TITLE : CHAMTANY AGRO-VET

NAME : SIRIKWO J. FRANCIS

ADM NO : 115R00392

INDEX NO :

COURSE CODE : 2413

COURSE : DIPLOMA IN CHEMICAL ENGINEERING.

INSTITUTION : RIFT VALLEY TECHNICAL TRAINING INSTITUTE.

DEPARTMENT : PHARMACY AND CHEMICAL SCIENCES.

PRESENTED TO : THIS BUSINESS PLAN IS SUB,MITTED TO THE KENYA

NATIONAL EXAMINATION COUNCIL ( KNEC) IN

PARTIALFULFILLMENNT FOR THE AWARD OF

DIPLOMA IN CHEMICAL ENGINEERING

SUPERVISOR : MR. TIBAI

SERIES : NOVEMBER 2017

i
DEDICATION
It is to my dear parents that I humbly dedicate this work. They have spared no effort in looking
after me. This work is also dedicated to the Department of pharmacy and Chemical Science for
their valuable support, for making it a reality and for their co-operation. I do pray that GOD will
grant them long, healthy and enjoyable life.

ii
ACKNOWLEDGEMENT
With great humility and profound gratitude I would like to thank everyone.

I would like to express my in-depth acknowledge and appreciation for the assistance and support
receive from many individuals, without whom this work would not have been possible. I am
really honored.

The guidance and support of my lecture is highly appreciated.

Above all, I thank God for keeping me safe and blessing me with good health and giving me the
strength and ability to successfully complete this business plan

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DECLARATION
I declare that this report is my own work. It is being submitted for the Diploma of Chemical
Engineering at Rift Valley Technical Training Institute. It has not been submitted before for any
diploma or examination in any other institution.

iv
Table of Contents
DEDICATION...........................................................................................................................................ii
ACKNOWLEDGEMENT........................................................................................................................iii
DECLARATION..................................................................................................................................iv
CHAPTER ONE........................................................................................................................................1
EXECUTIVE SUMMARY...................................................................................................................1
1.0 BUSINESS DESCRIPTION...........................................................................................................1
1.1 MARKETING PLAN......................................................................................................................1
1.2 ORGANISATION OR MANAGEMENT PLAN..........................................................................1
1.3 PRODUCTON / OPERATION PLAN...........................................................................................1
CHAPTER TWO.......................................................................................................................................3
2.0 OWNERS BACKGROUND..........................................................................................................3
2.1 BUSINESS DESCRIPTION..........................................................................................................3
2.2 BUSINESS NAME..........................................................................................................................3
2.3 BUSINESS LOCATION................................................................................................................4
2.4 FORM OF OWNERSHIP..............................................................................................................4
2.5 TYPE OF BUSINESS................................................................................................................6
2.6 PRODUCT AND SERVICES...................................................................................................6
2.7 JUSTIFICATION......................................................................................................................7
2.8 INDUSTRY................................................................................................................................8
2.9 BUSINESS GOAL.....................................................................................................................8
2.10 ENTRY AND GROWTH STRATEGY...................................................................................9
CHAPTER THREE.................................................................................................................................10
MARKET PLAN.................................................................................................................................10
3.0 INTRODUCTION.........................................................................................................................10
3.1 CUSTOMERS................................................................................................................................10
3.2 COMPETITORS.....................................................................................................................10
3.3 MARKET SHARE...................................................................................................................11
3.4 METHODS OF PROMOTION AND ADVERTISEMENT.................................................12
3.5 PRICING STRATEGY...........................................................................................................13
3.6 SALES TACTICS...........................................................................................................................14
3.7 DISTRIBUTION STRATEGY..................................................................................................14

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CHAPTER FOUR...................................................................................................................................16
ORGANISATION AND MANAGEMENT.......................................................................................16
4.0 INTRODUCTION...................................................................................................................16
4.1 ORGNISATION STRUCTURE...................................................................................................16
4.2 KEY MANAGEMENT PERSONNEL.........................................................................................17
4.3 OTHER PERSONNEL.................................................................................................................17
4.4 RECRUITMENT, TRAINING AND PROMOTION OF STAFF.............................................20
4.4.1 RECRUITMENT......................................................................................................................20
4.4.2 TRAINING...............................................................................................................................21
4.4.3 PROMOTION..........................................................................................................................21
4.5 REMUNERATION AND INCENTIVES....................................................................................21
4.5.1 REMUNERATION..................................................................................................................21
4.5.2 Incentives..................................................................................................................................21
4.6 LICENSE, PERMIT AND BY-LAWS.........................................................................................22
4.7 OTHER SUPPORT SERVICES...................................................................................................23
CHAPTER FIVE.....................................................................................................................................24
5.0 PRODUCTION PLAN..................................................................................................................24
5.1 PRODUCTION FACILITIES AND CAPACITIES..................................................................24
5.2 PRODUCTION STRATEGY......................................................................................................25
5.4 REGULATION AFFECTING OPERATION.......................................................................28
CHAPTER SIX........................................................................................................................................30
6.0 FINANCIAL PLAN.......................................................................................................................30
6.1 PRE-OPERATIONAL COST.......................................................................................................30
6.2 WORKING CAPITAL STATEMENT........................................................................................31
6.2.1 SALES SCHEDULE FOR THE YEAR................................................................................31
6.2.2 PURCHASE SCHEDULE FOR THE YEAR...........................................................................32
6.4 ANNUAL PAYMENT OF CREDITORS....................................................................................39
6.5 PROFOMA INCOME STATEMENT...................................................................................39
6.6 PROFOMA BALANCE SHEET............................................................................................41
6.7 THE BREAK -EVEN POINT.................................................................................................42
6.8 THE BREAK – EVEN POINT...............................................................................................43
6.9 PROFITABLE RATIOS............................................................................................................44

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6.9 DESIRED FINANCING..........................................................................................................45

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CHAPTER ONE
EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION
The name of the business will be CHAMTANY AGRO-VET. Which will be owned by Mr.
Francis Sirikwo . the business will be a sole proprietorship type of business and it will be located
Eldama Ravine.

The business main activity will be buying and selling of veterinary drugs , Agricultural
chemicals , horticultural, fertilizer and animal feed. It will also offer consultancy service for
farmers. The commence on 10th January 2018after the owner completes his Diploma course in
Chemical Engineering Rift Valley Technical Training Institute (R.V.T.T.I). He will have
gathered enough knowledge and the necessary capital to start and run the business.

1.1 MARKETING PLAN

The business will draw its customers from the district and mainly from the location will be
ravine .the potential customers will be Mercy Girls High School , Ratemo high school, Sabatia
farmers and poror stores. The business will face competition from OgilgeiAgro-vet and Baitoo
Agro-vet. Sales promotion and advertisement will be conducted every month and also direct
selling be done.

1.2 ORGANISATION OR MANAGEMENT PLAN

The owner of the business will be manager assisted by other employees which include salesman,
security guard, drivers, distributers, cleaners and marketing officers. Below is a management
plan.

1.3 PRODUCTON / OPERATION PLAN

For the effective and smooth running of the business, computer, calculators, furniture’s and the
business car are required . most of these will be acquired through cash and hire purchase terms.

Production process will be planned well to ensure the efficient flow of goods from the suppler to
the final consumer. The business will operate under licensed board. And it will obtain its licence
from Ravine municipal council.

1.4 FINICIAL PLAN

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The business will receive finance from the following sources;

Sources Amount
Personal savings 300,000
Contribution from friends and relatives 100,000
Loan from bank 1,200,000
Total 2,500,000

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CHAPTER TWO
2.0 OWNERS BACKGROUND
The owner of the business will be Mr. SIRIKWO . K. FRANCIS, He is 25 years old, he
completed his primary education in the year 2009 at Kabel priary school and joined Bennonin
mixed day secondary school where he completed his secondary education in the year 2013.there
after he was employed at Baltoo Agro-vet at Eldama Ravin as a sales person.

In the year 2014 he joined Kenya Institute of Management (KIMS). Where he enrolled for a
computer application packages. In January 2015 he advanced his education by enrolling for a
diploma course in chemical engineering at Rift Valley Technical Training Institute (R.V.T.T.I).
He is expected to complete his diploma course by November 2017. He will start the business on
early January 2018 after completing his studies. He has gathered enough capital to start and run
the business.

2.1 BUSINESS DESCRIPTION

This describes the background of the business, The Name , Location, Ownership, type of
business, production and goods. The name of the proposed business will be CHAMTANY
AGRO-VET .Which will be owned by Mr. Francis Sirikwo. The business wil be a sole
proprietorship form of a business and it will be located within Eldama Ravine town.

The business main activity will be buying and selling of veterinary drugs, agricultural chemicals,
horticultural seeds, fertilizers and animal feeds. It will also offer consultancy service to farmers .
the business will commence on 8th January, 2018 after the owner completes his diploma in
Chemical Engineering at Rift Valley Technical Training Institute, he will have gathered enough
knowledge and the necessary capital to start and run the business.

2.2 BUSINESS NAME

The name of the business will be CHAMTANY AGRO-VET. The name is derived from a
kalenjin word which means to love a cow. Thus the business aim is to offer quality products for
the benefit of the cattle who gives us milk and meat. The investible capital of the business will be
from various sources i.e personal savings, contribution from friends and relatives and loan from
bank.

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 Contributions Amount (Ksh.)
Personal savings 300,000
Friends and relatives 1000,000
Loan from bank 1,200,000
Total 2,500,000

2.3 BUSINESS LOCATION

The business will be located at Rift Valley Province, Baringo county, Eldama Ravine town. It
will be situated opposite Kenol Kobil Petrol station and it will be 20m away from Rvavine
Nakuru highway, besides Taptok bookshop and stationery. The choice of location was due to:

i Availability of security
ii High population within the place.
iii Good infrastructure e.g good transport system.
iv Availability of electricity and water.
v Nearness to dairy farmers and agricultural farmers.

2.4 FORM OF OWNERSHIP.

The business will be a sole proprietorship type of business owned by Mr. Francis K. Sirikwo.
The business. The business deals with buying and selling of veterinary drugs, Agricultural
chemicals, horticultural seeds, Fertilizer and Animal feed. It will also province consultancy
services to farmers. Below are the reasons justifying the choosen type of ownership.

i The owner will be the boss of the business.

ii Profit obtained will not be shared.
iii Decision making will be made by the owner
iv The starting capital will be low compared to the other form of business
ownership like partnership and company

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 THE PYSICAL LOCATION OF CHAMTANY AGRO-VET

TO Nakuru

To Eldoret
Kenol kobil
petrol station

County council
KPLC office
KCB Bannk offices

To bus stage Police Samba

station hotel

Friends
Children
TAIDYS Hotel
nursing home

To the showground To mary hospital

Latema
Mercy Chamtany
day
girls high agro-vet Oti supermarket
secondary
school

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2.5 TYPE OF BUSINESS

The business will be both trade service type of business. It will be selling goods in retail and
wholesale basis and it will also offer some services to customers.

Below are reasons justifying the type of business.

i Offering consultancy service for farmers on various commodities .

ii Delivering goods to customers.
iii Selling of veterinary drug, Agricultural chemical, fertilizers and animal feeds
to customers on both wholesale and retail basis.
iv Displaying goods available in the industry.
2.6 PRODUCT AND SERVICES

The business will be selling goods to its customers and offering to its customers such goods
includes:

 Veterinary drugs

The business will be selling veterinary drugs which are both injectable and non- injectable. The
injectable drugs will include; alamsine, pen-strap Oxy-vet and multivitamin.

The non-injectable drugs are mostly used for deworming. These include; Albefas 10%,levafas
extra, Nilzan and diamond.

 Agricultural chemicals

This include pesticide tactic, tixfex, almatix stedatone and sypletix.

 Horticultural seeds

They include potato seeds, flower seed, cabbage seeds, maize seeds, spinach seed and carrot
seeds. This helps farmers to get high quality seeds.

 Fertilizer

Fertilizer include; CAN, used as top dressing, DAP and Urea. This will increase crop
productivity.

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  Animal feed

Animal feed include; dairy meal, CKL extra sunflower, stock hak, madick and tricks.this helps to
increase milk productivity.

SERVICES

The business will offer the following services;

 Consultancy services

The business will offer consultancy services to it customers for example on how to
solve problems facing low milk productivity, poor crop production and how to
successfully using available resources e.g water and land.

 After sale service

The service will be offered to farmers through various ways for example when a
farmer buys goods , thus goods will be packed in a way that it can be easy handled.
Goods can also be carried for the customer to the bus stage and this will greatly
improve the morale of customers buying from the business.

2.7 JUSTIFICATION

Choosing the type of business which has been favoured by adequate market from high
population and the main economic activity of the of the community living within Baringo
county.

This makes the business to have high demand of its goods and services throughout the year .the
business will out complete its competitors due to its location in the town where it will receive
many customers. It will also have goo infrastructure which will facilitate the transportation of
goods and services to customers. It will also have enough packing space for customers to park
their cars. The community will benefit from the business because the business will employ
workers from within and outside the district.

2.8 INDUSTRY

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The business falls under trade industry. It will be giving out services to its customers like
consultancy services to farmers. The business will use labour in most of its operation and
requires an average number of ten employees who are well trained and qualified to give out
services . it will be large scale type of business.

The entry requirements to the industry will be:

i Should pay a share of Ksh 50,000.

ii Should meet the qualifications set by the ministry of public health.
iii Should acquire license from Ravine municipal council.
iv Should employ not less than ten employees.

2.9 BUSINESS GOAL

Through the owners hardwork and determination of the business, the business will have a short
and long term goal for the achievement of it.

a. Long term goals.

i To improve the enterpreneurs living standard.
ii To expand its operations by opening branches in the districts like Baringo North,
Marigat and Eldama Ravine sos as to command a wider market.
iii To market the business extensively in the area so as to create awareness and get
customers informed of the extenstence of the Agro-vet.
b. short term goals
i To create self-employment.
ii To make small profit and its initial stage in order to extend its existence in the market.

2.10 ENTRY AND GROWTH STRATEGY

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Entry strategy

CHAMTANY AGRO-VET will enter the market through advertisement within and outside the
district. The business will be issuing free T-shirt and shoes to those customers who will organize
sports activities like cross country and football tournament in order to market its products and
services. The business will also erect Bill boards along the highway i.e Ravine to Eldoret ,Ravine
to Nakuru to attract more customers.

1.1 Growth

The business plan to buy a new pick up vehicle in order to enable the business to transport goods
from the supplier to the potential customers.

The vehicle will be used during advertisement so as to reach many customers. The business also
plans to expand its operation to the neighbouring towns like Marigat, Karbarnet, Nakuru so as to
bring goods and services close to its customers.

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CHAPTER THREE
MARKET PLAN
3.0 INTRODUCTION
The identifies the customers to the business, the price of the product, competitors and the
distribution as well as promotion strategy.

3.1 CUSTOMERS
These are people who come to the business to buy goods and services that are offered at
affordable price. They are categorized as follows :

i Individual customers

These are customers buying the goods and services for personal usage. This will include daily
customers and new customers. The business will expect more than Ksh 35000 from these
customers per mounth.

ii Institutional customers

Mercy Girls High School, Poror High school and Bondeni day will be the potential customers to
the business. The expected market share from them will be Ksh. 100,000 per month.

iii Commercial customers.

These are customers who will buy goods in large quantities for sale purpose and those buying for
personal stock. They will include retailers and wholesalers. The business expects a market share
of approximately Ksh.250,000 weekly from these customers.

The business will expect the sales to the higher during raining season, this due to the fat that
many farmers start planning soon as it rains.

3.2 COMPETITORS

The business will face competition from the already existing Agro-vets on the town. These are
mainly;

a. Ogilgei Agro-vet
b. Baltoo Agro-vet

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Ogilgei agro-vet is a large scale Partnership located 200m away from Chamtany Agro-vet and
sales mainly veterinary drugs, horticultural seeds, Agricultural chemicals from tools and
equipment’s, while Baltoo Agro-vet is a small sale business about 60m away from CHAMTANY
AGRO-VET and also deals with the selling of vertinary drugs, horticultural seeds, and
Agricultural chemicals. Below is a table showing the strength and weakness for the three
business.

Name Strength Weakness

Ogilgei Agro-vet -Good management -Expensive products
-Financially stable - no offer sale services.
- poor customer care
Baltoo Agro-vet -Financially stable -Expensive products
-Open at 0700HRS and closes - no advisement
at 0830HRS - poor customer care.

Chamtany Agro-vet -Financially stable

- Well trained and skilled
workers
-Proper customer care.

Ways of countering weakness of my competitors.

a. Slightly lowering to prices of commodities than those of my competitors.

b. Offer after sale service.
c. Widely advertise the products to reach many customers as possible.
3.3 MARKET SHARE.

The business is targeting an approximate of 350,000 people. The approximate population in the
location is about 800,000 and the reason is due to existence of other agro-vets like Ogilgei and
Baltoo Agro-vet. The business also aims at getting customers of approximately 100miles away
from the business location. The business also aims at commanding a larger market as shown
below in the Pie- chart.

11
 Sales

Chamtany agro-vet
Ogilgei agro-vet
baitoo
chamtany agro-vet

The market share is as shown above due to;

a. Chamtany Agro-vet will be strategically positioned in where the customers can

easily see.
b. Chamtany offers discounts to its customers and high quality products.
c. Ogilgei is enjoying the popular name.

3.4 METHODS OF PROMOTION AND ADVERTISEMENT

3.4.1 Promotion
Customers promotion will be conducted monthly to attract and maintain the existing
customers through the following ways;
1) Business exhibition and trade shows. The business will participate in trade shows
and exhibitions to promote the business goods and services.

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 2) Free sample
Frequent customers will be given free samples e.g T-shirts, shoes and calenders
bearing business name and logo.
3) Commodity development projects
The business will also involve itself in the community projects for example
creation of awareness on HIV/AIDS.
3.4.2 Advertisement

The business will advertise its products through various methods of advertisement such as poster,
radio stations like Kss FM, KBC and citizen. Radio will advertise an interval of two times per
year pach costs of advertisement will costs Ksh. 15,000.

The posters will be designed as shown below;

CHAMTANY AGRO-VET

FOR THE BEST PRODUCTS AND SERVICES

DEALS WITH: VETERINARY DRUGS, AGRICULTURAL CHEMICALS,

HORTICULTURAL SEED, FERTILIZERS AND ANIMAL FEEDS.

TEL NO: 0707-247-592

BOX NO :36 ELDAMA RAVINE

3.5 PRICING STRATEGY

By considering the products, quality and services, the price will be flexible. There will be room
for bargain by the customers which will then promote customer satisfaction. The prices will
increase when the demand is high and decrease when the demand is low. Every item product will
have a specified contribution of certain amount to be used to pay for the business license, rent ,
water,electric bills, transport, wages and salaries.

13
3.6 SALES TACTICS
For the success of the business trade, cash discount will be offered to customer service like after
sale service will be offered.

The business will also offer free samples to daily customers hence they will end up coming again
and again. A qualified sales person will also be employed so that he/she can maintain good
customer seller relation which will portray a very good picture of the business hence attract and
maintain them.

3.7 DISTRIBUTION STRATEGY

This refers to the ways in which the owner will ensure that goods and service reach the
customers who buy products in retail, sale will be made to them on the spot.

For customers who are outside the location of the business i.e outside the district the distributors
will use the business vehicle to transport the products to them.

Some of the problems faced in distribution may include:

a. High competition where farmers issue ten tenders.

b. Transport difficulties for some of the roads leading to rural areas are poorly constructed.
c. Retail sellers in the rural areas win customers through influence. The possible solution for
the above problems will be ;
i) The business will apply for a tender to supply products whenever it is there.
ii) Open up new branches in the areas where the demand for products is high.
iii) Widely market the products of the business in the rural areas and popularize the
business in these areas.

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SWOT analysis of CHAMTANY AGRO-VET.

Strength Weakness Opportunity Threats

- Payment of -slow in sales process -high population - government policy
wages and and delivery of goods growth rate ensures and By-laws.
salaries to to customers expansion of business. -Bad debts.
workers in -high competition
time
- Good
management
- Good
customer
relation.

The weakness above will be overcomed through:

i) The business will ensure that the goods are being ordered in time so as to be
delivered in time and be sold.
ii) The business will slightly reduce the prices of the commodities from those of its
competitor

15
CHAPTER FOUR
ORGANISATION AND MANAGEMENT
4.0 INTRODUCTION

The business will operate as a team with the manager at the top then the accountant distribtors,
salesmen, and marketing officier in the middle level management and finally watchman, drivers
and cleaners in the bottom.

4.1 ORGNISATION STRUCTURE

The manager of the business will be the owner.

Manager

Accountant

Salesman

Distributors
Marketing officer

Drivers Cleaners Watchman

16
 The manager will be the owner of the business he will plan, organize and co-ordinate the
business and other staff will assist him.

Significant of the Organization structure.

i) It shows the specificstion function of each position.

ii) The chain of command is clearly defined
iii) It clearly shows the span of control.

4.2 KEY MANAGEMENT PERSONNEL.

4.2.1 Manager.

These will be the general manager who will perform the following duties and responsibilities.

i) He will be planning, organizing ,directing, and controlling the business activities.

ii) He will formulate and design policies for the business.
iii) He will be in charge of wages and salary.

Administration qualification of the manager.

i) Holder of higher Diploma in Human Resource Management.

ii) Should be a computer literate.
iii) Should posses good leadership skills and communication skills.
iv) Must have a valid driving licencse and certificate of good conduct.
v) Should be 25 years old and above
vi) Should have 3 years relevant experience

4.3 OTHER PERSONNEL

Account 1) post

Qualification

i) Holder of CPA (iii)

ii) Certified in computer application
iii) At least two years experience
iv) Should be 20-22 years old.
v) Diploma in purchase and supply chain will be an added advantage

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Duties and Responsibilities

i) Keep and maintain the books of account.

ii) Preparation of payroll
iii) Prepare the financial statement of the business per year.
iv) Prepare the budget for the year.

Sales person (1)

Qualification

i) Holder of diploma in sales and marketing

ii) Should be computer literate
iii) Certificate in good customer care and negotiation skills.
iv) Should be 23years old and above
v) Any other certificate in related field will be an added advantage
vi) One year relevant experience.

Distribution (2) posts

Qualification

i) should be a certificate holder in supply and procurement.

ii) Should have a certificate of good conduct.
iii) Should be computer literate
iv) Should have 1 year experience in the relevant field.

Duties and Responsibilities.

i) Distribute goods to customers who buy through an order.

ii) Advertise the business and goods
iii) Ensure goods are delivered safely to the customers.

Marketing officer (2) post

Qualifications

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i) Certificate holder in sales and marketing.
ii) Must be computer literate and well informed about the current trends
iii) Should be 24-35 years of age.
iv) Should have 2years of experience.

Duties and Responsibilities

i) Advertising the goods and services of the business.

ii) Conduct sale promotion activities

Drivers (2) post

Qualification

i) At least K.C.S. E certificate.

ii) Valid driving license
iii) Certificate of good conduct
iv) Good communication skills
v) 3 years relevant experience in a busy company
vi) Should be 30years old of age

Duties and Responsibilities

i) To distribute goods to various places.

ii) Tp maintain the business.

Watchman (2) posts

Qualification

i) At least K.C.S.E certificate with D+ and above.

ii) Certificate of good and conduct
iii) Good communication skills
iv) Age 27-40 years
v) 5 years’ experience
Duties and Responsibilities

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 i) To ensure the firm security
ii) To safeguard the business assets
iii) To maintain occurrence book
Clearness (2) post
i) At least K.C.S.E certificate
ii) Should have good communication skills
iii) Should have good health
iv) Should be 20-25 years of age
v) Certificate of good conduct

Duties and Responsibility

i) To maintain cleanliness in the premise

ii) To ensure the compound is clean by collecting litters around
iii) To ensure that cleanliness is done in time

4.4 RECRUITMENT, TRAINING AND PROMOTION OF STAFF.

4.4.1 RECRUITMENT
Recruitment is the process of discovering the source of man power to meet the recruitment of
staffing schedule and employ effective measure for attracting the manpower in adequate number
for effective selection of an efficient work force.

Below are the source of recruitment

i) Educational institution
ii) Advertisement
iii) Unsolicited application

The manager will advertise its job through the news in the local radio. This should be done
basing on the following Qualifications.

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4.4.2 TRAINING
The business will organize refresher course on the job training for the employees this may be in
form of attending seminars, conferences and Agricultural shows which will update on the
experience performance .

4.4.3 PROMOTION
The business will promote its emloyees according to abilities and performance based on the
results yield. For one to be promoted he/she should have worked for at least one year.

4.5 REMUNERATION AND INCENTIVES

4.5.1 REMUNERATION
The business will depend on existing government policis, labour laws. Net profit by the business.
At the end of the second year the enterprenuer will increase employees salary and incentives.
The business will also base on the job specification and position held by the employee to
determine their remuneration.

4.5.2 Incentives
Incentives will be provided to the employees to promote work morale among them. Below are
the incentives that will be offered to employees.

i) Bonus award – bonus will be awarded as an incentive. When sales increase hence
high profit in the business.
ii) Overtime pay – overtime pay will be awarded to any employee who has worked
overtime depending on the performance.
iii) Medical allowances – a medical allowance of 500 per month will be awarded to the
employees.
iv) Staff tea – this will be provided as a welfare provision for the employees. The
employee will drink tea at 10.30 am and at 4.00pm during working days.
v) Commission –This will be provided when the employees sell the goods and services
in a large quantity and gain more profit than expected. The employees will be entitle
to earn salary as shown below.

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 Employees No. of workers Monthly salary plus Annual monthly
Allowance salary
Manager 1 45,000 540,000
Accountant 1 30,000 360,000
Salesman 1 20,000 240,000
Marketing officer 2 30,000 360,000
Distribution 2 30,000 360,000
Drivers 2 24,000 288,000
Watchman 2 20,000 240,000
Cleaners 2 12,000 144,000
TOTAL 13 211,000 2,532,000

4.6 LICENSE, PERMIT AND BY-LAWS

The legal formalities of the business will be the owner through compliance of all legal
requirement by the government. This will be through:

a. Registration

The business will be registered under the business name CHAMTANY AGRO-VET by paying
the registration fee of Ksh 50,000 for the business to operate legally. This will be paid by the
business as provided by the law.

b. License

The license will be acquired from Ravine municipal council upon payment of Ksh 2,500. The
business license will be renewed on expiry which is an annual basis.

c. Permit

Permit will be applied through a legal process by the business. This especially when the business
intends to transport its goods and services to its customers in rural areas.

d. Health certificate

22
This will be acquired from the Ministry of Public health and sanitation upon the fulfillment of
health requirements in the business premise.

The certificate will be renewable after every five months upon payment of Ksh 1000.

e. Labour laws

The business will comply with all labour laws to ensure good industrial relation in the business
e.g trade dispute Act (CAP 234), employment Act (CAP 238). The business will adopt
arbitration as a machinery to solve dispute in the business

4.7 OTHER SUPPORT SERVICES

Support service Service provider
Postal service Ravine post office
P.O Box 200-32100
Ravine
Banking service Kenya Commercial Bank (KCB)
P.O Box 0284
Ravine branch
Power service Kenya Power and Lightning Company
P.O Box 130
Ravine
Water service Kirobon-dam water project,
P.O Box 1208
Eldama Ravine
Tel No-0718021315
Insurance service Amaco Insurance Company
P.O Box 1281
Ravine
Health services Ravine District Hospital
P.O Box 281,
Ravine
Tel : 0725037912

23
CHAPTER FIVE
5.0 PRODUCTION PLAN
INTRODUCTION

This shows the breakdown of equipment materials and other necessary requirement to facilitate
production of goods and services.

5.1 PRODUCTION FACILITIES AND CAPACITIES

The production process will require the following facilities for goods and services.

Equipment Quality Capacity Costs @ Total cost Supplier

Computer 3 14 inches 45,000 135,000 Pollar and
electronics
Office tables 3 5,000 15,000 ART Ravine
Chairs 10 300 3,000 Kaczam
hardware
Wheelbarrow 2 3,000 6,000 Uruqur
rubber
Cloves 10 pairs 300 3,000 company
Masks 10 500 5,000 Sundower
Calculator 5 800 4,000 pharmacy
Taptok
bookshop
TOTAL 54,900 171,000

The computer will be used for storing data and information, Access internet and calculation
which are voluminous and complicated.

The calculators are used for working simple calculations e.g addition and subtraction of figures.

The tables will be used while writing an act as a base where computers rest while chairs are used
for sitting by both workers and customers.

24
The wheelbarrow will be used to offer after sale services like transport to the customers who buy
goods in large quantities.

The cloves will be used by the workers to protect themselves from harmful chemicals and drugs.

The masks also serve the same purpose which protects the workers from inhaling harmful
chemicals.

5.1.1 The ground plan for the proposed premise s

Table

Stores

Shelves

Entry Entry

Entry Chaiis

Managers office entry Accountant office

Table

Clock rooms

Proposed ground plan for the premise

5.2 PRODUCTION STRATEGY

The business will lay down strategies necessary for the production so as to reduce the cost of
experience and delays and improve the supply of goods and services.

25
The business will transport the goods direct from the suppliers to reduce the chances of delays
and reduce the cost of expenses. Marketing will be carried out during the planting season and
harvesting season to enable the business to sell more.

Discount will also be offered to customers who buy goods in bulky as to keep them coming.

Monthly labour requirement .

Direct labour Job title No. of workers Qualification Rate/ amount

Management Manager 1 Diploma in BA 45,000
Accounting Accountant 1 CPA 30,000
Sale Salesman 1 Diploma in sales 20,000
Advertisement Marketing 2 Certificate in
officer marketing 30,000
Distribution 2 Certificate in
Distributors supplies 30,000
Driving 2 K.C.S.E
Driver certificate and 24,000
Security 2 Driving license 20,000
Cleanliness Watchman 2 K.C.S.E 12,000
Cleaner Certificate
K.C.S.E
Certificate
TOTAL COST 14 211,000

26
The list of Preliminary cost

OVERHEADS COST
Rent 3,000
Water 250
Electricity 1,300
Registration fee 50,000
Rent / license 25,000
Telephone 120
Advertisement 1,500
Transport 10,000
TOTAL 92,250

The total cost per month = direct labour cost – overhead cost

= Ksh 211,000 – 92,250

= Ksh 118,750

5.3 PRODUCTION PROCESS

The business will operate under the following steps

i) Ordering

The manager of the business will place an order to the supplier and the supplier upon receiving
the order will supply the goods as prescribed by the order.

ii) Receiving

After receiving the order, the supplier will supply the goods to the business upon the half
payment will be made through the M-pesa service provided by safaricom mobile company and
the goods will be delivered to the business.

iii) Storing

27
After the business receives the products they are stored till demand arises.

iv) Selling

After storage, the goods are sold to customers who are in need of it. These are factors which are
likely to order the production process. These are both internal and external factors.

Internal factors affecting the production process.

i) Long period of collecting funds.

ii) Misappropriate use of business funds by workers.
iii) Theft among other employees.

How to overcome the factors.

i) Close supervision and auditing to curb misappropriate of funds

ii) High competition from the Agro-vets.
iii) Employ trustworthy and well discipline employees.

External factors affecting production process.

i) High competition from the Agro-vets.

ii) Government policies and regulation

How to overcome external factors .

i) Improve the quality of goods and services.

ii) Adhering to the government set policies and by-laws.

5.4 REGULATION AFFECTING OPERATION

The government regulation should be adhered to ensure that free transactions is legal and
acceptable by the government policies. Below is the table showing the regulations affecting
operations.

28
 Regulation Provider Costs (Ksh) Remarks
(Authority )
License /Permit Municipal council 2,500 Annually
Health Permit Ravine district 1,000 Annually
hospital
Single business Annually
Permit
Insurance Thirteen insurance 5,000 Annually
company
Safety N.S.S.F 3,000 Annually
Environment NEMA
Total 17,000

CHAPTER SIX
6.0 FINANCIAL PLAN
INTRODUCTION

29
The financial plan shows the financial requirements of the business venture, it also provides the
proposed source and use of the finance. All the finance information is contained in profoma
income statement and break-even point.

6.1 PRE-OPERATIONAL COST

These are cost incurred before the commencement of the business

ITEM AMOUNT
Machinery and equipment 145,000
Furniture and fittings 30,000
Electricity deposits 1,300
Permit 2,500
License 2,500
Water 250
Registration fee 50,000
Telephone 1,200
Advertisement 15,000
Transport 10,000
Rent 3,000
Postage 210,000
Miscellaneous 500,000
Insurance 5,000
Maintenance 80,000
1,05600

6.2 WORKING CAPITAL STATEMENT

This is the capital investible in the business and the various source of capital.

The required capitalization

30
DETAILS AMOUNT(Ksh )
Loan from bank (KCB) 1,200,000
Owners contribution 300,000
Friends and relatives 1,000,000
TOTAL 2,500,000

6.2.1 SALES SCHEDULE FOR THE YEAR

MONTH AMOUNT (Ksh)
January 435,000
February 500,000
March 480,000
April 400,000
May 300,000
June 350,000
July 200,000
August 350,000
September 420,000
October 500,000
November 520,000
December 480,000
TOTAL 5,015,000

6.2.2 PURCHASE SCHEDULE FOR THE YEAR

MONTH AMOUNT (Ksh)
January 30,000
February 25,000
March 20,000
April 15,000

31
May 30,000
June 2,000
July 10,000
August 150,000
September 15,000
October 20,000
November 15,000
December 15,000
TOTAL 230,000

6.2.3 ANNUAL COLLECTION FOR DEBTORS SCHEDULE

MONTH AMOUNT (Ksh)

January
February 15,000
March 18,000
April 12,000
May 15,000
June 20,000
July 10,000
August 25,000
September 10,000
October 12,000
November 15,000
December 20,000
TOTAL 172,000

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 6.3.1 Cashflow Statement for the Year Ended 31st December 2018
Item Jan Feb March April May June July August Sept. Oct. Nov. Dec Totals
Cash in flow
Cash sales 180,000 193,500 171,000 202,500 180,000 189,000 162,200 193,500 184,500 207,000 198,000 153,000 2,214,00
0
Collection - 20,000 21,500 19,000 22,500 20,000 21,000 18,000 21,500 20,500 20,500 23,000 227,500
from Debtors
Bank Loan 300,000 - - - - - - - - - - - 300,000
Borrowing 100,000 - - - - - - - - - - - 100,000
from Friends
Borrowing 100,000 - - - - - - - - - - - 100,000
from Relatives
Owner’s 700,000 - - - - - - - - - - - 700,000
contribution
Total Cash 1,380,000 213,500 192,500 221,500 202,500 209,000 183,300 211,500 206,000 227,500 218,500 176,000 3,641,50
Inflow 0
Cash out flow
Cash purchase 80,750 68,000 60,350 63,750 59,500 59,500 42,500 68,000 51,000 68,000 68,000 59,500 748,850
Payment to - 143,250 12,000 10,650 11,250 10,500 10,500 7,500 12,000 9,000 12,000 12,000 121,650
creditors
Pre-operational 850,000 - - - - - - - - - - - 850,000
cost
Salaries 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 690,000
&wages
Electricity 1,100 1,100 1,100 1,100 1,150 1,150 1,150 1,150 1,150 1,150 1,150 1,150 13,600
Insurance 25,000 - - - - - - - - - - - 25,000
Advertising 3,000 - - - 3,000 - - - 3,000 - - - 9,000
Selling expense - 900 900 1,000 1,200 1,000 800 1,000 800 700 900 100 9,300
Telephone - 1,000 1,000 1,000 1,000 1,000 1,000 1,200 1,200 1,200 1,200 1,200 12,000
Postage 100 150 125 125 125 125 125 125 140 110 100 150 1,500

33
Transport - 150 150 160 160 180 180 150 150 170 150 200 1,800
Interest on loan 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Loan - 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 55,000
repayment
Repair & - - - - - 8,000 - - - - - 12,000 20,000
maintenance
Water 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Total Cash 1,020,350 150,950 89,225 143,185 142,785 93,255 121,655 144,525 134,840 145,730 148,900 147,200 2,592,50
outflow 0
Net Cash 359,650 62,550 103,275 78,315 59,715 115,775 61,345 66,975 71,160 81,770 69,600 28,800 1,158,93
0
Accumulated 359,650 422,200 525,475 603,790 663,505 779,280 840,625 907,600 978,760 1,060,530 1,130,130 1,158,93
Cash 0

6.3.2 Cash Flow Statement for the Year Ended 31st December 2019

Item Jan Feb March April May June July August Sept. Oct. Nov. Dec Totals
Cash in flow
Cash sales 180,000 190,000 200,000 250,00 170,00 190,000 162,20 200,000 185,00 210,000 198,000 155,00 2,290,0
0 0 0 0 0 00
Collection - 205,000 18,000 240,00 22,500 15,000 22,000 18,000 16,000 23,400 20,000 26,000 225,400
from Debtors 0
Bank Loan 300,000 - - - - - - - - - - - 300,000

34
Borrowing 100,000 - - - - - - - - - - - 100,000
from Friends
Borrowing 100,000 - - - - - - - - - - - 100,000
from Relatives
Owner’s 700,000 - - - - - - - - - - - 700,000
contribution
Total Cash 1,380,000 210,500 218,000 274,00 192,50 205,000 184,00 218,000 201,00 233,400 218,000 181,00 37,115,
Inflow 0 0 0 0 0 400
Cash purchase 80,000 70,000 65,000 64,000 55,500 40,500 55,000 60,000 50,000 68,000 65,000 59,000 732,000
Payment to 14,500 - 13,000 10,000 10,000 15,000 8,000 7,500 12,000 9,000 5,000 9,000 113,000
creditors
Pre- 850,000 - - - - - - - - - - - 850,000
operational
cost
Salaries 57,500 58,000 57,500 57,500 57,500 57,500 58,000 58,000 57,500 57,500 57,500 57,500 691,500
&wages
Electricity 1,100 1,100 1,100 1,100 1,150 1,150 1,150 1,150 1,150 1,150 1,150 1,150 13,600
Insurance 25,000 - - - - - - - - - - - 25,000
Advertising - - - 3,000 - - - - 3,000 - - - 6,000
Selling - 900 900 1,000 1,100 800 700 300 500 400 1,200 1,000 8,800
expense
Telephone - 1,000 1,000 1,000 1,000 1,200 1,000 1,000 1,200 1,000 1,000 1,000 11,400
Interest on 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Loan
Loan - 5,000 5,000 - 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 50,000
repayment
Repair - - - - - 8,000 - - - - - 12,000 20,000

35
&maintenance
Water 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Total Cash 1,005,100 138,170 145,640 139,77 133,43 131,350 131,03 135,140 132,49 144,230 138,050 147,75 2,522,1
outflow 0 0 0 0 0 50
Net Cash 374,900 72,330 72,360 134,23 59,070 73,650 52,970 82,860 68,510 89,170 79,950 33,250 1,193,2
0 50
Accumulated 374,900 447,230 519,590 653,82 712,89 786,540 839,51 922,370 990,88 1,080,0 1,160,000 1,193,2
Cash 0 0 0 0 50 50
st
6.3.3 Cash flow Statement for the Year Ended 31 December 2020
Item Jan Feb March April May June July August Sept. Oct. Nov. Dec Totals
Cash in flow
Cash sales 150,000 130,000 180,000 200,000 160,000 210,000 140,000 100,000 180,00 190,000 200,000 150,000 1,990,000
0
Cash from - 20,000 17,000 20,000 25,000 17,000 24,000 15,000 20,000 24,500 26,000 30,000 238,500
debtors
Bank Loan 300,000 - - - - - - - - - - - 300,000
Borrowing from 100,000 - - - - - - - - - - - 100,000
Relatives
Borrowing from 100,000 - - - - - - - - - - - 100,000
Relatives
Owner’s 700,000 - - - - - - - - - - - 700,000
contribution
Total Cash 1,350,00 150,000 197,000 220,000 185,000 227,000 164,000 115,000 200,00 214,400 226,000 180,000 3,428,500
Inflow 0 0
Cash purchase 50,000 70,000 60,000 40,000 50,000 40,000 50,000 60,000 40,000 65,000 60,000 50,000 700,000
Payment to - - 13,000 16,000 10,000 16,000 9,000 8,000 12,000 9,000 8,000 6,000 102,000
creditors

36
Pre-operational 850,000 - - - - - - - - - - - 850,000
cost
Salaries &wages 57,500 58,000 57,500 57,500 57,500 57,500 58,000 58,000 57,500 57,500 57,500 57,500 691,500
Electricity 1,100 1,100 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 14,500
Insurance 25,000 - - - - - - - - - - - 25,000
Advertising - - - - - - - - 3,000 - - - 6,000
Selling expense 200 900 900 1,100 1,100 800 700 300 500 400 1,200 1,000 9,000
Telephone 1,000 1,000 1,000 1,000 1,000 1,100 1,100 1,100 1,100 1,100 1,100 1,100 12,700
Postage 100 150 120 120 120 120 120 120 100 100 100 100 1,370
Transport - 120 120 160 160 180 160 170 140 180 200 100 1,680
Interest on Loan 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Loan Repayment 5,000 5,000 - 5,000 5,000 5,000 - 5,000 5,000 5,000 5,000 5,000 50,000
Repair & - - - - - 8,000 - - - - - 10,000 18,000
Maintenance
Water 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Total Cash 991,800 138,170 135,740 136,770 128,030 130,950 122,230 135,840 122,49 141,430 136,250 133,950 2,504,550
Outflow 0
Net Cash 358,200 11,830 61,260 83,230 56,970 96,050 41,770 20,840 77,510 73,070 89,750 46,050 1,016,530
Accumulated 358,200 370,030 431,290 514,520 571,490 667,540 709,310 730,150 807,66 880730 970,480 1,016,53
Cash 0 0

37
6.4 ANNUAL PAYMENT OF CREDITORS
MONTH AMOUNT (Ksh)
January 40,000
February 50,000
March 55,000
April 52,000
May 45,000
June 50,000
July 50,000
August 48,000
September 38,000
October 42,000
November 50,000
December 52,000
TOTAL 574,000

6.5 PROFOMA INCOME STATEMENT

Profoma income statement for the year ending 2020

ITEMS 31/12/2018 31/12/2019 31/12/2020

Sales 5,015,500 5,384,000 5,468,000
Less cost of goods
sold 401,000 416,000 421,800
Gross profit 4,614,000 4,968,000 5,046,200
Expenses
Creditors 574,000 560,370 2,532,000
Wages and salaries 2,532,000 2,532,000 36,000
Rent 36,000 36,000 2,970
Water 3,310 2,856 16,038
Electricity 18,870 14,700 86,000
Transport 81,000 85,000 5,000
38
 Maintenance 5,000 5,000 28,000
Insurance 21,000 25,000 1,500
Telephone 1,200 1,800 480,000
Loan repayment 440,000 480,000 2,500
Permit 2,500 2,500
Registration fee 50,000
Miscellaneous 500,250 26,840 24,980
TOTAL

TAX = 5,000

Net profit before tax

Net profit = G.P – Expenses

N.P = 4,614,000 – 4,297,630

=316,370

Net profit after tax (Net profit tax )

=316,370 – 5,000

=311,370

6.6 PROFOMA BALANCE SHEET

The profoma balance sheet for the year ending 2020.

39
ITEMS 31/12/2018 31/12/2019 31/12/2020
Assets
Current assets
Cash in hand 300,000 500,000 520,000
Cash at bank 1,200,000 1,000,000 800,000
Stock 343,000 378,000 406,000
Total current assets 1,843,000 1,878,000 1,726,000
Fixed assets
Machinery and
equipment 145,000 150,000 168,000
Furniture and fitting 30,000 34,000 38,000
Total fixed assets 175,000 184,000 206,000
TOTAL ASSETS 2,018,000 2,062,000 1,932,000
LIABILITIES
Current liabilities
Creditors 574,000 582,000 596,000
Total current liability 574,000 582,000 596,000
Long term term
Owners equity 300,000 350,000 400,000
Bank loan 1,144,000 1,130,000 936,000
Total long term
liabilities 1,444,000 1,480,000 1,336,000
Total liabilities 2,018,000 2,062,000 1,932,000

6.7 THE BREAK -EVEN POINT

This is the period when the business will make neither profit nor loss

Break – even point =fixed costs

Contribution margin %

Item Amount (Ksh )

40
Fixed cost
Salary and wages 2,532,000
Insurance 5,000
Permit and license 5,000
Loan repayment 440,000
Registration 50,000
Total fixed costs 3,032,000
Variable costs
Creditors 574,000
Rent 36,000
Water 3,310
Electricity 18,870
Transport 81,000
Maintenance 21,000
Infrastructure 30,000
Miscellaneous 23,980
Total variable cost 788,160

6.8 THE BREAK – EVEN POINT

i) Contribution margin
= total sales – variable costs
=5,015,000 – 788,160
= Ksh 4,226,840
ii) Contribution margin percentage
= contribution margin

41
 Total sales

= 4,226,840 x 100%

5,015,000

= 84.28%

iii) Total fixed cost as at 31/12/2018

= 3,032,000

iv) Break – even point

= fixed cost

Contribution margin in %

= 3,032,000 3,597,532.036

0.8428

= 3,597,532

6.9 PROFITABLE RATIOS

This will help the enterprenuer to determine the performance of the business over a specific
period of time.

i) Gross profit ratio

Gross profit x 100%
sales

4,641,000 x 100%

42
 501,500

= 92.5%

ii) Return of equity

Net profit after tax x 100%
Owners equity

321,340 x 100%

300,000

= 107.1%

iii) Return on investment

Net profit after tax x 100%
Total investment

321,340 x 100%

2,500,000

= 12.8%

6.9 DESIRED FINANCING

ITEMS AMOUNTS Ksh

Pre-operation 1,056,000
Working capital 1,269,000
Fixed assets 1,750,000
Total 4,075,000

6.10 PROPOSED CAPITALISATION

Items Amounts Ksh

43
Owners’ equity 300,000
Bank loan 1,200,000
Friends and relatives 1,000,000
Total 2,500,000
uses of profit

i) The profit will be used in expansion of the business .

ii) It will be used to increase the salaries and wages of employees.
iii) The entrepreneur will use for his personal development .
iv) The saved profit will earn bank interest to be used in future.

44