BUSINESS PLAN

BUSINESS NAME : SAFI BUTCHERY

BUSINESS ADDRESS : P.O BOX 473 - KALIMONI

PRESENTER : GICHURU AMOS

INDEX NO : 08202101230

COURSE CODE : 2705/206

CENTRE NAME : NYERI TECHNICAL TRAINING INSTITUTE

COURSE : DIPLOMA IN BUILDING TECHNOLOGY

PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL

DATE OF PRESENTATION : JULY 2016

NAME OF SUPERVISOR : KARIUKI .C.K

i
 DECLARATION
I Gichuru Amos declare this business plan is my original work and no part of this has over been
forwarded to the examination body

SIGNITURE : ……………………….

NAME : GICHURU AMOS

This business plan has been submitted to KNEC with approval supervisors name Kariuki C.K

Signature

ii
 DEDICATION

I wish to dedicate this project to my dad Samuel Gitau for his contribution toward this plan

Special thanks go to all classmates’ for their valuable positive moral support all along

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 ACKNOWLEDGEMENT

Preparation of this business plan has drawn up variety of experience I wish to acknowledge with

a lot of thanks and gratitude to my parents. Mr. and Mrs. Gitau for their support during studies

and also their parental care .May God bless them for their financial support and mutual support.

Sincere gratitude to my lecturer Kariuki CK who provided guidance and support while coming

up with this document.

Table of Contents

iv
DECLARATION.........................................................................................................................................ii
DEDICATION............................................................................................................................................iii
ACKNOWLEDGEMENT..........................................................................................................................iv
CHAPTER ONE..........................................................................................................................................1
1:0 Executive Summary.........................................................................................................................1
1:1 Business Description.......................................................................................................................1
1:2 MARKETING PLAN......................................................................................................................1
1:3 ORGANIZATION AND MANAGEMENT PLAN.........................................................................2
1:4 OPERATION AND PRODUCTION PLAN...................................................................................2
1:5 FINANCIAL PLAN........................................................................................................................2
CHAPTER TWO.........................................................................................................................................3
2:1 BUSINESS DESCRIPTION............................................................................................................3
2:2 BUSINESS LOCATION AND ADDRESSES...............................................................................3
2:3 FORM OF BUSINESS OWNERSHIP............................................................................................4
2:4 TYPE OF BUSINESS.....................................................................................................................4
2:5 PRODUCT AND SERVICES.........................................................................................................5
2.5.1 PRODUCTION AVAILABLE....................................................................................................5
2.5.2 SERVICE AVAILABLE.............................................................................................................5
2:6 JUSTIFICATION OF OPPORTUNITY..........................................................................................5
1:7 THE INDUSTRY...............................................................................................................................6
2:8 GOALS OF BUSINESS..................................................................................................................6
2:9 ENTRY AND GROWTH STRATEGY..........................................................................................6
CHAPTER THREE.....................................................................................................................................8
3:0 MARKETING PLAN......................................................................................................................8
3:1 CUSTOMERS.................................................................................................................................8
3:2 MARKET SHARE..........................................................................................................................9
3:3 COMPETITION..............................................................................................................................9
3:4 PROMOTION AND ADVERTISING STRATEGY.....................................................................10
SALES TACTICS.....................................................................................................................................10
PRICING STRATEGY.............................................................................................................................11
DISTRIBUTION STRATEGY..................................................................................................................11
CHAPTER FOUR.....................................................................................................................................13

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4:0 ORGANISATION AND MANAGEMENTT PLAN.....................................................................13
4:1 BUSINESS MANAGERS AND QUALIFICATION....................................................................13
4.2 PERSONNEL NUMBER AND DUTY...............................................................................................13
4.3 RECRUITMENT, TRAINING AND PROMOTION..........................................................................15
4.3.1 RECRUITMENT..............................................................................................................................16
4.3.2 TRAINING.......................................................................................................................................16
4.3.3 PROMOTION..................................................................................................................................16
4.4 REMUNERATION AND INCENTIVES............................................................................................16
4.5 LICENSE PERMIT AND BY-LAWS.................................................................................................17
4.5.1 BY-LAW..........................................................................................................................................18
4.6 SUPPORT SERVICES........................................................................................................................18
4.6.1 LEGAL SERVICES.........................................................................................................................18
4.6.2 POSTAL SERVICES.......................................................................................................................19
4.6.3 BANKING SERVICES....................................................................................................................19
4.6.4 INSURANCE SERVICE..................................................................................................................19
CHAPTER FIVE.......................................................................................................................................20
5.0 OPERATION / PRODUCTION PLAN...............................................................................................20
5.1 PRODUCTION FACILITIES AND CAPACITY REQUIRED..........................................................20
5.2 PRODUCT STRATEGY.....................................................................................................................21
5.3 PRODUCTION PROCESS.................................................................................................................23
5.4 GOVERNMENT REGULATIONS GOVERNING OPERATIONS OF THE....................................24
CHAPTER SIX.........................................................................................................................................25
6:0 FINANCIAL PLAN......................................................................................................................25
6:1 PRE-OPERATIONAL COST...................................................................................................25
6:2 WORKING CAPITAL REQUIREMENTS...................................................................................26
6.3 CASH FLOW ……………………………………………………………………………….27
6.3.1 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 31ST 2017…….27
6.3.2 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 31ST
DECEMBER 2018……………………………………………………………………………….28
6.3.3 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 31ST
DECEMBER 2019……………………………………………………………………………….29

6.4 PRE-FORMA INCOME STATEMENT.............................................................................................30

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6.5 PROFORMA BALANCE SHEET AS AT 31ST DECEMBER 2017...................................................30
6.6 BREAK EVEN LEVEL......................................................................................................................31
6.7 EXPECTED PROFITABILITY RATIO.............................................................................................32
6.8 DESIRED FINANCING.....................................................................................................................33
6.9 PROPOSED CAPITALIZATION.......................................................................................................33

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 CHAPTER ONE

1:0 Executive Summary

1:1 Business Description

The business name will be SAFI BUTCHERY. The business will be operated under the

following address;

SAFI BUTCHERY
PO BOX 473
KALIMONI
MOBILE: 0711809633
The business will be a sole proprietor dealing with the selling of meat .The name of the owner of

the business will be Gichuru Amos. The total amount of capital required to start the business will

be Ksh 400,000.

The source of the capital will be obtained from;

Owners equity — ksh100, 000

Bank — ksh250, 000

Friends – ksh50, 000

The manager of the business intends to commence his business in 2017

1:2 MARKETING PLAN

The business will be located at a place where there is a large population,most of the targeted

potential customers will be institutional based, commercial and domestically based .To enlarge

1
and promote to the ultimate of the business the management will actually conduct advertisement

and promotion of their product and services

1:3 ORGANIZATION AND MANAGEMENT PLAN

The enterprise will be managed by the owner who will be the manager .The manager will be

assisted by his employees who include accountant, salesman, gateman and supervisor to promote

the welfare of the workers named and improve their lives by giving them incentives such as

medical allowances, holiday, gifts etc.Banking services will be offered by Equity Bank as a

supportive servicer. UAP insurance will other the enterprise insurance

1:4 OPERATION AND PRODUCTION PLAN

In production the owner will look for healthy meat from the slaughter house which are free from

diseases so that he can raise the standard of the customers.Machine and equipments in the

business will be repaired and maintained regularly and the service offered will be of high

standard. The distribution process will be from manufacturer to the suppliers and finally to the

potential customers.

1:5 FINANCIAL PLAN

The total amount of the money required to run and develop the proposed business will be Kshs

400,000. This is shown as follows

Owner’s equity-Kshs 100,000

Bank loan –Kshs 250,000

Friends& relatives-Kshs 50,000

Total-Ksh 400,000
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 CHAPTER TWO

2:1 BUSINESS DESCRIPTION

The proposed business will be called SAFI BUTCHERY.This is a Swahili word meaning

clean .This name is very suitable since cleanliness in the butchery business creates a good image

to potential customers

The business proprietor is Gichuru Amos aged 22 years these are his personal addresses.

PO BOX 473

KALIMONI

TEL 0711809633

He attended Thiririka primary school and later joined Gituru High School after his high school

education he did the International Computer Driving License (ICDL) for a period of three

months and later enrolled for another course in Nyeri Technical Training Institute for a Diploma

in Building Technology which he is currently undertaking,

2:2 BUSINESS LOCATION AND ADDRESSES

The business location will be located in Juja town directly opposite happy supermarket which is

on Bidii Road at the Skyline Plaza, the plot No is s/s 530/010

Some of the reasons that led to the choice of the business location are as follows

 Improved security

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 Centrally located with high traffic flow of people

 Efficient supply of water and electricity

 The high population provides a larger market

 Has a good network of roads as it is nearly located to the Thika superhighway

For easier communication these are the contacts of Safi Butchery

SAFI BUTCHERY

PO BOX 473

KALIMONI

MOBILE 0711809633

2:3 FORM OF BUSINESS OWNERSHIP

The business will be a sole proprietorship, the entrepreneur find it advantageous for the

following reasons

 Quick decision making

 The feeling of being the boss

 Enjoys all the profit alone

He will partially find the starting of the business, the rest of the capital will come from parent

donation and the balance will be a bank loan.

The business will be registered under the ministry of health and hospitality of Kenya at kshs

2500

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2:4 TYPE OF BUSINESS

The enterprise is mainly interested in selling of fresh meat and offering services to customers. It

will operate as a retail type of business because of its advantages as follows.

1. Serving low income partners

2. Initial capital required is low

3. Food relationship created among customers.

2:5 PRODUCT AND SERVICES

2.5.1 PRODUCTION AVAILABLE

i. Fresh meat (pork, beef and mutton)

ii. Stake

iii. Bones

2.5.2 SERVICE AVAILABLE

i. Soup

ii. Deep fried meat

iii. Roasted meat

iv. Boiled meat

2:6 JUSTIFICATION OF OPPORTUNITY

After intensive research of this business in Juja town, many have little knowledge about the consumption

of meat and its product. Generally the future of the business is promising and prospects are that the

products will satisfy the customers to the best.

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Safi Butchery will sell genuine meat unlike the existing business which are offering meat from animals

which has not been accepted by the society or poached meat which is an illegal activity in our country.

The business will provide employment to the people within the locality thus improving the standards of

the area. The business will give back to the society by funding harambees in the area, sensitizing the

people on taking the healthy amount of meat for their health and also advising them on how to properly

cook meat.

1:7 THE INDUSTRY

The business will lie under the food industry. This industry has grown tremendously since food

is a basic need among human beings. This kind of food can be used with any other type of food

with high demand. The product has become much cheaper because of the digital weighing

machine enabling low income earners consuming meat.

2:8 GOALS OF BUSINESS

The following are the goals of the business

 To create employment

 To make profit of 10% of sales per day

 To increase market share from 20%-60% within three years time

 To buy a vehicle within three years time

 To increase meat stock

 To expand the premises within five years’ time

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2:9 ENTRY AND GROWTH STRATEGY

Before the business opens its door the owner will carry out an intensive promotional

advertisement through local print media and posters which will be placed at strategic points.

The owner wishes to start the business after his completion of his on-going course in year 2017.

Safi Butchery will use various strategies to maintain its customers. These tactics will include

negotiating price with customers, adding them an extra cut of meat and giving them discounts.

Good communication and handling means will also be a great deal. The business will meet the

above requirements to enable the business grow in a smooth manner.

As the sponsor I will be attending shows and seminars, advertising the products, educating the

community on their health and the importance of the business to them and their country and

adding of more hours than those of my competitors

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 CHAPTER THREE

3:0 MARKETING PLAN

3:1 CUSTOMERS

A good marketing plan enables entrepreneur to understand and know his potential customers,

their purchasing power, what they lack in the market and examines how best to reach and meet

their needs.

Some of the potentials customers will include:

 Individual customers

 Intuitional customers

 Commercial customers

Individual customers

This class includes lower income partners and higher income partners. Most of these are young

people and middle aged people who are a working class. This category includes people working

in small and large scale enterprises in Juja town, also people from private firms and local

residents, example of the these people are as follows

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  Casual laboures within Juja town

 Teachers from surrounding schools and institute e.g. Juja secondary school, Kalimoni

primary and Corner Brook school.

3:2 MARKET SHARE

The proprietor has conducted adequate market supply which will help to examine the market

share. The business experts to attain 60% of the market’s population which is about 20000

people since the meat and meat products will be fresh and clean and of the required standard.

The customers target per day will be kshs 100000. Offering after sale services and high quality

services will enhance high slope of customers thus high output

3:3 COMPETITION

Main competitors are

i. Kims New Butchery ii. Stage Butchery

P.O Box 62028 P.O Box 63028
Thika Thika

Tel: 0712 34 56 78 Tel:0712 67 81 20

They are located in Juja town Uhuru Road about 500m from the proposed site of location. The

advantage of Safi Butchery has over its competitors is that it is located near the bus station where
9
it is the main entrance to Juja town, thus anybody leaving and getting in the town will have a

choice of buying from Safi Butchery.

The enterprise will also be coming up with new features thus attracting customers. The business

will be using the latest technology such as refrigerators and digital weighing machine to keep our

product in good conditions hence effective .Our customers need will be the business driving

force towards success.

3:4 PROMOTION AND ADVERTISING STRATEGY

Advertising and promotion is very crucial for a new business. It helps the new business to

penetrate and gain acceptance in the market. Entrepreneur actually will look for the best and

cheap method to minimize the cost of advertisement and promotion.

Local vernacular radio station

In the radio station, the language used will reach a large number of customers. Advertising

through Inooro Fm Radio Station will be a good purpose. The cost of advertising will be 15

shilling per word.

Posters and leaflets

They will be given to customers who attend the premise as well as willing customers.

They will include:

Products and services offered

Name of the business

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 Location of the business

SALES TACTICS

Credit facilities will be offered to stable customers. After sale service offered to products

sold for a specified period of time. Most of peak sales are expected at the end of the month

and beginning of the month. This is because the employed individuals will have taken their

salary and also farmers get their money towards the end of month. Overtime actually will be

an added advantage to the employer to motivate them to work harder

PRICING STRATEGY

The pricing strategy of products and services will be affected by some of their

 Demand

 Supply

 Discount offered

 Government policy e.g taxation

 The selling price of the product

The selling price of the product and services will be calculated as follows

Selling = Transport + Buying Price + Tax Profit

DISTRIBUTION STRATEGY

SLAUGHTER HOUSE

REPRESENTATIVE

11
 SAFI BUTCHERY

CUSTOMER

The proprietor will buy his product from manufacturer representative and then sell directly to

the customers.

All the services and maintenance will be conducted within the promise workshop. All the

transportation of the enterprise will be by road transport. This will cost the proprietor a cost

of ksh 14,000 per month

The transportation costs will be very cheap and few challenges will be met along

transportation since the slaughterhouse is located near the proposed business area. The

transport challenges that will face the business includes breakdown of the motorbike and to

escape this the business will be maintaining and repairing it every month.

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 CHAPTER FOUR

4:0 ORGANISATION AND MANAGEMENTT PLAN

4:1 BUSINESS MANAGERS AND QUALIFICATION

Butchery business requires a lot of attention, since any light malfunction may affect the business
drastically. Therefore since the business is at it’s young stage, a qualified manger will contribute
highly to its success.

My duties will include:

i. Making decision on the growth and expansion of the business

ii. Supervising the workers to ensure effective work is done
iii. Buying of equipments required in the business
iv. Training and motivating the employees to ensure good work performance
v. Planning on a new development required in the business
vi. Obtain permits, insurance and licenses from the concerned authority and confirm duration
for renewal.
vii. Capable of solving conflicts that may arise between the firm and its external influence
and also within the business.
The manager has the following qualification
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 i. Diploma in building technology
ii. Have experience in a busy running business
iii. He is a good team player with good interpersonal relationship.
iv. He is a computer literate
v. He is a Kenyan citizen

4.2 PERSONNEL NUMBER AND DUTY

The business needs some employees for it to run smoothly and to share the task. Every employee
will be given responsibility and some authority depending on his/her position. These employees
include.

i. Storekeeper
ii. Accountant
iii. Butcher man
iv. Cleaner
v. Supervisor

ACCOUNTANT

Qualifications

a. Must be a holder of C.P.A section (iv certificate

b. Must be a computer literate
c. Must be a Kenyan citizen
d. Must have a good past record
e. Must have at least one year of experience.

Duties and Responsibilities

a. Keeping the sale and purchasing records

b. Issuing receipts on sale
c. Depositing cash received from sales
d. Opening and closing the business daily
e. Receiving cash on sale and in charge of accounting

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STORE KEEPER

Qualifications

a. Must be a holder of certificate in store keeping

b. Must be a computer literate
c. Must be a Kenyan citizen
d. Must have a good past record

Duties and responsibilities

a. Ensuring that all working tools and equipments are in good condition.
b. Should keep store records properly to avoid loses
c. Ensure that the amount of meat is well maintained throughout

BUTCHER MEN

Qualification

i. Have knowledge of a butcher man

ii. Must be a Kenyan citizen
iii. Work with minimum supervision
iv. Ability to communicate well with customers
v. Must maintain cleanliness throughout

Duties and responsibilities

i. Serving customers
ii. Sorting of the different kinds of meat
iii. Working with accountant on stock sold

Organizational chart

Manager

Accountant Supervisor Store keeper Sales man

15

Butcher man
4.3 RECRUITMENT, TRAINING AND PROMOTION

The aim of recruitment is to select the individual who is truly qualified and competitive in the
butchery business.Ths means that any individual who qualifies should be in a position to meet all
the requirements of the job in question or the vacant to be filled.

4.3.1 RECRUITMENT

Safi Butchery will be recruiting its staff and other personnel’s by advertising the vacant post by
use of posters circulars. The postors will be fixed around Juja Town and other surrounding places
in the district. The advertisement will be full of address of the company and will clearly outline
all the recquirements and conditions that the applicant should meet. The manager will have the
responsibility to evaluate the potential of the applicants during the applicantion. The recruitment
and selection will be done in a fair manner without any favor or discrimination.

4.3.2 TRAINING

Training will be done mostly to the new employees where they will be introduced to the working
of the machine and then operations and other duties that they will be carrying out. They will also
be taught about the safety measures to be taken in the working premises. There will also be
seminary and workshops which will be catered for by the business. Also re-training will be
offered to the existing employees in case of any technological change or change of duties.

4.3.3 PROMOTION

The method of promotion will be seniority based. This depends purely on the experience of the
employee and how best he can perform his job. It will also be based on how you have served the

16
business on the assumptions that you are familiar with all the operations of the business. This
helps in maintaining discipline and respect among employees. Again it motivates the ones who
get promoted because they feel honored and recognized.

4.4 REMUNERATION AND INCENTIVES

It is well known that salaries and wages is the most motivating factor to the employees in any
field and also considering current economic conditions and financial constraints. Putting this into
consideration, the business will be carrying out its maximum production and to achieve its set
goals. Allowances will be given not forgetting overtime hours which will be included in the
wages and salaries.

The leaves will also be offered to its workers and each worker at his own day and this will avoid
over exploiting them by over working. There will also be some gifts given during holidays and
award will be given at the end of the year to the best performers and this will motivate other
workers to work hard.

There will be also some trips which will be catered for by the business so as to expose the
workers on what is happening in the meat business and this helps the whole team to be creative
and competent. The monthly pay of the year is shown in the schedule below.

BASIC SALARY ALLOWANCE TOTAL NET PAY

(KSH)
MANAGER 16000 700 16700 16050
ACCOUNTANT 9000 200 9200 8650
STORE 6000 200 6200 5850
KEEPER
BUTCHER 5000 200 5200 4930
MEN
CLEANER 3500 200 3700 3430
TOTAL 39500 1300 41000 38910

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4.5 LICENSE PERMIT AND BY-LAWS

The ministry of trade and industry will issue this license under the trade license act cap 447. This
will permit the business to start opening legally. This operation will be facilitated by the
citification of registration and also a trade license. This is expected to cost the business around
ksh. 6,000.

The permits will be acquired from Kiambu County Government.

4.5.1 BY-LAW

The act, rule that the employees right should be protected. It recognizes the employees rights to
be paid for services they render and the employees should give a notice of at least three months
to the employee of his intentions to terminate his services.

Workman’s compensation Act Cap 334. An employer is liable to provide appropriate payment to
employees or their families in case of accidents or death while on services.

Labour law – this firm is supported to provide a conducive working atmosphere or conditions.
All payments should be settled in time according to the agreement made during employment to
the agreement made during employment.

N.S.S.F Act Cap 258 = requires that every employer must register the employees with N.S.S.F
and meet all the requirements regularly, as needed, for instant monthly.

4.6 SUPPORT SERVICES

The business will be needed to consult different times for it to run smoothly. These firms will
give advice so as to enable the company to operate smoothly and realise its goals. Different firms
will be consulted for different issues.

4.6.1 LEGAL SERVICES

This helps the business in legal matters. In case of any issue that pertains to legal matters of the
business,it will be registered under the law firm.

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 D.K AND MWANGI ADVOCATES

P.O BOX 473,

KILIMONI

TEL: 0720920361

4.6.2 POSTAL SERVICES

This will help the business in the field of communication for example sending and receiving
mails and parcel delivery. The business will use the following address.

SAFI BUTCHERY

P.O BOX 473,

KILIMONI.

4.6.3 BANKING SERVICES

The business will open an account with the Equity Bank of Kenya. This will be chosen due to the
business operations for matters involving finance. The bank will also provide us with loan if
need arises. The bank requires a minimum balance of ksh 200 and no limits on frequency of
withdrawals. These are easy access to loans and overdrafts facilities based on ability of payment.
All these will favors the business. The address of the bank is:

EQUITY BANK OF KENYA

P.O BOX 00201

JUJA

4.6.4 INSURANCE SERVICE

There is need to insure the business against unexpected accidents in the business as theft or fire
or any risk. This insurance company will be;

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 BRITAM INSURANCE COMPANY

P.O BOX 40201

THIKA

CHAPTER FIVE

5.0 OPERATION / PRODUCTION PLAN

5.1 PRODUCTION FACILITIES AND CAPACITY REQUIRED

In order to realize maximum output the enterprise will employ the use of the following tools and
equipment, their capacity and their unit cost is also indicated.

Machine / equipment No required Cost per item (sh)

Fridge 2 80000
Weighing Grain 3 18000
Motorbike 1 40000
Electronic Calculator 3 12000
Sweeping Broom 5 15000
Furniture 4000
Dust Bin 4 200
Buckets 4 200
Panga 4 800
Knives 4 200
Files 3 300
Total 157200

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Some of the tools and equipments are not required instantly e.g. grinding machine, transportation
van. Therefore the proprietor will hire them when their need arises. The business mostly depends
on particular suppliers as indicated above.

Hired machine Cost per day (ksh)

Grinding machine 300
Transportation van 750

Plan for repair and maintenance of machinery

The manager will hire some experts workers who are qualified in repairing equipment. The
workers will come from well established companies and they will be repairing the equipment and
machine once per month. The cost of service will depend on the properties and the customer.

Factory layout of Safi Butchery

SECURITY PARKING MANAGERS OFFICE

SUPERVISOR
GATE
OFFICE

STORE
ACCOUNTANT

SALES ROOM
KITCHEN

Expansion and future plan of the business

As the time goes, depending on the growth of the business, there will be space for expansion in
the future .This will also depend on the profit which will be made.

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5.2 PRODUCT STRATEGY

The business will require some materials like newspaper, small polythene bags, detergent,
charcoal and firewood. The enterprise shall have enough meat in order to achieve customers
satisfaction. The main suppliers will include Kiamaiko Slaughter House. Charcoal and firewood
will be supplied by local traders who will be given tender.

The technology kind that will be employed to facilitate smooth operation of the business will be
intermediate technology. The technology is simple hence requiring little capital. It is cheap and
can be used by the worker without much problem.

Due to diversified change in technology the enterprise will cope with it. In the due time as the
business grows the owner will change the mode of technology gradually. But as the business
grows the owner change the mode of technology and storage facilities.

This is the calculation of cost of raw materials and over head, cost a production overheads and
expenses.

Description overheads Amount

Rent 10000
Water bills 200
Electricity bills 400
Telephone 4500
Salaries and wages 41000
Transport expenses 4500
Adverts and promotions 3000
License and permits 2000
Repair and maintenance 1500
Professional services 1000
Total 63900

Labor Control

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Safi Butchery has several employees. This includes one manager, an accountant, store keeper,
butcher man, supervisor, cleaner and gate keeper.

Job Qualification No. of Amount

workers
Manager Diploma in building technology 1 16700
Diploma in information technology
Accountant C.P.A level 3 1 9200
Store keeper diploma in procurement 1 7500
Conversant In English and Kiswahili
Supervisor Diploma in business administration 1 8000
Butcher man Certificate in K.C.S.E 2 5200
Conversant in English and Kiswahili
Cleaner Certificate in K.C.P.E 1 3700
Gate keeper Certificate in K.C.P.E 2 4000

Time control

The working schedule time will be normal working hours. The work will be scheduled from 6.00
am to 10.30 p.m from Monday to Sunday. During holidays, there will be work and workers will
be paid for the overtime.

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5.3 PRODUCTION PROCESS

The production process will involve the following stages in producing its product, weighing meat
at different quantities that is fatty meat, stake etc, cooking meat of different qualities e.g. roasted
meat, boiled meat, then selling the product to the customer and supplying products and services
into various customers.

External factors that are likely to affect Safi Butchery are the output volume of the product and
services demanded, the fashion way of looking high, competition from other firms within the
town and the possible effect of advertising. Government policies will also be an external factor.
Internal factors that are likely to affect the business are the machine breakages, time wastage,
theft from workers which the supervisors will be handling smoothly.

5.4 GOVERNMENT REGULATIONS GOVERNING OPERATIONS OF THE

BUSINESS

Several government regulations have been put in place and are unexpectedly monitored by the
government agent from time to time. Therefore the business must obtain a trading license whose
subscription will be done annually. The business will also be required to obtain a permit from the
health authority to allow it to sell those products. The products must be inspected by the health
officers that are good for human consumption. After inspection of the quality, symbol of
standardization is put.

License procured Issued by Charges (ksh)

Single business permit Thika county council 3000
License Council 2000
Total 5000

24
 CHAPTER SIX

6:0 FINANCIAL PLAN

Financial plan will include the following:

 Pre-operational cost
 Working capital requirement

 Projected cash flow statement

 Pro-forma income sheet

 Break-even level

 Desired financing

 Expected profitability ratios

6:1 PRE-OPERATIONAL COST

The following are pre-operational cost required for a business which is proposed to start

operating.

Item Quantity Cost

Telephone 1 10,000

25
 Calculators 3 3,600
Tables 6 6000
Chairs 10 5000
Fire extinguisher 2 7000
Dust wat 4 600
Gumboot 2 1000
Pangas 4 1200
Hacksaw 2 700
Weighing machine 3 10,000
Total 45,600

6:2 WORKING CAPITAL REQUIREMENTS

The estimation of working capital will form the financial requirement for everyday operation.

Working capital =C.A-C.L

AMOUNT in kshs

Current assets Year 1 Year 2 Year 3

Stock 40,000 35,000 40,000

Cash in hand 1,2000,000 1,214,000 1,217,000

Cash in Bank 60,000 40,000 45,000

Debtors 10,000 15,000 15,000

Total C.A 1,310,000 1,264,000 1,317,000

AMOUNT IN (KSHS)

Current liabilities Year 1 Year 2 Year 3

Creditors 17,000 16,000 16,800

26
Bank overdraft 2000 1950 2500

Total C.C 19,000 18,850 18,300

Working Capital

Year 1 =1,310,000-19000

=Kshs 1, 291,000

Year 2 =1,264,000-18,850

Kshs 1,245,150

Year 3 = 1,204,000-18,300 =Kshs 1,298,700

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 JAN FEB MAR APR MAY June JULY AUG SEP OCT NOV DEC TOTAL
Beginning cash 54080 36340 40920 49740 42310 87080 119190 104600 85360 90745 99465 782800
Cash sales 130000 140000 125000 133000 100000 150000 155000 150000 160000 165000 168000 170000 1746000
Cash in bank 60000 30000 39000 32000 35000 40000 45000 40000 45000 45000 46000 50000 507000
Cash in hand 15000 10000 21000 18000 16000 20000 22000 25000 30000 32000 35000 35000 279000
Total 205000 234080 221340 223920 200000 252000 309050 334190 339600 327000 339795 354465 3340390
Expenses
Purchases 70000 130000 110000 105000 90000 95000 120000 160000 190000 172000 170000 150000 166000
Salaries 41000 41000 41000 410000 41000 41000 41000 41000 41000 41000 41000 41000 492000
Adverts 2400 3000 3500 4000 12900
Electricity 300 2800 200 240 200 210 200 200 220 200 200 240 2860
Fuel 20000 17000 20000 16000 17000 20000 20000 16000 15000 14000 16000 17000 226000
Telephone 800 700 800 740 700 700 740 770 200 810 840 700 9240
Licences 8000 8000
Repair and 1000 1200 900
600 600 400 400 400 390 350 300 300 6840
maintenance
Water 170 200 200 190 300 180 320 190 225 400 400 2995
Postal services 100 90 200 100 90 140 200 140 200 240 240 1640
Loan
Rent 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 84000
Miscellaneous
6.3 CASH100
FLOW 300 120 400 900 250 200 200 100 120 300 300 3290
ST
6.3.1 PROJECTED
Total expenses 150920 CASH FLOW
197740 STATEMENT
180240 174180 FOR THE YEAR
157690 164950 ENDING
189860 31 229590
2017 254240 236255 240280 216180 2392125
Net cash flow 54080 36340 40920 49740 42310 87050 119190 104600 85360 90745 99465 138285 948085

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 JAN FEB MAR APR MAY June JULY AUG SEP OCT NOV DEC TOTAL
Beginning cash 667,416 690,561 715,161 740,111 766,111 794,206 821256 847,456 934,461 1012506 1083716 1134776 10207737
Cash sales 450,000 440,000 440,000 460,000 465,000 465,000 473,000 540,000 535,000 540000 540000 541000 10207737
Cash in bank 40,000 45,000 45,000 48,000 50,000 50,000 50,000 50,000 52,000 55000 50000 50000 5893000
Cash in hand 38,000 42,000 43,000 45,000 48,000 50,000 50,000 50,000 50000 45000 48000 50000 559000
Total 1,195,41 1,217,561 1,243,16
1,293,111 1,329,111 1,359,206 1,394,256 1,487,456 1,571,461 1652506 1721716 1779776 15757181
6 1
Expenses
Purchases 420,000 430,000 430,000 450,000 460,000 465,000 470,000 480,000 485,000 49500 510000 525000 5620000
Salaries 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60000 60000 60000 60000 720000
Adverts 3000 - 2980 3300 3500 12780
Electricity 465 460 420 480 365 390 400 425 445 400 370 420 5040
Fuel 2200 1400 1750 1900 3600 13000 2100 1,900 1700 2700 3000 2250 25800
Telephone 700 680 590 600 580 630 720 700 900 800 600 650 8150
Licences 8000 - - - 8000
Repair and 2100 2140 2100
3160 2210 2400 2260 2000 3000 2000 1500 1000 25880
maintenance
Water 300 320 290 280 340 280 260 270 330 3570
Postal services 90 - 200 - 350 130 300 250 150 300 870
Loan - - -
Rent 7000 7000 7000 7,000 7000 7000 7000 7000 7000 7000 7000 7000 84000
Miscellaneous 1000 400 700 600 800 750 650 720 480 630 700 630 8760
Total expenses 504,855 502,400 503,050 527,000 534,905 537950 546,800 552,995 558955 568790 586000 597580 6521280
Net cash flow 690,561 715,161 740,111 766,111 794,206 821,256 847,456 934,461 1012506 1083716 1134776 1182196 11806233

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6.3.3 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 31ST DECEMBER 2019

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6.4 PRE-FORMA INCOME STATEMENT

SAFI BUTCHERY FOR THE 1ST THREE YEARS

Items 2017 2018 2019

Sales 1,200,000 1,215,000 1,230,000
Less Cost Of Goods 20,000 25,000 30,000
Gross Profit 1,180,000 1,190,000 1,200,000
Expenses
Transport 30,000 35,000 40,000
Rent 84,000 84000 84000
Wages And Salaries 492,000 492,000 500,000
Water 2,995 3000 3125
Electricity 2860 2900 3000
Telephone 9240 9330 9500
Advertising 12,900 12,900 13,400
Permits And Licence 8000 8000 8000
Repairs 22,000 23,000 20,000
Miscellaneous 3290 3300 3800
Total expenses 667,285 673,430 684,825

Net Profit Before Tax Year 1 2018 2019

Kshs=1,180,000- 1,190,000- 1,200,000-
667,285=kshs512,715 673,430=kshs516570 684,825=kshs515,175
Less 16% tax 16/100 x Less 16% tax16/100x Less 16% tax16/100x515,175
512,715 =kshs 82,034,40 516,570=kshs82,651,20 =kshs82,428
Net profit after tax=512,715- Net profit after tax=516,570- Net profit after tax =515,175-
82,034.4 =kshs430,680.60 82,651=kshs433,918.80 82,420 =ksh 432,747

6.5 PROFORMA BALANCE SHEET AS AT 31ST DECEMBER 2017

Paticulars 2017 2018 2019

Assets

31
Current Assets
Cash At Hand 279,000 517,000 559,000
Cash At Bank 507,000 738,000 585,000
Closing Stock 170,000 517,000 559,000
Fixed Assets
Equipment 73,000 103,100 104,000
Total Assets 1,029,000 1,858,700 1,388,000
Liabilties
Bank Loan 250,000 180,000
Creditors 1000 14,000 45,000
Wages 492,000 720,000 720,000
Capital 1,627,300 5,872,805 12,801,323
Total Liabilities 2,370,380 6,786,885 13,566,323

6.6 BREAK EVEN LEVEL PARTICULARS AMOUNT KSHS

Variable Expenses
PARTICULARS AMOUNT Maintenance 22000
KSHS Telephone 9240
Fixed Expenses Fuel 10050
Licences 24500 Water 2995
Salaries 40000 Miscellaneous 3290
Advertisement 25000 Electricity 2860
Rent 10000 Raw Material 10000
Total fixed expenses 99500 Total Variable 60435

Total Contribution Margin

Total sale – total variable expense

1200000 – 60435

Ksh 1139,656

Contribution margin for year 2017

32
= total contribution margin x 100
Total sale of the year

= 1139565 x 100
1200000
= 94096%
Break – even point for the year 2017
= fixed cost for the year
Contribution margin percent
99500
94.096 = 1047.81

6.7 EXPECTED PROFITABILITY RATIO

Gross profit %

= Gross profit x 100

Sales

= 1180000 x 100

120000
= 98.33%

Return on equity
= net profit after tax 430680.60
Owner equity 200000
= 2015

Return on investment
= net profit after tax x 100 430680.60 x 100 = 10.77
Total investment 4000000

6.8 DESIRED FINANCING

The total investment required for the business for three years expansion and development is kshs
4000000 for three consecutive years.

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Particulars Amounts (Ksh)
Working capital 11700
Pre-operation 2200
Fixed assets 45000
Total 58900

6.9 PROPOSED CAPITALIZATION

Particulars Amounts (Ksh)

Owners equity loans 200000

Relatives 20000
Bank loan 20000
Inheritance 50000
Total 470000

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