VOLKS SCAFFOLD HIRING ENTERPRISE

PRESENTER: Kariithi Vivian Wangui

INDEX NO: 4011030434

PAPER NO:

INSTITUTION: Railway Training Institute

SUPERVISOR: Madam Leah M.

PRESENTED TO: Kenya National Examination Council in partial fulfilment for

the award of Diploma in Building Technology.

EXAM SERIES: October/November 2023

DECLARATION

I declare that this is my original work and has never been presented anywhere else for the

purpose of examination I therefore present it with the approval of my supervisor.

1
NAME: Kariithi Vivian Wangui

SIGNATURE:

DATE:

DECLARATION BY THE SUPERVISOR

I hereby certify that this business plan is submitted to the Kenya National Examination Council

with my approval as the supervisor

NAME: Madam Leah M.

SIGNATURE:

DATE:

DEDICATION

I dedicate this project to my parents for the financial support and continuous encouragement and

comfort in my training.

I also dedicate it to my supervisor Madam Leah for the guidance during the writing of the

business plan.

ACKNOWLEDGEMENT

My special gratitude is to the almighty God for the strength and good health.

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A lot of special thanks is to my parents for the support and love they have shown me.

I also acknowledge my supervisor for the sufficient knowledge instilled in me in entrepreneurial

skills.

May God bless you all.

Executive Summary

Chapter One: Business Description

The name of the proposed business shall be Volks Scaffolds Hiring Enterprise. The business will

be a sole proprietorship business owned by Kariithi Vivian Wangui. It will be located within

Narok County, two kilometers from Narok town along Narok-Bomet highway opposite Masimiti

Hardware. The business will be dealing with hiring of scaffolds and scaffolds boards and also

providing services to their customers. The business will offer high quality products which ensure

safety and easy access to their builders.

Chapter Two: Marketing plan

Volks Scaffolds Hiring Enterprise will use market segment and will have individuals, non-

governmental organization and the government as its potential customers. The business will

3
capitalize on competitors’ weakness and cope with the competition satisfying up to 70% of the

population. The business provides affordable prices for products and services, hire qualified

personnel and also offer discounts to their customers. The proposed business will be importing

quality required products. Advertisement of the business will be done by use of bill boards,

posters, magazines, and social media in order to attract more customers.

Chapter Three: Organization and Management Plan

The business will employ a line organization structure where authority flows from top to bottom.

The managerial team will consist of the manager, assistant manager, secretary, accountant and

scaffolders. Some of their qualifications will be holder of diploma in building technology,

certificate of liberal skills to manage the business, should be computer literate and should be

fluent in national language. The support staffs comprise of cleaners, drivers and security men.

Some of their qualifications are holder of certificate of good conduct, valid driver’s license for

the drivers, for the security men, must have worked with a security firm and the cleaners should

be aged 20 years and above. The business will provide incentives to motivate the employees.

Some of the incentives are transportation allowances medical allowances salary increment by 5%

annually and being paid extra during overtime.

Chapter Four: Operational Plan the proposed business will purchase some of the machines and

equipment that will enable it provide its services effectively. Some of the machines to be

purchased are; scaffold hosts and scaffold runway system. The business will use different

methods to plan the future production of materials and services. The operational labor of the

4
business will be considered in terms of quality operation and the cost of labor will be highly

valued.

Chapter Five: Financial Plan

The owner of the proposed business will acquire money from the bank, relatives and personal

savings. This chapter entails the pre0operational cost which the cost incurred before start of the

operations and also the working capital which is the cost of operation. Owners’ equity in the

business is 250,000 shillings and the working capital of the business is 2,500.000 shillings

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Table of Contents
DECLARATION.......................................................................................................................................1
DECLARATION BY THE SUPERVISOR.............................................................................................................2
DEDICATION................................................................................................................................................2
ACKNOWLEDGEMENT.................................................................................................................................3
Executive Summary.................................................................................................................................3
BUSINESS DESCRIPTION.......................................................................................................................8
1.1 BUSINESS NAME................................................................................................................................8
1.2 LOCATION..........................................................................................................................................9
MAP SHOWING BUSINESS LOCATION................................................................................................10
1.3 BUSINESS JUSTIFICATION...........................................................................................................11
1.4 FORM OF BUSINESS OWNERSHIP....................................................................................................11
1.5 TYPE OF BUSINESS...........................................................................................................................12
1,5 PRODUCTS AND SERVICES...............................................................................................................12
1.7 INDUSTRY ANALYSIS........................................................................................................................13
1.8 BUSINESS GOALS AND OBJECTIVES..................................................................................................14
1.9 ENTRY AND GROWTH......................................................................................................................14
CHAPTER 2.................................................................................................................................................16
2.0 MARKETING PLAN............................................................................................................................16
2.1 POTENTIAL CUSTOMERS..................................................................................................................16
2.2 COMPETITION ANALYSIS..................................................................................................................17
SWOT ANALYSIS.................................................................................................................................17
2.3 MARKET SHARE................................................................................................................................19
2.4 PRICING STRATEGIES.......................................................................................................................20
2.5 SALES TACTICS.................................................................................................................................21
2.6 METHOD OF PROMOTION AND ADVERTISING................................................................................22
2.7 DISTRIBUTION STRATEGY.................................................................................................................22
CHAPTER 3.................................................................................................................................................24
3.0 ORGANISATION AND MANAGEMENT PLAN.....................................................................................24

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 3.1 INTRODUCTION...............................................................................................................................24
3.2 MANAGERS......................................................................................................................................26
3.3 OTHER PERSONNELS........................................................................................................................28
3.4 RECRUITMENT, TRAINING AND PROMOTION..................................................................................28
3.5 REMUNARATIONS AND INCENTIVES................................................................................................31
3.6 LICENSE AND REGISTRATION...........................................................................................................32
3.7 SUPPORT SERVICE............................................................................................................................33
CHAPTER 4.................................................................................................................................................34
4.0 OPERATIONAL PLAN........................................................................................................................34
4.1 INTRODUCTION...............................................................................................................................34
4.2 PRODUCTION FACILITIES AND CAPACITY.........................................................................................34
PREMISE LAYOUT...................................................................................................................................36
4.3 PRODUCTION STRATEGY..................................................................................................................37
4.4 PRODUCTION DESIGN AND DEVELOMENT......................................................................................39
4.5 SERVICE DELIVERY PROCESS............................................................................................................40
4.6 REGULATIONS AFFECTING OPERATIONS....................................................................................41
4.7 INTERNAL RULES AND REGULATIONS........................................................................................41
CHAPTER 5.................................................................................................................................................43
5.0 FINACIAL PLAN.................................................................................................................................43
5.1 PRE-OPERATIONAL COSTS...............................................................................................................43
5.2 WORKING CAPITAL..........................................................................................................................44
5.3 a) CASH FLOW PROJECTION FOR THE FIRST YEAR...........................................................................45
5.3 b) CASH FLOW PROJECTION FOR THE FIRST THREE YEARS..............................................................50
5.4 PROFORMA INCOME STATEMENT AS AT 31ST DECEMBER...............................................................54
5.5 PROFORMA BALANCE SHEET FOR THE FIRST YEAR..........................................................................56
5.6 CALCULATION OF BREAK-EVEN POINT.............................................................................................58
5.8 DESIRED FINANCING........................................................................................................................60
5.9 PROPOSED CAPITALIZATION............................................................................................................60

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 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

Volks Scaffolds Hiring Enterprise is the name of the proposed business, the business will be

dealing with renting of scaffolds materials, transporting, constructing the scaffolds platforms,

performing safety checks and dismantling them for their clients.

Volks is a German name meaning people therefore the proposed business name helps create an

identity among the competitors, to grab attention and to impress the investors.

The skills of dealing with scaffolds were gotten during the attachment period.

YEAR INSTITUTION QUALIFICATIONS

2021 TO DATE Railways Training Institute Pursuing Diploma in Building

Technology

2015 - 2019 Stephjoy High school K.C.S.E certificate

2007 -2014 St. Francis Academy Attained K.C.P.E certificate

Contributing towards the project.

SOURCE AMOUNT PERCENTAGE

Personal saving 250,000 10%

Bank loan 1,750,000 70%

Relatives 500,000 20%

TOTAL 2,500,000 100%

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1.2 LOCATION

The business will be located within Narok county, two kilometers from Narok town on Narok-

Bomet highway opposite Masimiti Hardware.

Reasons for choosing the location is due to;

a) Availability of market opportunity.

The business will have an advantage of prospering since the town is fast growing meaning there

will be a lot of upcoming buildings in Narok county.

b) Good roads and infrastructure

Easy transportation of goods and quality service due to good roads making it convenient and fast

thus easily accessible by everyone.

c) Security

The area is more secure due to the police station around the area

d) Low competition

Business competition is low since there are few scaffolds hiring companies in Narok county.

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MAP SHOWING BUSINESS LOCATION

10
1.3 BUSINESS JUSTIFICATION

The owner of the proposed business dedicated to do this business because;

 Scaffolds provide builders and workers with a safe secure platform to carry out their

duties.

 It helps improve efficiency of any construction job.

 It also helps improve accessibility at work.

 Scaffolds are easy to assemble and dismantle.

 Availability of cheap labor.

 It requires a minimum start-up capital.

The venture will decrease the shipping distance to the customers and access quality products and

services at an affordable price.

The enterprise will also provide job opportunities thus improving the living standards of the

locals.

1.4 FORM OF BUSINESS OWNERSHIP

The form of business ownership will be a sole proprietorship business. The owner will be able to

make decisions, organize direct and control the business.

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Reasons for choosing this form of business ownership is because it is easy to make decisions,

since the entrepreneur is the boss, the entrepreneur will enjoy the profits alone, start-up costs are

low, there is maximum privacy in the business, establishing and operating of the business is

simple and it is easy to change legal structure later without consulting anyone first.

1.5 TYPE OF BUSINESS

Volks Scaffolds Hirin Enterprise will be a hiring business whereby scaffolds and scaffolds

boards will be hired to customers and services will be provided,

To provide clients with quality services Volks Scaffolds Hiring Enterprise will employ

scaffolders, storekeeper and also have reception offices.

1,5 PRODUCTS AND SERVICES.

The enterprise will have different types of scaffolds such as double scaffolding, cantilever

scaffolding, suspended scaffolding, wooden and bamboo scaffolding and steel scaffolding. The

scaffoldings will be of good quality.

The scaffold boards sizes may come in a typical length of 13ft but are also available in different

sizes like 5ft, 6ft, 8ft and 10ft. Scaffolding structures, whereas the shorter lengths may be used

for DIY projects.

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Scaffold tagging are solid green, yellow or red color with black lettering. The red color is used

when a scaffold is unsafe or incomplete while green is used when a scaffold is safe and ready to

use.

Benefits of scaffolds to the customers is that

 Enables easy access

 Provides perfect balance

 Ensures safety

 Boosts productivity

 Acts as bridge

 Lasts for a long time

 They are easy to assemble and dismantle.

1.7 INDUSTRY ANALYSIS

Volks Scaffolds Hiring Enterprise belongs to a building /construction industry which will be

medium sized since the other operating ventures dealing with the same business will lead to

competitive analysis thus deploying tactics of modern technology, prices, attitude towards

customers to cater for the competition.

The key characteristics that the proposed ventures will employ is the production of high-quality

products and services at an affordable price.

The labor cost in the area is seasonal thus its continuously changing with time but the owner of

the business will employ qualified and skilled staff to help him run the enterprise.

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 1.8 BUSINESS GOALS AND OBJECTIVES

The business has been established with the aim to make profits, to provide employment and thus

it has some long-term goals like producing quality products and services and to expand the

business.

Starting a scaffolding business can be very profitable venture due to scaffolding being an

essential part of many construction projects, providing a safe and sturdy platform for workers to

stand on while they carry out their work.

The objectives of the proposed business are;

 To meet the demands of ready market and gain the profits.

 To provide accessible, robust technical guidance for scaffolders and their clients. This

helps encourage high standards of training and competence across the industry and also

ensuring that technical information and guidance is available to all.

 To have a dedicated project manager for projects carried out on construction sites to

enhance much sales by increasing profits thus improving the living standards of workers

and people living around.

1.9 ENTRY AND GROWTH

ENTRY

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In order to make the enterprise well known by many different techniques will be used to make an

entry to the market by advertising the business in various like use of posters, banners and social

media platforms.

Appropriate technology of products would be used in order to provide clients with products and

services of high quality in order to enhance durability, flexibility and convenience of products

for maximum output returns of the venture.

Providing products and services at an affordable price in order for the demand to be high.

GROWTH

Most effective ways for the growth of the proposed business are by actively invest in the

equipment and infrastructure, this helps to work more efficiently alongside putting across a more

professional business image.

Invest in marketing is another way of growing the business, this is by professionally designing a

website with easy to find contact information and rates and a portfolio of past work.

Lastly, adoption of sustainable practices which includes resolving to use only recycled boards for

scaffolding planks, or regularly training staff on sustainable disposal processes.

15
 CHAPTER 2

2.0 MARKETING PLAN

Modern economy has enhanced marketing worldwide due to fast growing of technologies

making work easier and faster. The scaffolding market will be operating within individuals, non-

governmental organization, the government and other facilities who rely heavily on scaffolds.

Marketing enhances generation profits which helps the business, this is done by giving quality

products and services to the customers, having affordable prices to the customers and providing

client with long lasting scaffolds.

2.1 POTENTIAL CUSTOMERS

Since the proposed business will be located within the upcoming town, the business has a

potential of growing. The proposed business will be dealing with different customers like the

individuals, non-governmental organization and government.

INDIVIDUALS

This consists of mainly those holding various income generating activities with the business

catchment areas. These classes of prominent people would construct permanent and better

infrastructure to improve their living standards.

NON-GOVERNMENTAL ORGANIZATION

Many clients that bring in the idea of construction. This enhances them in projects tendered by

self-sponsored firms or parastatals.

GOVERNMENT

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Government projects are regularly tendered publicly through advertisements in various media in

Kenya. They include engineering works such as construction of infrastructures.

2.2 COMPETITION ANALYSIS

Volks Scaffold Hiring Enterprise will not face stiff competition since there is low competition in

the area due to lack of scaffolding hiring companies within the area. The available hiring

companies are located far away from Narok town.

The business faces competition from Zebu Scaffolding Enterprise and Ole Tipis Scaffolding

Hiring Enterprise.

SWOT ANALYSIS

BUSINESS STRENGTH WEAKNESS OPPORTUNITY THREATS

NAME

VOLKS 1.Have good 1.Less sakes 1.Room for 1.Government

SCAFFOLDIN customer representatives expansion policies

G HIRING relation 2.Modern

ENTERPRISE 2.Good means equipment

of transport acquisition

17
 3.Affordable

products and

services prices

ZEBU 1.Quallified 1.Poor sales 1.Room for 1.Insecurities

SCAFFOLDIN personnel tactics expansion 2.Bankruptcy

G 2.Materials are

ENTERPRISE locally

available

OLE TIPIS 1.Affordable 1.Poor Road 1.Support from 1.Do not

SCAFFOLDIN products and network the county embrace change

G services prices government in technology

2.Good

customer

relation

3.Qualified

personnel

2.3 MARKET SHARE

The enterprise intends to capture 70% of the market share and will increase as the business

continues to expand. The market comprises of 360 clients and will be shared among other

competitors.

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The following shows the numbers of customers each business will obtain.

VOLKS SCAFFOLDING HIRING ENTERPRISE

70/100*360=252

ZEBU SCAFFOLDING ENTERPRISE

10/100*360=36

OLE TIPIS SCAFFOLDING HIRING ENTERPRISE

20/100*360=72

PIE CHART REPERSENTATION

Sales

10%

20%

70%

VOLKS SCAFFOLDS HIRING ENTERPRISE OLE TIPIS SCAFFOLDING HIRING ENTERPRISE

2.4 PRICING STRATEGIES

Factors determining the pricing of the products and services offered are;

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  Market demand

 Government policy

 Competitors prices

 Availability of material

PRODUCTS QUANTITY COSTS(KSHS)

DOUBLE SCAFFOLDING 1 250

CANTILEVER 1 300

SCAFFOLDING

SUSPENDED 1 400

SCAFFOLDING

WOODEN AND BAMBOO 1 150

SCAFFOLDING

STEEL SCAFFOLDING 1 200

The pricing will be maintained at the normal rates due to the following factors;

 Material cost being relatively low.

 Maintaining the customers.

 Increase of business competitors.

 Competitors prices being high.

2.5 SALES TACTICS

Sales tactics will be adopted in order to have a large quantity of products sales. After sale

services will also be done through;

 Lower pricing to compete with the business competitors.

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  Offering discounts to customers.

 Formal education to customers on how to use the products and advantages of using them.

 Scaffolders will be given additional commissions based on the work done.

Using these tactics will benefit the clients by raising confidence in them and also benefit the

enterprise by maintaining the customers and increase in the business liability towards the

products provided and the services.

2.6 METHOD OF PROMOTION AND ADVERTISING

Volks Scaffolds Hiring Enterprise will adopt different methods of promotion and advertising the

business.

PROMOTION STRATEGIES

The products will be hired at a high discount off its original price. Transportation will also be

done to the clients and service.

ADVERTISING STRATEGIES

The business will advertise its products and services by use of bill boards, posters, magazines,

newspapers, and social media in order to attract more customers.

2.7 DISTRIBUTION STRATEGY

The channels of distribution to be adopted by Volks Scaffolds Hiring Enterprise and acquire

all products required will direct channel. Thus, there will be no agents or middlemen

involved. Services offered will be of direct advantage to the clients.

PRODUCER CONSUMER
21
 ADVANTAGES OF DIRECT CHANNEL

a) There will be direct interaction with clients giving the business the chance to observe

trends in the market place and changes in client preferences.

b) Since there is no intermediaries profit share, most direct distribution channels tend to

have higher rates of profits than indirect distribution channels.

c) There will be no need to share profit margins since the business has complete control

over the sales process.

d) Using a direct channel of distribution to connect customers with the product, especially a

web-based channel can have several benefits.

MEANS OF TRANSPORT

The business will have lorries which will be used in transportation of scaffolds to the clients’

respective areas. After the clients are done with the scaffoldings, the business will dismantle and

transport the scaffolds back.

ANTICIPATED CHALLENGES

a) Corruption in the government offices affecting the business operation.

b) Existence of quakes in town due to massive investment in property estate.

c) Higher cost of transport due to increase in fuel levy and change in weather conditions like

during rainy seasons cost of transport is high.

d) Lack of quality products in the country.

SOLUTIONS TO THE CHALLENGES

22
 a) Report corruption deals to the authority.

b) Training of employees to enhance work ethics.

c) Identify better methods of coping with climatic conditions and poor infrastructure.

d) Importance of the required products.

CHAPTER 3

3.0 ORGANISATION AND MANAGEMENT PLAN

For a business to succeed the skills of the staffs need to be improved for organization to grow.

Management structure should delegate duties to the staff to make sure that the job undertaken is

fully satisfied. Availability of required number of staff is considered in order to avoid workload/.

IMPORTANCE OF HUMAN RESOURCE

a) Developing, reinforcing and changing the culture of an organization.

b) Helps in setting up qualification of each job that is available.

c) Provide training facilities to the workers.

d) Helps managing internal problems within the firm.

e) Helps in developing public relations through organizations of seminars and meetings

on behalf of the company to build up relationship among various departments

around.

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 f) Helps in maintaining good working environment hence motivates the workers by

working under conducive environment.

3.1 INTRODUCTION

The management team will compose of people with experience in scaffolding. The philosophy is

laser-like focus on the client’s needs. The organization will have a manager, assistant manager,

secretary, accountant and scaffolders.

ORGANIZATION CHART

MANAGER

ASSISTANT MANAGER

ACCOUNTANT

SECRETARY

SCAFFOLDERS CLEANERS

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3.2 MANAGERS

PERSONNEL NUMBER QUALIFICATIONS DUTIES

MANAGER 1 -Holder of Diploma. -Give directions to

-Certificate of liberal the activities being

skills to manage the performed in the

business. firm.

-Responsible for

making financial

decision and

controlling aspects of

the business.

ASSISTANT 1 -Holder of Diploma -Addressing clients.

MANAGER in building -Acting manager

technology. when the manager is

absent.

ACCOUNTANT 1 -Holder of Diploma -Balancing the

in accounting. cashbook.

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 -Should be computer -Receiving cash

literate. payments from

clients.

SECRETARY 1 -Should be fluent in -Taking minutes of

national language. meetings.

-Should be computer -Receiving clients

literate. and directing them.

-Should have 2 years’

experience.

SCAFFOLDERS 5 -Should be aged 25 -To assemble and

years and above. dismantle scaffolders.

-Should have a -Maintaining

Certificate in building scaffolders.

technology.

CLEANERS 2 -Should be aged 20 -Maintaining

years and above. cleanliness in the

firm.

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3.3 OTHER PERSONNELS.

PERSONNEL NUMBER QUALIFICATION DUTIES

DRIVERS 2 -Holder of a valid -Making sure the

driving license. vehicles are well

-Aged 25 years-60 maintained.

years. -Delivering of

-3 years of scaffoldings to the

experience. required places.

-Holder of a

certificate of a good

conduct.

SECURITY MEN 2 -Must have worked -Guarding the

with a security firm. business at all time.

Must be aged 25 -Inspecting other

years – 55 years. workers before and

after work.

3.4 RECRUITMENT, TRAINING AND PROMOTION

RECRUITMENTS

27
The organization will have to recruit personnel to ensure that qualified persons are employed.

This process is done to ensure that maximum output is achieved.

I. Job Advertisement

It is a way of informing people of job vacancies at the organization. This can be achieved

through use of newspapers, radio, magazines, television, billboards, posters and social media.

II. Applications

The personnel interested in the job advertised will have to send their application letters to the

organization attaching their curriculum vitae before the stated deadline date.

III. Short listing

The letters will be checked in order to select the applicants who will be informed for the

interview. The selection is done by considering the qualifications of the applicants.

IV. Interview

The qualified applicants are then invited for an interview. Where the organization comes up with

a panel which carry out the interview process. The panel members are able to determine different

capacities in terms of skills, experience and technical knowledge of the interviewers and come

up with the best that fits the vacancy.

V. Selection

28
The qualified applicants are firmly selected and hence takes the vacancy of the job that was

advertised by the organization.

VI. Acceptance letters

The newly employed personnel will write or sign an acceptance letter following orders from the

managers.

VII. Employment

The newly employed employees are then allowed to join the other staff members as new

employees and carry out duties assigned to them,

VIII. Training

The newly employed workers will be trained by the organization through seminars, trade

exhibition, field work so as to gain more skills and orientation of the job that is supposed to do.

The employees are taught on how to use and operate technical equipment and also on how to use

the modern ones.

IX. Promotion

The organization will employ different ways of boasting the employees’ morals towards the

allocated work by;

 Increase in salary

 Elevation of job group

 Giving more roles

Job appraisal will also be conducted accordingly to;

29
  Job performance

 Employees experience

 Certifications obtained by the employees

 Employees qualifications.

3.5 REMUNARATIONS AND INCENTIVES

REMUNERATION

The payment will be made monthly and salaries will be based on work positions, experiences

and academic qualification.

EMPLOYEES NUMBER MONTHLY TOTAL ANNUAL

TITLE SALARY SALARY

Manager 1 20,000 240,000

Assistant manager 1 15,000 180,000

Accountant 1 12,000 144,000

Secretary 1 12,000 144,000

Scaffolders 5 50,000 600,000

Cleaners 2 10,000 120,000

Drivers 2 17,000 204,000

Security men 2 15,000 180,000

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 Total 151,000 1,812,000

INCENTIVES

The organization will provide incentives to motivate the employees. The workers will be paid

twice the salary when they work overtime. The salary will be increased by 5% annually and also

the firm will provide advances to the workers like;

 Transportation allowances

 Medical allowances

 Safety boots, jackets, gloves and reflectors.

3.6 LICENSE AND REGISTRATION

Trade license

The firm will obtain all legal documents that are required by the law before it starts its

operations. The business will be registered to carry out its business in Narok County.

Professional permits

The trading permits is provided by the country trade offices. This ensures that all products are

legally allowed to be stocked and able to be hired to the clients.

Business Registration

31
This allows you to hire full-time employees and pay them in accordance to state laws. During

business registration, one receives a state identification number that allows you to route state

taxes on behalf of the employees.

3.7 SUPPORT SERVICE

a) Banking services

This helps the organization in transaction of funds during deposits and withdrawals and will bank

with the Kenya Commercial Bank (KCB) in Narok Town.

b) Insurance Service

The firm will have to be insured to minimize risks that may arise like accidents.

32
 CHAPTER 4

4.0 OPERATIONAL PLAN

This chapter describes the nature of the business, the sales, marketing strategy, the facilities,

labor, overheads, government regulations, compliance and approvals which is optimal for

success.

4.1 INTRODUCTION

The products and services will be designed such that it will satisfy and fit the customers need.

The services offered will be advanced technology so as to meet the rapid changing of

technology. The enterprise will need equipment of quality and facilities to be purchased in order

to have high quality services that will attract more customers.

4.2 PRODUCTION FACILITIES AND CAPACITY

The proposed enterprise will purchase some of the machines and equipments and that will enable

it to provide its service effectively. Maintenance and repair of the machineries and equipments

will be done regularly in order to prevent damages and also to prolong the life expectancy. The

spare parts of the machineries are locally available allowing the business to meet its production

goal.

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 QUANTITY UNIT TOTAL SUPPLIER

PRICE(KSHS) PRICE(KSHS)

MACHINES

Scaffold Hoists 2 20,000 40,000

Scaffold runway system 2 15,000 30,000

EQUIPMENT

Claw Hammer 4 150 600

Pipe Cutter 2 200 400

Safety Boots 5 1000 5000

Gloves 5 100 500

Podgier 2 950 1900

Scaffold Wrench 3 450 1350

Tape Measure 5 100 500

Adjustable wrench 3 350 1050

Magnetic Levels 2 300 600

Scaffolding tool belt 5 200 1000

Helmet 5 250 1250

Reflector 5 150 750

FURNITURES

Office desk 4 800 3200

Office chair 4 500 2000

Office waiting chairs 2 1000 2000

Office cabinets 4 1000 4000

34
 Plastic chairs 2 300 600

EQUIPMENT

Computer 4 20,000 80,000

Printer 1 4000 4000

Telephones 5 1500 7500

Scanner 1 4000 4000

Shredder 1 2000 2000

Receipt machine 1 1500 1500

TOTAL 195,700

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PREMISE LAYOUT

36
4.3 PRODUCTION STRATEGY

The proposed enterprise will use different methods to plan the future production of materials and

services implementing various production planning strategies creates a foundation that can help

determine how much of each service to provide.

The proposed business will have different monthly requirements such as;

 Labor

 Materials

 Overheads

COST OF LABOR

PERSONNEL QUANTITY SALARY PER

MONTH(KSHS)

Manager 1 20,000

Assistant manager 1 15,000

Secretary 1 12,000

Scaffolders 5 12,000

Cleaners 2 10,000*5=

50,000

Drivers 2 8,500*2

=17,000

Security men 2 7,500*2

=15,000

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 Total 151,000

COST OF MATERIAL

ITEM QUANTITY UNIT TOTAL PRICE

PRICE(KSHS) (KSHS)

Scaffold Hoist 2 20,000 40,000

Scaffold runway 2 15,000 30,000

system

Claw hammer 4 150 600

Pipe cutter 2 200 400

Safety boots 5 1000 5,000

Gloves 5 100 500

Podgier 2 950 1,900

Scaffold wrench 3 450 1,350

Tape measure 5 100 500

Adjustable wrench 3 350 1,050

Magnetic levels 2 300 600

Scaffolding tool belt 5 200 1,000

Helmets 5 250 1,250

Reflector jackets 5 150 750

TOTAL 39,000 84,900

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OVERHEAD COST

ITEMS COST PER

MONTH (KSHS)

Electricity bill 1,500

Telephone bill 950

Water bill 1,000

Licenses and permits 2,500

Insurance 3,000

Maintenance and 3,550

repairs

Rent 10,000

Miscellaneous 3,500

Total 26,000

4.4 PRODUCTION DESIGN AND DEVELOMENT

Design of production mostly depends on the need of the customers. The type of scaffolds the

business will produce will be double scaffolding, cantilever scaffolding, suspended scaffolding,

wooden and bamboo scaffolding and steel scaffolding. The scaffoldings will be handled by

qualified personnels who are well trained on how to use the scaffoldings. The machines to be

used are of advanced technology which will enable the business to produce quality services to

the clients. The products produced and the services offered will be put in the market through

social media platforms, posters, magazines, gazettes and business cards, this will help in

39
development of the business allowing the business to grow. The business will also conduct open

air market around the area so as to reach for more customers.

4.5 SERVICE DELIVERY PROCESS

Once the customer has arrived at the premises, the secretary will be reasonable of taking them

through and showing them the different types of scaffoldings the business hires and tells them

the services offered by the business.

If the customer is satisfied, they are taken to the accountant where payment and agreements are

made. Delivery of the scaffoldings chosen by the customers is then done to the customers

proposed location. Assembling of the scaffolding is then done by the business scaffolders’

After the customer is done with the scaffolding, the business is responsible for dismantling and

transporting the scaffoldings back to the business.

Factors to likely to affect the business service and production process are;

1. High cost of transport due to increase in fuel levy and change in weather conditions like

during rainy seasons cost of transport is high.

2. Corruption in the government offices affects the business operation.

3. Existence of quakes in town due to massive investment in property estate.

4. Lack of quality product in the country.

Ways to minimize the impact of these external factors is as follows;

1. Identify better method of coping with climatic conditions and poor infrastructure.

2. Report corruption deals to the authority.

40
 3. Training of employees to enhance work ethics.

4. Important of the required products.

4.6 REGULATIONS AFFECTING OPERATIONS

In accordance with health and safety act, a certificate will be required. Trade license,

professional permits and business registration will be required as well. NSSF certification will

also be required.

REGULATION COST(KSHS)

Trade license 3,500

Professional permits 4,000

Business registration 6,500

Health and safety certificate 2,500

NSSF 1,500

TOTAL 18,000

4.7 INTERNAL RULES AND REGULATIONS

The business will be operating for 8 hours in a day and working from Monday to Friday.

Saturday being overtime where the business will be operating for only 5 hours. The management

will formulate rules and regulations in order to maintain harmonious relations between the

employees in the business. The management will also be responsible for solving any conflicts in

the business and bringing up of ways on how to resolve the conflict.

The management will provide uniforms to the workers in order to have a formal dressing code

and creating equality among the employees. Downward communication will be used which is

41
formalized information within an organization for business purposes. For external parties,

external communication will be conducted where information is transmitted between the

business and the company’s external environment

42
 CHAPTER 5

5.0 FINACIAL PLAN

Financial plan helps determine if the idea is sustainable and then keeps track to financial

potential pro-forma, balance sheet, pro-forma profit and loss accounts and projected cash flow

statement will be prepared. Break-even level of sales and expected profitability ratios of the

business will also be determined. Finally, requirements and proposed capitalization will be

considered.

5.1 PRE-OPERATIONAL COSTS

These are expenses that must be incurred before commencement of the business which include;

ITEM COST(KSHS)

Transport 2,000

Market research 1,000

Assets 195,700

Consultation fees 500

Installations 3,300

Stationeries 2,000

Telephone 1,500

Licenses and registrations 2,500

Rent deposit 7,500

TOTAL 216,000

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5.2 WORKING CAPITAL

Is the amount of money required to finance the enterprise

Working capital= Current assets- Current liabilities

ITEM YEAR 1 YEAR 2 YEAR 3

Current Assets

Closing stock 582,850 691,500 1,085,500

Debtors 202,000 150,000 340,000

Cash in hand 610,280 766,500 415,700

Cash at bank 718,350 825,000 869,800

Rates prepayment 12,000 12,000 12,000

Insurance prepayment 36,000 36,000 36,000

TOTAL ASSETS 2,161,480 2,481,000 2,759,000

Current Liabilities

Creditors 790,800 558,250 595,400

Loan repayment 240,000 240,000 240,000

TOTAL LIABILITIES 1,030,800 798,250 835,400

Working capital=A-B 1,130,680 1,682,750 1,923,600

44
5.3 a) CASH FLOW PROJECTION FOR THE FIRST YEAR

45
ITE JAN FEB M AP M JU JU AU SEPT OC NOV DEC TO

M UA RUA AR RI A N L GU EMB TO EMB EMB TA

RY RY CH L Y E Y ST ER BER ER ER L

CASH FLOW

Begin 2,50 _ _ _ _ _ _ _ _ _ _ _ 2,5

ning 0,00 00,

cash 0 000

Cash 220, 270,0 320 30 27 21 20 164 200,9 172, 221,0 220,1 2,7

sales 000 00 ,00 2,6 6,0 8,0 5,0 ,00 00 400 00 00 90,

0 00 00 00 00 0 000

Debt _ 130,0 _ _ _ _ _ 42, _ 30,0 _ _ 202

ors 00 000 00 ,00

TOT 220, 400,0 320 30 27 21 20 206 200,9 202, 221,0 220,1 2,9

AL 000 00 ,00 2,0 6,0 8,0 5,0 ,00 00 400 00 00 92,

CAS 0 00 00 00 00 0 000

INFL

OW

(A)

CASH OUTFLOW

Purch 10,0 15,00 11, 5,0 4,5 6,0 5,9 9,8 4,000 9,50 10,10 11,00 102

ase 00 0 200 00 00 00 00 00 0 0 0 ,00

Rent 7,50 7,500 7,5 7,5 7,5 7,5 7,5 7,5 7,500 7,50 7,500 7,500 90,

0 00 00 00 00 00 00 0 000

Salari 151, 151,0 151 15 15 15 15 151 151,0 151, 151,0 151,0 1,8
46
es 000 00 ,00 1,0 1,0 1,0 1,0 ,00 00 000 00 00 12,

0 00 00 00 00 0 000
5.3 b) CASH FLOW PROJECTION FOR THE FIRST THREE YEARS
ITEM Year I (kshs) Year II (kshs) Year III (kshs)

CASH FLOW

Beginning cash 2,500,000 30,633,750 58,128,100

Cash sales 31,113,400 32,570,350 63,058,850

Debtors 1,622,150 1,802,000 2,950,350

TOTAL CASH 32,735,550 34,372,350 66,009,200

INFLOW (A)

CASH OUTFLOW

Purchase 1,879,900 1,631,500 2,450,700

Rent 120,000 120,000 120,000

Salaries/wages 1,812,000 1,812,000 1,812,000

Electricity 16,900 14,200 13,300

Water bill 13,900 10,100 9,500

Insurance 36,000 36,000 36,000

Loan repayment 540,000 600,000 610,000

Interest on loan 60,000 60,000 60,000

Maintenance 39,600 25,100 33,000

Telephone 12,100 10,600 9,900

Postage 3,600 2,500 2,000

Stationery and printing 21,750 19,500 15,000

Transportation 24,000 22,500 29,100

Miscellaneous 14,000 14,000 14,000

TOTAL CASH 4,601,750 4,378,000 5,214,500

OUTFLOW (B)
47
28,133,750 29,994,350 60,794,700

NET CASH= A-B

ITEM Year I (kshs) Year II (kshs) Year III (kshs)

Sales 32,735,550 34,372,350 66,009,200

Less purchase of stock 1,879,900 1,631,500 2,450,700

GROSS PROFIT (A) 30,856,650 32,740,850 63,558,500

EXPENSES

Rent 120,000 120,000 120,000

Salaries/wages 1,812,000 1,812,000 1,812,000

Electricity bill 16,900 14,200 13,300

Water bill 13,900 10,100 9,500

Insurance 36,000 36,000 36,000

Loan repayment 540,000 600,000 610,000

Interest on loan 60,000 60,000 60,000

Maintenance and repair 39,600 25,100 33,000

Telephone 12,100 10,600 9,900

Postage 3,600 2,500 2,000

Stationery and printing 21,750 19,500 15,000

Transportation 24,000 22,500 29,100

Miscellaneous 14,000 14,000 14,000

Total expenses (B) 2,713,850 2,746,500 2,763,800

Profit before Tax 28,133,750 29,994,350 60,794,700

Provision for Tax 2,444,600 3,623,900 4,712,800

Net profit after Tax 25,689,150 26,370,450 56,081,900

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5.5 PROFORMA BALANCE SHEET FOR THE FIRST YEAR

Proforma balance As at 31st December As at 31stDecember As at 31stDecember

sheet year I year II year III

Fixed Assets

Machinery and 84,900 90,500 100,00

equipment

Furniture and fittings 110,800 116,400 1177,200

Accumulated 15,000 30,000

depreciation

Total Fixed Assets 195,700 221,900 247,200

Current Assets

Debtors 202,000 150,000 340,000

Rates prepayments 12,000 12,000 12,000

Insurance 36,000 36,000 36,000

prepayments

Cash at Bank 718,350 826,000 869,800

Cash at hand 610,280 766,500 415,700

Closing stock 582,850 691,500 1,085,500

Current liabilities

Creditors 790,800 558,250 595,400

Sundry 14,000 14,000 14,000

2,966,280 3,053,250 3,368,400

Net Assets

Financed by

50
 Capital 2,500,000 2,500,000 2,500,000

Net profit 466,280 553,250 868,400

2,966,280 3,053,250 3,368,400

51
5.6 CALCULATION OF BREAK-EVEN POINT

Fixed Costs Amount

(KSHS)

Salaries 1,812,000

Rent 90,000

Licenses 30,000

Insurance 36,000

Goodwill 5,000

Depreciation 15,000

Loan repayment 240,000

Total fixed costs 2,228,000

Variable Cost

Water bills 2,600

Recruitment costs 45,000

Allowances 192,000

Advertising costs 30,000

Electricity bills 3,300

Miscellaneous 14,000

Transport 24,000

Total Variable Costs 310,900

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 Total sales−Total variables
Contribution margin = ∗100 %
Total sales

2,992,000−310,900
∗100 %=89.61 %
2,992,000

¿ cost
Break-even level=
Contributionmargin %

2,228,000
=24864.30
89.61 %

53
5.8 DESIRED FINANCING

Description Amount

Pre operational costs 216,000

Initial working capital 2,284,000

TOTAL 2,500,000

5.9 PROPOSED CAPITALIZATION

ITEM AMOUNT

Equity 750,000

Bank Loan 1,750,000

TOTAL 2,500,000

54