BUSINESS PLAN

TITLE:KIMRO TIMBERYARD DISTRIBUTORS

PRESENTER:KIMELI DICKSON

INDEX: 5401010648

INSTITUTION: KAIBOI TECHNICAL TRAINING INSTITUTE

SUPERVISOR: MR BOAZ OYOLA

PRESENTED TO: THE KENYA NATIONAL EXAMINATION COUNCIL FOR

PARTIAL FULFILMENT FOR THE AWARD OF DIPLOMA IN SOCIAL WORK
AND COMMUNITY DEVELOPMENT

SERIES: NOVEMBER
DECLARATION
I declare that this is my original work and to the best of my knowledge it has never been
presented anywhere else for examination purpose

STUDENT NAME: KIMELI DICKSON

Signature: ………………………………….

Date: …………………………………………...

Declaration by the supervisor

This project has been presented for examination with my approval as the college supervisor.

SUPERVISOR: MR BOAZ OYOLA

Signature: ……………………………….

Date: ……………………………………….
DEDICATION
I dedicate this my work to my parents, relatives, and friends, and my colleagues for their
financial support during my business plan writing in which they took part for the success
until the end of the entire business plan. Their gratitude, love, support, determination and
dedication to my work pilled me through. May God reward all of them and I highly
appreciate their support.

ACKNOWLEDGEMENT

My sincere thanks and appreciation goes to all those who assisted me in one way or another
to make this business plan successful.

First appreciation goes to the business fraternity for allowing me to make a business decision
while still in school for the purpose of academic excellence.

Special thanks to my supervisor Mr. Boaz Oyola for his guidance and tireless efforts during
the process of writing this project.
EXECUTIVE SUMMARY
The name of the business will be KIMRO TIMBERYARD DISTRIBUTORS. The business
type will be sole proprietorship. The owner will engage in buying and selling of timbers and
making furniture. The principal customers will be individuals and commercial customers that
include contractors and institutions such as hospitals, schools and developing businesses in
the area. The main aim of the business is to identify its customers and attract more in order to
diversify and acquire large market share. The target market of the business will be the local
residence within institutions, hospitals and upcoming centers. The business will attract both
high and low earners and will face competition, will consider pricing of product and the cost
of production of the products in order to take advantage of the production rate of products
thus increase in sales hence profit increase

Transportation facilities will be offered to the customers in any quantity. The products will be
advertised through verbal and posters informing the customers about the products.

The business will operate direct or indirect when making sale to the customers. The owner of
the business will be Kimeli Rono.He will be able to employ some employees who will assist
in the business management.

Recruitment will be done to employ them when there is vacancy and it will be based on
ability to produce and experience. They will be promoted base on field production and the
quality of products produced. Enumeration will also be provided to motivate the workers.

Kimro Timberyard Distributors will be dealing with the production of timber. Products of
different sizes and texture will be produced. The prices of the products will vary according to
the customers' choice. Whatever will influence the cost of products will also be the costs
incurred during production and the pre-operational expenses such as water, rent, telephone,
salaries and license will be incurred in this process.

The business will start with a capital of Kshs.1,000,000 where the source is Kshs.100,000
will be from personal savings,Kshs.50,000 from bank loan and Kshs.400,000 from family
contributions. The business will be able to make transactions at the end of every year to
gauge whether it is operating on profit or incurring losses.

The business might face the risks and problem of shortage of timber due to increased illegal
logging of wood or government restrictions on felling and transportation of logs.

The business will therefore take a precautionary measure of planting fast maturing trees on a
set piece of land and replanting after harvesting.
‘

Contents
DECLARATION.......................................................................................................................ii

DEDICATION..........................................................................................................................iii

ACKNOWLEDGEMENT........................................................................................................iii

EXECUTIVE SUMMARY........................................................................................................v

CHAPTER ONE........................................................................................................................1

1.0 BUSINESS DESCRIPTION................................................................................................1

1.1 BUSINESS NAME..............................................................................................................1

1.2 BUSINESS LOCATION AND ADDRESS.........................................................................1

1.3 FORMS OF OWNERSHIP..................................................................................................2

1.4 PRODUCTS AND SERVICES...........................................................................................3

1.5 JUSTIFICATION OF THE BUSINESS OPPORTUNITY.................................................3

CHAPTER TWO........................................................................................................................6

2.0 MARKETING PLAN..........................................................................................................6

2.1 CUSTOMERS......................................................................................................................6

2.2 MARKET SHARE...............................................................................................................7

2.3. COMPETITION..................................................................................................................8

2.4. ADVERTISING AND SALES PROMOTION..................................................................9

2.5. PRICING STRATEGY.....................................................................................................10

2.5.1. COST OF PRODUCTION.............................................................................................10

2.5.2. DEMAND ORIENTED.................................................................................................10

2.5.3. PENETRATION............................................................................................................10

2.5.4. DISCOUNT....................................................................................................................10

2.6. SALES TACTICS.............................................................................................................11

2.7. DISTRIBUTION STRATEGY.........................................................................................12

CHAPTER THREE..................................................................................................................13

3.0. ORGANIZATIONAL MANAGEMENT PLAN..............................................................13

3.1. THE MANAGER..............................................................................................................14

3.2. KEY PERSONNEL...........................................................................................................15

3.2.1. SUPERVISOR...............................................................................................................15

Duties and responsibilities........................................................................................................15

3.2.2. ACCOUNTANT............................................................................................................15

Duties and responsibilities........................................................................................................16

3.2.3. SALES REPRESENTATIVE........................................................................................16

3.2.4. WORKERS....................................................................................................................16
3.2.5. DRIVER.........................................................................................................................16

3.2.6. SECURITY GUARD.....................................................................................................16

3.3. OTHER PERSONNEL.....................................................................................................17

3.3.1. LAWYER QUALIFICATIONS....................................................................................17

3.3.2. AUDITORS....................................................................................................................17

3.4. RECRUITMENT, TRAINING AND PROMOTION.......................................................17

3.4.1. RECRUITMENT...........................................................................................................17

3.4.2. TRAINING.....................................................................................................................17

3.4.3. PROMOTION................................................................................................................18

3.5. RENUMERATION AND INCENTIVES.........................................................................18

3.5.1. RENUMERATION TABLE..........................................................................................18

3.5.2 INCENTIVES.................................................................................................................18

3.6. LICENSES, PERMIT AND BY LAWS...........................................................................19

3.6.1. BY-LAwS.......................................................................................................................19

3.7. SUPPORT SERVICES.....................................................................................................19

BANKING SERVICES............................................................................................................20

BOOK KEEPING AND ACCOUNTING SERVICES...........................................................20

LEGAL SERVICES.................................................................................................................20

BUSINESS MANAGEMENT CONSULTANCY SERVICES..............................................20

POSTAL SERVICES...............................................................................................................20

CHAPTER FOUR....................................................................................................................21

4.0. PRODUCTION/OPERATIONAL PLAN.........................................................................21

4.1. FACILITIES AND EQUIPMENTS..................................................................................21

Kimro Timberyard Distributors layout will be as follows,......................................................22

4.2. PRODUCTION/OPERATIONAL STRATEGY..............................................................23

4.3. PRODUCTION PROCESS...............................................................................................24

4.4. REGULATIONS AFFECTING OPERATION................................................................25

4.5.1. MATERIAL REQUIREMENT PER MONTH..............................................................25

4.5.2. COST OF LABOUR......................................................................................................26

4.5.3. OVERHEAD COSTS....................................................................................................27

4.5.4. TOTAL COST OF PRODUCTION PER MONTH.......................................................27

CHAPTER FIVE......................................................................................................................28

5.0. FINANCIAL PLAN..........................................................................................................28

5.1 PRE- OPERATIONAL COSTS.........................................................................................28

5.2. WORKING CAPITAL......................................................................................................29

5.3. PROJECTED CASH FLOW STATEMENTS..................................................................30

5.3.1. PROJECTED CASH FLOW STATEMENT FOR YEAR 2023...................................30

5.3.2. PROJECTED CASH FLOW STATEMENT FOR YEAR 2024...................................32

5.3.3. PROJECTED CASH FLOW STATEMENT FOR YEAR 2025...................................34

5.4. PRO-FORMA BALANCE SHEET AS AT JANUARY 2023.........................................36

FIXED ASSETS.......................................................................................................................37

LIABILITIES...........................................................................................................................37

Long term liabilities.................................................................................................................37

5.5. BREAK EVEN ANALYSIS.............................................................................................38

5.5.1. CONTRIBUTION MARGIN.........................................................................................38

SALES......................................................................................................................................38

5.5.2. THE TOTAL EXPENSES.............................................................................................39

5.5.3. CALCULATION OF BREAK EVEN LEVEL.............................................................39

5.6. EXPECTED PROFITABILITY RATIOS........................................................................39

5.6.1. GROSS PROFIT PERCENTAGE.................................................................................39

5.6.2. RETURN ON EQUITY.................................................................................................39

5.7. DESIRED FINANCING...................................................................................................40

CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The name of the business will be called Kimro Timberyard Distributors. The name is derived
from the owners name Kimeli Rono The owner interim to start the business in the year 2023
and will be a sole proprietorship type of business. The major activities will be buying of
timbers and making furniture. The principal customers will be institutions such as hospitals,
schools and upcoming buildings in Kitale town.

1.2 BUSINESS LOCATION AND ADDRESS

Kimro Timberyard Distributors will be located in an area, Mail trading Centre, plot number
357A,land registration number LA/B20/C40 Wezima plaza, Lodwar-Kitale Highway 5Km
from Kitale town. The businesses address is,

KIMRO TIMBERYARD DISTRIBUTORS,

PO BOX 1784,

KITALE.

TEL; 0718445453
BAKHITA
E-MAIL:[email protected]
ACADEMY

MBUGUA &
SONS
MAP SHOWING BUSINESS LOCATION
SHAH RAMJI
BROTHERS
HIGHLAND HIGH
SCHOOLS

KIMRO TIMBERYARD
DISTRIBUTORS
MOI UNIVERSITY
KITALE CAMPUS.
The business market will be the residents of Kitale area where many regions developing
rental houses for servants and businessmen around there will encourage expansion of

The business market will be the residents of Kitale area where many regions developing
rental houses for servants and businessmen around there will encourage expansion of the
trading Centre.

The identification of the business is close to the source of raw materials in that the man-
made forest is a few meters from the location, the potential market is easily available and
favorable demand from the customers.

1.3 FORMS OF OWNERSHIP

The business will operate as a sole proprietor that is managed by one person who is
responsible for the profits and losses. This business is highway considerable because this is
personal supervision of the work of the owner thus creating good customer relations. It can
respond flexibly to market changes and customers demand and decisions can be taken
quickly and also the owner has independence and control over the business.

The owner of the proposed business will be Mr.Kimeli Rono who is intending to start a sole
proprietor business in the year 2023. The owner is currently a student at Kaiboi Technical
Training Institute pursuing a diploma course in Social Work and Community Development
where the completion year is 2022.
The relevance of his experience in this business will be to create job opportunities too many
idle youths in the village and be able to produce marketable wooden products which furnishes
the room to the level of customer’s expectation. Training services will also be offered.

The intended compensation for lack of experience in the planned business is through training
and encouraging individuals to join computer training studies hence a digitalize world.

1.4 PRODUCTS AND SERVICES

The proposed business will offer main product as timber which will provide materials for
construction, making of furniture and the saw dust used as firewood by the nearby customers
being sold to them at a cheaper prices. The customers will receive free transportation services
of the already bought products.

Customers will get products of high quality and will last longer as will be flexible and have a
good texture to attract customer's attention.

The unique features from competitors are durable products, free transportation services,
attractive decorations, fair prices of the products, good quality wood used and clean working
environment.

Other proprietor features required for the products are availability of required size, variety of
type, good management and control system, high rate of training the youths to be Carpenters
to avoid unemployment and idleness.

1.5 JUSTIFICATION OF THE BUSINESS OPPORTUNITY

Justification of the opportunity is that certain wooden made are in high demand and supply of
it will venture the business. This is also a reliability of raw materials that are trees needed in
the surrounding places.

The business will contribute to local market or community that is creating job opportunities
to the residents utilizing available resources that is trees and introducing new skills to the
workers and also the members' available getting saw dust at a cheaper price.

1.6 INDUSTRY

The proposed business will fall under the wood work and carpentry industry thus dealing
with wood work and wood machines.
The size of the proposed business will be medium because of the available resources and the
rate of work being done. The general level of sales is through its working to earn and
maximize profits as the main objective of the proposed business.

Seasonal factories experienced in the business is that not all individuals decide to build in the
same period, not all individuals sell their trees without proper transport means. A problem
may arise in the case of rainy season especially individuals who comes from muddy roads in
the villages.

The industry trends and prospected signs of growth will be through good employer employee
relationship and good customer relationship, desirable work ability and good governance.

The industry will be stable due to the fact that rules and regulations are clearly formed, time
management and high value of profit making. Its decline and will be minimal if the correct
orders are followed and adhered to. The competitive trends in the industry in the case of
innovation is only through the internet which the owner can get access to new development
and be able to put in place as long as the entire customers accept.ie. Modification will also be
part of the competitive trend as same products need to be modified that is shapely, design and
also sizes so as to suit the customers need thus the owners has to learn about the current
modifications in the field of industry through many sources such as newspaper, television,
internet, radios.

1.7 GOALS OF THE BUSINESS.

The goals of the business in order to facilitate market include:

1. To encourage team work in the place of work

2. To earn and maximized profits

3. To use the available resources

4. Provision of high quality products to satisfy customers’ needs

1.8 ENTRY AND GROWTH STRATEGIES

The following reasons will be put into consideration in order to penetrate in the market.

(a) Fair prices to the customers

(b) Providing hard wood which will produce high quality products thus durable products will
be produced.

(c) Providing quick means of transportation facilities.

(d) Qualified personnel will be employed in order to provide necessary skills in the industry.

(e) Conducting market respond.

The growth opportunities will include opening an M-pesa account to facilitate the customers
in paying their money through it, also opening a hotel room next to that timberyard through
posters, media and also adverts. The plans for growth and expansion beyond entry of
products are making sure that each product produced goods hand in hand with the customers
demand, the products are of high quality, they are durable made by qualified Carpenters and
making sure that services rendered are of quality to the customers and readily available at any
time required.
CHAPTER TWO.

2.0 MARKETING PLAN.

Kimro Timberyard Distributors is a type of business that will target small scale and large
customers. The business will ensure that customers who buy products for their local use and
those that buy the same products for resale are all gathered for. The business will try all
means possible using the able employees to ensure that customers are served well. The
customers to the business include the following.

2.1 CUSTOMERS
These will comprise of various customers that the business intends to get. They are divided
into;

INDIVIDUAL CUSTOMERS

These are customers who will be coming for their personal services and products from the
business. The needs of the customers will be made through transportation, milling and
sawing.

INSTITUTIONAL CUSTOMERS

These are customers that are adversely growing within the market region, they include
hospitals, schools, colleges and churches.

The business owner intends to capture more customers due to high demand for timber and
other building materials. This makes the population of the market to be more competitive
therefore a lot of suppliers of products will be increasing as time goes by. The most targeted
institutions are Highland high School, Bakhita Academy and Moi University Kitale campus.

COMMERCIAL CUSTOMERS

They will be the prime customers as they will be handling large number of contractors and
offer negotiable service, with other partner contracts. The contracts will include Ngetich and
sons and Ram's brothers.

2.2 MARKET SHARE

This refers to the scope of the market that Kimro Timberyard Distributors will achieve out of
the existing market.

According to the survey conducted by Shiners Statistical Agency within the market, the
shares are as follows:- The market share of 58% and other of 42% are to the competitor in the
market.

The number of customers are 50,000 and the business intends to absorb a total of 30,000 at
the first year hence the percentage market shares is;
2.3. COMPETITION
Kimro Timberyard Distributors is a business located near Kitale town and there are a number
of competitors .The competitors neighboring Kimro Timberyard Distributors are shown in the
table below;

Area of Kimro Dream Land Island Zion

competition Timberyard Distributors Distributors Distributors
Distributors

Location Strategic Partially Fairly Unstrategic

strategic strategic
Size Big Small
Medium Medium
Personnel Skilled
Standard 8 Form four
Advertisement Use of media Unskilled
leavers leavers
Quality of Radios
Posters Newspaper
work
Standard Fair
Good Substandard
Pricing
Fair Moderate
High High
Working
Good Fair
capital Fair Average
Punctuality Strictly Fair
Late Poor
Order of client

Good Moderate
Fair Poor

2.4. ADVERTISING AND SALES PROMOTION

ADVERTISING

The business will face stiff competition hence the business will employ intensive advertising
methods to campaign for products to reach into the market thus the following media should
be used.
RADIO

The business will advertise on the radio in a specified time by the commercial breaks in the
programs.

This will be vital as customers will be informed about the products

FACE TO FACE

The personnel and sales representative will use verbal means when handling potential
customers. This will be much more effective due to personal approach to problems are easily
solved and feedback are also obtained

POSTERS AND SIGN BOARDS

This will be aimed at creating awareness and direction to new customers. The posters will be
distributed evenly within a radius of twelve Kilometers from the business premises. They will
be printed and placed at strategic positions like along the roads and junctions also nearby
towns.

SALES PROMOTION

DISCOUNTS

The more the sales to customers the more the discount, thus makes the customers to be more
frequent and bring attraction that is if customers purchase hundred pieces of timber the
discount given is ten other pieces.

2.5. PRICING STRATEGY

The owner will set up its price strategy after considering some factors like the cost of
production, the quantity of purchases and the competition prices.

2.5.1. COST OF PRODUCTION

The business will set price of its products after considering the cost of production incurred
during the production process. The cost will be provided in transportation cost, labor cost,
processing cost etc.
2.5.2. DEMAND ORIENTED
The owner will be able to determine the production by use of demand of building materials
within the region thus high demand, the price will be probably high.

2.5.3. PENETRATION
The price within the market tends to go up, the mean of products tends to fluctuate, this gives
much attention to Kimro Timberyard Distributors to penetrate by lowering the price with
limit and take advantage of the market.

2.5.4. DISCOUNT
For the business to be obtained under good condition the Kimro Timberyard Distributors has
developed discount offer to its customers depending on their purchases.

2.6. SALES TACTICS

The business will use both direct and indirect methods of selling.

During the start of the product

Producer Consumer

Producer middlemen Consumer

CREDIT FACILITIES

Credit sales will be allowed to known customers and payment will be made on installments.
The sales representative in the business will be qualified in the sales and marketing and the
owner will enumerate them by the exact date of payment.

MODERN TECHNOLOGY

The business will strive to acquire few methods and facilities of modern technology in order
to increase production.

These techniques online payment and payment through bank and mpesa services. This will
increase the number of customers because transaction of business will be convenient to all.
AFTER SALES SERVICES

The Kimro Timberyard Distributors will provide after sales services to its customers. This
will promote the business and increase market for the products. The more sales, the more the
number of customers being served with appropriate services example sharing and offering
transportation to the customers.

2.7. DISTRIBUTION STRATEGY

Kimro Timberyard Distributors will use the channels that are reachable to the customers that
is direct selling to customers. The business will use the sales representatives to sale the
products to reach the customers.

The products and materials are transported mainly by road. The means of transport is much
appropriate to the nature of product and it is also cheap. The problem that will be anticipated
on transportation of product is that same customer accessibility are not manageable because
they use paths. The transport cost per month will not be more than expected since the
business is able to rise and is ready to incur any loss in transportation. To purchase many
vehicles that will ease transportation thus facilitating the the increase number of customers
thus increasing the area covered by the business at large.
CHAPTER THREE

3.0. ORGANIZATIONAL MANAGEMENT PLAN

Kimro Timberyard Distributors will have its organizational structure. The personnel
employed in the business have different qualifications based on the role in which each plays
in the business.

These staff also have their own remuneration levels based on qualifications and duties.

The management will ensure that the employees' needs are met for efficient work.

The business will operate as follows;

ORGANIZATION STRUCTURE
 Manager

Supervisor

Accountant Sales representative

Workers Driver

Security guards

3.1. THE MANAGER

The manager in Kimro Timberyard Distributors is Mr Kimeli Rono who is the owner of the
business. The owner is a diploma holder in Social work and Community Development from a
recognized institution in Kenya and therefore has skills to manage the business with support
from qualified personnel who will be employed in the business. The qualifications of the
manager include:

Diploma holder in Social work and Community Development.

Has mastery of Swahili and English language.

Attained a certificate in Project development and Management.

Duties and responsibilities

Be able to raise capital for the business

1. Formulate and implement policies and procedures regarding the business

2. Ensure there is smooth running of the business

Should be concerned with well being of workers

Recruiting, promoting and dismissing employees

3.2. KEY PERSONNEL

The owner will only require fourteen employees whereby everyone will be entitled to duties
and responsibilities each one has to perform in order for the business to attain it's objectives.
The job title, qualifications, duties and also responsibilities of the employees are as below:

3.2.1. SUPERVISOR
Must attain a diploma in marketing

Should have a certificate in public relations

Must be flexible in decision making

Must have organizational skills

Duties and responsibilities

Supervision of workers to ensure they execute their duties

Reporting to the manager on day to day activities or status of the business

Legal advisor of the manager

3.2.2. ACCOUNTANT
Be a holder of certificate in Accounting from recognized institution.

Be 25 years and above of age.

Hardworking.

Should be able to work under minimal supervision.

Should be computer literate

Duties and responsibilities
Making payments to the employees and customers

Receiving cash and cheques from customers

Keeping all transactions records

3.2.3. SALES REPRESENTATIVE

Should have good communication skills

Should have good public and human relations

3.2.4. WORKERS
Be physically fit

Be flexible in work place

Good communication skills

Must be tolerant to harsh conditions

3.2.5. DRIVER
Be a qualified one with driving license

3.2.6. SECURITY GUARD

Well trained

Age of 24 years and above

Should have at least KCSE certificate

3.3. OTHER PERSONNEL

3.3.1. LAWYER QUALIFICATIONS

Be a degree holder in law be of 28 years and above of age

Good communication skills

3.3.2. AUDITORS
Be having a degree in accounting and specialized in auditing

Must be 28 years of age

Must have a good public relations

3.4. RECRUITMENT, TRAINING AND PROMOTION

3.4.1. RECRUITMENT
The applicants are required to send filled application forms to the offices of Kimro
Timberyard Distributors whereby those who will qualify will be shortlisted then informed on
the date of the interview.

The successful ones are then informed on the dates of reporting to work and are then ready to
take part in their required positions.

3.4.2. TRAINING
Workers will receive different training in the employment especially joinery, cutting,
measuring of timbers.

The highest the performance of an employee the better the wage and salary advancement.

Each employee has his/her working procedures which must be strictly followed and be able
to attempt at least in any work done.

3.4.3. PROMOTION
The workers will be promoted basing on their level of qualifications, the position of work and
the length of stay in the business. The later will make workers work hard hence much
productivity to the business.

3.5. RENUMERATION AND INCENTIVES

The workers and staff will be handled by the accountant. These are workers who are casual,
basically on weeks, months and the salaried staff. Those on salary will be paid mid and end
of the month and casuals are made after two weeks.
3.5.1. RENUMERATION TABLE
Manager 1 13000 2000 15000 180000

Supervisor 1 9000 1000 10000 120000

Supervisor 1 8000 1000 9000 108000

Sales 2 6000@ 500@ 14000 168000

Representative

Representative 6 4500@ 500@ 30000 360000

Workers 1 5500 500 6000 72000

Driver 1 4000 500 4500 54000

Security guard 1 4000 500 4500 54000

3.5.2 INCENTIVES
Those employed will also be given allowances. The incentives issued after every two months
are bar soap, tissue paper, shoe polish and sanitary towels for ladies, aprons, helmets, and
lunch will be provided for the workers

3.6. LICENSES, PERMIT AND BY LAWS

DETAILS FROM COST

Businesses registration Kenya Revenue Authority 23000

License Tranzoia county 2000

Health certificate Kitale Trade Office 4000

Value added tax Kenya Revenue Authority 2400

Insurance AMACO Insurance 3200

3.6.1. BY-LAwS
The Kimro Timberyard Distributors is working under the set rules that lead to production and
are stated;

The person entitled to supervise the work must be liable at any cost

Every personnel in the company should work positively to production

There must be a weekly meeting

Workers should attend to customers well

Neatness is mandatory

Holidays are provided to workers

3.7. SUPPORT SERVICES

Kimro Timberyard Distributors will create room for the services to participate fully to
increase production. These include;

BANKING SERVICES
The Kimro Timberyard Distributors will be able to access bank services easily like loans, and
also for workers. This will be obtained from Equity Bank Kitale.

BOOK KEEPING AND ACCOUNTING SERVICES

This will be done mostly by an auditor and be clarified by an accountant.

LEGAL SERVICES
This will come from the support of the government thus providing legal and certified goods
to its customers.

BUSINESS MANAGEMENT CONSULTANCY SERVICES

It will be highly available thus marketing of our products to different customers.

POSTAL SERVICES
This services will be easily available to its workers and customers for proper direction. This
will be from post office in Kitale town.
CHAPTER FOUR

4.0. PRODUCTION/OPERATIONAL PLAN

The Kimro Timberyard Distributors will be dealing with the production of timber products of
different sizes and texture will be produced. The prices of products will be varying according
to customer's choice. The business will require materials and equipment’s to produce the
products for the customers. The business therefore has the following operation plan for the
business.

4.1. FACILITIES AND EQUIPMENTS

ITEMS QUANTITY SUPPLIER UNIT TOTAL

Receipts book 2 Chania 120 240

Register book 2 Wahu 120 240

Rungus 3 Tinglo 270 810

Log book 1 Elimu 1300 1300

Filing cabinet 6 Wiper 200 1200

Pens 12 Elimu 40 480

Calculator 1 Elimu 300 300

Furniture and
Fittings

Chairs 5 Rocky 900 4500

Curtains 4 Shine 450 1800

Window pane 6 Shine 200 1200

TOTAL 11,550

Kimro Timberyard Distributors layout will be as follows,

Toilets Security Reception

office

Parking area Supevisor’s

office
loading/unloading area

Manager’s

office

Stores department
Finance office

Sales department

17

16

Processing department

Reserved Parking
4.2. PRODUCTION/OPERATIONAL STRATEGY
The manager will take charge in running the business to make sure that activities run
effectively. The supervisor will also assist to make sure that the workers are doing their work
and the accountant is paying them promptly. This will enable the business grow and be
sustainable.

The materials used in the business will be available throughout the year because the owner
will have the man-made forest and people within the region will be able to apply goods thus
enhancing production process to take place.

The raw materials will be transported by use of hired Lorries at the cost of Ksh.30, 000 per
month. The will have to direct workers who will be required to perform daily activities in the
business.

The machinery will be maintained by use of modern facilities after every work done. The
procedural method of cleaning will be followed according to the specifications of manual
book.

The washing materials are provided and detergents are supplied weekly thus the team of
workers have to maintain cleanliness.

The workers are provided training and seminars after every two months, thus activity is done
to facilitate the promotion of product to the firm and also sustain the welfare of worker.

The skills obtained from the training will be enable the workers to have good relationship
with customers on how to handle them.

The production processes are well maintained, this will be done in case of breakage of
tools/machines breakdown. This emergency calls to the spare parts of dealers within the
town. This will improve efficiency of work.

The tools and equipment’s are obtained from Patel dealers as the main supplies dealers as the
cost depends on the material or the equipment.

4.3. PRODUCTION PROCESS

Kimro Timberyard Distributors will be dealing with all standard measurements that will be
required by the customers. The production process will be done as per the following steps;

Step 1: Felling down the trees

Step 2: Measurement of logs to the required sizes

Step 3: Cutting of logs according to the measurement

Step 4: Shaping to different sizes

Step 5: Taking products to plane

Step 6: Display of final products

The external factors that are likely to affect the production process is the economic factors
like recession and depreciation. The owner will budget well in order to avoid such incidences
to occur in the business enterprise

4.4. REGULATIONS AFFECTING OPERATION

Concerning health regulations, the workmen who will be having health problems will be
allowed to stay back for medications and also it will be a no smoking zone place of work.

The owner will have to ensure that the business operating on specified patterns and copyright
of the business insurance.

The injured workmen to be treated and fire extinguishers to be put in place in case of fire
eruption to present losses.

The business will have to go as per the rules of the National Environment and Management
Authority Act (NEMA) to ensure that there is no environmental pollution at any cost.

The business will have to be approved by according and get permit, license registration of
business though expensive but important for the continuation of business from the county
government of Tranzoia.

The costs of such compliances normally depends on which type of documents you require
and the size of the business to be operated.

4.5.1. MATERIAL REQUIREMENT PER MONTH

ITEMS QUANTITY UNIT COST TOTAL COST

Tape measure 2 500 1000

String rule 200 ft 2000 4000

Panga 2 300 600

T-square 6 500 3000

Gloves 9 100 900

Hammer 3 250 750

File 3 250 750

Overalls 7 1000 7000

Wall clock 1 2500 2500

Nails 5 kgs 100 500

Total 20000

4.5.2. COST OF LABOUR

EMPLOYEES NO OF AMOUNT PER
EMPLOYEES MONTH

Manager 1 15000

Accountant 1 10000

Supervisor 1 9000

Sales representative 2 14000

Workers 6 30000

Driver 1 6000

Security guard 2 9000

Total 93000
4.5.3. OVERHEAD COSTS
ITEMS AMOUNT

Rent 8000

Renovations 5000

Water bills 2000

Electricity bills 1000

License 2000

Permit 5000

Postal service 1000

Insurance 10000

NHIF 5000

Total 39000

4.5.4. TOTAL COST OF PRODUCTION PER MONTH

ITEMS AMOUNT

cost of materials 20000

cost of labor 93000

overhead costs 39000

Total 152000
CHAPTER FIVE

5.0. FINANCIAL PLAN

The business is supposed to incur some expenditure as it regards its operation. The proportion
of working capital and Cash flow are some of the financial plans.

The financial financial position of the business will be evaluated by the use of proforma
income statements, balance sheet and break even analysis for the first three years.

The proposed business will have a designed finance of Ksh. 500000 which will be equal to
proposed capitalizations.

The business will be able to make transactions at the end of every year to gauge whether it is
operating on profit or incurring losses.

5.1 PRE- OPERATIONAL COSTS

ITEMS AMOUNT

Good will from relatives 400,000

Rent deposit 8000

Renovations 5000

Installations cost 3000

Water deposit 2000

Electricity deposit 1000

License 2000

Permit 5000

Materials 150,000
Machinery and Equipment’s 350,000

TOTAL 926,000

5.2. WORKING CAPITAL

ITEMS YEAR 2023 YEAR 2024 YEAR 2025

Stock of material 110,000 130,000 150,000

Working progress 140,000 350,000 450,000

Stock of finished 125,000 370,000 400,000

goods
90,000 150,000 340,000
Debtors
200,000 300,000 450,000
Cash
75,000 170,000 45,000
Creditors

TOTAL 740,000 1,470,000 1,835,000

5.3. PROJECTED CASH FLOW STATEMENTS

5.3.1. PROJECTED CASH FLOW STATEMENT FOR YEAR 2023

ITEM JA FE MA AP MA JU JU AU SEP OC NO DE TO
S N B R R Y N L G T V C TA
L

cash - - - - - - - - - - - - -
inflow

cash 150 153 120 110 120 125 120 115 105 130 130 160 153
sales 000 000 000 000 000 000 000 800 000 00 000 000 800
0

Debtor 400 600 500 300 700 600 500 450 800 600 500 400 635
s 00 00 00 00 00 00 00 00 00 00 00 00 500

Total 190 213 170 140 190 185 170 160 185 190 180 200 217
cash 000 000 000 000 000 000 000 000 000 000 000 000 300
inflow 0
s

cash
outflo
ws

cash 800 200 100 150 100 250 200 300 200 200 100 150 275
purcha 00 00 00 00 00 00 00 00 00 00 00 00 000
se

station 100 150 100 200 100 100 150 200 100 800 500 100 143
ery 00 00 00 00 00 00 00 00 000 00 0 00 000

rent 100 100 100 100 100 100 100 100 100 100 100 100 120
00 00 00 00 00 00 00 00 00 00 00 00 000

salarie 180 180 180 180 180 180 180 180 180 180 180 180 216
s 00 00 00 00 00 00 00 00 00 00 00 00 000

tel bill 150 200 170 150 100 200 250 160 100 150 130 250 200
00

electric 250 250 250 250 250 250 250 250 250 250 250 250 300
bill 0

water 100 170 250 200 110 160 160 150 160 160 170 210 200
bill 0

adverti - - 100 - - 100 - - 100 - - 100 400

sing 0 0 0 0 0

postag 200 290 250 220 200 300 300 280 200 220 200 250 291
e 0

repair - - 100 - - 100 - - 100 - - 100 400

0 0 0 0 0

taxes 100 100 100 100 100 100 100 100 100 100 100 100 120
0 0 0 0 0 0 0 0 0 0 0 0 00

insuran 300 300 300 300 300 300 300 300 300 300 300 300 360
ce 0

license 150 - - - - - - - - - - - 150

and 0 0
permit

hiring 200 200 200 200 200 200 200 200 200 200 200 200 240
0 0 0 0 0 0 0 0 0 0 0 0 00

Total 114 582 452 581 429 602 582 731 550 510 380 502 705
cash 500 10 20 20 60 10 60 40 10 80 50 60 020
outflo
w

Net 755 154 124 818 147 124 111 868 129 138 141 150 146
monthl 848
y cash 00 790 780 80 040 790 740 60 900 920 950 240 0

Accum 755 230 355 436 585 708 820 907 103 117 141 146
ulated 00 290 070 950 990 780 520 380 737 629 824 848
cash 0 0 0 0

5.3.2. PROJECTED CASH FLOW STATEMENT FOR YEAR 2024

Particul JA FE MA AP MA JU JU AU SE OC NO DE TOT
ars N B R R Y N L G P T V C AL

Bal B/f 300 128 106 328 745 715 506 305 435 268 197 820 5703
000 300 000 80 80 00 80 00 50 90 80 00 590

Sales 500 526 530 540 565 590 855 640 665 690 720 820 4185
00 00 00 00 00 00 00 00 00 00 00 00 00

Bank 200 - - - - - - - - - - - 2000

loan 00 0

Debtors

Total 101 584 686 731 761 312 901 740 999 105 104 118 1051
cash 170 950 470 050 150 630 650 140 900 103 347 803 1590
flow 0 0 0

Cash - - - - - - - - - - - - -
outflow

Pre- 310 - - - - - - - - - - - 3180

operati 800 0
onal

Purchas 150 500 290 230 250 200 280 300 350 340 320 455 3600
e 0 0 0 0 0 0 0 0 0 0 0 0 0

Salaries 250 250 250 250 250 250 250 250 250 250 250 250 1230
00 00 00 00 00 00 00 00 00 00 00 00 00
Electric 100 800 950 500 550 600 850 950 100 100 100 150 9800
ity 0 0 0 0 0

Water 500 500 700 100 900 800 500 700 600 650 850 900 7800
0

Rent 650 650 650 650 650 650 650 650 650 650 650 650 8000
0 0 0 0 0 0 0 0 0 0 0 0 0

Credito - - - - - 100 - - 300 - - - 4000

rs 0 0

Transp 225 200 300 245 200 300 350 350 200 215 242 250 3870
ort 0 0 0 0 0 0 0 0 0 0 0 0 0

License - - - - - 200 - - - - - - 2000

00 0

Adverti 400 - - - - - - - - - - - 4000

sement 0

Securit 300 300 300 300 300 300 300 300 300 300 300 300 3600
y 0 0 0 0 0 0 0 0 0 0 0 0 0

Postage 100 - - - - 130 170 180 150 160 140 120 1620

Repairs - - - - 200 - - 100 - - 300 - 6000

0 0 0

Total 260 290 280 280 340 490 420 755 350 390 350 390 3480
cash 00 0 0 0 0 0 0 0 0 0 0 0 0
outflow

Bal B/f 234 286 406 442 412 481 449 623 686 808 908 571 6312
950 470 050 150 630 650 900 800 030 000 900 020 330

5.3.3. PROJECTED CASH FLOW STATEMENT FOR YEAR 2025

Particul JAN FE M AP M JU JU AU SEP OC NO DE TOT
ars B AR R AY N L G T V C AL

Cash
inflow

Bal B/f 421 526 125 328 745 715 412 305 412 268 125 477 1648
00 00 0 00 80 00 0 00 0 90 0 30 390

Sales 256 530 526 540 565 590 855 640 665 690 720 820 3839
00 00 00 00 00 00 0 00 00 00 00 00 750

Bank 200 - - - - - - - - - - - 2000

loan 00 0

Deb - - - - - - - - - - - -
tors

Total 550 409 155 845 251 584 410 740 520 582 986 997 3917
cash 00 00 00 00 60 00 00 00 00 000 50 00 50
flow

Cash - - - - - - - - - - - - -
outflow

Pre- 347 - - - - - - - - - - - 3470

operatio 000 00
nal

Purchas 150 290 230 255 200 280 285 300 325 340 326 445 1285
e 00 00 00 00 00 00 00 00 00 00 80 50 00

Salaries 250 250 250 250 250 250 250 250 250 250 250 250 3000
00 00 00 00 00 00 00 00 00 00 00 00 00

Electrici 100 800 950 500 550 600 850 950 100 100 100 150 1055
ty 0 0 0 0 0 0

Water 500 500 700 100 900 800 500 700 600 650 850 900 9400
0
Rent 650 650 650 650 650 650 650 650 650 650 650 650 7800
0 0 0 0 0 0 0 0 0 0 0 0 0

Creditor - - - - - 100 - - 300 - - - 4000

s 0 0

Transpo 225 200 300 245 210 300 350 352 200 215 210 250 9120
rt 0 0 0 0 0 0 00 00 0 0 0 0 0

License - - - - - 200 - - - - - - 2000

00 0

Insuranc 100 - - - - - - - - - - - 1000

e 00 0

Advertis 400 - - - - 200 ? - - - - - 6000

ing 0 0

security 300 300 300 300 300 300 300 300 300 300 300 300 3600
0 0 0 0 0 0 0 0 0 0 0 0 0

Loan 800 800 800 800 800 800 800 800 800 800 800 800 9000
repayme 0 0 0 0 0 0 0 0 0 0 0 0 0
nt

Loan 250 240 230 220 210 200 190 180 170 160 150 140 1050
interest 0 0 0 0 0 0 0 0 0 0 0 0 00

Repairs - - - 100 - - - - 200 - - 200 5000

0 0 0

Miscella 500 400 420 200 250 280 200 200 250 220 200 120 7000
neous

Total 695 477 555 440 295 832 600 830 788 460 318 137 3300
cash 0 0 0 0 0 0 0 0 0 0 0
outflow

Bal B/f 546 857 124 368 437 981 169 190 202 201 143 149 3377
 60 70 00 90 00 0 90 640 690 170 000 980 850

5.4. PRO-FORMA BALANCE SHEET AS AT JANUARY 2023

ASSETS Sh Sh

Cash 150000

Debtors 40000

Stock of finished goods 125000

Stock of material 110000

TOTAL ASSETS 425000 425000

FIXED ASSETS
Fixed assets Shs

Machines 350000

Accumulated depreciation 60000

Vehicles 300000

Furniture and fittings 10000

Total fixed assets 720000

LIABILITIES
Current liabilities

Creditors
Long term liabilities
Capital employed (equally) 613'324

Bank loan 50'000

Add owner profit after tax 471'376

Total Liabilities 1'145'000

5.5. BREAK EVEN ANALYSIS

5.5.1. CONTRIBUTION MARGIN

YEAR 1

Variable cost AMOUNT (Kshs)

Electricity 3,000

Purchases 275,000

Telephone charges 2,010

Postal charges 2,910

Repair and maintenance 4,000

Total 286,920

SALES
Construction margin=Sales Total variable cost

= 1538000 _ 286920

= 1,257,080

Gross profit = profit÷sales×100%

125,157,080 ÷ 1538,000 × 100%

 = 81.34 %

5.5.2. THE TOTAL EXPENSES

ITEMS KSHS

Rent 12000

Wages and salaries 216,000

License and permit 1500

Hiring of machines 24,000

Total 257,100

5.5.3. CALCULATION OF BREAK EVEN LEVEL

Break-even level=fixed cost ÷ contribution margin c

=257,100÷76.22%

= 3373.10

5.6. EXPECTED PROFITABILITY RATIOS

5.6.1. GROSS PROFIT PERCENTAGE

Gross profit percentage=gross profit ÷sales×100%

=1294240÷1538000×100%

=84.16%

5.6.2. RETURN ON EQUITY

Return on equity=net profit ÷owners’ equity ×100%

=471376÷100000×100

=471.376

5.7. DESIRED FINANCING

DETAILS KSHS
Pre-operational cost 80,550

Working capital 413,450

Total 490,000

DETAILS KSH

Owners’ equity 280,000

Bank loan 170,000

Promotion from friends 50000

Total 500,000