8 COVER PAGE

THE PROPOSED (BUSINESS NAME)

BUSINESS LOGO
BUSINESS CONTACTS

PRESENTED BY: NAME OF CANDIDATE

INDEX NO:

SUPERVISED BY: NAIROBI TECHNICAL TRAINING INSTITUTE

PRESENTED TO: THE KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILLMENT FOR
THE AWARD OF DIPLOMA IN …………………..

DATE OF PRESENTATION: e.g. NOVEMBER, 2016

 DECLARATION
Declaration by the Candidate
I declare that the business plan is my original work and has never been presented to any examining body
Name:

Index Number:

Signature:

Date:

Declaration by the Supervisor

I declare that the business plan is forwarded to the Kenya Examination Council with my approval as the
supervisor of the institute.
Name:

Signature:

Date:
 DEDICATION
Dedication should be to one or two people at most who have made an impact in your life.
 ACKNOWLEDGEMENT
In the acknowledgement page, you may acknowledge everyone who has contributed to your studies
including the institution that you have studied in. The acknowledgement should be in one paragraph only.
The order of acknowledgement should be;
1. The institution
2. Academic Supervisor(s) and Lecturers
3. Financiers if any such as HELB, CDF etc.
4. Parents/guardians and family
5. Friends and colleagues
6. Any other
 TABLE OF CONTENTS
Declaration……………………………………………………………………………………… i
Dedication ii
Acknowledgement------------------------------------------------------------------------------------------- iii
List of Figures ----------------------------------------------------------------------------------------------- iv
List of Tables ----------------------------------------------------------------------------------------------- v
Table of Contents ------------------------------------------------------------------------------------------- vi
Executive Summary ---------------------------------------------------------------------------------------- vii

CHAPTER ONE

1.0 Business Description

1.1 The Business Name
1.2 Type of Business
1.3 Products/Services
1.3 Business Location
1.4 Business Ownership
1.5 The Industry
1.6 Entry and Growth Strategy
1.7 The Business Goals

CHAPTER TWO
2.0 The Marketing Plan
2.1
2.2
2.3
2.4
2.5
CHAPTER THREE

3.0 The Management and Organizational Plan

3.1
3.2
3.4

CHAPTER FOUR
4.0 The Production Plan
4.1
4.2
4.3
4.4
4.5
4.6

CHAPTER FIVE
5.0 The Financial Plan
5.1 The Pre-operational Plan
5.2 The Projected Working Capital
5.3 The Pro-Forma Profit and Loss Account
5.4 The Pro-forma Balance Sheet
5.5 The Projected Cash flow Statement
5.6 The Break-Even Point
5.7 The Desired Capital
5.8 The Profitability Ratios
 THE EXECUTIVE SUMMARY
(The Executive Summary should not exceed one and a half pages)
1.0 The Business Description

2.0 The Marketing Plan

3.0 The Management and Organizational Plan

4.0 The Production Plan

5.0 The Financial Plan

 CHAPTER 1
1.0. BUSINESS DESCRIPTION

1.1. Business name

● It means the name of the business

● Need to describe how the name was selected

● One needs to come up with a logo of the business

● Logo identifies the business

1.2. Business location and address

● It means where the business will be located, the place and also the site

● Location is general

● Site is specific

● Include a map of the location

● Physical address of the business including email and website

1.3. Form of ownership

The form of business may include:
● Sole proprietorship

● Partnership

● Private/ public company

● Cooperatives

● Give reasons for choosing that kind of ownership

● Give advantages and disadvantages to show that you understand the business you are going to
start

1.4. Type of business

● It means whether the business is a start-up or ongoing

● Give some of the activities of the business

1.5. Products and services

● What product(s) are you going to offer?

● Describe clearly and include features of products and services for example indicate size, color,
shape, materials, quality and packaging of the product.
 ● What benefits will customers obtain from using your product/service e.g. consider the
performance, convenience, economy, comfort, durability, usage, flexibility, servicing and
warranties.

1.6. Justification of opportunity

The reason for choosing that kind of business for example exploiting resources, nutritional value of
opportunity, niche market, technology advancement, professional qualifications, unmet demand,
climate favorable, infrastructure and security

1.7. Industry
Which industry does your proposed business belong to? For example a matatu belongs to transport
industry, consider the total number of firms in that industry or competitors. What is the industry
trend? Is the industry growing, declining or stable? Explain what’s happening in that industry.
Industry characteristics that is capital requirements and kind of technology in that industry including
capital investment and labor requirements.

1.8. Goals of business /objectives

1.8.1. Goals
What does the business want to achieve in the long term? For example to become a quality leader, market
leader, penetrate in other markets.

1.8.2. Objectives
What does the business want to achieve in the short term? For example to maximize profits, increase
sales, minimize costs.

1.9. Entry and growth strategy

● It means how you will penetrate and gain acceptance in the market

● Need to consider the competitive advantages among competitors, pricing and distribution,
advertisement or promotional methods.

1.9.1. Entry plan

i. Competitive advantages of the business that is what your business has compared to
competitors
ii. Weakness of the competitors
iii. Pricing plan – how you will set the prices for your products
iv. Plans to attract consumers – methods you’re going to use

1.9.2. Growth plan

i. Trends which signal business growth/signs of business growth
ii. Opportunities coming from the trends/ prevailing opportunities
iii. Plans to take advantage of the advantage of the opportunities.

Carry out a SWOT analysis or use the 4 P’s of marketing as strategies for entry and growth.
 CHAPTER 2
2.0. MARKETING PLAN
2.1. Customer
● Understanding potential customers or current customers is important for any business because
there’s need to determine who your customers are; wholesalers, retailers, user/individual,
household and institutions like schools, hospitals, churches
● You need to determine location of your customers e.g how many are they’re and their location in
terms of income, age, size, education, occupation etc
● What will customers be looking for in your product or service? For example:
i. Product consideration/ characteristics: price, quality, appearance, colour, shape,
materials, size, weight, volume and efficiency.
ii. Business considerations
● Advertisements and promotion

● Variety of goods and services

● Credit facilities

● Capability of employees

● Method of selling etc

Examples of customers need to be analyzed

● Wholesalers
 ● Retailers

● Institutions

● Individuals/households

2.2. Market share/size

It is the amount of unit sales e.g what is your estimated expected sales in units per month or even
quarterly or even yearly. In estimating the market size, one needs to list down the business selling similar
products in the market for example assuming that we have the following firms:

Before you penetrate the market

A B C TOTAL
Sales 20,000 40,000 40,000 = 100,000
Market share 20% 40% 40% 100%

After penetration
A B C D TOTAL
Sales 20,000 40,000 40,000 20,000 = 120,000
Market share 16.7% 33% 33% 16.7% 100%

2.3. Competition
● Need to consider what they are doing

● Analyze factors that have contributed to their success or failure

● Determine if there are gaps to be filled

● Determine your potential competitors and their size in terms of assets, sales volume and
market share of the major competitors
● Determine the strengths and weaknesses of the competitors

● Plans to capitalize on the weaknesses of the competitors

Assuming that we have three firms A, B and C

Table 6: competition
 A B C
Assets 200,000 100,000 200,000
Sales volume 400,000 500,000 300,000 = 1,200,000

Market share 400,000 = 33.3% 500,000 = 42% 300,000 = 25%

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

Profit p.a 80,000 100,000 60,000

No. of employees 3 4 2

2.4. Methods of promotion and advertisement

i. Media to use which can be electronic and print media
ii. How will you portray your products? What image do you want to project in the mind of
consumers?
iii. How often will you advertise your products or services?
iv. How much will each advertisement cost?
v. How will you measure the effectiveness of your advertisement?
vi. What promotion campaign will you undertake when introducing the product and service e.g free
samples and free introductory services
vii. What promotional methods will you employ on regular basis e.g trade shows, sponsorships of
competitions and the cost of promotion per events
viii. How will you measure the effectiveness of your promotional campaigns?
2.5. Pricing strategy
i. The methods of calculating the selling price for your products or services
ii. Factors which will influence your price setting include:
● Income of clients targeted

● Prevailing market prices

● Cost of raw materials

● Nature of competition
iii. Actual selling prices of product and services
iv. Credit terms to be offered
● What kind of credit will you give loyal customers or the ones you know?

● When are you going to offer credit? Is it at the end of the month?

● When will your customers pay back?

v. Discounts offered
● Cash discounts when one pays promptly
 ● Trade discounts when one buys in large quantities
vi. Any after sale services
● Offered after purchase e.g transport, warranty, installation etc

2.6. Sale tactics

i. Selling tactics you will employ e.g direct selling to the customers or personal selling or selling
indirectly (through an agent)
ii. If you intend to sell indirectly to the consumers, how will you recruit, retain and remunerate your
sales force
iii. If you intend to sell to the distributors or agents, how will you select and motivate them? E.g for
middlemen, you can use the one already used by many competitors, select the ones who have a
high reputation. Motivate the middlemen by giving them a high profit margin.
iv. Which geographical areas will your agents cover?

2.7. Distribution strategy

i. How will you get your products to reach your customers? E.g through sales representatives,
wholesalers or distributors?
ii. What means of transport will you use e.g road, rail, air, etc?
iii. How much will the chosen means of transport cost you per month or for a given period of time?
iv. What specific distribution problems do you anticipate?
v. How will you solve the problems that you anticipate?

CHAPTER 3
3.0. ORGANIZATION AND MANAGEMENT PLAN
3.1. Management team
Need to include the members of the management team for your proposed business e.g Human resource
manager, managing director, production manager, marketing manager, finance manager etc
 3.1.1. Describe each of the managers stated above eg Managing Director (MD)
● Duties and responsibilities

● Qualifications of the MD. One must have a master’s degree and CPA (k) depending on
the nature of the business.
● Experience; 15 years’ work experience at a managerial level.
3.1.2. Purchasing manager
● Duties and responsibilities

● Qualifications

● Experience

3.2. Other personnel

These include other employees who are not in management team:
Table 7: other personnel

Title No. Qualifications Duties

Accountant 1 [Link], CPA (k) Budgeting, financial reports,
Payment of salaries

Sales Rep 2 K.C.S.E (C) distributing products

Dip in Sales and marketing sales promotion

Security officer 1 K.C.S.E Premises security

Experienced
Figure 4: organization chart

Managing
director

HRM

FINANCE MARKETING PROCUREMENT

MANAGER MANAGER MANAGER
3.3. Recruitment, training and promotion
3.3.1. Recruitment
Need to describe how managers and other personnel will be recruited: for management team one can use:

● Use poaching

● Advertise

● Recruiting agencies

Other personnel:

● Poaching

● Recruitment agencies

● Word of mouth

3.3.2. Training
● Induction training will be given to the newly employed staff and also those who are promoted

● On the job training

● Off the job training that include workshops and seminars for the staff. Explain the purpose of the
training.

3.3.3. Promotion
● Criteria of promoting personnel e.g promotion on basis of evaluation/merit, after training and
attaining qualification and experience

3.4 Remuneration and incentives

● Indicate firm policy on remuneration e.g. to offer attractive salaries to employees so as to
motivate and retain them.

Table 8: remuneration and incentives

Title No. Monthly pay Allowances/ benefits Total
MD 1 40,000 20,000 60,000
HR 1 30,000 15,000 45,000
Marketing manager 1 25,000 25,000 50,000
Security Officer 1 5,000 3,000 8,000
3.4.1. Incentives
● Bonus

● Commission

● Lunch

● Tea, overtime allowance

3.5. Licenses, permits and by-laws

3.5.1. Licenses
● Trading licenses are paid for in order to start trading

● Where are you going to get the license and how much will it cost you? City council licenses?

● State the purpose of trading license

3.5.2. Permits
Depending on the nature of the business e.g milk business will need a permit from Kenya Dairy Board,
for beer from Kenya Liquor Licensing Board, School from Ministry of Education or District Education
Board.
3.5.3. By-laws
The business will need to comply with the by-laws issued by the county council, municipal council or city
council.
Give reasons why your business needs to comply with the by-laws.
3.6. Support services
The business will require support services to enable it to carry out its operations effectively. These
services will include:
3.6.1. Banking services
● The bank to open an account and the branch

● Type of account

● Purpose of account

3.6.2. Insurance services

● Firm which will insure your business

● Indicate what you want to insure against

● How much is it likely to cost you?

3.6.3. Consulting services

 ● Depending on the nature of the business, for a school you need advice from teachers/ lecturers

● Indicate who will be your consultant and the kind of advice expected

3.6.4. Legal services

● Legal services will be required when writing contracts, drafting legal letters, interpreting labour
laws and employment
● Indicate the legal firm and the lawyer(s)

● Indicate the registered office

CHAPTER FOUR
4.0. PRODUCTION/ OPERATION PLAN

4.1. Production Facilities and Capacity

● Types of facilities required

● List all equipment, machinery and show the cost of each

● List any other facility required to set up the business and show the cost

● Explain your plans for repairs and maintenance of the machinery

● Show your factory/office layout

● Levels of production (maximum and minimum)

● Explain the expansion and future plans of the office/factory

Table 9: production, facilities and capacity

Item quantity cost capacity
Office 2 Rooms 40,000 5 office personnel
Store 2 rooms 20,000 1 ton of tools/removable
equipment
Pick-up 1 200,000 cc1800
Electricity 3 phase 30,000 1000kw
 Pangas 5 2,000 5 persons

4.1.1. Firm layout

● Draw a firm’s layout

4.2. Production Strategy

Means the methods used to produce the product

● Describe production development from idea to saleable product/ service

● Indicate the cost that you will incur when developing the new product

● What kind of method(s) will you use?

● What changes do you anticipate in technology and how will you cope with them?

● Describe your material requirements, who will be your main supplier?

● What alternative sources are available?

● Describe the skills required for efficient production both for direct and indirect workers

● Describe the monthly production cost for the products and services

● What will be the total production cost in a month?

● Purchasing and stock control methods to use

4.3. Production Process

● Show stages in producing the product or services
What external factors are likely to affect the production process
● How will you minimize the effects of external factors

● Indicate factors that affect production process in the organisation

4.4. Regulations Affecting production

4.4.1. Health regulations
● The requirements of the public health will be adhered to in handling all the company’s
products
● Regular advice that would be sought from the government departments
 4.4.2. Safety
Necessary measures that you would take or be followed to guard against physical injuries of the
workers e.g use of the mask, boots, jackets, helmets etc
4.4.3. Environmental regulations
Environmental concerns are one of the major emerging issues in the running of any business. Today
environmental legislation set by the government will be adhered. Regular audits should be done to
check the availability and their efficiency. Are there measures to conserve the environment? For
instance, what environmental concerns will be handled by planting trees?

CHAPTER FIVE
5.0. FINANCIAL PLAN
5.1. Pre-operational Costs
Items cost
Research/travelling XXXX
Designing XXXX
Licenses XXXX
Advertisement XXXX
Recruitment XXXX
Professional fee XXXX
Installation XXXX
Rent deposit XXXX
Utility bills XXXX
TOTAL AMOUNT XXXX

5.2. Working Capital

Working capital is the current assets – current liabilities
i.e WC = CA – CL
Current assets
Cash at hand XXXX
Cash at bank XXXX
Debtors XXXX
Stocks XXXX
Less current liabilities
Creditors XXXX
Bank overdraft XXXX
Accruals XXXX
XXXX
Working capital XXXX

5.3. Cash Flow Projection

5.3.1. Cash Flow Projections For The year 2019
Receipts Jan Feb March …………….. Dec
Loan 50,000 - -
Sales 30,000 70,000 80,000
Debtors 20,000 20,000 35,000
Discount Received 5,000 5,000 4,000
105,000 95,000 119,000
Payments
Purchases 30,000 40,000 45,000
Salaries/wages 10,000 10,000 15,000
Creditors 30,000 30,000 34,000
Discounts allowed 10,000 10,000 8,000
80,000 90,000 102,000

Cash flow 25,000 5,000 17,000

Balance b/d - 25,000 30,000
Balance c/d 25,000 30,000 47,000

5.4. Pro-forma Income Statement (trading, profit and loss account)

Item year 1 year 2 year 3
Sales XXXX XXXXX XXXX
Cost of sales XXXX XXXX XXXX
Gross profit XXXX XXXXX XXXX

Gross profit b/d XXXX XXXXX XXXX

Expenses
Salaries and wages XXXX XXXXX XXXX
Rent XXXX XXXXX XXXX
Water XXXX XXXXX XXXX
Telephone XXXX XXXXX XXXX
Postage XXXX XXXXX XXXX
Transport XXXX XXXXX XXXX
Total Expenses XXXX XXXXX XXXX
Net profit before
Tax XXXX XXXXX XXXX
Taxation (%) (XXXX) (XXXX) (XXXX)
Net profit after tax XXXX XXXXX XXXX

5.5 Pro-forma Balance Sheet

Balance sheet As At December 2018
Assets (fixed)
Building at cost XXXX
Land XXXX
Motor Vehicle XXXX
Less Depreciation (XXXX)
Furniture and fittings XXXX
Less Depreciation (XXXX)
XXXX
Current assets
Stock XXXX
Cash at bank XXXX
Cash at hand XXXX
Debtors XXXX
Pre-payments XXXX
XXXX
Less current liabilities
Creditors XXXX
Accruals XXXX
Bank overdraft XXXX
Total current liabilities XXXX
Working capital XXXX

5.6 Break Even Analysis

Formula of break-even point (B.E.P)
i. B.E.P in units = fixed costs
Contribution/units
ii. B.E.P in value (shs) = fixed costs * selling price/units
Contribution/units

iii. Contribution/ sales ratio = contribution/unit * 100

 Selling price

iv. Number of units for target profits = fixed costs + target profits
Contribution/unit

v. Sales for target profit = fixed costs + target profits (selling price)
Contribution/units
example
A company makes a single product with a price of shs 10 and a marginal cost of shs 6 and the fixed costs
of shs 60,000 p.a. calculate:
i. Number of units per break-even
ii. Contribution per sales ratio
iii. What number of units would need to be sold in order to achieve a profit of 20,000 p.a?
iv. Which level of sales will achieve a profit of 20,000 p.a?
Solution:
a) Number of points to break-even point (B.E.P)
B.E.P in units = fixed cost
Contribution/ units
Contribution = selling price – marginal/variable cost
= 10 – 6
=4

B.E.P in units = 60,000 = 15,000 units

4

b) Break-even point in (shs) value = fixed cost * selling price/units

Contribution/unit
=60,000 * 10 = 150,000 (value)
4
c) Contribution per sales ratio = 4*100 = 40%
10
d) Target profits = 60,000 + 20,000 = 80,000 =20,000
4 4

60000+20000
e) Sales for target profit = * (10) = 200,000
4

5.7 Desired Financing

Item amount
Pre-operational costs XXXX
Working capital XXXX
 Fixed assets XXXX
XXXX
5.8 Proposed Financing
Item amount
Owners’ contribution XXXX
Borrowed funds XXXX
Total investment XXXX

5.9 Profitability Ratios

i. Gross profit ratio = G.P * 100
Sales

ii. Net profit ratio = N.P * 100

Sales

iii. Return on equity = N.P * 100

Owners’ equity

Owners’ equity = (opening capital + net profit) less withdrawing

iv. Asset turnover = sales revenue (total sales)

Assets (CA+FA)

v. Quick ratio = current assets – stock (closing stock)

Current liabilities

vi. Liquidity ratios = current assets

Current liabilities