factories.
Individual customers – They are the individuals who buy products as a person that is they only
buy to be used by them and may be others in their families.
12
3.2 MARKET SHARE
The products and services that will be offered are believed to rise in the market potentially to a
greater improvement due to the affordable price, reliability and even the availability of products
at relatively cheaper prices. This will ensure that at least a market share of approximately 26%
will be realized.
In order to achieve this prime objectives the business will be well focused and follow the right
ways of offering the best quality products and services as an enterprise so as to bind them to
continue using the products in that enterprise
A healthy environment should also be ensured in the business as this is a very essential thing.
The company to the other existing ones so as to be able to come up with the strengths and its
weaknesses and afterwards improving where possible
3.3 COMPETITION
There are two main competitors in the industry which gives much threats to the business these
are: vision tailor and Lanet Tailor Enterprise.
Through there services are not up to date that is why we proposed as a solution to the market
demand in the surrounding environment
Below are the strengths and weaknesses realistic
Strength and weakness Smart look Vision Lanet tailor Management 1 3 2Employer 1 3 2Expenses 2 2 2Location 2 2 4Expenses 2 3 2Total 8 13 12
The table below indicates the strengths, weakness and the market share of the three enterprises.
Name of business Strengths Weakness Market shareSmart looks tailor Well trained
personnel, reasonable
prices, reliable and
Not well known to
customers
34%
13
flexible services and
availability of
materials Vision tailor Known by customers
high sales and
sufficient distribution
Unreliable, lack of
good customer
relations and lack of
advanced technology
38%
Lanet tailor Strategic location and
long working hours
Unreliable and lack of
enough materials
hence lot of delays
28%
In order to overcome the competition smart looks intends to take various measures including:-
Planning well and in advance for the operation of the business
Use sophisticated machines so as to increase the product quality hence attraction of more
customers provides quality services and products that’s by adhering to customers demand on
time.
3.4 ADVERTISING AND PROMOTION
They are the communication methods to be used to remind or persuades existing and potential
customers that the products or services exists as opposed to personal selling. Maximum
awareness will be made to the public by:-
Producing posters bearing the name of the business and all that entails the said business, its
location and the contacts.
Colluding with the existing business so as to market products hence widening the market share
3.5 PRICING STRATEGY
The pricing strategy of the business is to range from profits, achieving returns on investments,
maintaining or increasing the market share. Consequently these are major factors influencing
price strategic of the business products and services.
14
Competitors – They are other players in the field offering the same services hence to
strategizing price in away. Also the business as a buyer in to request price bids from interested
suppliers on a proposed purchase or contract.
The price of fuel – The fuel price directly determine the fare charges since the transport of
material and other products will be proportional to each other
Market – The business is to use the probabilities biding to fully exploit the market. Its expected
to give dominate the market with variable prices if only a mathematical techniques is used to
determine price in biding situation where competitors are assumed to behave in future as they
have in the past with high prices.
The quality of material: The higher the quality of the material, the higher the price of the
products. It mainly determines the kind of prices to be charged.
Government policies sometimes government may chip in to regulate prices within a certain
range.
However, the business is expected to calculate in advance the cost to be involved and incurred
for after sales services. The cost of which is to be determined on to expected services charges
and the necessary sub-components to be involved during the services then added before any
product is resold to customers. This is to be used so as to exploit and enhance the objectives
without inflation.
3.6 SALES TACTICS
It needs perseverance endurance and total devotion to the workshop, positioning and selling
stores in the business markets will involve creative selling as a way of a rousing demand and
influencing patronage pricing of products or commodities in any business must be kept into great
consideration for any business to prosper.
The business will employ certain strategies to make more profits:-
Recruit proper and trained sales and marketing officers to conduct the marketing
activities.
Train employees on how to handle the customers well.
15
Maintain a clean and conducive working environment.
Design better modes of reaching the potential customers and vice verse
Give discounts to clients and also lower prices to achieve the wanted maximum profit.
3.7 DISTRIBUTION STRATEGY
These are the means of transport used in roads. Since it’s a link between the buyer and the seller..
Gaining access to any reseller are convenient as the roads are tamarcked the business intends to
use intensive distribution and in an attempt to select only the better intermediaries in utilizing a
selective distribution policy.
The firm is to distribute the products to eliminate number of retailers in selected areas. However
the firm is to accept selective distribution because of the various reasons including the
following:-
The intermediaries who from a status stand a point to find its advantages to distribute the firm’s
products in the local business market.
Distributors who are to give preferential treatment to the firms have limited competition.
The business is to get an uphill to obtain teamwork of employees who are to practice for the
better running of the business. The business however expects to come together and appeal to the
government and to the local council to repair roads, and at the same time emphasis the need to
work together as a team and boost from firms for job security to its employees.
16
CHAPTER FOUR
4.0 ORGANIZATIONAL PLAN
In an organization company or institution there are channels of management form top to bottom
of the managerial arrangement. The general manager who is to be the owner of the business is to
be at the top level of the hierarchical structure. She should not guess, decide without knowing
why, appreciated that the administration has to prophesy however, little she may that she is
among the prophets.
She should not drift into forecast or plans based on them without recognizing that there have
been a deliberate of what the future holds. As a planner she is to plan in relations to various
characteristic including the following:- a plan that’s based on clearly defined objectives, simple
that provider for a proper analysis and classification of actions to establish standards.
As investigations she should see that statistic and other data are expressed in terms that
correspond with the realistic of the situation. She should bear in mind that there is nothing more
misleading than a figure which appears very dramatic and significant but which is in fact
irrelevant.
The manager is her capacity is to carry out regular training to improve the effectiveness of her
business to herself and her employees and personnel in a wide range of areas such as quality
control, customers relation costing and pricing production management she must identify those
areas that can be improved by training and also identify organizations or individual that can carry
out the training.
She should be a good time manager by use of time schedule to arrange the activities or tasks to
be performed.
17
4.1 ORGANIZATIONAL STUCTURE
The following is the order of staff as smart look tailor enterprises.
General Managers 1
Sales and marketing officer 1
Designer 2
Tailors 4
Watchman 1
Driver 1
GENERAL MANAGER
SALES & MARKETING OFFICER
DESIGNER
18
TAILOR 3
TAILOR 2
TAILOR 1
DRIVER
OTHER STAFF
WATCHMAN
4.2 KEY MANAGEMENT PERSONNEL
For the smooth running of the firms operation smart looks requires a well established framework
in which responsibilities will be defined and lines of authority laid down clearly so as to ensure
good working relationships proper reception of customer.
4.2.1 Manager
The manager will have completed her Diploma course in Business Administration at the
Mombasa Polytechnic.
4.2.2 Duties of the manager
To recruit new employees
19
To coordinate duties
Control all business activities
4.3 OTHER BUSINESS PERSONNEL
The other staff that will be employed in the business will involves:-
Designer
Sales and marketing officer
Tailors
Watchman
Driver
4.3.1 Designer
The business will seek to recruit a designer whose position falls under the management service
division. His purpose is to be contributed to the information and achievements of the objectives
and strategic as set out in the business strategic plan and be guided by the designers manuals.
4.3.1 Qualifications
Diploma holder in relevant course to his work
Have good communication skills
Have a working experience of at least 2 years
Should be computer literature as an added advantage
Aged between 21 – 25 years
20
Should show competence and efficiency
Responsibilities
Make decisions for the business pertaining various to be produced
Assist in the preparation of officer budgets applicable for staff servicing and maintaining
necessary budgetary control of the business.
Motivate the employees
Administrating performance management for employees
Receive and make request quotations to and from clients
Finance all the accounts records
4.3.4 Sales and marketing officer
He is to be responsible for the information or awareness to the public on the public given
and carry out the following task.
Keep records of the sale products
Market the organization policies
Buy new ideas which will be incorporated into the business
Advice the business on trends and preferences
Acts as a link between the business and consumer
Keeping up to date by reading and discussion
Submitting reports of his section to the manager
Qualification
21
Have a diploma or its equivalent in sales and marketing
Have 2 years working experience in a busy company
Preferably a lady of between 20 – 27 year of age
Be willing to work under harsh conditions
Be conversant with English and Kiswahili
4.3.5 Tailors
Qualification
Should be a diploma holder or equivalent in the same field
Should be 20 – 30 years of age
Should have at least 2 years working experience
Be willing to work under will conditions
Above all he/she should posses the following personnel attributes.
He/she should be of a good personality and conduct
Fairness, treating all workers as equal as possible
Flexibility, that is he/she should took at other peoples suggestions
Keep up to date records.
Duties and responsibilities
Maintain the standards of the business
Ensure that he/she do the work given per day
Advice on the new ideas in making up decisions
Be responsible for any other work assigned by manager
4.3.6 Watchman
22
Qualification
Must be an O-level certificate holder
Working experience of 2 years
Be aged 28 years and above
Must have certificate of good conduct
Must be flexible to change
Duties and responsibilities
Safeguard business asset
4.3.7 Driver
Must have a valid driving license
Qualification
Delivery of goods from the purchasing center to the premises
4.4 RECRUITMENT ON PROMOTION OF PERSONNEL
4.4.1 Recruitment
Adverts will be put access and will be fair and open to all who have a need on its. It will be
based on competence, merits and experiences. Afterwards the short listed candidates will be
selected. Orientation programs will then be carried out. It must be systematically followed with
the laid down procedures.
4.4.2 Promotion
There will be promotions in order to achieve the goals and the targets of the business. It will be
hard work, qualification, discipline, competence, effectiveness work performance.
4.5 REMUNERATION AND INCENTIVES FOR PERSONNEL
4.5.1 Remuneration
23
The management of the business is to ensure adequate and proper remuneration of workers. The
business is to ensure that salaries are paid well to reduce grievances and dissatisfaction among
the employees thus the following is a summary table showing how employee will be rewarded.
Position Number Salary Total amount (Ksh.)Manager 1 12, 500 12, 500Designer 2 10, 800 21, 600Sales and marketing officer 1 9, 000 9, 000Tailors 4 7, 800 31, 200Driver 1 6, 000 6, 000Watchman 1 5, 200 5, 200
4.5.2 Incentives
The business is to offer the incentives to the employees for their hardworking so as to motivate
then and invest more in the business in form of ability and capability.
The incentives includes:-
Financial incentives
Non – financial incentives
Financial incentives
Besides salaries the workers will be given some other incentives as:-
Awarding commission
Awarding of bonuses
Introduce employees SACCOS where shelves will be directed by the employees
Organization thanksgiving parties
Non financial incentives
Include:-
24
Job securities
Organizing of trips to different companies
Providing better and healthy working conditions
Job satisfaction
Training and improving workers in the organization
4.6 LICENSES, PERMITS AND BY – LAWS
According to the Kenya constitution cap 216 of the societies Act, all business must be registered
and awarded a certificate before its operation. It will be done under the office of the attorney
general.
Licenses
For a business to operate without any problem, a license is to be obtained from the ministry of
local government. The business is to be registered and given a certificate of incorporation from
the higher authority especially the attorney general. The business is to have the following
documents as licenses.
Item Sources Amount Ksh.Business license County council 400Local authority County council 200Registration District office 600Services charge County office 500
Permits
A permit is to be obtained from the district officer. This is valid for a period of 12 months thus
renewable at every year.
By – laws
25
On acquiring the license, the by-laws is to have already those which should be adhered to
Employment (Act cap 226) this provides the regulation regarding to employee wages to working
conditions. The business is to observe al the regulation on wages and then working conditions
and should much standard.
Public Health Act (Cap 242), the act within and around the environment of the business. Litters
from the business should be disposed in the proper place.
Income tax Act (Cap 497) taxation of income earned by individuals.
4.7 OTHER SUPPORT SERVICES
For the business to flourish, it’s to be supported by the professional staff.
4.7.1 Legal services
The business is to hire Kendui and company advocates to deal with the legal matters involving
the business and cases like theft of the business property. Its address is as follows
KENDUI AND COMPANY ADVOCATES
HILL HOUSE
P.O BOX 1992
NAIVASHA
TEL: 0738 555482
4.7.2 Banking services
The commercial bank of Kenya is to provide the business with the following accounts.
Current account, savings account and fixed deposits account. The bank is also to offer both long
term and short term loans and the overdraft.
4.7.3 Security services
The business is to employ the Kenya security company to offer security to the business property
and be sending big parcels.
26
CHAPTER FIVE
5.0 PRODUCTION PLAN
For the success of smart looks the owner of the business intends to lay down a very effective and
efficient system of production and operational plan to satisfy and sustain the business. The means
and ways of undertaking a good operational plan is utilize the available resources. Smart looks
will identify the potential customers and enlighten them of the new technologies to be applied
business. Otherwise all the employees must operate with unity in order to achieve a good
operational plan hence success in the business.
27
5.1 PRODUCTION FACILITIES
The success and failure of the business at any given time depends on its cost of operation. This
entirely relies fully upon how well the workshop is equipped in terms of tools and equipment. If
the tools are not operational then its implies that whatever services and products given to the
esteemed customer is very low and poor in quality since the spares are to be ready available from
the local supplier the business will not be expected to meet many expenses hence its to give its
tender to iron tailor company to supply to the business.
Its then to make sure that the preventive maintenance is carried out periodically to all the
machinery and equipments according to manufactures recommendations. As per the business
regulations and stipulation their operation will service the machines. However the workshop is to
be installed with several equipments including:
5.1.1 Tables
Three tables are required which are to be used by designer manger and tailors. The table will
facilitate the work done by the manager in administering the business objective and the target
which with its strategies. The designer will be using it in taking records and dealing with the
business customers. In each case each of the totals of Ksh. 1, 600. The third table will cost Ksh.
1, 000 which is to be used by the tailors as they measure and cut the materials. Also its to be
placed in a spacious room to ease the work and movements in the room. The total amount will be
Ksh. 2, 600
5.1.2 Sewing machines
The business will be a total of 5 sewing machines to be used in the smooth and efficient running
of the business each normal machine to cost Ksh. 2, 800. (Three are to be purchased at Ksh. 8,
400 and two are to be the electric ones costing Ksh. 7, 000 which will facilitate high production
of the business hence meeting the current demand. Every machine will be used for the right
purpose at the right time.
5.1.3 Chair
28
There will be seven chairs to be used in the business, each to its relative position ranging from
the manager, designer, tailors, sales and marketing officer and the other staff. Three chairs
costing Ksh. 500 each and the other remaining four are costing Ksh. 300 each, summing to a
total of Ksh. 3, 000.
5.2 PRODUCTION STRATEGY
The business will be purchasing materials for use mainly to the addition of the remaining on a
monthly basis since it will be depending on the customer. The sales of the ready cloths will be
done in cash at hand transactions so as to reduce credit sales hence an efficient running of the
business. Materials will be available throughout the year at the market which will help in the
proper flow and running of the plan.
This will facilitate the profit making of the business. Moreover the business will have its own
store of materials that will enable customers to choose their favorite colours and type. The setting
of the product will be on time so as to maintain the faith of the prospective clients and in
overcoming the competitor’s weakness. The manager should be ensured best quality products of
high standards on made so as to win the customer relationship with the business.
5.2.1 Product design and development
The business intends to use the manufacturers design in lending to customers. In which case the
business is not to incur much expense to develop its products, for the business to offer its
services efficiently it’s to use both indigenous and the alternative technology so as to attain the
very best.
In consideration to simply utilization, cost effectiveness, flexibility and operating machine
maintenance, the business is to cope up with changes in technology by regularly updating its
workers.
5.3 PRODUCTION PROCESS
For good quality dress making the following processes is to be implemented. Purchase of
materials, taking of measurements, cutting of the materials to the desirable measurements,
ironing and storing.
29
PURCHASE OFMATERIALS
TAKING OF MEASUREMENTS
CUTTING OF THE DESIRABLE MEASUREMENTS
JOINING EDGES
TAKING MEASUREMENTS AGAIN
SEWING BY MACHINES
IRONING
STORE
SALE
30
5.3.1 Operation
Materials shall be collected from the relevant seller as a chosen quality material that customers
demand at the market. Taking of measurements, of the client to its approximate value which in
return enables the utilization of the material during the cutting process, joining of the edges will
be the next process done in order to enhance the acquisition of the right size, shape and unity of
the dress to be made. Sewing by the machine is made easier and flexible thus working faster.
Taking of measurements again enables accuracy and reduces errors that are encountered during
the process hence bringing up a clear bright shape of the dress made. Ironing is then to the dress
to give its good look and admirable thus bringing greater marketing of the business products.
The designer facilities the process since he/she will be giving the required guidance to the tailors
of the new fashions in the market. The designs will depend on the fashion at the market and on
customer’s desire.
5.4 REGULATIONS AFFECTING OPERATIONS
5.4.1 Health Regulations
To comply with the sanitation there will be toilets and bathrooms in the premise connected to the
sewage system and also a fan to ensure a fresh working environment. Workers are expected to
have a certificate of good health from a recognized health officer. Moreover clean water and
good ventilation will be provided. Tools should be kept in their right place to avoid unnecessary
accidents. These health regulations are to be strictly adhered to.
5.4.2 Business Trademark
After the business has been registered under the business laws of Kenya, the trademark shall be
used to stamp the products or the receipt to avoid the possibility of goods faulty brought and sold
under its name. The trademark is to have the business full name that is SMART LOOKS,
TAILORY OUTFITTERS ENTERPRISE.
5.4.3 Safety regulations
31
To avoid workers sliding, the floor is expected to be kept dry by ensuring that no droppings of
any liquids or pins are there. Absence of pins will be ensured by the provision of dustbins which
have to be emptied each day before closing the business. They will also be an emergency does to
be used incase of dangers as fire break outs in the business.
32
CHAPTER SIX
6.0 FINANCIAL PLAN
6.1 PRE-OCCUPATIONAL COSTS
Particulars Amount Starting inventory, decorations and renovation
Tools and equipment
Marketing research
License fee
Electricity and water deposits
Business registration
Insurance
Telephone bill
520, 000
130, 000
4, 000
3, 000
20, 000
2, 500
3, 000
4, 000TOTAL 686, 500
33
6.2 WORKING CAPITAL
Working capital is simply the difference between the current Assets and the total current
liabilities
6.3WORKING CAPITAL FOR SMART LOOKS AS AT JANUARY 2013
PARTICULAR YEAR 2013 YEAR 2014 YEAR 2015CURRENT ASSETS KSH. KSH. KSH.Opening stock 100, 000 180, 000 185, 000Debtors 80, 000 130, 000 90, 000Cash and bank 300, 000 280, 000 320, 000Cash at hand 40, 000 110, 000 120, 000
340, 000 390,000 440, 000Total current assets
Less: Current Liabilities
CREDITORS
WORKING CAPITAL
340, 000
520, 000
(120, 000)
400,000
390, 000
700, 000
(220, 000)
480, 000
440, 000
715, 000
(315, 000)
400, 000
34
6.3. PROJECTED CASHFLOW STATEMENT FOR SMART TAILORY ENTERPRISE FOR THE
YEAR ENDED 31ST DECEMBER 2013
PARTIC
ULARS
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
CASH
INFLO
W
KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH
BEGIN
NING
CASH
B.
- 303,500 317,470 326,820 342,480 345,480 346,540 340,160 361,080 374,600 381,910 385,200 3,825,320
OWNE
R
EQUIT
Y
300,000 - - - - - - - - - - - 300,000
CASH
SALES
210,000 200,000 200,000 192,300 195,000 201,000 198,000 212,300 203,000 195,000 192,000 200,000 2,388,600
RECEN
T
FROM
DEBT
ORS
- 15,200 15,200 14,200 16,500 13,500 11,000 15,000 7,000 8,500 10,000 12,550 140,610
TOTAL
CASH
INFLO
W
510,000 518,700 524,570 533,570 583,580 559,980 55,540 567,460 571,080 578,180 583,910 597,750 6,654,070
CASH
OUT
35
FLOWCASH
PURC
HASE
60,000 65,000 59,200 60,000 76,000 80,000 75,000 82,330 61,750 68,000 71,100 72,500 830,880
SALLA
RIES/W
AGES
100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1,200,000
LICEN
SES
4,000 - - - - - - - - - - - 4,000
WATE
R
BILLS
2,500 3,000 4,500 5,200 2,100 3,000 2,020 3,500 2,500 2,500 2,500 2,800 37,120
ELECT
RICITY
3,600 4,000 5,300 5,500 3,200 3,200 3,240 3,500 3,400 3,320 3,450 3,450 4,160
MAINT
AINAN
CE
20,000 24,000 23,000 18,850 23,000 23,400 21,500 26,850 25,200 19,000 18,200 19,200 262,200
TRANS
PORT
4,200 5,000 5,500 6,100 3,500 3,500 3,300 3,000 3,200 3,000 3,000 3,000 46,300
INSUR
ANCE
12,000 - - - - - - - - - - - 12,000
POSTA
L
CHAR
GE
200 230 250 500 300 340 320 350 350 450 460 520 4,270
TOTAL
CASH
OUTFL
OW
206,500 201,230 197,750 191,300 108,100 215,440 215,380 206,360 196,400 196,270 198,710 201,470 2,432,930
NET
CASH
INFLO
W
303,500 317,470 326,820 342,480 345,480 346,540 361,160 361,080 374,680 381,910 385,200 396,280 4,221,140
36
6.4PRO-FOMA INCOME STATEMENT
FOR SMART LOOKS TAILORY ENTERPRISE
AS AT 31ST DEC. 2013
ITEM 31ST DEC. 2013 31ST DEC. 2013Sales
Less: Cost of sales
Opening stock
Add: Purchase
Cost of goods available for sale
Gross profit
Less:
EXPENSES
Wages and salaries
Telephone
Advertisement
Electricity
License
Transport
Insurance
Total expenses
100, 000
830, 880
100, 000
4, 000
4, 800
10, 000
3, 000
4, 200
3, 000
5, 302, 000
930, 880
4, 371, 120
129, 000
37
Net profit before tax
Provision for tax 15%
Net profit after tax
4, 242, 120
63, 318
36, 005, 803
6.5PRO-FORMA BALANCE SHEET
FOR SMART LOOKS TAILORY ENTERPISE
AS AT 31ST DEC. 2013
ITEM 2013 2013FIXED ASSETS
Machinery and equipment
Less depreciation (10%)
CURRENT ASSETS
Stock
Debtors
Cash in bank
50, 000
5, 000
200, 000
140, 000
45, 000
38
Cash hand
Total assets
CURRENT LIABILIES
Creditors
Working capital
FINANCED BY
Owners Equity
Bank loan
Less loan repayment
TOTAL LIABILITIES
350, 000
735, 000
265, 200
520, 000
300, 000
50, 000
15, 000
780, 000
370, 200
6.5BREAK EVEN ANALYSIS
FOR SMART LOOKS TAILORY
This is the point where the business is making no profit no loss.
Item Fixed asset Variable
39
Salaries and wages
Advertisement
Rent
License
Telephone
Transport
1, 200, 000
60, 000
4, 000
5, 000
4, 270
Total 1, 264, 000 9, 270
Calculation Margin
Sales – Variables
(1, 264, 000 – 9, 270)
= 1, 254, 730
Contribution margin percentage
Contribution margin x 100
Sales
= 1, 254, 730 x 100
1, 264, 000
40
= 99.3%
Total fixed costs – Total operating expenses for the year
Break even level of sales = ________Fixed cost__________
Contribution margin percentage
= 1, 254, 000
99.3
= 12, 729.10
6.6DESIRED FINANCING
This is the capital required to start the business
Item Amount Working capital
Fixed assets
Preoperational costs
700, 000
50, 000
280, 050Total 1, 034, 500
41
6.7PROPOSED CAPITALIZATION
FOR SMART LOOKS TAILORY
Item Amount Total investment
Owners equity
Bank loan
Borrowing from friends
Total
100, 000
300, 000
50, 000
100, 000
550, 000
6.8EXPECTED PROFITABILITY RATIO
FOR SMART LOOKS ENTERPRISE
Show the rate of return the business will yield after finance being employed to it
Gross profit percentage
Gross profit x 100
Sales
4, 371, 120 x 100
1, 264, 000
= 345.8%
42
Return on equity
Net profit after tax x 100
Owner’s equity
360, 005, 802 x 100
300, 000
= 1200.19%
Return on investment
Net profit after tax x 100
Total investment
360, 005, 802 x 100
100, 000
= 36005.5%
43
