BUSINESS PLAN

LANGAT’S METAL RECYCLING AND MODIFICATION

TITLE LANGAT’S METAL RECYCLING AND MODIFICATION

SUBMITTED FROM: BRIAN KIPRONO LANGAT

INDEX NO.:

COURSE CODE 2502

COURSE DIPLOMA IN MECHANICAL ENGINEERING (PLANT OPTION)

SUBMITTED TO KENYA NATIONAL EXAMINATION COUNCIL FOR PERTIAL

FULFILLMENT FOR THE AWARD OF DIPLOMA IN MECHANICAL ENGINEERING (PLANT
OPTION)

COLLEGE KIPKABUS TECHNICAL AND VOCATIONAL COLLEGE.

DECLARATION

I hereby verify that the business plan is my original document and it’s derived from my own thoughts
study and research and was not copied from any other source

NAME BRIAN KIPRONO LANGAT

SIGNATURE…………………….. DATE………………….

SUPERVISOR MADAM LILIAN

SIGNATURE………………………. DATE……………………
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ACKNOWLEDGEMENT
I would like to send my sincere gratitude to people who contributed to publication of this booklet by providing
kind of assistance I needed.

I also wish to extend my gratitudes to my parents,my best teachers,who led me believe very early in life that
could be and do anything I set my mind to.Also special thanks goes to supervisor who tirelessly guided me.

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DEDICATION

This business plan is dedicated to my lovely parents for the upbringing me to be who I am and their
contriution in financing my education throughout the course.

MAY GOD BLESS YOU ALL

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iv
EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

In this chapter details location of the business,is located in Uasin Gishu County,Nakuru town just forty five
kilometre from Eldoret town.The business is under sole proprietorship and the owner of the business of sole
proprietorship.

The product services offered are suspension system repair and maintainance and engine overall.The business
employs modern tools and equipment in operations with qualified personnel to provide customers the best the
quality services.The industry continues as well as expanding to become established firms.

The main goals of the business were to attain a profit of over 500,000 annually and quality services provided to
many customers and opening the business across the country.Before the business commencing advertisement
is done through newspapers and posters to reach mass of people.Also theme is free services offer to customers
with minner faults as means of attracting customers.

2.0 MARKETTING PLAN

Under this,the following are discussed,the potential customers and the population growth of the narket
share of each of the Generator competion and stages set to overcome the competion existence.

The market expectation is expected to cover areas like Eldoret,Sotik,Bomet and Litein.The major
competitors mentioned are green star Auto Generator works,Sun-shine Generator and Umoja Auto
Generator

The firms will employ all the machines and equipment to ensure time is utilized,good,quality services at
fair prices are offered and competent employees are required to the firm the business will employ both
direct and indirect distributors.

3.0 ORGANISATIONAL AND MANAGEMENT PLAN

The enterprise will be managed by a sole proprietor who will have managerial skills to operate
effectively. Other member will be financial controller, purchasing director, sales and marketing officer,
transportation personnel, loaders and off loaders and security personnel who will contribute to smooth
operation of the enterprise.

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Promotion such as salary increment, free programs will be organized by the managing director
depending on skills such as meeting customers’ service expectations, constantly meets sales goal and
demonstrate leadership skill in working field.

Government regulations such as trade licenses will be issued to the enterprise before it commences.

4.0 OPERATION AND PRODUCTION PLAN

In this chapter the aspects of the employee are dealt with different angle.This included duties
qualification and recruitment,responsibilities selection,motivating employees and training strategies laid
to cab the changing technology.

There is also remunerationand incentives ad employees in terms of payment.Legal information are

required in the business such as permit,license by laws before starting any business.

The business employs banking service,insurance services,post services,telephone,water and electricity

for the smooth and effective operation

5.0 FINANCIAL PLAN

This contains plan on how the enterprise will acquire its material for operation and analyses its
profitability ratios for budgeting asset allocation for its set goal.

Its financial layout will be as follow;

Personal saving 50,000

Bank loan 150,000
Inheritance 50,000
Friend’s contribution 50,000
Total 300,000

This will be used in pre- operational costs such as rent licenses, salaries, advertisements, stock and
insurance in order to generate meaningful revenues in relatively short period of three years based on
external market.

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Contents
BUSINESS PLAN.........................................................................................................................................1

LANGAT METAL RECYCLING AND MODIFICATION............................................................................1

DECLARATION...................................................................................................................................................2

ACKNOWLEDGEMENT.................................................................................................................................3

DEDICATION.....................................................................................................................................................4

EXECUTIVE SUMMARY..........................................................................................................................................6

1.0 BUSINESS DESCRIPTION.........................................................................................................................6

2.0 MARKETTING PLAN.....................................................................................................................................6

3.0 ORGANISATIONAL AND MANAGEMENT PLAN............................................................................................6

4.0 OPERATION AND PRODUCTION PLAN.........................................................................................................7

5.0 FINANCIAL PLAN.........................................................................................................................................7

CHAPTER ONE.......................................................................................................................................................2

1.0 BUSINESS DESCRIPTION..............................................................................................................................2

1.1 BUSINESS NAME.........................................................................................................................................2

1.2 BUSINESS LOCATION AND ADDRES.............................................................................................................2

1.2.1 BUSINESS LOCATION......................................................................................................................2

1.2.2 BUSINESS ADDRESS.........................................................................................................................2

1.3 FORM OF BUSINESS OWNERSHIP...............................................................................................................3

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

1.4.1 PRODUCTS.......................................................................................................................................3

1.4.2 SERVICES..........................................................................................................................................3

1.5 JUSTIFICATION OF OPPORTUNITY...............................................................................................................3

1.6 INDUSTRY...................................................................................................................................................3

1.7 GOALS AND OBJECTIVES.............................................................................................................................4

1.8 ENTRY AND GROWTH STRATEGY................................................................................................................5

1.8.1 ENTRY STRATEGY...........................................................................................................................5

1.8.2 GROWTH STRATEGY......................................................................................................................5

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 The four P’s of the market will be;..............................................................................................................6

CHAPTER TWO......................................................................................................................................................7

2.0 MARKETING PLAN.......................................................................................................................................7

2.1 CUSTOMERS................................................................................................................................................7

2.1.1 DOMESTIC CUSTOMERS................................................................................................................7

2.1.2 INSTITUTIONAL CUSTOMERS.......................................................................................................7

2.1.3 COMMERCIAL CUSTOMESR.........................................................................................................7

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

2.3 COMPETITION...........................................................................................................................................12

2.3.1 SWOT ANALYSIS............................................................................................................................14

2.4 METHODS OF PROMOTION AND ADVERTISEMENT..................................................................................14

2.4.1 METHODS OF PROMOTION.......................................................................................................14

2.4.2 METHODS OF ADVERTISEMENTS.............................................................................................15

2.5 PRICING STRATEGY...................................................................................................................................15

Various good store in the business will follow the price strategy below.....................................15

2.6 SALES TACTICS..........................................................................................................................................16

2.7 DISTRIBUTION STRATEGY.........................................................................................................................16

CHAPTER THREE.................................................................................................................................................18

3.0 ORGANISATION AND MANAGEMENT PLAN..............................................................................................18

3.1 MANAGEMENT TEAM.......................................................................................................................18

3.2 TABLE........................................................................................................................................................19

3.3 RECRUITMENT AND TRAINING.........................................................................................................20

3.3.1 RECRUITMENT..............................................................................................................................20

3.3.2 TRAINING.......................................................................................................................................20

3.3.3 PROMOTION..................................................................................................................................21

3.4 RENUMERATION AND INCENTIVES...........................................................................................................21

3.4.1 RENUMERATION...........................................................................................................................21

3.4.2 OTHER INCENTIVE.............................................................................................................................22

3.5 STAFFING..................................................................................................................................................22

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 3.5.1 STAFF RULES AND REGULATION.......................................................................................................22

3.5.2 HOW TO EVALUATE PERFOMANCE OF EMPLOYEES.........................................................................24

3.5.3 HOW TO REWARD OUTSTANDING PERFOMANCE.............................................................................24

3.6 PEOPLE SYSTEM.......................................................................................................................................24

3.6.1 RECRUITMENT...................................................................................................................................24

3.6.2 TRAINING...........................................................................................................................................24

3.6.3 PROMOTION......................................................................................................................................25

3.6.4 RETATION..........................................................................................................................................25

3.6.5 COMMUNICATION CHANNEL.............................................................................................................25

3.6.6 INCENTIVES....................................................................................................................................26

3.7 LEGAL REQUIREMENTS.............................................................................................................................27

3.7.1 LICENCES, PERMITS AND BY LAWS...........................................................................................27

3.7.2 LICENSE...........................................................................................................................................27

3.7.3 PERMIT...........................................................................................................................................27

3.7.4 BY LAWS..........................................................................................................................................27

3.7.5 SUPPORT SERVICE........................................................................................................................27

CHAPTER FOUR...............................................................................................................................................28

4.0 PRODUCTION/ OPERATING PLAN.............................................................................................................28

4.1 FIRM LAYOUT............................................................................................................................................29

4.2PRODUCTION STRATEGY.....................................................................................................................30

4.2.1MARKET RESEARCH............................................................................................................................30

4.3 PRODUCTION PROCESS.............................................................................................................................33

4.3.1 STAGES OF PRODUCTION USED IN KIPS WELDING AND FABRICATION..............................................33

 The proof of concept...............................................................................................................................33

4.3.2 EXTERNAL FACTORS THAT INFLUENCE PRODUCTION.................................................................34

4.4PRODUCT AFFECTING OPERATION............................................................................................................35

4.4.1 HEALTH REGULATIONS...............................................................................................................35

Restricted to public health risks which will interfere with Trans pans traffic in the business such
instruments will enclose health insurance................................................................................................36

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 4.4.2 SAFETY..............................................................................................................................................36

4.4.3 ENVIRONMENTAL REGULATIONS.............................................................................................36

CHAPTER FIVE.....................................................................................................................................................37

5.0 FINANCIAL PLAN.......................................................................................................................................37

5.1 PRE-OPERATIONOF COST...................................................................................................................37

5.3 PROFOMA BALANCE SHEET AS 31ST DEC 2024..........................................................................................38

5.4 WORKING CAPITAL REQUIREMENT..........................................................................................................40

5.5 CASH FLOW PROJECTION..........................................................................................................................41

5.5.1 CASH FLOW PROJECTION FOR THE YEAR 2023......................................................................41

5.5.2 CASH FLOW PROJECTION FOR THE YEAR 2024......................................................................42

5.5.3 CASH FLOW PROJECTION FOR YEAR 2025.........................................................................................43

5.6 PRO-FORMA INCOME STATEMENT [TRADING PROFIT AND LOSS ACCOUNT;.....................................45

5.7 BREAK EVEN ANALYSIS..............................................................................................................................45

5.8 DESIGNED FINANCING..............................................................................................................................46

5.9 CAPITALISATION...................................................................................................................................46

5.9.1PROFITABILITY RATIO...................................................................................................................46

5.9.2 GROSS PROFITABILITY RATIO 2023...........................................................................................46

5.9.3GROSS PROFIT ABILITY RATIO 2024...........................................................................................46

5.9.4 GROSS PROFIT ABILTY RATIO 2025..................................................................................................47

5.9.5 RETURN ON EQUITY RATIO ON EQUITY YEAR 2026.................................................................47

Appendix.............................................................................................................................................................48

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CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.1 BUSINESS NAME
The name of the business shall be derived from special name Brian Kiprono Langat metal recycling and
modification to come up with Langat recycling and modification metal.

The business will be a solve proprietor type and its name will be Langat Metal Recycling and
Modification and the owner chooses the name for its simplicity and its collection oh his names.The
business will deal with all kinds of services as per the customers requirements

The business shall operate under entrepreneur Brian Kiprono langat who is currently a student at
Kipkabus Technical and Vocational College pursuing a course in Mechanical Engineering “Plant
Option”.

1.2 BUSINESS LOCATION AND ADDRESS

1.2.1 BUSINESS LOCATION
The proposed business will be allocated in Uasin Gishu County,Nakuru town just forty five kilometre
fro ELDORET town.It will be operating opposite Tea Land petrol station operates for 24 hours.This
will help the business to have more generators to be serviced throughout the day.

The premises is a permanent building and it has enough space for parking and a conducive shade for the
customers to rest while waiting their generators.Also there is availability of security because of Nakuru
police station.

1.2.2 BUSINESS ADDRESS

Langat metal recycling and modification
P.O Box 19-20400

Eldoret.

TEL :0791696627
EMAIL :langatmetalrecyclingandmodification@gmail.com

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 1.3 FORM OF BUSINESS OWNERSHIP
The business will be a sole proprietorship that is operated by one person. The main reason for this
ownership is that the owner will be able to make faster decisions on his own, requires few formal
business documents it also has limited liabilities for the obligation of the business, only business license
is needed. Profits are not shared and also the business will be flexible to operate effectively in order to
promote profitability since the owner will be the central manager controlling all business activities.

1.4 PRODUCTS AND SERVICES

1.4.1 PRODUCTS
The business shall offer free service to its customers who will include transporting of bulky goods to
respective sites of construction advice on products and services.

1.4.2 SERVICES
The business shall offer free services to its customers that includes deliveries of goods from one place to
another.

1.5 JUSTIFICATION OF OPPORTUNITY

The enterprise aims at providing quality products of the right quantity and punctual deliveries to
customers who access to it easily due to its visible location.

The area has majority of human traffic due to improved quality services like the road network in and out
of the town thus making it a good environment for enterprise venture.

The availability of construction firms in the area will also play a vital role in selecting its location. The
business will enhance customers’ satisfaction because it will indulge with customers in terms of
innovation and putting on consideration of the whole society at large.

My contractors are not satisfied with products and services offered by other competitors thus they will
find it necessary to involve themselves in my company.

1.6 INDUSTRY
> Langat metal recycling and modification is fully under the generator-industry.This industry ranges from
small jua-kali generator to big established generators manufacturing companion.
> Generator technology,,has continued to develop from those early timesand great change has at the
increased compound to the generator we have the current times.These changes have been done in all

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 modern generators,right from the body transmission suspension,noise regulation,braking,and anyother
system within a generator.
> They have put much emphasize in the development of the engine as the unit and the transmission
whereby in the gearbox and differential unit.
> The future of the industry is clearly defined as new technology will continue to advance,this is to say
langat’s Metal Recycling and Modification stands a very good chance to grow within the advancing
technology as well as expanding to become an established firm in future

1.7 GOALS AND OBJECTIVES

The enterprise will be set to achieve the following goals in a period of less than three months

> To meets needs of customers by offering quality products at the right quantity and time. This will
increase profitability in business.
> Ensuring all the resident are well informed about the business operations through use of posters Skiza-
bizna that includes when a customer calls the ring back tone plays what you offer in the enterprise.
> Offering job opportunities to unemployed resident so as to improve their living standard.
> Ensuring sales volume increases by 15% within a period of three months which will be facilitated
through engaging competent staff who will encourage efficiency in operations and also by offering trade
discount. The following are the objects that the enterprise targets in one year time;
a) Maximizing of profits of the business to ensure it opens up each customer in their regions.

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b) The business shall ensure employees are trained and recruited to become competent. The business will
ensure personnel undergoes indoors and intended servants.
c) The business will offer better facility to personnel to ensure the firm offers a competitive edge to other
competitors around the area.
d) The business will ensure that it will construct its own storage to cut down costs in renting a store house
which will assist the firm maximize the money in other able areas.

1.8 ENTRY AND GROWTH STRATEGY

1.8.1 ENTRY STRATEGY
To enter into the business the owner will be able to conduct research to identify the weakness of the
competitors and therefore come out with best practices to be able to survive in the market. Such
practices will include advertisements i.e. radios, posters to enable the business to sell its ideal products
to customers and influence them to buy.

The business shall offer better prices to customers as compared to competitors and will ensure provision
of trade discounts for daily customers and will ensure provision of quality items as compared to the
competitors and also offering after sales services like transport and repair.

Salesperson will tour residential places educating and finding out the feedback concerning the business
operation so that the firm will be able understand needs and requirements hence better services will be
offered.

1.8.2 GROWTH STRATEGY

The major commitment of the business is to provide better quality products and services compared to
other competitors in order to ensure that the firm will engage skilled personnel, increase tools and
equipment, improving work force and also concerned about the welfare of the society.

The business shall notice its growth by taking both opening and closing stocks even end a week to
determine whether the stock has increased or decreased.

Opportunity offered by the business will increase free consultations trade discount to

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 Ensure customers views and ideas are upheld hence company grows.

The four P’s of the market will be;

I. Price which will be affordable according to customers’ income.

II. Products which are of quality and proper quantity.

III. Place of localization where there are much of human activities to increase its sales being the target of
the business.
IV. Promotion to all customers who buy in bulky goods so as to attract more customers.

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CHAPTER TWO
2.0 MARKETING PLAN
2.1 CUSTOMERS
Customers withina region and home owners who perform their own home repair, property managers
those who keep property in good repair contractors who will be building new homes and repair also
commercial houses.

2.1.1 DOMESTIC CUSTOMERS

Local home owners and tenants will buy goods on a daily basis for their own repair of home
improvement projects.

2.1.2 INSTITUTIONAL CUSTOMERS

Since the area will be undergoing institutional projects such as ROYAL COMPREHENSIVE HIGH
SCHOOL, KYOGONG HOSPITAL the business will likely to benefit on this since its main target is to
sale on offer quality and affordable products and services.

2.1.3 COMMERCIAL CUSTOMESR

Property managers will be buying goods in large quantities since they always work on projects from its
start to the end. Since the business will focus on every kind of hardware product it will establish a food
relationship with contractors to get help they need when buying materials and also detect a problem that
needs a solution.

2.2 MARKET SHARE

The following table is the analysis in percentage distribution.

GROUP TOTAL NO: OF PEOPLE IN PEOPLE ESTIMATED

INTERVIEWED PEOPLE FAVOUR DISAGREEMENTS MARKET

SHARE
BUSINESS MEN 200 150 50 75%

CONTRACTORS 150 100 50 75%

INSTITUTIONAL 200 170 30 85%

CUSTOMERS

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 OTHERS 50 40 10 80%

According to the above table institutional customers attributed to the highest estimated market shares in
percentages. This indicates that institutional customers such as school and hospitals will be utilizing the
services by LANGAT’S METAL RECYCLING AND MODIFICATION.

BRIAN and SON METAL RECYCLING AND MODIFICATION PERCENTAGE MARKET

MARKET SHARE

= (number of target customer/ actual number of customer) 100

First year = (180/500)100 = 36%

Second year = (150/500)100 = 30%

Third year = (125/500)100 = 25%

KIRUI METAL RECYCLING AND MODIFICATION %AGE MARKET SHARE

= (number of target customer/ actual number of customer) 100.

First year = (170/500)100 = 34%

Second year = (130/500)100 = 26%

Third year = (100/500)100 = 20%

GENERAL INITIAL METAL RECYCLING AND MODIFICATION %AGE MARKET SHARE

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= (number of target customer/ actual number of customer) 100

. First year = (100/500)100 = 20%

Second year = (100/500)100 = 20%

Third year = (75/500)100 = 25%

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LANGAT’S METAL RECYCLING AND MODIFICATION %AGE MARKET SHARE

= (number of target customer/ actual number of customer) 100.

First year = (50/500)100 = 10%

Second year = (120/500)100 = 24%

Third year = (200/500)100 = 40%

The following table shows competitors market share and percentage

COMPETITOR YEAR ONE YEAR TWO YEAR THREE

BRIAN and SONS 36% 30% 25%

METAL RECYCLING
AND
MODIFICATION
KIRUI METAL 34% 26% 20%
RECYCLING AND
MODIFICATION
GENERAL INITIALS 20% 20% 20%
METAL RECYCLIG
AND
MODIFICATION
10% 24% 40%
LANGAT’S METAL
RECYCLING ANF
MODIFICATION

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2.3 COMPETITION
The business competitor in the market include
BRIAN AND SON METAL RECYCLING AND MODIFICATION
P.O BOX 19-20400

ELDORET

Located 500M away.

GENERAL INITIAL METAL RECYCLING AND MODIFICATION

P.O BOX 19-20400

ELDORET

Located 150M away

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KIRUI METAL RECYCLING AND MODIFICATION

P.O BOX 19-20400

ELDORET

Located at 200 M away

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 2.3.1 SWOT ANALYSIS
The following analysis shows in and out flow of strength and weakness of the existing
competitions.

GENERAL INITIAL Offers cheap prices Offer poor services

METAL RECYCLING because customers
AND MODIFICATION complain of after

sales service
BRIAN and SONS Products of high High prices since high
METAL RECYCLING quality income
AND MODIFICATION earners are

targeted
KIRUI METAL Well trained Products are not of
RECYCLING AND standard quality
MODIFICATION employees and
highly recognized

2.4 METHODS OF PROMOTION AND ADVERTISEMENT

2.4.1 METHODS OF PROMOTION
a) SPECIAL OFFER - The business will offer special offers such as
price reduction but for a limited time and customers.
b) GIFTS - The business will offer gifts like cups, shirts of products
in order to attract them.
c) AFTER SALES SERVICES - The business shall ensure customers are happy
with products and with response they receive in and event of any query or complains such as providing
guarantee promptly when necessary.
d) BRONCHUS and CATALOGUES - The business will design a well and attractive
bronchus to give impressions to customers thus highly quality product are produced.

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 2.4.2 METHODS OF ADVERTISEMENTS
e) LEAFLETS AND BUSINESS CARDS - The business shall distribute leaflets and
business cards to customers on their respective sites or will be made available at the premise of the
business shops and other return outlets.
f) RADIO - The business shall advertise through radio because it has
a wide number of people increasing, can be repeated at different programs to communicate to them, and
the radio is also a suitable media for advertising because it captures large geographical area.
g) SKIZA BIZNA - The business shall make sure all sales person
phone numbers when called it has a hello tune which describes the name of the business and what it
offers.

2.5 PRICING STRATEGY

Various good store in the business will follow the price strategy below

Instead of doubling the cost of a product to arrive at 50% markup products to 40% in order to attract
more customers. Therefore the formula used will be;

Price of a product = ((cost of a product/100) markup %age) 100)) e.g. if the business construct ceiling
vent for sale each vent will cost Ksh 45 to construct its price will be as follows;

Price = ((45/ (100-40) (100))

Price = ((45/60)100))

Price = (0.75)100

Price = Ksh 75.

The business will be selling at higher price than the spending to make profit which will cater for other
expenses like rent and other taxes to make more money in order to still stay in the market.

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However, its selling price will not exceed that of its competitors so that customers may not shop
anywhere else.

The business will entail discount period such that if a customer purchases a product on credit terms one
will have to pay within fourteenth day he will receive 2% discount, on case of delays may be one day
later he will have to pay the amount without discount.

If a product worth 20000 were to be paid within 14 days

Discount 2% of 20000=19600

2.6 SALES TACTICS

The business shall survey all contractors, casual purchasers and home owners in the region the benefit
they look in that business.

The business shall offer discounts to contractors on orders over a certain amount of goods purchased
which will be set by the sales persons. The business offer advice home owners on best products and tip
for using them which will help in proper promotion of goods.

The business will work hard to attract more customers through offering transport facilities after sale
services like packing already bought product and loading them to transport vehicle and offloading on
their respective sites.

2.7 DISTRIBUTION STRATEGY

For delivery of products on the final customer, products will be bought over the premises counter or be
delivered to customers place by the help of a business vehicle. This means that mode of transport will
be road because it is cheap and efficiently.

Transportation will be because it will cost only five thousand only a day which will sum to fifteen
thousand per month. It will enhance efficiency thus increasing customers to the business since free
transport is available. This will require a distribution channel as follows

Producer – Wholesaler –Retailer - Consumer

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 This channel will have some factors to consider;

a. Customer characteristics such that size of the market geographical dispersion of customer buying
habits in terms of quantity.
b. Middlemen characteristics serve their required, service provided and their availability.

c. Production

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CHAPTER THREE

3.0 ORGANISATION AND MANAGEMENT PLAN

3.1 MANAGEMENT TEAM
The enterprise management team will comprise of the following;

MANAGING DIRECTOR

SALES AND MARKETING OFFICER

TRANSPORTING OFFICER

LEADERS AND OFF-LEADERS

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SECURITY OFFICER
3.2 TABLE

TITLE KEY NO QUALIFICATIONS DUTIES

PERSONELL 1 A HOLDER OF Responsible for

MANAGING DIPLOMA IN daily operations of the
DIRECTOR BUSINESS organization Hire, train
MANAGEMENT and terminate staffs
manage administrative
functions to ensure
smooth running and
efficiency in the
organization.

SALES AND 1 A HOLDER OF Selling and

MARKETING DIPLOMA IN promoting
OFFICER commercial
SUPPLY CHAIN
products in the
MANAGEMENT
enterprise

TRANSPORTING 1 HAS A UNIK Carrying out tasks

OFFICER DRIVING LICENCE such as provision

of maintenance of
vehicle and manage
diverse transport

operation

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 3.3 RECRUITMENT AND TRAINING
3.3.1 RECRUITMENT
The business shall advertise its recruitment through posters circulating all over the village by posting
them on electrical poles and public places in which management financial controller sales and market
purchase personnel will be required to have the following;

a) Obtain referrals from their current employers

b) National identity cards and a photocopy

c) Academic certificate both original and photocopy

d) Professional certificate both original and photocopy

e) Curriculum vitae

f) Two colored passports

On the interview date that will be set by the enterprise all the names will be required to explain in few
words their work experience and what they look forward with their new carriers.

For transporting personnel will be required to carry the original identity cards and a photocopy and a
curriculum vitae and be ready to explain challenges they have come through when operating a vehicle.
For loaders and off loaders identity cards are needed and not should not be more than twenty five years
old.

3.3.2 TRAINING
The enterprise shall ask all participants to share their experience since many of the participants are
experienced personnel who will have valuable information to contribute to the business.

23
The business shall show all participants all the working places where each will be doing their work.
Also it will provide a clear outline training manual which will include job description that list their
essential duties, skills and performance goal. Will also show an enterprise hierarchy flow chart and
safety standards such as occupational safety and health administration. The manual should communicate
day to day task value vision and goals.

3.3.3 PROMOTION
As times goes by the employees will be exposed to working environment and developing attitudes of
carrying out their duties and interest of work. The enterprise will keenly observe a well-qualified
employee in a sense that meets customer service expectations sales goals, work well with co- workers
has ability to overcome challenges, demonstrate leadership ability and leers quickly.

3.4 RENUMERATION AND INCENTIVES

3.4.1 RENUMERATION
The table below shows how employees will be remunerated;

EMPLOYEE QUANTIT SALAR MEDICA TRANSPOR INCENTIVE TOTA

Y Y L T S L
COVER AND GROSS

HOUSE
ALLOWAN
CE
MANAGING 1 15000 500 500 2000 18000
DIRECTOR
SALESMAN 1 10000 500 500 1000 12000

TRASPORTIN 1 8000 500 500 500 9500

G OFFICER

OFF/ 2 5000 500 500 500 13000

LOADERS
SECURITY 2 2000 250 250 500 6000
OFFICER
TOTAI 7 47700

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3.4.2 OTHER INCENTIVE
1. Free lunch
2. Tea break (before and after work)

3.5 STAFFING
This process of finding the right worker with appropriate qualification or experience and recruiting them
to fill a job position or role
The following are the staff who will be required
1. Manager
2. Salesman and women
3. Marketing officer
4. Security office

1. MANAGER
I will be walking up very early in the morning and reach the business premises before everyone else
because all the operation and the success of the business depend on me hence I must be easily available
when needed.
2. SALESMAN /WOMEN
A. Must be literate
B. Must observe time
C. Ability to deal with all kind of customer and client
3. SECURITY OFFICER
A. Good writing skills
B. Being in the office

3.5.1 STAFF RULES AND REGULATION.

Rules; these are guideline and instruction for doing something right
Regulation; Are rules accepted legally by administration

25
1. Working Hours; any workers /staff should his or her workers test fully. Arrive punctually at the
work place, ready to begin the day work and do not leave before dismissal time. The staff should not
 Be habitually late for work
 Leave early except for good reason and with manager permission
 Sleep or loiter during working hours
 Abuse rest period or lunch break
 Come drunk at workplace
 Use any drug abuse at workplace
2. Time Record; the staff should keep daily time record and make only true and correct entries on the
time records.
The staff may not;
 Falsely entries in the time records
 Intentional fill the time records of another employee
 Make unauthorized alteration on any time record
3. Leave and absence; all leaves, whether with or without pay are subject to prior authorization. If for
reason, one cannot report for work, send word/the employee may not;
 Absence himself or herself without manager permission particularly on work days immediately
before or after a weekend or paid holidays
 Fail to notify the manager immediately in case of absence or sickness

4. Behaviors; in the performance of duties and in the working relation with others, one should observe
the basic roles of courtesy and good behavior given in due regard to the wellbeing of other regardless of
position.
The employee may not engage in any form of disorder conduct such as;
 Use of abusive language
 Engaging in any form of unruly behavior
 Report work under influence of alcohol

26
3.5.2 HOW TO EVALUATE PERFOMANCE OF EMPLOYEES
i) Quality of work. It is measured through regular review of the client deliverables, their role in
client effort stability of the production changes /perform best practices and feedback from
the client.
ii) Amount of consistent improvement. when change in the form is taking place continuously
therefore the workers is performing their roles effectives
iii) Level of creativity .when the workers are bringing out different ideas which can help in
improving the firm operation and bringing solution to different situation the employees are
playing their role nicely
iv) Quality of work. If the product sold are of high quality and of high standard then the
performance of workers collectively is good.
v) Regular reports. When employees such as security officer are giving report about the work,
like that cases the workers is performing his/her job perfectly. unlike the worker who do not
give report should be demoted from work immediately since it will lead to collapse of the
business

3.5.3 HOW TO REWARD OUTSTANDING PERFOMANCE

i. Promotion ; for the employee who have been in the firm for quite long and he /she has
excellent performance ,they will be promoted to another level of work
ii. Addiction of salary; there will be a good strategic plan for those employee who are
working more hard through reward of allowance to motive workers
iii. Free transport

3.6 PEOPLE SYSTEM

3.6.1 RECRUITMENT
My firm will advertise vacancy position for willing applicant, the business will shortlist
applicant who will meet requirement and special interview being carried. New employed or
recruit employee will be oriented by the manager or accounting manager who will play my roles
in absent

3.6.2 TRAINING
For qualified staff workers, I will take them for one to three month this is for more skills and
know about business
TRAINING WILL BE BASED ON
 The academic qualification
 Job assigned to carry out in the firm
27
  Working experience in the firm
 Potential leadership skills

3.6.3 PROMOTION
To those work well there will be increment in the salary

3.6.4 RETATION
I will retain the employees by
 Paying above average sales
 Showing a appreciation respects
 Encouraging input feedback
 Providing flexibility
 Allowing employees speak freely on problems and issue they face

3.6.5 COMMUNICATION CHANNEL

The following is the communication channel in my workshop to employees
 Face to face communication
 Through phone calls
 Instant messaging
 Email
 Social media (twitter, WhatsApp)

28
3.6.6 INCENTIVES

EMPLOYEES INCENTIVES

MANAGING DIRECTOR Voucher of Ksh 1000 for public holding,

airtime 1000 per month and 1 month live per
year

TRANSPORTING OFFICER Airtime 3000 per month and mileage of Ksh

3000 per month

SALES AND MARKETING Airtime 500 per month and ksh 1000 tea and
lunch

OFF/LOADERS Ksh 500for tea

SECURUTY KS 500 for tea

29
3.7 LEGAL REQUIREMENTS
3.7.1 LICENCES, PERMITS AND BY LAWS
3.7.2 LICENSE
The business trade license serves as a business permit to operate in a decide county for approval of
many services such as fine protection and outdoor advertising. The business shall obtain its municipal
license through online platform as Mombasa electrical services which will conveniently access
Mombasa County government services like that of a license electrically costing at nine thousand shilling
only.

3.7.3 PERMIT
Since the enterprise will a single proprietor, the agency which will issue a certificate of registration is
known as Department of Trade and Infrastructure (DTI).

3.7.4 BY LAWS
This includes rules and regulations issued by various Acts that needs to be followed like labor laws,
Employment Act which state that employees should never be discriminated against payment, conducive
environment in the manner that employees have insurance cover in case of injury he/ she is
compensated

3.7.5 SUPPORT SERVICE

ITEM BRANCH SERVICES

BARCLAYS BANK ELDORET CENTRAL BANKING AND

WITHDRAWALS

POST OFFICE ELDORET SENDING AND RECEIVING

30
 MAILS AND PARCELS

D.O OFFICE ELDORET OFFERING BOTH SOCIAL

AND SECURITY SERVICE

INSURANCE APARTHID INSURING AGAINST FIRE

THEFT, FLOOD ETC

LEGAL JOMO INCENTIVES COMMISIONER OF OATH

CHAPTER FOUR
4.0 PRODUCTION/ OPERATING PLAN
The table below shows facilities list and capacity required in LANGAT METAL RECYCLING AND
MODIFICATION

ITEM QUANTITY COST CAPACITY

Office 4 Rooms 6000 4 Personnel

Store 5 Rooms 7500 5 Tones
Pick Up 1 25000 2 Tones
Electricity 3 10000 100kw
Weighing Machine Phase 8500 150kg
Shelves 2 22000 1000ft
Counter Table 20 5000 5 Draws
Welding Machine 2 85000 60kg

31
Wheelbarrow 2 7000 40kg

32
4.1 FIRM LAYOUT

33
4.2PRODUCTION STRATEGY
4.2.1MARKET RESEARCH

Before this enterprise spends time and money on creating a new product, it will carry out some research
on whether the product has its consumers and as well as what will be needed to do differentiating to
stand out from other competitors.

PATIENT RESEARCH

The enterprise will visit websites in order to investigate on patent items that are to be invented to ask
questions in order to be sure about legality of the invention for the business to create and sell also
consult with attorney specialized patents.

DEVELOP APROTOTYPE

Once the legal path is clear the idea of a new product will be brought for fruition by either drawing of
diagram complex working profession product to decide on manufacturing.

Cost of producing a new product includes;

ITEM COST SOURCE

WATER 9000 ELDORET WATER AND

SEWAGE COMPANY

ELECTRICITY 5600 KENYA POWER AND

LIGHTING COMPANY

LICENSE 9860 COUNTY GOVERNMENT

OF ELDORET

MAN POWER 87000 PERSONNELS

TRANSPORTATION 10000 NAEN TRANSPORTERS
MARKETING 5500 PERSONNELS
MOBILE STONE CRUSHER 5000 MAKIGA SUPPLIERS

TOTAL
193400

34
Direct materials from the manufacturers include;

ITEM COST SOURCE

METALS 4400 LANGAT METAL

RECYCLING AND
MODIFICATION LABOUR
CEMENT 6400 BAMBURI CEMENT
NAILS 36000 MABATI ROLLINGS
IRON BARS 66000 KUS STEEL MAKERS
IRON SHEETS 42000 DOSHI STEEL MAKERS
TIMBER 8000 LIGNA ENTERPRISE
BALLAST 25000 KIJIWE LABOUR
FENCING POLES 36000 YIMAN ENTERPRISE
BIRBED WIRE 14000 MABATI ROLLINGS
SPADE 4000 AZIZ TRADERS
SAND 25000 KIJIWE LABOUR
PLIERS 2500 AQIQ TRADERS

TOTAL
500000

TOTAI EXPENDITURE FOR THE WHOLE MONTH WILL BE

500000+193400= 593400;

35
 Product design used in LANGAT METAL RECYCLING AND MODIFICATION;

a) Fuzzy frontend-this involves of activities employees before and more formal under well-defined
requirement for completion of specification. Requirement speaks to what the product should do or have
at a varying degree of specifying in order to meet the perceived market.
b) Product design-this development of both the high level and detailed level design of a product which
turns requirement to specific product.
c) Product implementation- this will be done by refining the testing what may be used to
validate prototype if it actual meets all design specifications.
d) Fuzzy back end- will be a commercialization phase which will represent the action end steps
where the productivity and market launch occurs.
The enterprise will use some efficient skills of product such as:

a) Getting rid of motivation killers such as toxic people, abrasive organizational visions and absence of
opportunity for professional development, poor communication system, autocratic management skill
and the feeling of lack of appreciation.
b) Motivation through ramification techniques such as use of badges, leader board ranking point’s
challenges and other game elements to make repetitive and quantifiable task move.
c) Set clear goals of providing guidance for everyone to properly manage their sells of doing task to meet
targets, provide feedback to show employees are being supervised and also acknowledge of
accomplishment while failures or errors in meeting targets should promptly addressed.
d) Use of technology responsibility in such that not dust having a computer and internet connection in an
office but important to study and utilize different hardware and software so that it can improve
employees productivity.
e) The business shall set standards and providing skills development so that everyone should perform
their assigned tasks and responsibilities without clear or explicit

36
 Expectations people tend to find excesses when they fail to achieve goal or target.

f) The business shall ensure efficient effective communication by not only use of mobile devices such as
phone verbal and written exchanges of information but also designing and using communication
systems that are appropriate for the needs of business will also enable them to know hierarchy and
expertise within the enterprise in order to know who to reach out regarding their concerns.

4.3 PRODUCTION PROCESS

4.3.1 STAGES OF PRODUCTION USED IN KIPS WELDING AND FABRICATION
 The ideas
Since the business aim will be to produce a successful product it will look at good ideas and prelate it
roughly like the size of the market it is going to reach.

 The proof of concept

The business will be rewind to show its ideas it is not just a dream but something real focused on
functional of the product in mind.

 Funding
The business shall launch a row funding campaign to enable test its idea in front real potential
customers and take pre-orders that will enable the business to manufacture with confidence.

This will enable the business to create official name loge demo video call trending to share in with the
audience since risk is not about money but love of the product.

 Certification

37
The business shall access a lab that will taste the photo type and make sure its respect the rules laid on
that product also it will enable the business with time to take product insurance.

 Assembling

This is where all pieces of product are put together.

 Testing
This will be done to make sure that product is working perfectly for customer satisfaction.
Material involved in production includes:

 Machinery to mix ingredients

 Finance to carter for all financial resources

 Man power involved in running the machines

 Well planned and organized time

 Land which plant will be built

 Marketing and advertisement of the resources management

4.3.2 EXTERNAL FACTORS THAT INFLUENCE PRODUCTION

 Natural and manmade disaster

Since individuals cannot control natural buy the business will develop recovery plans such as installing
storm proof windows improving mater run off.

In commodities and natural sources the business shall closely mention price functions and make
adjustment afterwards such as increasing prices for the consumer at the register.

Scarcity of mater affects electricity utility thus cost will be sometimes passed to the final consumer

 Government policy

38
 This is another external in which the business shall content with high business taxes health care
mandates and requirements by rations agencies that oversee business activity must operate within the
confines of established law.

 Supply chain defects and recalls

It is a vital part in which the business need to understand since it leads to a product on services
pulled out from the market

 Innovation
This will stern personal creativity and ideas

 Computerization
This will enable the business to devise new ways of running business operations
The following are ways on how to minimize external factors
• The business shall prepare multiple outcomes since innovation is a good enology for prediction.
• The business shall find and relay on the predictable elements of the situation since other participants
have extremely high influence in prediction.
• The business shall focus on evaluation of initiatives on inputs not just output since inputs accounts for
the quality of the process that went into its planning and execution.
• The business shall remain focus agile to respond quickly since there is no substitute for awareness
listening and detecting events as soon as they happen.
• The business shall prepare for failure success and everything between as long as others find your
business trustable.

4.4 PRODUCT AFFECTING OPERATION

4.4.1 HEALTH REGULATIONS
The business shall have a legal instruments that covers measures for preventing transnational speed of
infection disease in such a way that they compensate with and

39
 Restricted to public health risks which will interfere with Trans pans traffic in the
business such instruments will enclose health insurance
4.4.2 SAFETY
Covers to each member of the enterprise.

The business shall be issuing statements in safety to show greater involvement by everyone in health
and safety of the enterprise very task being issued will include.

o Receiving regular reports in progress performance and implementation of safety and health plans.
o Ensuring sufficient resource are made available to achieve and implement these safety and health
plans.
o Ensuring senior managers and work force are actively involved in the management of safety and
health.
o The business shall develop a communication to show the board committees to its safety and health.
o The business shall also ensure safety and health and it’s are undertaken to monitor all aspects of safety
and health policy implementation.

4.4.3 ENVIRONMENTAL REGULATIONS

The business shall confirm with any relevant regulations and avoid environmental legal pitfall by
establishing practices to prevent waste generation or improper waste disposal by tracking waste streams,
building toilets for all staffs and also obtain a permit that allows.

40
CHAPTER FIVE
5.0 FINANCIAL PLAN
5.1 PRE-OPERATIONOF COST

The following table shows the cost which the enterprise will incur before the start of the
business
.
ITEM AMOUNT IN KSHS
Transport 50000

Premises 150000
Vehicle 300000
Insurance 48000
Equipment 50000
Advertisement 2000
Total 600000

41
5.3 PROFOMA BALANCE SHEET AS 31ST DEC 2024

ITEM JAN 2024 DEC 2024

ASSETS
CURRENT ASSETS

Debtors 40000 28000 15000

Cash in hand 60000 80000 120000
Cash in bank 150000 200000 290000
Pre-paid 20000 30000 45000
Stock of finished good 250000 200000 250000
Total current assets 520000 538000 720000
FIXED ASSETS
Machinery and 150000 120000 90000
equipment
Vehicle - - -
Others 100000 180000 200000
Furniture and fitting 250000 - -
Total fixed asset 1020000 838000 720000
LIABILITIES
CURRENT LIABILITY
Creditors 300000 250000 150000
Emergency loan 400000 350000 300000
Others 500000 520000 550000
Total current liabilities 1200000 1120000 1000000
LONG TERM LIABILITY
Bank 800000 600000 550000
Owner equity 400000 350000 420000
Others 500000 550000 350000
42
Total long term 1700000 1500000 1320000
liabilities
Total liability 290000 2620000 2320000

43
5.4 WORKING CAPITAL REQUIREMENT
ITEM 1ST YEAR 2023 2ND YEAR2024 3RD YEAR 2025

Stock 110000 115000 120000

Debtors 20000 12000 5000

Cash in hand 60000 80000 120000

Cash in bank 160000 190000 200000

Good in process 130000 150000 160000

TOTAL CURRENT ASSET 480000 547000 605000

CURRENT LIABILITIES

Creditors 25000 20000 15000

Insurance premium 35000 35000 35000

Short time loans 55000 50000 58000

TOTAL LIABILITIES 115000 105000 108000

WORKING CAPITAL 365000 442000 497000

44
5.5 CASH FLOW PROJECTION
5.5.1 CASH FLOW PROJECTION FOR THE YEAR 2024

ITEM JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
CASH FLOW
SALES 200000 220000 240000 252000 240000 225000 215000 230000 270000 280000 300000 250000 2922000
DEBTORS 40000 60000 30000 5000 10000 9000 12000 4000 7000 4000 - - 181000
BANK LOAN 20000 19000 10000 16000 11000 6000 15000 8000 6000 3000 - - 144000
OTHERS 60000 120000 150000 180000 150000 186000 210000 250000 280000 260000 140000 260000 2286000
TOTAL 320000 419000 430000 453000 411000 426000 452000 492000 563000 547000 440000 510000 5463000
CASH FLOW
PURCHASE 25000 30000 200000 16000 14000 10000 12000 11000 20000 18000 13000 16000 205000
ELECTRITY 2000 1600 1900 1500 2600 2100 1800 1850 1650 1350 1980 2200 22570
WATER 3500 2010 1600 2000 2500 1990 1700 2800 3000 3050 2900 2800 29870
WAGES 115000 115000 115000 115000 115000 115000 115000 115000 111500 115000 115000 115000 138000
LICENSE 3500 - - - - - - - - - - - 3500
TELEPHONE 1500 1400 1600 1450 950 1350 1500 1400 1250 1050 1000 900 15350
TRANSPORT 5500 6000 6100 5800 6800 4000 3500 4200 2400 3800 4100 3800 56000
MISCELLANIOUS 3500 4500 4000 5000 3800 4100 4300 2400 5400 3800 74100
TOTAL 159500 160510 144100 146750 145650 134440 139600 140550 143300 144680 142480 144500 1746060
NET CASH FLOW 160500 258490 285900 306250 265350 291560 312400 351450 419700 402330 297520 365500 3719400
ACCUMULATIVE 16050 25849 28590 30625 26535 29156 31240 351455 41970 40233 29752 36550 371940
CASH 10%

45
5.5.2 CASH FLOW PROJECTION FOR THE YEAR 2024

PARTICULARS JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL

Cash flow

Balance b/f 205200 206500 208100 211000 212500 214200 212500 219000 219000 221300 222500 223400 2575200

Bank loan

Cash
investment

Sales 330100 331300 332700 334000 335200 335200 337100 340200 340500 348000 342100 344300 4050700

Debtors 149750 139125 140875 141255 142475 142475 143475 147325 144125 144275 143850 145725 1722730

Total cash flow 685050 677925 687675 686255 690175 691875 694775 703825 703625 705575 708450 713425 8348630

Cash outflow

Purchases 140000 155000 157000 160200 162500 162500 162800 160000 165100 166400 167300 170700 1924500

Insurance 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 240000

Vehicles

Salary and 21090 21090 21090 21090 21090 21090 21090 21090 21090 21090 21090 21090 253080
wages

Electricity 6000 6200 5900 6300 6350 6350 6250 6100 6000 6100 5900 6100 73550

Tele postage 6300 6450 6300 6500 6400 6400 6250 6100 6000 6100 6175 6250 75225

Water 5000 5100 5150 5300 5450 5450 5500 5000 5650 5000 5350 5400 63450

46
Transport 21000 21200 20200 19500 29000 20000 20500 21000 21600 20000 23500 20400 257900

Stationary 3000 3100 2900 3250 3200 3200 3300 3050 3300 3050 3000 3050 37400

Loan and 15600 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 187475
Replacement

Advertisement - - - - - - - - - - - - -

Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000

License/permit 1000 - - - - - - - - - - - 1000

Fittings - - - - - - - - - - - - -

Creditors 16000 16200 16300 16800 16800 17500 17500 17450 17500 17600 17500 17700 204850

Miscellaneous 3200 3750 28500 29100 17000 17000 17450 17450 17500 17600 17500 17700 203750

Total cash 478525 469425 472125 473785 475975 475975 484475 484825 484325 484075 485050 463250 624585
outflow

Ending cash 206500 208100 211000 212500 212500 214200 219000 219000 221300 222500 223400 124100 8144880
flow

47
5.5.3 CASH FLOW PROJECTION FOR YEAR 2025

PARTICULARS JAN FEB MAR APP MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL

Cash flow
Balance/f 224100 2000 228400 232700 234300 236200 237900 239200 243600 241200 247275 245000 2840
Bank loan

Cash invested 800000 - - - - - - - - - - - -

Sales 384000 387200 363100 388400 381300 380100 372200 376900 375300 373900 372700 3711200 454
Debtors 138025 130405 129960 131435 130925 132195 126635 126895 125535 124125 165325 126635 1584

Total cash flow 725225 156065 729585 734895 737835 739610 750195 751425 755425 756660 759905 772500 9773

Cash out flow

Purchase 210300 201500 200200 186600 185400 17500 179100 177300 175900 174000 172300 170000 2207
Insurance 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 264
Vehicle 800000 800

Salary &wages 210900 210900 210900 210900 210900 210900 210900 210900 210900 210900 210900 210900 2530

Electricity 6800 6750 6300 6400 6400 6650 6775 6950 6800 6200 6500 6700 79
Telephone/
6800 6750 6300 6400 6550 6650 6670 6310 6500 6520 6410 6350 79
postage
Water 6700 5670 5550 5450 5800 5810 5770 5650 5800 5750 5700 5500 68
Transport 2100 21200 22000 19500 19500 20000 20500 21000 22300 2000 23500 24000 257
Stationary 3000 3100 2900 3250 3250 3200 3300 3050 3300 3050 3000 3150 337

Loan replacement 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 187

Advertisement - - - -- - - - 1000 - - - - 1

Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78

48
License/permit 1000 - - - - - - - - - - - 1

Coffins/fittings - - - - - - - - - - - -- -

Creditors 16000 16200 16300 16800 16800 17500 17500 17450 17500 17600 17500 17700 203

Miscellaneous 38,000 3200 3150 2850 2950 2910 17000 17450 17500 17600 17600 17500 2037

Total cash output 4955125 478525 469425 4721025 473785 473785 475975 484475 484825 184325 484075 48325 624

Ending cash flow 206500 208100 211000 212500 212500 214500 21900 21900 221300 222500 223500 224100 2588

49
 5.6 PRO-FORMA INCOME STATEMENT [TRADING PROFIT AND LOSS
ACCOUNT;
ITEMS YEAR 1 YEAR 2 YEAR
SALES 2922000 3010500 335000
COST OF GOOD 780000 800000 850000
CROSS PROFIT 2142000 2210500 2500000
SALARIES AND 110000 110000 120000
WAGES
ELECTRICITY 22500 20000 18000
ADVERTISEMEN 3500 2000 1500
T
STATIONARY 3500 4000 4500
TRASPORT 5000 6000 4000
RENT - - -
INSURANCE 2500 2500 2000
TELEPHONE 2000 2500 3000
LICENSE 3000 3000 3000
TOTAL 152000 152000 150000
EXPENSES
NET PROFIT 1990000 2060500 2343200
BEFORE TAX
20% TAX 398000 412100 468640
NET PROFIT 598835 1440075 1635620
AFTER TAX

5.7 BREAK EVEN ANALYSIS

Item Cost
Personal Saving 50000
Bank loan 150000
Inheritance 50000
Friend contribution 50000
Total 300000

50
5.8 DESIGNED FINANCING
ITEM COST
Pre-operational cost 120000
Working capital 200000
Fixed asset 100000
Furniture 140000
Variable cost 250000
Total 890000

5.9 CAPITALISATION
5.9.1PROFITABILITY RATIO
5.9.2 GROSS PROFITABILITY RATIO 2023
GROSS PROFIT RATIO= (GROSS PROFIT/SALES) 100

= (21420000*100/2922000)
= 73.37%

5.9.3GROSS PROFIT
ABILITY RATIO = [GROSS PROFIT/SALES] 100
2024
= [2210500/2922000]100

= 75.65%

51
5.9.4 GROSS PROFIT = (2500000/2922000)100
ABILTY RATIO 2025 85.55%

5.9.5 RETURN ON
EQUITY RATIO ON = [1608400/400000] 100
EQUITY YEAR 2026
= 402.1%

YEAR 2023 = (1661660/350000)100

=47
4.76
%

52
Appendix

Location Uasin Gishu along Nakuru highway,

References langat metal recycling and modification is located in attachment of supplemental material in
ProQuest or www.unlvedgeoplate

53