OTERI DRAPERS

ADDRESS: P. O BOX 150-30200 Kitale

TELEPHONE NUMBER: 0113098127

EMAIL : [email protected]

PRESENTED BY : PAUL OTERI

DEPARTMENT: BUILDING AND CIVIL ENGINEERING

ADMISSION NUMBER: BC-CPL/31198/22

SUPERVISOR : MR. PAUL MBACHI

PRESENTED TO : KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFULLMENT OF THE
REQUIREMENT FOR THE AWARD OF CERTIFICATE IN
PLUMBING

INDEX NO : 5031110026

DATE OF PRESENTATION: 22/11/2024

i|Page
DECLARATION
I hereby declare that this business plan is my original work. I also affirm that it has not been presented
to this institution or any other college for academic purposes, or for any other purpose.

STUDENT

NAME: PAUL OTERI

ADMIN NO: BC-CPL/31198/22

SIGNATURE: ...............................................

Date: 22/11/2024

SUPERVISOR

NAME: MR. PAUL MBACHI

SIGNATURE: ..................................................

DATE: 22/11/2024

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DEDICATION
I dedicate this business plan to almighty God for his continued blessings and my mother Mrs. Sarah
Emojong, who has continued to support me throughout the study. I also dedicate this business to my
brother, Edwin Omoding who has been supporting me throughout my studies. You gave me a reason
to study hard.

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ACKNOWLEDGEMENT
I am very grateful to the almighty God for giving me good health, guidance, and the strength to do my
business plan work. My sincere thanks also go to my parent, my brother for their moral, social and
financial support during writing of the business plan. I also appreciate my friends for their corrections
and support. Thanks to my business plan supervisor, Paul Mbachi for guidance and support during the
business plan. May God Bless you all.

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TABLE OF CONTENTS
DECLARATION.............................................................................................................................ii
DEDICATION...............................................................................................................................iii
ACKNOWLEDGEMENT..............................................................................................................iv
EXECUTIVE SUMMARY..........................................................................................................viii
CHAPTER ONE..............................................................................................................................1
1.0 BUSINESS DESCRIPTION..................................................................................................1
1.1 BACKGROUND...................................................................................................................1
1.2 INVOLVEMENT OF THE BUSINESS................................................................................1
1.3 NATURE OF THE BUSINESS.............................................................................................1
1.4 NAME OF THE BUSINESS.................................................................................................1
1.5 BUSINESS LOCATION AND ADDRESS..........................................................................2
1.1.1. Products and services to be offered:...............................................................................2
1.1.2.Business rules and regulations........................................................................................3
1.6 INDUSTRY...........................................................................................................................3
1.7 ENTRY AND GROWTH STRATEGY................................................................................3
1.8 JUSTIFICATION OF THE BUSINESS................................................................................4
1.9 GOALS OF THE BUSINESS................................................................................................4
CHAPTER TWO.............................................................................................................................5
2.0 MARKETING PLAN............................................................................................................5
2.1. INTRODUCTION................................................................................................................5
2.3. CUSTOMERS.......................................................................................................................5
2.3.1. Industry Customers.........................................................................................................5
2.3.2. Commercial Customers..................................................................................................5
2.4. COMPETITORS...................................................................................................................6
2.5. MARKETING SHARE.........................................................................................................7
2.7. DISTRIBUTION STRATEGY.............................................................................................8
CHAPTER THREE.........................................................................................................................9
3.0 ORGANIZATION AND MANAGEMENT PLAN..............................................................9
3.1. INTRODUCTION................................................................................................................9

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 3.2. BUSINESS MANAGER AND QUALIFICATIONS.........................................................10
3.3. PERSONNEL, NUMBER AND DUTIES..........................................................................10
3.4. RECRUITMENT, TRAINING AND PROMOTIONAL PROGRAM..............................11
a) Training..............................................................................................................................11
b) Recruitment........................................................................................................................12
c) Promotion...........................................................................................................................12
3.5. LICENSES, PERMITS AND BI-LAWS............................................................................12
3.6. SUPPORTIVE PROFESSIONAL AND SERVICES.........................................................13
CHAPTER FOUR.........................................................................................................................15
4.0 PRODUCTION AND OPERATIONAL PLAN..................................................................15
4.1. PRODUCTION FACILITIES AND CAPACITIES...........................................................15
EQUIPMENT AND STATIONERIES......................................................................................15
Stock.......................................................................................................................................16
Others.....................................................................................................................................16
Total Costs..............................................................................................................................16
Facilities.................................................................................................................................17
Business Premises Details......................................................................................................18
Room Division.......................................................................................................................19
Layout Diagram......................................................................................................................19
4.2. PRODUCTION STRATEGY OTERI DRAPERSPLUMBING STORES........................20
Business Premises Layout......................................................................................................21
Layout Diagram......................................................................................................................21
4.3. REGULATIONS AFFECTING THE BUSINESS OPERATIONS...................................22
4.4 ESTIMATED DAILY SALES.......................................................................................23
Summary of Sales...................................................................................................................23
CHAPTER FIVE...........................................................................................................................25
5.0 FINANCIAL PLAN.............................................................................................................25
5.1. ASSUMPTIONS.................................................................................................................25
PRE-OPERATIONAL COSTS..................................................................................................25
5.2 CASH FLOWS....................................................................................................................26
Year 1.....................................................................................................................................26
Year 2.....................................................................................................................................27

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 Year 3.....................................................................................................................................28
5.3. OTERI DRAPERS'S BALANCE SHEET..........................................................................29
5.4 LIABILITIES AND OWNERS' EQUITY...........................................................................30
5.5 BREAK-EVEN LEVELS....................................................................................................30
5.6 PROFITABILITY RATIO...................................................................................................31
5.7 PROPOSED CAPITALIZATION.......................................................................................31
Desired Financing...................................................................................................................32
Return on Equity....................................................................................................................32
Return on Investment.............................................................................................................32
REFERENCES..............................................................................................................................33
APPENDICES...............................................................................................................................34

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EXECUTIVE SUMMARY
1.0 Business description

This business will operate under the name OTERI DRAPERS and will be situated in Kipsaina,
Kitale along the Kitale-Eldoret Highway. It will operate as a sole proprietor by P as the Proprietor.

The Proposed Business' address will be P.O Box 230-30200 Kitale and will use owner's phone
number 0113098127 for communication. It will commence on 1st July 2024. The main activity of the
business will be selling of various tools and equipment’s of plumbing and will also be rendering
services like repair and fixtures.

2.0 Marketing Plan

The business potential customers will include the dwellers of Kitale town and its vicinities, various
hardware’s and wholesale plumbing shop owners. The business is also going to face two competitors
namely; Tranzoya Hardware and Suam glass &hardware.

3.0 Organizational and Management Plan

The business will be managed by various personnel, in their various sections. The owner will be the
overall boss assisted by the deputy manager who will also check on the shortcomings of the enterprise
and give solutions in absence of the general manager. All the accounts will be under the cashier who
will control credits, keep books of accounts and receive payments and information on behalf of the
business. 4.0 Operational plan

This business will need balances, bicycles, pick-ups, masks aprons, shelves etc. It will also require
stock from CHASE Importers limited which also provides the transport services. The store will be
rented at a cost of Ksh. 20 ,000 PER MONTH. There will be regulations affecting the running of the
business.

5.0 Financial Plan

The business requires a capital of Eight Hundred Thousand Shillings Ksh.900,000. The entrepreneur
will raise Seven Hundred Thousand Shillings ksh.800, 000, in form of owners' equity. The remaining
Hundred Thousand Shillings Ksh.100, 000 will be borrowed from cooperative bank of Kenya.

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CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BACKGROUND

The business will be operated and managed by Paul Oteri, who is currently taking Certificate course
in Plumbing at KITALE NATIONAL POLYTECHNIC. The business will commence its
operations in the year 2024 August 1st. This will be possible because the owner will have
accumulated enough capital, will have acquired enough entrepreneur skills and also will have
discovered there is unemployment in Kenya, hence creating employment.

1.2 INVOLVEMENT OF THE BUSINESS

The business will be involved in selling different variety of equipment's and prices according to
quality and quantity of the equipment. This includes buying and selling construction materials, small
tools and equipment and plumbing fixtures and fittings. This will be done purposely to satisfy
customers and win them from the exciting competitors hence maximizing profits and allowing
expansion of the business in future.

1.3 NATURE OF THE BUSINESS

The business will run under Sole Proprietorship at the start up stage because of the following:
 It is easy to raise capital from personal savings
 Decision making is easy
 Easy to control and manage the business
 The secrets of business are kept
 The owner enjoys all the benefits alone
 The owner becomes the boss of the business, and an employee
 The owner has direct contact with customers and gets their views about the business

1.4 NAME OF THE BUSINESS

 The business will operate under the name OTERI DRAPERS. At the start up stage it shall be only
one branch but more branches will be opened two years after opening of the business.
 Availability of capital from the existing business
 Increased demand for plumbing tools in the area
 High rate of growth of Industrialization and building and construction which rely on plumbing
tools and equipment's.

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1.5 BUSINESS LOCATION AND ADDRESS

a) Location OTERI DRAPERS shall be located Kipsaina, Kitale along the Kitale-Eldoret
Highway from Kitale town.

b) Address The business will operate under the following address OTERI DRAPERS

P.O.BOX 150-30200 KITALE

Tel. 0113098127

COMMENCEMENT OF BUSINESS OPERATIONS

The business will commence its operations in the year 2024 AUGUST 1st due to the following
reasons

I. The owner will have accumulated enough capital through personal savings.
II. The owner will have had enough time to do market research and acquired essential legal
documents like licenses.
III. The owner would have proved that there is unemployment in Kenya.
IV. The owner would have completed her course and would not like to stay idle with her
entrepreneur skills.
V. The operator will have discovered the need of the plumbing tools and equipment's in the
market and what they are needed by customers and yet not available in the market.

1.1.1. Products and services to be offered:

OTERI DRAPERS will offer all types of plumbing tools like plumbers’ tape, pipe thawer, auger,
drain snake, faucet keys, hose cutter, plunger, channel locks, washers, pipe bender, bore scope, metal
file, cordless drill, hacksaw, small pipes (internal diameter 50-100mm), extra - large pipes (diameter
more than 100 mm) and hammers. This will be of the best quality which will be very expensive and
others of low quality that will be cheap for the lower-class customers. There will this provision of
different qualities and quantities. The business will provide transport to the customer's premises when
they make orders for the product or they buy in bulk. 9

Maintenance and repairs of plumbing fixtures and fittings include; bath tabs, channel drain, drinking
fountain, kitchen sink, wash hand basins, water closets and rain water goo's- gutters and rain water
down pipes. The business will have a technical plumber expert who will be offering the service of
fixing and repairs. In addition, the entire business staff will ensure that their customers get the best
products and services at the most affordable prices; and that they will be offering individual attention
to customers.

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1.1.2.Business rules and regulations

OTERI DRAPERS shall have the following rules for the effective customer relations

I. The owner of the business, as a customer would expect and demand good services, provided
the same for the customers.
II. Never overlook or underestimate the importance of effective customer relations
III. Always be positive and enthusiastic
IV. Treat each customer with royalty
V. Communication must be open, honest and prompt
VI. Ensure customer satisfaction through fulfilling his needs and solving his problems
VII. The customer is always right.

1.6 INDUSTRY

OTERI DRAPERS falls in the plumbing stores industry which has grown steadily over the past five
years to 2016.Has the housing market that has strengthened and the consumer confidence has
reviewed. The industrialization, planning, construction and growth rate in Kenya as a whole are
favorable for selling, production of plumbing tools and supplying the plumbing materials in general.
With 10 rapid growths of hotels, schools, hospitals, companies, business buildings and apartments
seem to increase with time. Future of the industry with increased rural to urban migration the
population in Kitale seems to increase rapidly. Due to unemployment those unemployed will get
employment by providing labour by loading and offloading stock and those skilled by driving the
available transportation means like bicycles and pick-ups hence growth of plumbing stores. The
industry seems to grow also because of the prevailing climatic conditions which favor growth of the
industrialization, building and planning sector due to the rural to urban migration and the growth of
population and business in urban centers and towns

1.7 ENTRY AND GROWTH STRATEGY

The business will enter the market through the following strategies;
I. Collecting all legal documents like licenses
II. Pay the initial rent and furnishing the rooms as well as writing the name of the business and
what it offers on the doors.
III. Creating awareness; this will be made possible by putting posters in some strategic areas
indicating the location and variety of products offered.
IV. Pricing; the business shall offer low prices than its competitors to attract more customers
V. Attraction market; this will be achieved through promotional techniques e.g. free samples and
services. Growth will be developed on demand on plumbing tools and equipment's. A

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 customer being the base line of every successful business, he will determine the growth of the
business. Growth will also depend on entrepreneur' public relations and the following
professional ethics:
i. Cleanliness (personal hygiene and the working area)
ii. Punctuality. Opening at the right time without delay
iii. Interest and efforts Ability to keep on trying something upon a point of success.
iv. Self-organization of the working place
v. Co-operation and team-work spirit. Have interest with others, assist and don't be selfish.
vi. Self-control. Control your temper, use diplomatic way of approach and know how to
solve the problem
vii. Responsibility. Take duties seriously. All this will contribute to growth and
diversification of the business to even other forms of business

1.8 JUSTIFICATION OF THE BUSINESS

The researches carried on the area justify the suitability of the area for the intended type of the
business. This is due to the following reasons;
i. Market: There is customer and industrial market in the area
ii. Demand: There is increased demand in the area because of high population of the middle-
class people
iii. Availability of social amenities e.g. hospital, school etc.
iv. Good transport and communication network

1.9 GOALS OF THE BUSINESS

a) Maximize profit and satisfy customers

b) Cope with market demand after the six months on starting
c)Win customers
d)Provide the best and quality products and service to customers
e) To be self-reliant
f) To expand market share by 30% through opening other branches.

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CHAPTER TWO

2.0 MARKETING PLAN

2.1. INTRODUCTION

Marketing is created awareness of a good or service that already exists in the market, or being hoped
to be put in the market soon that the customer may be made aware of it. Marketing creates direct flow
of the product from the entrepreneur to customers in order to achieve business objectives and

targeting areas. 2.2. MARKETING AREA

Marketing areas will be selected according to the availability of market targeted by the business. For
example, since this shop is a plumbing shop, the targeted market should be availability of many
construction sites and buildings and where income of people is really high. The business area will also
depend on the status of the market, that is; is the business growing, declining, or stable? are their
potential customers? and is the product needed while not available? At startup the business shall target
the estates starting with Kipsaina and later go to open a branch in other estates such as Milimani
estates, Matisi and Gatua estates

2.3. CUSTOMERS

The targeted customers will be grouped according to their potentiality of buying. This grouping will
depend on various factors like income, social class, economic activity in the area and traditional belief
and practices.

These groups include:

2.3.1. Industry Customers

These are customers who buy goods to go and produce others. They include those customers in estates
owning plumbing shops, because most of the customers for plumbing in estates prefer buying from
shops which is cheaper. The shop owners will buy in large quantities all the variety of tools that they
are in need of creating

2.3.2. Commercial Customers

These customers who buy products for sale at a profit. This will be possible because when there is
stability in the country, tools are cheaply sold therefore we will buy in high qualities and stock for sale
when tools are scarce at a whole sale price to the nearby plumbing shop around.

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2.3.3. Final Customers These are the final users of the products. Most of the people in estates and
contractors are taking the tools from plumbing wholesales.

2.4. COMPETITORS

There are two main competitors who are really active and take 70% of the market share and are
located in MILIMANI ESTATES, but since they opened (after four years of operation) they have
never improved/opened other branches. The main competitors are
(a) Tranzoya
i. Address P.O BOX 133, Kitale
ii. Location
It is located at opposite kitale law Courts, a few meters from the bus terminus.
iii. Strength

 It's widely known

 Have excellent customer services
 Offer sales services e.g. transport
 Provide all types of tools to their customers
 Don't argue with customers in case of a problem
 They have established good customer relations
 They sell quality and pure products

iv. Weakness

 Lack packing facilities

 Dirty and disorganized workers e.g. dirty aprons
 Employees steal from customers when weighing and packing and customers discover there
are missing tools.
 Little stock
 Offer a bit higher price.

(b) Suam Glass And hardware

i. Address P.O BOX 146, Kitale.

ii. Location

It is located just behind along Kenyatta street, a few meters from matatu terminus.

iii. Strengths

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 It is highly stocked
 Use direct channel of distribution
 Has a personal car for personal selling

iv. Weaknesses
 Have no specific working hours. It may be opened or closed any time.
 Offer substandard customer services to push competition out of market, OTERI DRAPERS will
use the following strategies:
 Offering of competitive prices which shall match with quality of the product
 It shall be opened from 8.00am to 9.00 pm, from Monday to Saturday
 Quality products will be offered
 Maintaining customer relationship
 Distribution goods to customers once an order has been made at the right time and in the right
quality and quantity
 Collecting views from customers about their feeling towards the goods and if they need any
change. Employing highly skilled personnel i.e. a diploma holder in Sales and marketing.

2.5. MARKETING SHARE

According to research done, the competitors take 50% of date in the total market area. OTERI
DRAPER will occupy 40% at the start up with a vision of increasing its market share up to 60%. This
will be achieved through proper marketing mix, which includes;
 Proper pricing
 Efficient and reliable channel of distribution
 Providing high quality products This will be done with an aim of maintaining and improving
market share, meeting competition, maximizing profits, achieving targets return on investment
and for survival.
 The influence of OTERI DRAPERS, the market shares will be as following in the charts in the
next page.

2.6. PROMOTION

This will be done purposely to create awareness to the customers of the new plumbing shops in the
area. It will include:

 Giving free samples

 Reducing prices
 Packaging in good boxes and packages
 Education on those who have no ideas on the tools. This will be achieved through:

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 (a) Personal selling
This will be done by being directly in contact with customers and concaving them that our
products are only the best in terms of quality, tests and preferences. The customer will give
views.
(b) Advertising
this will be done through sign posts placed in different places showing the price list of our
products and the variety of goods offered. It will also show location of the business.

(c)Public relations

OTERI drapers will contribute in sponsoring The Kitale county Hospital by offering repairing
materials through renovation of their premises. It will also provide;

 Good customer relations

 Always be positive and enthusiastic
 Treat each customer as Loyalty
 Have open, honest and prompt communication
 Fulfill customer's needs and solve their problems courteously and promptly
 Always appealing for sympathy i.e. Don't lose temper solving a problem
 Customer is always loyal, when overtime he has received, consisted, prompt and courteous
service.

2.7. DISTRIBUTION STRATEGY

Since tools are not perishable when stored, any channel of distribution can be used to distribute goods.
The business shall use a direct channel of distribution which will be very short and no middle men
shall be involved. From the producer or plumbing and producing board, which will be the supplier,
the tools will be transported to the business premises for sale to customers or to other retailer who will
also sell to customers as shown below. Producer Retail/whole seller plumbing/producing board
retailers oteri drapersrs customers

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CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

3.1. INTRODUCTION

In the organization of a business, several individuals with certain qualifications that suit the business
shall be employed to take responsibilities in the hayrack manner. Those in the top position will guide
and control those below them in operating the business. An Organization Chart At the start up, the
business will take the organization structure style as shown in the chart below

Managing Director

┌──────────┴────────────┐

General Manager Deputy General Manager

│ │

Marketing Manager Cashier

┌─────────┴───────────┐

Watchman Cleaners & Messengers

b. Management Technology

The business managers shall perform the following duties

i. Making decisions
ii. Making policies
iii. Planning
iv. Directing and controlling business operations
iv. Determining salaries
v. Employing, recruiting, promoting and demoting employees

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3.2. BUSINESS MANAGER AND QUALIFICATIONS

The business managers shall be controlling all business operations and activities.

Qualifications:

 Has a diploma in Plumbing

 Have leadership and communication skills
 Shall be having a working experience of two years in a recognized institution
 Should be married and aged above 25 years
 Should be creative and ambitious
 Should be a Christian (Born again)
 Should be faithful and responsible

3.3. PERSONNEL, NUMBER AND DUTIES

The business at startup will have eight personnel though it expects to employ more as the business
grows to diversity. The qualifications of these personnel are as shown in the organization chart in the
next page. 1. Managing Director

Diploma in accountancy Job description

 Employing new employee

 Decision making

2.Deputy General Manager

 Has managerial skills

 Evaluating and interviewing employees
 Check on the business shortcomings
 Give solutions in Director's absence
3.Marketing Manager

 Diploma in sales &marketing

 Promotional tools
 Coordinating Research program
4. Cashier
 K.A.T.C holder
 Receiving payment on behalf of the business
 Controlling credit Keep business documents

5. Messengers

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  Certificate in sales
 Taking orders from customers
 Distributing goods/products with bicycles

6. Technical expert

 Diploma in plumbing
 Doing plumbing repairs and fixtures

7. Watchman

 Maasai by tribe
 Faithful
 energetic
 Protecting business premises both at day & night 22

3.4. RECRUITMENT, TRAINING AND PROMOTIONAL PROGRAM

a) Training

The business will familiarize the workers with the job and give them all the basic skills like
communication, public relations, and technical skills in order to have the knowledge of the product
and how to maintain the facilities available. It will also enable them to:

 Have confidence and enthusiasm when dealing with customers.

 Learn from the competitors mistakes in order to help in correcting our mistakes.
 Borrow ideas from others especially sales representatives, distributors, customers suppliers
and competitors
 Use competitors as their lever The business managers will do this training within business
premises. The employees will also be allowed to attend seminars for more skills outside the
business premises

b) Recruitment

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This will be done to identify the right and qualified workforce for the business. It will be done in
different ways like:

 Interviewing both oral and written

 Looking at the certificate on application to know the level of education
 Age
 Size of the family (dependents)
 Sex

Physical examination and medical examination of the person This is also aimed at evaluating the
performance of the employee resulting to promotion of the best and demotion of some who did not do
well. This process is also aimed at improving the productivity of the business.

c) Promotion

Workers and any other employee in the business who will work hard towards the success of the
business shall be rewarded, promoted and given other priorities depending on how much the work
was done; and to promote encouragement to the rest who are not rewarded. An end of year party shall
be held in the premises. The best potential customer shall also be invited to the party.

3.5. LICENSES, PERMITS AND BI-LAWS

(a) License

his allows the business to operate within the town center. It will be obtained at Kitale Town Council
licensing office. Before getting a license, the business will be registered at Sheria house in KVDA
building. After registration, the business will get a license @ Ksh. 9000 and is renewed on a yearly
basis.

(b) Bi-laws

The business will use the following bi-laws during its operations: Install alarms for security especially
against theft. City commission laws-charging rates which are not in favor of the potential
entrepreneur. Labor laws enacted by the parliament to ensure fairness in the business operation among
employees and employers and to ensure that employee's rights such as compensation and leaves are
not violated. Sorting and separating tools to avoid confusion while selling. Install at least a fire
extinguisher to cater for any fire outbreak. 24

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3.6. SUPPORTIVE PROFESSIONAL AND SERVICES

The business shall rely on the following supportive services for its successful operations:

i. Banking

The business shall bank its money with cooperative bank of Kenya at the Mkulima House in Kitale Po
Box 2446 Kitale. This will provide security of the business money and it earns some interest.

ii. Advertising At the start up the business will not afford to advertise using radios and television but
will use sign posts for advertisement. As the business grows, it will use MITUME RADIO because it
is the cheapest and reaches a wide area.

ii. Insurance
When the business will have grown a bit, it will insure its premises and assets, storks and other
equipment against fire and theft risk. This will give the business security and hope of continuity in
case of break. The insurance goes for Ksh. 15,000 per year.
iii. Electricity
Will be supplied and managed by the Kenya Power and lighting Company. The bill is paid according
to the amount of electricity used. The bill will be paid through the branches of Kenya Power and
Lighting Company. Then business shall pay its bills at the Ambwere Plaza,
The Nzoia water company shall cater for water supply in the premises through Nzoia water Supply
Company. This shall be paid also according to the water used. Then bill shall be paid through Kitale
town: The business shall use the following remunerations:
(a) Allowances
All employees will enjoy transport and medical allowances Ksh. 1000 per month for each employee
and this will cater for their transport back home as well as their medical status.

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(b)Salary schedule:
The salaries shall vary with one's position and responsibilities as shown in the table below
Role Monthly Pay without Allowance (Ksh) Allowance (Ksh) Net Pay (Ksh)
M/Director 15,000 1,000 15,000
G/Manager 12,000 1,000 12,000
Mkt. Manager 8,000 1,000 9,000
Cashier 6,000 1,000 7,000
Technical expert 10,000 3,000 12,000
Messenger 5,000 1,000 6,000
Watchman 4,000 1,000 5,000
TOTAL 64,000 9,000 69,000
(c) Incentives The employee shall enjoy the following incentives in the business as a way of
motivating them.
(d) Off duties and leave
Each employee except the watchman and cleaner shall be given off duties every two weeks a day
(once in two weeks) one person at a time. In case of sickness, one shall get sick-off. Each person will
go two weeks paid leave in a year. They will also not work on holidays. (e) Parties There shall be an
annual party for the employees and the best customer at the end of the year will be awarded and even
the most frequent potential customer.

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CHAPTER FOUR

4.0 PRODUCTION AND OPERATIONAL PLAN

4.1. PRODUCTION FACILITIES AND CAPACITIES

At the start up, the business shall operate with the locally available machine and technologies. These
technologies will be cheap to purchase, easy to maintain and use effectively. This will be the bases for
advanced technology.

EQUIPMENT AND STATIONERIES

S/N Equipment Qty Supplier Cost (Ksh) Use

1 Balance 3 Jumbo Supp. 9,000 Weighing cement paints
2 Pick-up 1 Lieys 400,000 Transport
3 Furniture
4 Tables 2 Sam Entep 1,000 Placing paints
5 Chairs 2 Sam Entep 600 For cashier
6 Cabinets 1 Sam Entep 3,000 Office documents
7 Wooden bars 12 Sam Entep 12,000 Placing bags
8 Shelves 1 Sam Entep 1,500 Placing packed paints
9 Stationery Khetias Supermarket
10 Files 4 Khetias Supermarket 400 Keeping records
11 Receipts books 2 Khetias Supermarket 300 Showing purchases
12 Calculators 1 Khetias Supermarket 1,000 Doing calculations
13 Biro pens (1 pkt) 1 Khetias Supermarket 500 Writing
14 Wooven bags [big] (1 pkt) 1 Khetias Supermarket 500 Packaging
15 Paper punch 1 Khetias Supermarket 200 Punching file papers
16 Small paper bags (1 pkt) 1 Khetias Supermarket 300 Packaging

Stock
S/N Item Qty Supplier Cost (Ksh) Use
1 Plumbers tape 30 CHASE DISTRIBUTORS 15,000 Sale
2 Drain snake 10 pieces CHASE DISTRIBUTORS 13,000 Sale
3 Channel locks 50 CHASE DISTRIBUTORS 15,500 Sale

Page | 15
S/N Item Qty Supplier Cost (Ksh) Use
4 Faucet keys 20 pieces CHASE DISTRIBUTORS 5,000 Sale
5 Pipe benders 20 CHASE DISTRIBUTORS 20,000 Sale
6 Extra-large 100 mm pipes 20 CHASE DISTRIBUTORS 20,000 Sale
7 Metal file 20 CHASE DISTRIBUTORS 5,000 Sale
8 Small pipes 50 mm 50 CHASE DISTRIBUTORS 30,000 Sale

Others
S/N Item Qty Supplier Cost (Ksh) Use
1 Aprons 2 Yako Supp 2,000 Protection
2 Mouth mask 2 boxes Yako Supp 400 Protection
3 Cleaning detergent 5 ltrs Yako Supp 1,000 Protection

Total Costs

 Total number of carriages: 55

 20 bags
 Total cost of tools: Ksh 118,500
 Total cost of facilities: Ksh 433,700

Total Cost: Ksh 552,200

Facilities
Capital
The business source of finance will be from three sources:

 Personal savings: Ksh 700,000

 Owners' equity: Ksh 100,000
 Bank loan: Ksh 100,000

Total: Ksh 900,000

a) Personal savings
The operator of the business will have worked for three years after which she shall save up to 700,000
as personal savings. This will be used for startup cost like:
 Paying rent 29

Page | 16
  Initial capital
 Purchasing fitting
 Advertising
 Paying first month salary after opening and paying for other legal documents
b) Friend’s contribution and loan from the bank Friend's contribution and loan from the bank will
cater for the following startup cost
 Furniture and equipment
 Deposit for rent
 Business license and permits
 Legal fees
 Beginning inventory
 Advertisement for glad opening
 Operational expenses e.g. supply
II. Labor
The business will have a capacity of 8 laborers at the start up. They would require Ksh 55,000 per
month as salary. They will be providing both skilled and unskilled labor. They will also have the
following skill
 Communication skills in order to transfer information in a networking area.
 Managerial skills in order to control business resources e.g. machine, money, and other materials.
Entrepreneurial skills in order to evaluate risk and be able to generate ideas.
 Technical skills. This will help them to offer their plumbing services and its maintenance
Unskilled laborers will be used for loading and unloading bags, cleaning stores and business
premises. The worker will be motivated through; being paid on time as well as overtime hours.
III. Materials

This will include stock which includes plungers, bore scopes, drain snake, auger, channel locks, faucet
keys, washers, hose cutters. These must be stored in a well secured place and safe to avoid theft cases.
Other materials will include; receipt book, files, pens, etc. packaging material will also be used during
operation. This will cost the business Ksh. 522,200 at the start up. The materials will be well managed
to cut down costs of production

IV. SOCIAL AMENITIES:

The business will depend upon the following social amenities for the proper running of its operations:
Phone:
There will be owners’ phone at the cashiers' office and the cost will be catered for by the owner until
when the business will pick up to afford to pay its own phone [landline], and pay for its bills.
Water:

Page | 17
This will be supplied by the Nzoia Water Company and the bills will be paid monthly according to the
amount used. it is well treated water
Hospital:
There are three hospitals surrounding the business premises. They include; Wamalwa Kijana Referral
Hospital, Kitale County Hospital and Mt.Elgon Hospital
Schools:
There are many schools in the area including colleges and secondary schools beside primary schools.
These include Kitale National Polytechnic, Kitale School and St. Anthony Boys High school
V.PREMISES
Business Premises Details
 Location: Kipsaina
 Dimensions: 10 meters (width) x 12 meters (length)
 Total Area: 120 square meters

Room Division
The premises will be divided into four rooms as follows:
Room Width (meters) Length (meters)
Reception 5 4
Office 1 1 4
Office 2 1 5
Office 3 6 7

Layout Diagram

Here's a basic representation of the room layout:

lua
Copy code
Width: 10 meters
Length: 12 meters

-------------------------------------------------

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| | | |
| Room 1 | 1 meter wide | Room 3 |
| (Office) | | (6m x 7m) |
| (4m x 5m) | | |
| | | |
|----------------|--------------|------------------|
| | | |
| Room 2 | | Reception |
| (Office) | | (5m x 4m) |
| (4m x 1m) | | |
| | | |
-------------------------------------------------

In this diagram:

 Room 1 (Office 1) is 4 meters long and 5 meters wide.

 Room 2 (Office 2) is 4 meters long and 1 meter wide.
 Room 3 (Office 3) is 7 meters long and 6 meters wide.
 Reception is 4 meters long and 5 meters wide.

VI.TECHNOLOGY

At start up the business will use the cheapest and most available technology; i.e. calculator for making
work easier other than use of pen and paper. As business grows, a computer will be bought so that all
transactions are entered for references. Also, for further storage of information and for efficiency
hence reducing human errors.

4.2. PRODUCTION STRATEGY OTERI DRAPERSPLUMBING STORES

The business shall use production techniques to develop products finishing and packaging products. It
will then finally estimate distributing costs, putting into mind "Customer Care" and the attributes
preferred of the products by the customer. The business shall follow the criteria as shown below

1. Determining the product market within which market research will be conducted

2. Determine the importance of the equipment in the area

3. Presenting those attributes in a configuration perceived by the customer

Page | 19
4. Developing a model relating to customer's preferences and tastes. This development will be done
by different personnel in different hours using different equipment in order to suit the market as
shown below.

S/N Task Equipment Personnel Time (Hrs)

1 Conducting customer surveys Survey forms, tablets Marketing team 3
2 Analyzing survey data Computers, software Data analysts 5
3 Developing customer profiles Computers, software Data analysts 4
4 Creating product prototypes Design tools, materials Product designers 6
5 Testing product prototypes Testing equipment QA team 4
6 Collecting feedback on prototypes Feedback forms, tablets Customer service 3
7 Finalizing product adjustments Design tools, materials Product designers 5

Business Premises Layout

 Location: Kipsaina
 Dimensions: 10 meters (width) x 12 meters (length)
 Total Area: 120 square meters

Room Division

Room Width (meters) Length (meters)

Reception 5 4
Office 1 1 4
Office 2 1 5
Office 3 6 7
Main Store 4 7
Plumbing Store 3 7
Tea Room 1 7

Layout Diagram
Here's an updated layout diagram incorporating the new rooms:
Copy code
Width: 10 meters
Length: 12 meters

Page | 20
-------------------------------------------------
| | | |
| Office 1 | 1 meter wide | Office 3 |
| (1m x 4m) | | (6m x 7m) |
| | | |
|----------------|--------------|------------------|
| | | |
| Office 2 | | Reception |
| (1m x 5m) | | (5m x 4m) |
| | | |
|----------------|--------------|------------------|
| Main Store | | Plumbing Store|
| (4m x 7m) | | (3m x 7m) |
|----------------|--------------|------------------|
| | | |
| Tea Room | | |
| (1m x 7m) | | |
-------------------------------------------------
1. Determining market for the product within which to conduct market research
Personal car
Director 8hrs
1 Identifying important attributes/qualities Pen/papers for noting the quality Director 3hrs
2 Present product qualities in a configuration perceived by the customers Chart, pens/pencils
Director 5hrs
3 Developing model relating to customers preference and tastes if equipment's should be sorted and
separated Distributing equipment’s bicycle Employees 6hrs

4.3. REGULATIONS AFFECTING THE BUSINESS OPERATIONS

 External regulations (Government)

 The business must have a trading license
 The business must have required permits
 Each employee must have an identification card to show that he/she is an employee with your
business

The business must have a record showing all their facilities and equipment, stock and their source.
Internal regulations:

 All the employees must report at seven (7:00 am) in the morning as the business opens.
 Any employee must have permission from the manager wherever not at work

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  Any problem or proposal facing workers must be reported and handled immediately by the
personal manager.
 Any misconduct should be punishable e.g. stealing from customer; the employee will be
given a compulsory leave without pay and later on sacked. For minor cases like breakages,
one should be cautioned.

4.4 ESTIMATED DAILY SALES

Daily Cost Selling Price Selling Cost Sold Total Sale/day

Item
Customers (Ksh) (Ksh) (Ksh) Qty/day (Ksh)
Pipe thawer 5 1,400 1,120 2,520 20 pcs 100,800
Faucet keys 6 1,000 800 1,800 20 pcs 36,000
Drain snake 4 650 520 1,170 15 pcs 17,550
Channel
2 1,250 1,000 2,250 10 pcs 22,500
locks
Tape
4 1,050 840 1,890 24 pcs 45,360
measure
Auger 3 1,200 960 2,160 30 pcs 64,800
Bore scope 2 1,550 1,240 2,790 50 pcs 139,500
Summary of Sales
Total Daily Sales Calculation

 Total Daily Customers: 5 + 6 + 4 + 2 + 4 + 3 + 2 = 26 customers

 Total Daily Sales: 100,800 + 36,000 + 17,550 + 22,500 + 45,360 + 64,800 + 139,500
= 426,510 Ksh

Estimated Weekly Sales

 Total Weekly Customers: 26 customers/day * 7 days/week = 182 customers/week

 Estimated Weekly Sales: 426,510 Ksh/day * 7 days/week = 2,985,570 Ksh/week

Page | 22
Estimated Monthly Sales

 Estimated Monthly Sales: 2,985,570 Ksh/week * 4 weeks/month = 11,942,280

Ksh/month

 7 days/week = 2,828 Ksh/week

Estimated Monthly Sales (Revised)

 Estimated Monthly Sales: 2,828 Ksh/week * 4 weeks/month = 11,312 Ksh/month

 Total Daily Sales: 426,510 Ksh

 Total Weekly Sales: 2,985,570 Ksh
 Total Monthly Sales: 11,942,280 Ksh

Page | 23
CHAPTER FIVE

5.0 FINANCIAL PLAN

This involves determining the course of action to achieve desired results. It ensures economic
operations, improves motivation, and facilitates control by reducing uncertainties.

5.1. ASSUMPTIONS

i. Machines and equipment, furniture and fittings will depreciate by 2% yearly

ii. Salaries will remain constant for the first year of operations but will appreciate yearly by 2%
from the second year of operation.
iii. Rent will appreciate by 3% yearly as from the second year of operations.
iv. Electricity and water bills will vary according to the work being done, that is, consumption.
vi. Stock will appreciate with 2%
vii. Sales will appreciate with 2% 5.2.

PRE-OPERATIONAL COSTS

Item Amount
Rent deposit 20,000
Insurance 30,000
Water bills 3,000
Electricity bills 2,400
Stock 290,955
Furniture & fittings 5,650
License 8,000
Machines and equipment 16,000
Safety clothing (aprons and masks) 6,040
Advertisement 6,000
Stationery 11,455
Total 400,000

Page | 24
 5.2 CASH FLOWS

Year 1

Cash inflow Jan Feb Mar April May June July August Sept Octo Nov Dec
Bal b/d 126200 93310 147577 100294 16520 96629 164729 685081 175323 56332 173193
Sales 1,500,000 1,800,00 2000,00 2,500,00 3000,0 3,500,0 4000,00 4,500,00 5000,00 5,500,0 6000,000 6,500,0
Cash 10,000,00
Debtors 50,000 70,000 100,000 90,000 60,000 100,00 200,000 150,000 180,000 150,000 200,000
Total cash inflow 11,500,00 5,715,50 5,706,60 5,927,60 6,10,15 6,668, 7,222,50 8,075,0 8,747,30 9,569,20 10,611,05 12,31,40

Cash outflow
Pre-operational 6,009,00
cost
Purchases 500,00 800,000 1000,000 1,300,00 1,500,0 1,800 2000,00 2,500,00 2,800,00 3000,000 3,200,000 3,800,000
Insurance 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000
Salaries 189,00 189,000 189,000 189,00 189,00 189,00 189,00 189,00 189,000 189,000 189,000 189,000
Water 1,200 1,500 1,700 1,300 2000 2,100 1,900 2,500 2,200 2,800 2,500 2,200
Electricity 2,000 2,200 2,500 2,400 2,700 3000 3,100 3,500 3,200 3,600 3,400 3,400
Renovation 7,000 10,000 13,00 12,000 10,000 8000
Advertisement 10,000 15,000 12,000 11,000 10,000 15,00 10,000 15,000 10,000 9000 11,000 10,000
License 4,000 4000
Creditors 50,000 90,000 100,000 120,000 100,00 150,00 170,000 200,000 180,000 210,000 190,000 200,000
Loan 312,500 312,500 312,500 312,500 312,50 312,50 312,500 312,500 312,500 312,500 312,500 312,500
0 0
Interest on loan 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250

Miscellaneous 500,000 600,000 700,000 800,000 900,00 1000,0 1,100,00 1,200,00 1,300,00 1,400,00 1000,000 700,000
0 00 0 0 0 0
Total cash 7,634,950 2,078,4 2,378,9 2,807,2 3,081,4 3,545,8 3,847,75 4,495,75 4,458,15 5,198,15 4,969,650 5,290,350
outflow 50 0 0 0 0
Net cash inflow 126200 93310 147577 161520 96629 164729 86508 175323 56332 173193 27431 37431

Page | 25
 Year 2

Cash inflow Jan Feb Mar April May June July August Sept Octo Nov Dec
Bal b/d 37431 129598 7699 93859 19290 86531 71790 193180 266288 520933 798048 973142
Sales 1,500,000 1,800,00 2000,00 2,500,00 3000,0 3,500,0 4000,00 4,500,00 5000,00 5,500,0 6000,000 6,500,0
Cash 10,000,00
Debtors 50,000 70,000 100,000 90,000 60,000 100,00 200,000 150,000 180,000 150,000 200,000
Total cash inflow 11,500,00 5,715,50 5,706,60 5,927,60 6,10,15 6,668, 7,222,50 8,075,0 8,747,30 9,569,20 10,611,05 12,31,40

Cash outflow
Pre-operational 6,009,00
cost
Purchases 500,00 800,000 1000,000 1,300,00 1,500,0 1,800 2000,00 2,500,00 2,800,00 3000,000 3,200,000 3,800,000
Insurance 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000
Salaries 189,00 189,000 189,000 189,00 189,00 189,00 189,00 189,00 189,000 189,000 189,000 189,000
Water 1,200 1,500 1,700 1,300 2000 2,100 1,900 2,500 2,200 2,800 2,500 2,200
Electricity 2,000 2,200 2,500 2,400 2,700 3000 3,100 3,500 3,200 3,600 3,400 3,400
Renovation 7,000 10,000 13,00 12,000 10,000 8000
Advertisement 10,000 15,000 12,000 11,000 10,000 15,00 10,000 15,000 10,000 9000 11,000 10,000
License 4,000 4000
Creditors 50,000 90,000 100,000 120,000 100,00 150,00 170,000 200,000 180,000 210,000 190,000 200,000
Loan 312,500 312,500 312,500 312,500 312,50 312,50 312,500 312,500 312,500 312,500 312,500 312,500
0 0
Interest on loan 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250

Miscellaneous 500,000 600,000 700,000 800,000 900,00 1000,0 1,100,00 1,200,00 1,300,00 1,400,00 1000,000 700,000
Total cash 7,634,950 2,078,4 2,378,9 2,807,2 3,081,4 3,545,8 3,847,75 4,495,75 4,458,15 5,198,15 4,969,650 5,290,350
outflow 50 0 0 0 0
Net cash inflow 12958 7699 93859 19290 85537 71790 193180 266228 520933 790045 97142 1178350

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 Year 3

Cash inflow Jan Feb Mar April May June July August Sept Octo Nov Dec
Bal b/d 1178350 1751510 1385028 2286884 171120 239409 2163278 2586431 2472403 2843200 296628 325761
1 8
Sales 1,500,000 1,800,00 2000,00 2,500,00 3000,0 3,500,0 4000,00 4,500,00 5000,00 5,500,0 6000,000 6,500,0
Cash 10,000,00
Debtors 50,000 70,000 100,000 90,000 60,000 100,00 200,000 150,000 180,000 150,000 200,000
Total cash inflow 11,500,00 5,715,50 5,706,60 5,927,60 6,10,15 6,668, 7,222,50 8,075,0 8,747,30 9,569,20 10,611,05 12,31,40

Cash outflow
Pre-operational 6,009,00
cost
Purchases 500,00 800,000 1000,000 1,300,00 1,500,0 1,800 2000,00 2,500,00 2,800,00 3000,000 3,200,000 3,800,000
Insurance 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000
Salaries 189,00 189,000 189,000 189,00 189,00 189,00 189,00 189,00 189,000 189,000 189,000 189,000
Water 1,200 1,500 1,700 1,300 2000 2,100 1,900 2,500 2,200 2,800 2,500 2,200
Electricity 2,000 2,200 2,500 2,400 2,700 3000 3,100 3,500 3,200 3,600 3,400 3,400
Renovation 7,000 10,000 13,00 12,000 10,000 8000
Advertisement 10,000 15,000 12,000 11,000 10,000 15,00 10,000 15,000 10,000 9000 11,000 10,000
License 4,000 4000
Creditors 50,000 90,000 100,000 120,000 100,00 150,00 170,000 200,000 180,000 210,000 190,000 200,000
Loan 312,500 312,500 312,500 312,500 312,50 312,50 312,500 312,500 312,500 312,500 312,500 312,500
0 0
Interest on loan 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250 31,250

Miscellaneous 500,000 600,000 700,000 800,000 900,00 1000,0 1,100,00 1,200,00 1,300,00 1,400,00 1000,000 700,000
Total cash 7,634,950 2,078,4 2,378,9 2,807,2 3,081,4 3,545,8 3,847,75 4,495,75 4,458,15 5,198,15 4,969,650 5,290,350
outflow 50 0 0 0 0
Net cash inflow 1751510 1385028 2286894 1171120 239408 216322 2586431 2472403 2843200 2966628 3257261 36185656
1 9 78 2

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5.3. OTERI DRAPERS'S BALANCE SHEET

As at opening July 2024, July 2024, August 2024, September 2024

Assets

Assets 1st July 2024 31st July 2024 31st Aug 2024 31st Sept 2024

Current Assets

Cash at Hand 92,922 82,955 84,614.14 48,152.8

Cash at Bank 202,473 206,578.98 205,000 200,000

Stock 82,955 84,614.14 86,373.23 87,932.3

Total Current Assets 378,350 373,193 339,426 319,623.14

Fixed Assets

Machines and equipment 16,000 16,000 15,366.4 15,366.4

Depreciation 2% 320 313.65 307.3 307.3

Furniture and fittings 5,650 5,650 5,537 5,426.26

Depreciation 2% 113 110.74 108.5 108.5

Total Fixed Assets 21,650 21,217 20,792.66 20,376.86

Total Assets 400,000 394,410 360,218.66 340,000

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5.4 LIABILITIES AND OWNERS' EQUITY

Liabilities and Owners' Equity 1st June 2023 31st July 2023 31st Aug 2023 31st Sept 2023

Current Liabilities 0 0 0 0

Long-term Liability 100,000 80,000 60,000 40,000

Retained Earnings 0 14,410 218.66 0

Owners' Equity 300,000 300,000 300,000 300,000

Total Liabilities 400,000 394,410 360,218.66 340,000

5.5 BREAK-EVEN LEVELS

Particulars 2023

Total Sales 3,397,594

Fixed Costs

License 8,000

Interest on loan 8,400

Insurance 30,000

Loan repayment 20,000

Total Fixed Costs 66,400

Variable Costs

Electricity bills 7,200

Cost of purchases 995,460

Advertisement 16,000

Salaries 768,000

Rent 39,000

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Particulars 2023

Water bills 4,800

Total Variable Costs 1,830,460

Total Contribution Margin 1,567,134

Contribution Margin Percentage 46.12%

Break-even of sales in currency 143,972.25

5.6 PROFITABILITY RATIO

Year Gross Profit/Sales x 100

Year 1 2,402,104/3,397,564 x 100 = 70.7%

Year 2 2,450,153.1/3,465,515.3 x 100 = 70.7%

Year 3 2,498,201.9/3,533,466.3 x 100 = 70.7%

5.7 PROPOSED CAPITALIZATION

Item Amount

Owners' Equity 300,000

Bank Loan 100,000

Total 400,000

Desired Financing

Item Amount

Pre-operational Cost 156,078

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Item Amount

Working Capital 378,198

Total 534,271

Return on Equity

Year Net Profit After Tax/Owners Equity x 100

Year 1 1,200,216.8/300,000 x 100 = 400.07%

Year 2 1,231,255/300,000 x 100 = 410.418%

Year 3 1,255,573/300,000 x 100 = 418.52%

Return on Investment

Year Net Profit After Tax/Total Investment x Interest

Year 1 1,200,216.8/400,000 x 8,400 = 3.02%

Year 2 1,232,255/400,000 x 8,400 = 3.09%

Year 3 1,255,573/400,000 x 8,400 = 3.16%

REFERENCES
Norton Paley (2004) Successful Business Planning - Energizing your Company's potential.

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Lomash (2008) Business policy and Strategy Management,

APPENDICES
P.O BOX 150-30200, Kitale

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TELEPHONE NO: 0113098127

EMAIL: [email protected]

OTERI DRAPERS

OPERATING HOURS

OPENING TIME: 8.00AM

CLOSING TIME: 8.00PM

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