THE PROPOSE WAN BANG'I UGUNJA BUILDING AND CONSTRUCTION LIMITED

COMPANY:

P.O BOX 40606-258

UGUNJA

PRESENTED BY: OTIENO MICHAEL MAGANA

EMAIL ADDRESS : [email protected]

TELEPHONE NUMBER : 0798240890

INDEX NUMBER : 7411050100

PAPER CODE :206

COURSE CODE : 1704/2

INSTITUTION CODE :741105

SUPERVISED BY : MADAM MELVIN NANJALA

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIALFULFILMENT FOR THE AWARD OF CERTIFICATE IN BUILDING

TECHNOLOGY

INSTITUTION NAME: THE KISUMU NATIONAL POLYTECHNIC

EXAMINATION SERIES: NOVERMBER2023

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DECLARATION
Declaration by student

I declare that, this is my original work and it has not been presented by another person to any
examination body or institution for examination purpose.

NAME: OTIENO MICHAEL MAGANA

INDEX NUMBER: 7411050100

SIGNATURE: _______________

DATE:

Declaration by the supervisor

I declare that, the business plan is forwarded to the Kenya national examination council with my
approvals as the supervisor of the institute.

NAME: ______________________________________________________________

SIGNATURE: _________________________________________________________

DATE:________________________________________________________________

ii
DEDICATION
My special dedication to my parents, Victor oduor Magana,father and Milicent Adhiambo
Magana,mother, for their support towards my education and research undertakings. May the
Almighty, God continue granting them more days of life. I also want to offer my special
dedication to my close friend Mr.VICTOR' for having been with me, support, training and
guidance and mentorship towards the business plan project writing.

The business plan is also dedicated to my supervisor Mrs. Melvin who offered her sincere
support, training, guidance and mentorship in the plan arrangement up to final completion.

iii
ACKNOWLEDGEMENTS
The success and the final outcome of this business plan (project) required a lot of guidance,
assistance and counseling from different parties, and I am privileged to have got this all along to
the completion of the work. First I give my gratitude to the almighty god for the care and
protection throughout the business plan writing.

Thanks a lot for empowering me with knowledge and wisdom, may the glory and honor be to
God.

Acknowledgements are extended to the following, The Kisumu National Polytechnic

administration for having allowed me to carryout research, get exposed to the field of business
both virtually and physically. They instill business knowledge in me, guided me, and trained up
to the end of my business plan writing.

Never the less, I am so grateful since this noble chance enabled me to gain practical knowledge
and experience in my proposed business that is, Wan Bang'i ugunja Building Construction
Company in general for co-operation and good relations.

Moreover, I would also wish to pass my special gratitude to my parents, Mr. and Mrs. Magana
for their tireless support

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EXECUTIVE SUMMARY
1.0 Introduction
This chapter entails all the important parts of the business plan that the management must
include though in summary form. These parts include business description, opportunity and entry
strategy, target market, competitive advantages, management team and finally financial plan.
This is the whole content of business plan.

2.0 Business Description

The name of the proposed business will be Wan Bang'i Ugunja Building and Construction
Limited Company. The name of the entrepreneurs is Odhiambo Otieno Michael Magana and he
is of 24 years of age. Wan Bang'i Ugunja building and construction ltd will be located in Ugunja
town. The enterprise will be offering or selling building and construction tools and commodities.
The business is scheduled to start its operation from January 2024. The enterprise will offer
adequate services to its customers and goods of high quality which will give satisfaction to
customers hence maintain them.

3.0 Opportunity And Entry Strategy

Business opportunity means existence of good environment for carrying out business in a even
area. Being that the need for building has increased in size in Ugunja town, and the source of raw
materials. Wan Bang'i Ugunja building and Construction Company therefore finds it easy to
expand in the area. The population is increasing daily and they build houses of new design.
There is a good market provided in the area since they are diversed or clustered within the town.
Not only that there is high population but also they lack source of these building materials. This
then gave victor an idea of starting building and Construction Company that will provide
hardware services. The business will provide goods and services at affordable rates and will
expand its branches will be advertised in social media platform and in Kenya gazettes to attract
customers.

4.0 Target Market

The customers for Wan Bang'i Ugunja Building and construction LTD will be institutional
customers, commercial customers and the individuals with Ugunja Town. The business will
reach its customers through advertisement and provision of quality goods and services. The
mode of advertising will be ratio, notices, fliers, printing the hardware shop and also providing
banners everywhere in town.

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5.0 Competitive Advantages
The numbers of people offering building services in Ugunja town are not many. They are
Opunde ltd Company and Walimu hardware shops. There Wan Bang'i Ugunja Building
Company has only two competitors offering same products. They are well known in the regional
also enjoy larger market share. Through they have a good number of clients; they offer services
of high standards. Their major weakness is poor customer attention. They are poor in handling
customers. Because the two competitors are well known and also have high number of
employees. Wan Bang'i Ugunja building and construction ltd will sell goods to its customers at
affordable prices, offer after sale services and also provide free delivery of goods and services.

6.0 Management Team

The manager will be the owner of the business. He comes from Siaya County. He has worked in
building sector as a crafts man and as a foreman prior to the start of building technology. This
therefore motivated him to become a contractor in civil engineering who will provide
employment opportunities to youths and also to himself. The manager’s name is victor oniony.
The management team will be family members since this will be a sole proprietorship form of
business unit. The assistant will be George Odhiambo who is a brother to
OTIENOMICHAELMAGANA.Georeg has knowledge on information science and operates his
business of cyber café as the manager. This therefore will enable him to carry out accounting
functions in the business and also handling of employees

7.0 Financial Plan

The total amount of money required to start the operation of the enterprise is ksh. 496000. This
amount will be used in rent payment, water and electricity services, payment for legal issues and
the purchase of stocks. The business will be financed by owner’s savings, family and friend’s
contribution and loans from other money lending institutions. The loan will be payed within
twelve months paying five thousand per month as installments. The private source will be kshs.
200000 and outside sourcing of kshs. 296000. The breakeven point of the sales will be kshs.
1684000 for the first year with the gross profit margin of kshs. 960800, expenses of kshs. 175944
and return on owners’ investment of kshs. 425000. The gross profit percentage for the first year
will be 57.1%, return equity of 67.3% all in first year. The amount of capital to be invested is
seen feasible to the owner.

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

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

ACKNOWLEDGEMENTS ................................................................................................. iv

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

1.0 Introduction ........................................................................................................ v

2.0 Business Description ........................................................................................... v

3.0 Opportunity And Entry Strategy ........................................................................... v

4.0 Target Market ..................................................................................................... v

5.0 Competitive Advantages .................................................................................... vi

6.0 Management Team ............................................................................................ vi

7.0 Financial Plan ..................................................................................................... vi

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

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

1.1 Business Name....................................................................................................1

1.2 Business Location And Address ...........................................................................1

1.3 Owners Profile And Background ..........................................................................2

1.4 Form Of Business ................................................................................................2

1.5Type Of Business .................................................................................................3

1.6 Products And Services .........................................................................................3

1.7 Industry ..............................................................................................................3

1.8 Goals Of The Business.........................................................................................3

1.9 Entry And Growth Strategies ...............................................................................4

CHAPTER TWO..............................................................................................................5

2.0 MARKET PLAN .....................................................................................................5

2.1 Customers ..........................................................................................................5

2.2 Market ................................................................................................................6

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 2.3 Competition ........................................................................................................6

2.4 Promotion And Advertising .................................................................................7

2.5 Pricing Strategies ................................................................................................7

2.6 Sales Tactics .......................................................................................................7

2.7 Distribution Strategy ...........................................................................................8

CHAPTER THREE: ..........................................................................................................9

3.0 ORGANIZATIONAL MANAGEMENT PLAN ...............................................................9

3.1 Management Personnel .......................................................................................9

3.2 Other Business Personnel ..................................................................................10

3.3 RECRUITMENT, TRAINING AND PROMOTION ......................................................10

3.4 Renumeration And Incentives ............................................................................11

3.5 Other Support Services ......................................................................................11

3.5.1 Banking Services .........................................................................................12

3.5.2 Insurance Services ......................................................................................12

3.5.3Consultancy Services .......................................................................................12

3.5.4 Legal Services .............................................................................................12

3.6 Licenses, Permit And By-Laws ...........................................................................12

CHAPTER FOUR: .........................................................................................................13

4.0 PRODUCTION/OPERATIONAL PLAN ....................................................................13

4.1 Production Facilities And Equipments ................................................................13

4.1.1Operation Plan And Capacity ........................................................................13

4.1.2 Plan For Maintenance And Repair ................................................................13

4.2 Production Strategy ...........................................................................................13

4.2.1 Technology To Use .....................................................................................13

4.2.2Tactics To Be Used In Operation ...................................................................14

4.2.3Monthly Material Requirements ....................................................................14

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 4.2.5Monthly Operation Expencess ......................................................................14

4.2.6 Monthly Operation Expenses.......................................................................15

4.2.7Monthly Production Cost ..............................................................................15

4.3 Production Process............................................................................................15

4.4 Regulations Affecting Operations .....................................................................16

4.4.1 Health Regulations ......................................................................................16

4.4.2 Safety Regulations ......................................................................................16

4.4.3Taxes ..........................................................................................................16

4.4.4 By Laws.......................................................................................................16

CHAPTER FIVE: ...........................................................................................................17

5.0 FINANCIAL PLAN ..............................................................................................17

5.1 Pre-Operational Costs.......................................................................................17

5.2 Working Capital ................................................................................................17

5.3 Projected Cash Flow Statement ............................... Error! Bookmark not defined.

5.4 PROFORMA INCOME STATEMENT .......................... Error! Bookmark not defined.

5.5 Pro-forma Balance Sheet ...................................................................................21

5.6 Break-Even Analysis ..........................................................................................21

5.6.1 Determination of annual sales ........................................................................21

5.6.2 Separating Variables And Fixed Assets .......................................................21

5.6.3 Total Contribution Margin .........................................................................22

5.6.4 Total fixed expenses.................................................................................22

5.7 Expected profitability rates .............................................................................22

5.7.1 Gross profit percentage ............................................................................22

5.7.2Return on owners equity ..............................................................................23

5.7.3 RETURN ON INVESTMENT ...........................................................................23

5.8 Desired Finance ...............................................................................................23

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5.9 Proposed Capitalization ...................................................................................23

x
 CHAPTER ONE.
1.0 BUSINESS DESCRIPTION
INTRODUCTION

Wan Bang'i Ugunja Building and Construction Company is basically set to deal with building
and construction materials and equipments. The anticipated business will be a potential business
based on the fact that the demand for building materials and equipments and services in Siaya
county has rapidly increased due to a few number of people are involve in the sale as well as
offering services in building industry. There is a change in the technology advancement in my
industry/ business and this will make easier in providing to more customers at a time. The
services that will be offered in my business will be sufficient of high quality and hence will
attract a good number of customers.

1.1 Business Name

The name of the business will be Wan Bang'i Ugunja Building and Construction Company. The
Wan Bang'i Ugunja signifies the costs of services which will be offered are hardware, building
as well as construction services. The name Wan Bang'i Ugunja is derived from the small
existing business trade mark that is well known in the whole county, with people involved in
business activities at its located within Central Ugenga location.

1.2 Business Location And Address

The address of the business will be;
Wan Bang'i Ugunja Building and Construction Company,
P.O Box 40606-258
Ugunja
Telephone: 0798240890
Email:[email protected]
The proposed business will be located in Ugunja town situated along Kisumu-Busia road and
opposite KCB Bank Ugunja branch. From the market survey carried out by the proprietor, it is
discovered that still there is no stiff competition on building industry in Ugunja town. And the

1
location of Wan Bang'i Ugunja Construction industry is appropriate, as it will thrive well to
serve its customers and attract more customers as well.

1.3 Owners Profile And Background

The owner was born in Siaya county, Central Ugenga location, Umala sub-location. And was
brought up in a small village called Asere B. After form four, he got an opportunity to join a
construction company by the name Tractebel company. Which was building bridges, culverts,
canals,houses and he got exposed to construction more so in building technology. This motivated
him so much, since at Tractebel he could interact with different craft’s men who could teach him
how to build, mix sand with ballast and come up with concrete as the final product. He was also
trained on working with different machines like internal vibrator, tilting drums, hoisting
equipments and sand washing and ballast washing equipment as well as plate compactors. Since
all these machines and equipments used at Tractebel were hired from Kisumu County, he could
think of ideal that having these machines at Siaya town could be paying. MICHAEL who’s the
owner proposed business has a skill in bonding work,massionery work, plastering and rendering,
bar twisting and also in roofing services. Since the foremen was a friendly man and hardworking
too. He engaged victor to have this skills and advised him to own a company in future to offer
building equipments as well as services in Ugunja town and later expand to all Siaya county by
expanding branches in Ukwala, Nyadorera, Bondo sub-county. Lastly Michael joine The Kisumu
National Polytechnics in 2022to pursue certificate in Building Technology .after completion of
his year one at the Polytechnic and after his gaining more experience at Tractebel where he did
his attachment, and believe that the course will enable him achieve his dream in building and
civil engineering department, he will advise many youths to join him hand and also create
employment rather than job-seeking.

1.4 Form Of Business

The business will be a sole proprietorship business as it is easy to start, manage and enhance
quick decision making. The profits and losses generated will be enjoyed by the owner alone
since there is no sharing the capital required to start and operate this business is also reduced
hence Wan Bang'i Ugunja construction company will operate as a sole proprietorship.

2
1.5Type Of Business
The business is both a retail and wholesale as it will offer hardware services to institutions,
college, high schools and also to individuals and sells hardware materials in wholesale and also
to retails and to individuals. The potential customers of the business are the commercial
customers from Ugunja town, Siaya town, Busia and Kisumu town.

1.6 Products And Services

The business will operate I offering building and construction equipments, that is selling of
cement, iron sheet, nails, paints, sand, ballast, doors, windows and distribution of the sold items
to propestic customers destinations. The objective of the business will be to ensure maximum
customers satisfaction through provision of high quality products at friendly prices. The business
will also offer equipments for higher in the construction industry i.e. the mixing plants like tilting
drum, sand washing machines, wheel barrows, spades, frameworks for higher and also to provide
the customers with craft’s men who will offer their services at free cost to attract more
customers. The business will also sell plumbing equipments, massionery tools, carpentry tools
and etc. at the start of the business; we will offer goods and services at low cost and to work for
24 hours daily except weekends.

1.7 Industry
The anticipated business belongs to the building and construction industry which has higher
potential growth capacity in Ugunja town. This is because the business will be dealing with
products relating to building and construction which are the necessities for human survival. Since
the business will be offering free transportation cost, craft’s men to install formworks higher at
company’s cost, it will thrive well in the industry and invite more customers. We will attend to
customers complain and go ahead to see the effect and if possible replace the commodity with
another one at no cost to avoid customers from running away. The size of the firm will be
medium since the kind of technology introduced is modern technology, i.e. there is use of
computers in computing large sums of money and storing of information of the firm.

1.8 Goals Of The Business

The primary goal of the business is to provide both products and services as well. The business
will ensure maximum customer satisfaction by offering goods of high quality at affordable costs
and also to deliver them at no cost. The business also aims at creating employment opportunities

3
to the employees and also to the proprietor. Training services are also intended to be offered to
the youths and enable them work with us and later they be their own employer. The business
intends to start in one area and later spread to the whole county thereby creating more
employment to the people who will be employed as sales agent, receptionists and also
distributors or drivers. The business will also intend to build and sell houses, quality affordable
homes by providing an honest fair working relationship with subcontractors, new home owners
and sales person in an atmosphere where families can experience the pride and satisfaction of
designing their own home. The business also intends to deliver goods and services at customer’s
premises within the agreed time.

1.9 Entry And Growth Strategies

The proposed business will be based on the fact that there’s high demand for building
equipments and services. The available business opportunity is caused by less people selling
building materials and the few who have the business does not provide adequate services to
customers. The proprietor has decided to set this business in Ugunja town along Kisumu-Busia
road where competitions are few and the population to be served is high over twenty thousand
people and this makes it easy for customers to penetrate the market. Also the business shall
install honest character amongst workers to win trust of existing customers for the purpose of
retaining them. The business will offer free delivery of sold items as well as installation of
formworks at their premises at low cost or free depending on the cost of purchases. By doing
this, the business will easily grow into success because its customers will enjoy customer’s
friendly prices as well as special credit to the esteemed customers thus meeting the anticipated
market share of twenty thousand people within and outside the area thus through laid strategies.
The business will provide plumbing equipments which are not available in Ugunja town since
people are importing them from neighboring counties and sell them at an expensive cost. Other
hardware’s that offer building materials only work for 8 hours daily but Wan Bang'i will operate
for 10 hours.

4
 CHAPTER TWO.
2.0 MARKET PLAN
The proposed business is aimed at serving customers from all levels and these include
commercial i.e. the people who will be purchasing for the purpose of selling in large quantities.
The commercial customers are mostly located in the town and within the CBD. The institutional
customers are the schools i.e. high schools, colleges and the universities of Maseno,Ugunja
KMTC,Ugenya technical and Ugunja technical college. These institutions will be purchasing for
the purpose of building and constructing new and for repairs but in bulk quantity. Then lastly are
the individuals of ordinary prudence. They will be purchasing in small and large quantities for
the purpose of direct consumption or building. And they will co-operate to more than 70% of the
customers.

2.1 Customers
The holding has a target of customers within Ugunja town and within its boundaries that is
Kisumu,Busia and Siaya town, neighboring communities at large. The expected customers will
be grouped into three main divisions, that is, individual customers, commercial customers and
the institutional customers. For institutional customers, the business will target the neighboring
institutions as its potential customers. For commercial customers the company/ business has
planned to contract successful small scale business within which it will offer credit facilities to
trustworthy customers as well as reasonable discounts on bulky purchases. Since Homa-bay
estate population is growing rapidly, with increase in building and design facilities. The
company will find a ready market. The customers within Homa-bay town are mostly aged 67 and
around 71% have retired and are now on pension. Most of them are interested in investing their
incomes from loans and pensions as well. These customers are Police offices, Teachers, and
Nurses and even retired business men and women. The business also targets attract more local
customers of all social caliber in the society. This is to be met by availing a variety of product
range so that customer satisfying as part of marketing strategy. This company will retain its
customer and will continue to attract more by providing goods of high quality. And all these are
to be met by availing a variety of product range so that customers find its taste and preference.
The business is interested in local customers as they serve a great role in advertisement of the
business through grapevine communication. The business will operate from Monday to Saturday,

5
the mode of payment will be cash, M-pesa and cheque will also be accepted. The business will
operate both on till number and pay bill.

2.2 Market
The approximate number of people who require the services of the business are around twelve
thousand from institutions, commercial also the local customers. The types of customers, their
number and percentage are represented in tabular form as shown below:

Type of customers Number of customers Percentage(%)

Institutional 3000 25
Commercial 3000 25
Local 4200 35
others 1800 15
The total sales per month in units are calculated as shown below

Type of customer Number of Frequency of Quantity of Sales per month

customers purchase purchase in unit
Institutional 3000 10 10 300,000
Commercial 3000 20 20 1,200,000
Local 4200 15 15 945,000
Others 1800 10 10 180,000
total 12000 55 55 36,300,00

2.3 Competition
Wan Bang'i Ugunja Company has two main competitors namely: Alendo Ltd and Homa-bay
hardware. However, Wan Bang'i Ugunja will attempt to offer satisfactory services to its
customer’s i.e. offering credit facilities, discounts, accepting cheques, M-pesa, pay bill and till
number compared to Opunde company and Mwalimu hardware shops. Wan Bang'i Ugunja
Company has a suitable location within Ugunja town centrally located and away from the two
businesses hence avoiding sharing of customers thus the location of the business is
advantageous. These two competitors have well established number of customers as compared to
Wan Bang'i Ugunja which will be new and not known to customers and in the town. They have a
stable financial background because they are more than ten years operating. Their number of

6
employee is relatively high and they are averagely popular due to this they are experiencing
larger market share. Even as much the two businesses have a number of strengths, they also have
weaknesses such as high number of employee’s turnover. Their level of tidiness or neatness is
also low. Poor customer’s care is their major weakness and though they have high number of
employees, most of them are unqualified and incompetence.Wan Bang'i company will offer
packaged products and will engage public relations.

2.4 Promotion And Advertising

The enterprise will ensure product and services promotion is fostered due to the need to maintain
customers this will be done through special offers, being awarded to esteemed customers.
Provision of after sales services to bulky purchases,free consultancy services and direction of
customers at the start of business. Ensuring discounts to products on a regular schedule,
association of product and services with prominent and famous person’s in the society e.g.
talented, musicians and finally issuing calendars, t-shirts, caps, handbags printed and branded
with organizations logo and name. Printing of fliars and bill boards and dropping them
everywhere in the town. Attending shows and exhibitions, radios to ensure the business is known
in the county. Opening Wan Bang'i Ugunja business accounts on social media platforms i.e.
facebook, instagram and also going extra mile on daily gazettes.

2.5 Pricing Strategies

The business aims at pricing level as to generate maximum profit possible without exploiting the
customer. Quality products and services will attract the price charged to customers. The
customers, who will purchase bulk quantities, will receive trade discounts and credit facilities.
The company will provide billed receipts on items sold as a method of avoiding losses and
returns filed after every financial period.

2.6 Sales Tactics

The entire population of Homa-bay town and the neighboring boundaries is twelve thousand
roughly by estimating. The population is evenly distributed in homesteads and apartments, as
well as firms. The business is expected to serve around ten thousand customers in a year with at
least thirty customers per day within the region thus the market shares will be based on the
following target.

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Customers Days of the Customers Total Expected Market
per day month per month customers per customers in shares
year total population
30 30 900 10800 12000 72%

Estimated customers to serve Estimated customers in total Target(%)

per year population
8000 12000 66.7
The enterprise will then operate on the return on investments by computing expected profits
earned in relation to the capital employed to the business in order to basically satisfy the
proprietor, that the percentage target and market share percentage were perfectly estimated.

2.7 Distribution Strategy

The business will use zero channel of distribution that is supply of products directly from the
business to the customer. The system of transport to be used is road transport and human portage
transport as the cheapest and affordable and also available means. The delivery of goods and
services will be automatically checked out in the system and most customers will be motivated
with this. Where there will be information that Katita Ltd have more customers coming from far,
the business shall open a branch in that place to expand and also to avoid large transport and
intermediaries effects. The business will try to avoid intermediaries and middlemen to avoid
increase in transport cost and taxation as well.

8
 CHAPTER THREE:
3.0 ORGANIZATIONAL MANAGEMENT PLAN
The proposed business enterprise is designed to have precise channel of flow of authority and
communication within members of the organization. The formal channel of communication and
authority will be laid to various departments’ levels as indicated in the figures.

1.1 organization structure

Manager

Assistant Manager

Cleaner Worker 1 Transporter

The above organizational chart is proposed structure and flow of communication to different
levels. It clearly indicates how information will be laid down to different departments.

3.1 Management Personnel

The the managerof thebusiness will beOtieno Michael Magana3, as the owner of the business. As
it is a sole proprietorship form of business, the owner will be assisted by family members. The
manager of the business has skills on building industry; he has participated in construction of
roads, bridges, canals, duck bill and different houses under Tractebel Company to their
completion. Michael who is the manager has been working as a foreman since the year 2020 and
has skills on management. The assistant manager will be George Odhiambo who is a family
member. George has a knowledge on information science and has practiced and having a work
experience of three years. George also operates a building hardware as the sole manager and
decision maker. Wan Bang'i Ugunja Building and Construction Company will stand a good
chance on working with new technology as the owners have managerial experience. The
business enterprise will employ three employees at the start. They will help the business to
achieve it’s goals. The assistant manager will be handling matters on recording, execution on
topmost duties, directing the manager where necessary. He will also provide accounting services
due to the experience he has.

9
3.2 Other Business Personnel
The business is planning to employ only three staffs who will assist in production, transport and
delivery of goods and services to different customers. Their roles and personnel are indicated in
the chart below.

No. Personnel Number of Personnel Duties

1. Manager one The overall resource allocation
Sole final decision maker
Chief formulator of business policies
2. Ass. manager One Checking books of accounts
Charged with personnel management
Charged with operation management
Assists manager in execution of topmost duties
3. Cleaner one Concerned with cleaning the environment and
assist in handling customers.
4. Workers Two This is the receptionist
Attending to office operations
5. Transporter Two Delivery of goods and services to customers

3.3 RECRUITMENT, TRAINING AND PROMOTION

The employment will be done on open forum. This will intend to communication and
announcement through notices. There will be no much qualifications required. This is to avoid
disturbance from people with high qualifications. Recruitment functions will be done by the
assistant manager being assisted by the manager.Wan Bang'i Ugunja Construction will recruits
members with no knowledge on construction and building. We will them organize and train them
at no cost. Once they are trained, they shall start operating on daily basis. The training will be
proceeding with the development of the enterprise. The employees of the enterprise will be
instilled with knowledge on carpentry, masonry, and plumbing and also on handling of
customers. Because we will be working with computers in storing of organization’s information,
accounting services, the type of customers we serve. The training on computers will also be
done. The major purposes for training the employees will be to ensure are well conversant with
the job. This will also increase or vast their knowledge and skills in the required job. The
following training will be conducted on various groups of employees;

i) Orientation training will seek to adjust the newly employed employees to the working
environment and to make them fully familiar with their superiors and subordinates and the
regulations of the organizations so as to instill confidence in them.

ii) On the job training will aim at increasing employees’ knowledge and skills on the technical
knowhow to perform duties at the working place.

iii) Safety training will aim at minimizing accident at the work and reducing damage of
plumbing facilities.
10
iv) Supervisory and management training will seek to train top level management to facilitate
effective decisions, how to work will people improve communications and also how to motivate
employees.

The criteria that will be used when promoting staff is;

i) The employees who are more experienced will be promoted and also those who have
worked for long time and still ready to work will be marketed to national companies.
ii) Those employees who perform well in the business without supervision will be
promoted when we open our branches in other places.
iii) The most competent the worker, the higher chances of promotion. The hardworking
and competent workers will be promoted.

3.4 Renumeration And Incentives

The workers will be paid on monthly basis. The company will make sure that it pays the
employees on the right time and right amount as agreed. This will act as a motivational factor to
employees and will increase their morale on job. The workers will be renumerated or paid as
follows;

Essential incentives will be given to employees and be inform of bonus, pay on overtime, work,
commissions on salaries, sometimes lunch will be provided as well as breakfast. The company
will ensure one day leave on each employee on weekly basis.

Job title Basic salary Medical Transport No. of Total salary

ksh. allowance allowance employees ksh.
ksh. ksh.
Manager 30000 2,000 1,500 1 33,500
Assistant 25,000 2,000 1,500 1 28,500
Manager
Cleaner 6,000 500 1,500 1 8,000
Workers 6,000 200 1,000 2 7,200
Transporters 6,000 1,000 2 7,000
Total 73,000 6,700 55,000 7 99,400

3.5 Other Support Services

The company will demand support services in its operation from other relevant money lending
institutions. These support services include; banking services, insurance services, consulting
services and legal services.

11
3.5.1 Banking Services
The enterprise will require several accounts i.e. savings accounts to save its money, deposit
accounts for purpose of deposit transactions. The enterprise will also establish itself to greater
heights through borrowing loans and financial advice seeking on the investment from banking
institutions.

3.5.2 Insurance Services

The enterprise has resources that are useful assets. The enterprise will ensure both natural and its
human resource against expected occurrences of risks i.e. medical insurance scheme for all
employees and insurance of organization property against collateral damage like fire and theft.

3.5.3Consultancy Services
The enterprise management will consult on how to run their daily operations for the successful
attainment of set goals from various sources i.e. financial consultancy on banking and
investments will be done in banking institutions.

3.5.4 Legal Services

Legal services will be required when establishing contracts, drafting legal letters, interpreting
labor laws, and during employment. The enterprise will be associated with Magellan and
Shanoar sons Advocacy Company limited in its legal affairs and will obtain relevant documents
from the government through the Kenya industrial labor courts whenever possible.

3.6 Licenses, Permit And By-Laws

A license is a legal document which gives official permission to conduct business. The
organization will get license from government revenue authority at a fee of two thousand per
month so that the business is legally conducted. The business will get permit from the
government of Homa-bay and by-laws will be set which will include labor laws which will state
that the employees should be given annual leave of not less than 21 days on full day and there
must be one rest day every week. The employee will be expected to supply sufficient supply of
water at work place and housing accommodation provided.

12
 CHAPTER FOUR:
4.0 PRODUCTION/OPERATIONAL PLAN
The operational plan involves the activities which operator has to meet to make the business run
smoothly. The business will be giving services to its customers, building services or hardware
services and also selling construction equipments.

4.1 Production Facilities And Equipments

The following table shows the equipments which will be required when starting the business.

4.1.1Operation Plan And Capacity

Serial Item description Date Quantity Cost per Total in
number required required item kshs.
2022
1 Iron sheets 1st February 100 600 60,000
2 Timbers 1st February 100 200 20,000
3 Cement 1st February 30 550 16,500
4 Wheelbarrow 1st February 20 2500 50,000
5 Plumbing pipe 1st February 10 10,000 10,000
6 Tiles 1st February 20 950 19,000
7 Nails 1st February 10kg 100 1,000
8 Plumb bob 1st February 20 150 3,000
9 Reinforcing bar 1st February 30 600 30,000
10 paints 1st February 50 500 25,000

4.1.2 Plan For Maintenance And Repair

To prolong the lifespan of machines and equipments, they will be stored safe, oiled and cleaned
after use’ to avoid things like timber from being spoiled, they will be nailed together and wood
preservative applied.

4.2 Production Strategy

4.2.1 Technology To Use
The manager will be using modern technology in running the business for example computer
will be used in storing information about the business and recording the business clerical
procedures which is easier.

13
4.2.2Tactics To Be Used In Operation
In order to meet production objectives, the manager will be able to maintain the following:

i) Meet delivery dates. This is where he is supposed to deliver the products in time to
the customers.
ii) Ensure there is enough stock as this will ensure there is continuous production in time
to the customers, thus efficient running of the business.
iii) Avoid delays in attending to customers to avoid loss of customers and prevent loss
being incurred.
iv) Ensure continuous inspection of quality goods, products and services being given to
customers.
v) Employing trained staffs and maintaining good relations with them, the working
environment can be efficient, maintain harmony and unity.
vi) Fixing working hours such that the customer understand the time they can be attended
to also know if there is overtime hours that will be scheduled if there is a lot during
busy seasons.

4.2.3Monthly Material Requirements

Stock required quantity Cost per unit Total cost (ksh.)
Iron sheet 100 600 60,000
Timber 100 200 20,000
Cement 50 600 30,000
Wheel barrow 30 2,000 60,000
Pipes 10 10,000 10,000
tiles 20 950 19,000
Nails 10kg 100 1,000
Plumb bob 20 150 3,000
Paints 50 500 25,000
total 228,000
The stock will be supplied by a supplier who will be supplying the materials constantly to ensure
continuous operation in the business.

4.2.5Monthly Operation Expencess

Serial Job title Level of skills Number of Salary /per Total pyment
number personnel head
1 Manager Diploma in 1 30,000 30,000
building cert.
2 Ass. Manager Degree in IT 1 30,000 30,000
3 Secretary Form 4 cert. 1 10,000 10,000
4 Cleaner Form 4 cert. 2 10,000 20,000
5 Security Kenyan 2 8,000 16,000
citizen
6 transporter Kenyan 2 8,000 16,000
citizen

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 122,000

4.2.6 Monthly Operation Expenses

There are other expenses will be increased in process of running the business a part from
monthly labor requirements and monthly materials requirements

Serial number description Cost per month

1 Rent and rates 2000
2 License 1500
3 Insurance 800
4 Repair and maintenance 1000
5 Travelling and transport 2000
6 Water and electricity 1000
7 Advertisement 1000
Contingencies 10% 1000
GRAND TOTAL 8500
TOTAL 9500

4.2.7Monthly Production Cost

items Cost per month
Materials costs Sh. 228,000
Labor costs Sh. 122,000
Overheads expenses Sh. 12,450
Monthly total Sh. 362,450

4.3 Production Process

a chart of operation process from when a customer places an order until that time when the
product is collected can be as shown below.

Order Costing Collection

Reception Receptioning

Processing Packaging

15
All the process shown will be strictly followed when giving services to customers. An order is
received from a customer by the assistant manager who will be in charge of sales. The assistant
manager then looks at it and considers all the details whether genuine or not. He then absorbs
and acts with a screened technology language which the manager understands. The product is
then processed and packed, receipted and then collected by the customer and then filed for future
reference.

4.4 Regulations Affecting Operations

4.4.1 Health Regulations
To ensure health in business, the manager will provide first aid kits in case of injuries, sanitary
appliances, and dust bins will be kept in all corners for proper disposal of waste products or
materials to ensure cleanliness. There will also be good ventilation in all the rooms to ensure
fresh air circulation. There will be gloves, safety boots, helmets and overalls and dust coats
provided for good health of employees.

4.4.2 Safety Regulations

The manager will take up some measures to cater for employees due to dangerous risk of fire, the
organization will provide fire extinguisher, emergency door, automatic cut off fuses and sockets,
in case of any inconveniences that may arise in the business. The management will also ensure
that there is no slippery floor to avoid various accidents which may occur, thus eases the
movement.

4.4.3Taxes
The taxes will be paid to Kenya revenue authority at the end of every month. And also the
business will file returns after every financial year to make its operation legal.

4.4.4 By Laws
The management shall comply with labor laws to ensure that the staffs get their rights and better
welfare facilities. The building laws shall also be complied to ensure the buildings are in the
right position and they conform the British standards. And they may not distract the running of
the organization in any way.

16
 CHAPTER FIVE:
5.0 FINANCIAL PLAN
The financial plan involves the financial requirements that the manager has to meet in order to
run the business. They include; pre-operational cost, working capital, projected cash flow
statement, proforma income statement, proforma balance sheet, breakeven point, profitability
ratios and desired financing.

5.1 Pre-Operational Costs

The cost which will be increased before operating the business includes the following;

No. item Amount (kshs.)

1 Fixed assets 50,000
2 Rent deposits 10,000
3 Transport 9,000
4 Permit 8,000
5 Licenses 1,500
6 Opening stock 50,000
7 Advert 3,000
8 Electricity 2,000
9 Security 5,000
10 Installation of water 6,000
total 146,000

5.2 Working Capital

Working capital is the total current assets less current liabilities

Working capital=current assets – current liabilities

CA - CL

17
5.5 Pro-forma Balance Sheet
Wan Bang'i Ugunja building and construction ltd

Pro-forma balance sheet

As at 2021 December

Item 31st-12-2022 31st-12-2022

Fixed assets
Machinery and equipments 457350 389350
Less: depreciation 37344 20344
Total fixed assets 420006 369066
Current assets
Cash in hand 100000 180000
Cash at bank 76709 100000
Stock 158242 200000
Total current assets 334951 480000
Total assets 754957 876066

Long term liabilities

One year loan 100000 100000
Total liabilities 100000 100000
New month 654957 776066

5.6 Break-Even Analysis

5.6.1 Determination of annual sales

This is just the value cost of sales made

Total annual sales =1684000

5.6.2 Separating Variables And Fixed Assets

VARIABLE COST KSH FIXED COST KSH
Purchases 723200 Salaries 6000
Utility 37400 Rent 4800
Legal fee 500 Advertisement 6000
Postage 5100 Depreciation 14400
License 800 Loan interest 37344
Transport 24300 Insurance 4200
Repairs 5660 Loan payment 60000
Miscellaneous 131450
Pre-operational cost 14600
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Total 934010 175944

5.6.3 Total Contribution Margin

Total sales variables

1684, 000-93, 4010

Ksh74, 9990

5.6.4 Contribution margin percentage

Contribution margin % = Contribution margin x100

Total sales
= 749990 X100 % 44.6%
1684000

5.6.4 Total fixed expenses

This includes the total fixed expenses for the year

Total fixed expenses for the year = ksh 175944

5.6.6 Break- Even level of sales

The break- Even level of sales is calculated as

Break- Even level of sales = Total fixed cost

% contribution

= 175944
44.6% =38083.17

5.7 Expected profitability rates

This involve calculation of gross profit percentage, return on owner’s equity, return on
investment for the proposed business

5.7.1 Gross profit percentage

Gross profit percentage = gross profit 100%

22
 Sales
960800 X 100% =57.05%
168400
5.7.2Return on owners equity
Where return on owners equity = Net profit after tax X 100%
Owners equity
134551 X 100%
200000
=67.3%

5.7.3 RETURN ON INVESTMENT

Where return investment = net profit X 100%
Total investment
134551 x 100%
425000
= 31.7%

5.8 Desired Finance

Item Amount In Item
Pre- operational cost 146000
Working capital 350000
Total 496000

5.9 Proposed Capitalization

Sources of funds Amounts
Bank loan 100000
Personal savings 200000
Relatives donations 125000
Total investments 425000

Loan payment ksh.

Amount of loan borrowed 100000
Payment period 1 year
Monthly payment 5000
Loan interest percentage 10%

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LOAN SECURITY
The security that the manager will use on his loan is tittle deed of his land and also the assets of
the business so that in case of failure in payment, then there will be a penalty on the promised
assets.
Bank loan 100000
Savings 200000
Donations 125000
Total 425000
A. Bank Loan = 100000 x360 = 84.710
425000
= 84.710
B.
Savings = 200000 x360
425000
= 169.410
C. Donations = 1250000 x 360
4250000
= 105.880

sources of funds pie chart

850

1690

1060

24