Emmanuel Omondi | Business Plan

BUSINESS PLAN

KENTO TIMBER HOUSE

P. O. BOX 143-40109

KISUMU

PRESENTED BY:

OLUOCH EMMANUEL OMONDI

EICI/01561/2019

TECHNICAL UNIVERSITY OF KENYA

B. TECH CIVIL ENGINEERING

DATE: 08/09/2023

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Emmanuel Omondi | Business Plan

DECLARATION

I hereby declare that the business plan is my original work and that it has not been presented for
the award of a degree or diploma to any institution.

NAME………………………………………………….

ADM NO……………………………………………..

DATE……………………………………………….. SIGN ………………………………

This work has been submitted with the approval of my supervisor

NAME………………………………………………………..

DATE……………………………………………SIGN…………………………………….

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ACKNOWLEDGEMENT

I give thanks to the Almighty God for providing me with life, wisdom, and knowledge to write
this business plan.

My gratitude’s goes to my lecturer, Dr. Mwiti for the wonderful insights and helping us through
this wonderful course. I give the last thanks to the entire family members, more so my parents for
their financial support they gave me from the beginning to the last point.

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DEDICATION

I dedicate this business plan to my parents Mr. David and Alice for their financial support and
moral support during my studies at The Technical University of Kenya.

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Contents
DECLARATION................................................................................................................................ 2
ACKNOWLEDGEMENT....................................................................................................................3
EXECUTIVE SUMMARY................................................................................................................... 6
MARKETING PLAN..........................................................................................................................6
MANAGEMENT PLAN..................................................................................................................... 6
OPERATIONAL PLAN.......................................................................................................................6
FINANCIAL PLAN............................................................................................................................ 6
CHAPTER ONE................................................................................................................................ 7
1.0 BUSINESS DESCRIPTION........................................................................................................... 7
1.1 THE OWNER OF THE BUSINESS................................................................................................ 7
1.2 BUSINESS NAME.......................................................................................................................7
1.3 BUSINES LOCATION AND ADDRESS.......................................................................................... 7
1.4 FORM OF BUSINESS OWNERSHIP.............................................................................................8
1.5 TYPE OF THE BUSINESS............................................................................................................ 8
1.6 PRODUCTS AND SERVICES........................................................................................................8
1.6.1 PRODUCTS.........................................................................................................................8
1.6.2 SERVICES...................................................................................................................... 9
1.7 JUSTIFICATION OF OPPORTUNITY............................................................................................9
1.8 GOALS AND OBJECTIVES.......................................................................................................... 9
1.8.1 GOALS............................................................................................................................... 9
1.8.2 OBJECTIVES....................................................................................................................... 9
1.9 ENTRY AND GROWTH STRATEGY............................................................................................10
1.9.1 ENTRY PLAN.................................................................................................................... 10
1.9.2 GROWTH PLAN................................................................................................................10
CHAPTER TWO............................................................................................................................. 11
2.0 MARKETING PLAN.................................................................................................................. 11
2.1 POTENTIAL CUSTOMERS........................................................................................................ 11
2.2 MARKET SHARE......................................................................................................................11
2.3 COMPETITION........................................................................................................................ 12

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2.4 METHOD OF ADVERTISEMENT AND PROMOTION.................................................................12

ADVERTISEMENT......................................................................................................................12
PROMOTION............................................................................................................................ 13
2.5 PRICING STRATEGY................................................................................................................. 13
2.6 SALES TACTICS........................................................................................................................ 13
2.7 DISTRIBUTION STRATEGY....................................................................................................... 13
CHAPTER 3................................................................................................................................... 14
3.0 MANGEMENT PLAN............................................................................................................... 14
3.1 MANAGEMENT TEAM............................................................................................................ 14
3.1.2 MANAGING DIRECTOR.................................................................................................... 14
DUTIES AND RESPONSIBILITIES............................................................................................14
3.1.3 MARKETING OFFICER...................................................................................................... 14
DUTIES AND RESPONSIBILITIES............................................................................................14
3.1.4 SALES MANAGER.............................................................................................................15
DUTIES AND RESPONSIBILITY...............................................................................................15
3.1.5 FINANCE MANAGER........................................................................................................ 15
DUTIES AND RESPONSIBILITIES............................................................................................15
3.1.6 SUPERVISOR.................................................................................................................... 16
DUTIES AND RESPONSIBILITIES............................................................................................16
3.2 RECRUITMENT, TRAINING AND PROMOTION.........................................................................16
3.2.1 RECRUITMENT.................................................................................................................16
3.2.2 TRAINING........................................................................................................................ 16
3.2.3 PROMOTION....................................................................................................................16
3.3 REMUNERATION AND INCENTIVES.........................................................................................17
3.3.1 REMUNERATION..............................................................................................................17
3.3.2 INCENTIVES..................................................................................................................... 17
3.4 LICENSE, PERMITS AND BY-LAWS...........................................................................................18
3.4.1 LICENSE........................................................................................................................... 18
3.4.2 PERMITS.......................................................................................................................... 18
3.4.3 BY-LAWS.......................................................................................................................... 18
3.5 SUPPORTIVE SERVIC.........................................................................................................19

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3.5.1 BANKING SERVICES......................................................................................................... 19

3.5.2 INSURANCE SERVICES......................................................................................................19
3.5.3 CONSULTING SERVICES....................................................................................................19
3.5.4 LEGAL SERVICES...............................................................................................................20
CHAPTER FOUR............................................................................................................................ 20
4.0 PRODUCTION PLAN................................................................................................................20
4.1 PRODUCTION FACILITIES AND CAPACITIES.............................................................................20
4.2 PRODUCTION STRATEGY........................................................................................................ 22
4.3 PRODUCTION PROCESS..........................................................................................................22
4.4 PRODUCTION AFFECTING OPERATION...................................................................................23
4.4.1 HEALTH REGULATION...................................................................................................... 23
4.4.2 SAFETY.............................................................................................................................23
4.4.3 ENVIRONMENTAL REGULATION......................................................................................23
CHAPTER 5................................................................................................................................... 23
5.0 PRE-OPERATIONAL COST........................................................................................................23
5.1 PROFORMA BALANCE SHEET FOR ONE YEAR.........................................................................25
5.2 WORKING CAPITAL.................................................................................................................26
5.3 PROFORMA INCOME STATEMENT..........................................................................................26
5.4 DESIRED FINANCE.................................................................................................................. 27
PROFITABILITY RATIO............................................................................................................... 27

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EXECUTIVE SUMMARY

This chapter entails business name, location, form of business ownership, type of the business,
products and services offered, justification opportunities, goals of the business and the growth
strategy of the business

MARKETING PLAN

This chapter explains the targeted customers of the business, market share, sale tactics methods
of promotion and advertisement and distribution strategy of the business

MANAGEMENT PLAN

It entails the organization structure of the business, business owner, the personnel number, their
duties and qualification, recruitment training, promotion, remuneration and incentives of the
employees, the license, permits and the by-laws of the business including the support services
that will also facilitate the smooth running of the business

OPERATIONAL PLAN

This chapter shows the production facilities and capacity, the production strategy that involves
product design and development, production process, production factors affecting the business,
health regulation and the safety of the business.

FINANCIAL PLAN

This chapter describes the pre-operational cost, the estimation of working capital, proforma
income statement, proforma balance sheet, profitability ratio and desired financing of the
business.

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CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 THE OWNER OF THE BUSINESS

The owner of the business is Emmanuel Omondi, he lives at Nyakach, Kisumu county. He holds
Degree in Civil Engineering Technology at Technical University of Kenya.

1.2 BUSINESS NAME

The name of this business will be Kento Timber House. According to the name of the business, it
will be dealing with supply of timber post, timber frames, timber plates and the best of finished
products such as standardized and classic chairs, tables among others.

1.3 BUSINES LOCATION AND ADDRESS

The business will be situated at Nyakach near Sondu town. I will be opposite Kinra Supermarket
hundred meters from Kenya Commercial Bank. For easy access of this business owner;

P.O BOX 143-40109

KISUMU

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Email: [email protected]

SONDU – KISII ROAD

KENTO TIMBER

HOUSE

1.4 FORM OF BUSINESS OWNERSHIP

The business will be sole proprietorship under the management of the owner. This because;

i. It is easy to raise capital from personal savings

ii. Decision making is easy
iii. Easy to control and manage the business
iv. The secrets of business are kept
v. The owner enjoys all the benefits alone
vi. The owner becomes the boss of the business, and an employee
vii. The owner has direct contact with customers and gets their views about the business

1.5 TYPE OF THE BUSINESS

The Kento Timber House will be dealing with the sale of finished products like furniture and
timber post and timber frames for those constructing houses and other carpentry works. The
business will also depend on which product is of high demand by its customers.

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1.6 PRODUCTS AND SERVICES

1.6.1 PRODUCTS

The Kento Timber House as the newly type of a business, it will ensure that the customers are
satisfied in such a way that the products will be delivered at a free cost to our customers. The
business will offer the following;

I. Modern chairs
II. Modern tables
III. Timbers
IV. Cupboards
V. Ply-wood
VI. Ceiling boards

1.6.2 SERVICES

The business will offer the following services;

I. Loading and offloading services

II. Packaging services

1.7 JUSTIFICATION OF OPPORTUNITY

The allocated business enterprise will contribute to viability business opportunity identified
around the Kento Timber. Already the business has market for the products that is going to
produce enhancing high level of starting the business. Around the business, there is a hardware
which will be supportive and also help the security additional to the bank security officers. There
are many trends of wood products and timbers, but Kento Timber Yard will ensure that it
provides the standardized new model of timber products and cut down the cost of the products.
The products will be produced continuously to ensure that customers are satisfied.

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1.8 GOALS AND OBJECTIVES

1.8.1 GOALS

The management will make awareness to its customers by advertising its products location
address of the business and the prices through social media magazines internet in order to trap
customers in various direction. The business aims to maximize profit which will satisfy the
customers and manage it to expand and make branches in order various town.

1.8.2 OBJECTIVES

The business will employ few employees at the start. After its expansion, employment
opportunities will be at high demand thus creating job opportunity. The business main objective
is to expand beyond the entry level after two years, this will put it in a better position to get the
better services provided. The business will add more assets and possible capital intensive by the
period of two years.

1.9 ENTRY AND GROWTH STRATEGY

1.9.1 ENTRY PLAN

The business will start at the medium level, offering its products to the people at the surrounding.
It will offer a stiff competition to other market competitors by offering a variety of the best
timber products in relation to its competitors who doesn’t offer full spectrum of customer needs.

The strategic position and the employment of qualified personnel will also act as a factor to the
business. Since the business is new, the use of internet descriptions and media will be easily
identified and inform the public about the timber yard existence.

1.9.2 GROWTH PLAN

As the business expands day by day earning more profit, it will be giving offers to the
consistently customers to motivate them and this will further assist in coming of the new
customers and increase of demand all over.

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CHAPTER TWO

2.0 MARKETING PLAN

The Kento Timber House will target its customers from the locality. It will market its products
and services through direct selling with its customers

2.1 POTENTIAL CUSTOMERS

Domestic customers

This customer will purchase the products from their own demand. Their needs also vary from
large to small quantities, but of high quality since these are the customers within the surrounding.

Commercial customers

At the centre of the market where the business is located, there is a hardware which will also
bring the customer at the workshop.

Institutional customers

The business will also be taking the tenders from institutions and health centers. Some of
targeted schools are like Nyaksure Primary school and Bunyala Vocatoinal Training Institute.

2.2 MARKET SHARE

The approximated population of the area I about eighty thousand people and most of them are
business men and women and also the civil servants which will enable demand of the
commodities be at high.

The business is expected to supply at least per day the minimum of 20 people, since it be selling
the products at standardized price to bring competition to the competitors.

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2.3 COMPETITION

The business expects fair competition from its competitors. The main competitors of Kento
Timber House are direct competitor, those selling and producing similar products within the
town.

In order to offer, attract more customers and establish monopoly over competitors, it should offer
fair prices which will be affordable by the majority of the customers. Well and better
coordination with personnel and conversant within the latest and new design types of the product
that will attract the customers.

BUSINESS STRENGTH WEAKNESS

General Timber Yard Perfectly located New in market

Okiyo Timber High technology Incompetent personnel

Kinoo Timber shop Good location Poor services

2.4 METHOD OF ADVERTISEMENT AND PROMOTION

ADVERTISEMENT

Using the following ways of advertisement will create awareness from various directions.

i. Magazine-the business will show the price and where it is allocated and how it conducts
its services to the customers on magazines.
ii. Use of internet- the news about the business will be viral all over the world through
internet.
iii. Use of sign posts- sign posts will be positioned at specific areas where people are
expected to be found most of time. The sign post will be brightly colored enabling easy
read from far and will consists the business name, logo, product offered, address and
telephone numbers for easy access.

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PROMOTION

The following promotion technics will be used;

I. Free sample
II. Trade discount
III. Show rooms

2.5 PRICING STRATEGY

Cost pricing methods will be deployed at the business; whereby consideration will be put to cost
occurred before selling. This will establish a base price that will set the prices to first produce
into the market. The business will also consider the prices offered by other competitors. The
comparison will help in determination of the best price at which products will be sold to the
customers.

2.6 SALES TACTICS

Below a tactic that will be used;

a) Direct to customer- The customers will have to choose the type of the product or
design they want themselves. Attendance will be there to help customers
satisfied.
b) Online sale - This entails using of telephones and online platforms. Customers
may order through internet as advertised following the procedures and be
delivered within the expected time. This will cut down the transport expenses to
the customers hence payment is done on delivery.

2.7 DISTRIBUTION STRATEGY

The nearby customers will be buying the goods directly from the shop, however those require
their goods to be delivered far away from the firm, arrangement shall be done on how to get and

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reach them. The product will be delivered according to the order request with our trucks
available.

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CHAPTER 3

3.0 MANGEMENT PLAN

3.1 MANAGEMENT TEAM

The management of the firm will be implemented through assignment of duties and
responsibilities from top to bottom. The management team will comprise of the following
personnel and the duties;

3.1.2 MANAGING DIRECTOR

DUTIES AND RESPONSIBILITIES

i. Organizing business resources
ii. Coordinating work
iii. Controlling work

QUALIFICATION

i. Certificate holder in building technology

ii. Two-year work experience
iii. Thirty years aged and above

3.1.3 MARKETING OFFICER

DUTIES AND RESPONSIBILITIES

i. Determining the quality and quantity of the products produced
ii. Looking for new designs and bring them to the firm
iii. Checks out the prices of other competitors

QUALIFICATIONS

i. Certificate holder in building technology

ii. At least one-year work experience
iii. Able to communicate in English and Kiswahili

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iv. Should be over 18 years

3.1.4 SALES MANAGER

DUTIES AND RESPONSIBILITY

i. The customers reach on his/ her desk
ii. Determines the type of the products customer wants
iii. Determine the price of the products at the firm

QUALIFICATIONS

i. Able to communicate in Kiswahili and English

ii. Must have attained K.C.S.E B+ in mathematics

iii. Over 18 years old

3.1.5 FINANCE MANAGER

DUTIES AND RESPONSIBILITIES

i. Determining the total cost of the materials
ii. Determining the worker salary and wages
iii. Determine the profit and losses of the day by day

QUALIFICATION

i. Certificate holder in business accounting

ii. Thirty years and above aged
iii. Two-years of working experience

3.1.6 SUPERVISOR

DUTIES AND RESPONSIBILITIES

i. Determining the stock of the materials
ii. Searching for the materials from the source
iii. Ensures there is smooth run of the business

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iv. Doing research of the materials that are suitable

QUALIFICATION

i. Has K.C.S.E certificate

ii. Able to communicate in English and Kiswahili iii. Able to ride a
bicycle and a motorcycle

3.2 RECRUITMENT, TRAINING AND PROMOTION

3.2.1 RECRUITMENT

Employees will be recruited through conducting preliminaries interviews so that to select the
best. For the skilled personnel we will also recruit people from other firms in order to standardize
the business.

3.2.2 TRAINING

The appointed employees will be trained by the trainer in application of various technical skills
and problem solving. The firm will be conducting workshop meetings mostly at Che’s Bay resort
in which the workers will be taught new skills and the concern of the business.

3.2.3 PROMOTION

The business will offer the promotion according to the work a person is doing and the level of
education that a person has attained.

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3.3 REMUNERATION AND INCENTIVES

3.3.1 REMUNERATION

TITLE BASIC ALLOWANCES TOTAL

SALARY(Ksh)
Managing director 25,000 5,000 30,000
Marketing officer 20,000 5,000 25,000
Sales manager 18,000 5,000 23,000
Finance manager 18,000 5,000 23,000
Supervisor 15,000 5,000 20,000
Driver 13,000 5,000 18,000
Security 8,000 3,000 11,000
Cleaner 5,000 3,000 8,000

TOTAL 158,000

3.3.2 INCENTIVES

The following incentives will be offered by the business;

i. Overtime
ii. Trip
iii. Lunch

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3.4 LICENSE, PERMITS AND BY-LAWS

3.4.1 LICENSE

The license of the business will be obtained from the County Council. It will operate for one year
at ksh.15000. This is because;

i. To ensure the business is legalized

ii. To ensure customers meet quality and required products and services

3.4.2 PERMITS

The business will get the permit from the County Council at a fee cost of ksh.15000.

3.4.3 BY-LAWS

The business will adhere and comply with laws and orders affecting it particularly for it running
effectively. The set-up by-laws will include;

i. All employees to be punctual and responsible at the field is required to be

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LICENSES REQUIRED

ITEM BREAKDOWN TOTAL (KSHS)

Single user business permit 1 15,000

Company business 1 30,000

registration (AG)

Fire inspection license 1 5,000

Signboard license 1 5,000

Equipment license 1 5,000

Miscellaneous License 1 10,000

TOTAL 70,000

3.5 SUPPORTIVE SERVIC

3.5.1 BANKING SERVICES

The business will use Kenya Commercial Bank, Sondu branch for banking services. The type of
account will be fixed account, this is because;

i. To safeguard the money

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ii. To avoid wastage of the money

3.5.2 INSURANCE SERVICES

The business will be insured from various cases like thefts with NITA Insurance Company. The
estimated cost of insurance is ksh.15000.

3.5.3 CONSULTING SERVICES

The business will seek advice from the professionals who will assist in advice on the best
operational and management skills.

3.5.4 LEGAL SERVICES

POLL Company and advocate will be used to in writing labour laws and contracts to ensure that
the business achieves its goals and objectives.

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CHAPTER FOUR

4.0 PRODUCTION PLAN

4.1 PRODUCTION FACILITIES AND CAPACITIES

The business workshop will require different types of facilities in its operation. The required
facilities are indicated below;

ITEMS QUANTITY COST PER UNIT TOTAL COST

Power saw 2 80,000 160,000
Hand plane 5 500 2,500
Truck 1 1,200,000 1,200,000
Multi-purpose blend 1 100,000 100,000
Band saw 1 200,000 200,000
Hammer 5 500 2,500
Surface plane 1 150,000 150,000
Lathe machine 1 40,000 40,000
Electric saw 2 30,000 60,000
Timber 1 10,000 10,000
treating/painting
equipment
Fire extinguisher 2 7,000 14,000

TOTAL 1,939,000

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FINANCE OFFICE

WORKSTATION 1

WORKSTATION 2 WORKSTATION 3

4.2 PRODUCTION STRATEGY

The business will ensure that it produces quality furniture to capture more customers. The skills
required for producing furniture includes;

 Setting up and operating machines for furniture making

 Production process to the final product

The production process will cost ksh.300,000

4.3 PRODUCTION PROCESS

The following stages will be followed to come up with the final products

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i. Cutting down trees

ii. Timber sawing into different size
iii. Transportation of timbers to work shop
iv. Storing timbers according to their sizes
v. Making different type of furniture

The production process may be affected by the following factors;

a. Inadequate funds
b. Lack of modern machines to improve on production
c. Inadequate water supply
d. Competition
e. Government policy

4.4 PRODUCTION AFFECTING OPERATION

4.4.1 HEALTH REGULATION

Kento timber House will strictly adhere to government regulations. Proper sanitary facilities to
the workers will be maintained to avoid disease out-break. Since the business deals with timber,
the wood deposit will be re-cycled to keep the environment clean. All the workers will be
required to have NHIF for medical purposes.

4.4.2 SAFETY

Kento timber House will ensure safety measures for all employees. All the workers will have to
observe the safety measures. The following safety measure will be observed;

i. Wearing an overall
ii. Wearing masks
iii. Wearing safety boots
iv. Wearing gloves

v. Wearing goggles

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4.4.3 ENVIRONMENTAL REGULATION

There will be bins for waste disposals. The business will also have good drainage systems for
keeping the environment clean. Good and conducive environment of the firm will also attract the
customers from different directions.

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CHAPTER 5

5.0 PRE-OPERATIONAL COST

ITEM COST ( Ksh)

Tools and equipment 400,000

License 70,000

Insurance 30,000

Electricity 20,000

Truck 1,200,000

Machines 500,000

Timbers 400,000

TOTAL 2,620,000

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5.1 PROFORMA BALANCE SHEET FOR ONE YEAR

FIXED ASSETS AMOUNT (Kshs)

Truck 1,200,000

Timber 400,000

Machines 500,000

Tools and equipment 400,000

TOTAL 2,500,000

CURRENT ASSETS

Cash at hand 1,300,000

Cash at bank 600,000

Stock 400,000

TOTAL 2,300,000

CURRENT LIABILITIES

Creditors loans 300,000

Bank loans 400,000

TOTAL 700,000

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5.2 WORKING CAPITAL

CURRENT ASSETS AMOUNT (KSHS)

Cash at hand 1,300,000
Cash at bank 600,000
Stock 400,000
TOTAL 2,300,000

CURRENT LIABILITIES AMOUNT (KSHS)

Bank loan 400,000
Creditors 300,000
TOTAL 700,000

Working capital = Current asset – Current liabilities

2,300,000 – 700,000

= KSHS 1,600,000

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5.3 PROFORMA INCOME STATEMENT

ITEM YEAR 1 YEAR 2 YEAR 3

Sales 2,000,000 2,500,000 3,000,000
Purchase 700,000 200,000 300,000
Gross profit 1,300,000 2,300,000 2,700,000

TOTAL 6,300,000

EXPENSES YEAR 1 YEAR 2 YEAR 3

Electricity 20,000 20,000 20,000
Insurance 30,000 30,000 30,000
Advertisement 50,000 50,000 50,000
Salary and wages 1,800,000 1,800,000 1,800,000
Maintenance 50,000 50,000 50,000

TOTAL 1,950,000 1,950,000 1,950,000

5.4 DESIRED FINANCE

ITEM AMOUNT (KSHS)

Pre operational cost 2,620,000
Working capital 1,600,000
Fixed asset 2,500,000

TOTAL 6,720,000

PROFITABILITY RATIO

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Gross profit = Gross Profit x 100%

Sales

= 6,300,000 x 100%
7,500,000

= 84%

Liquidity ratio = current asset

current liability

= 2,300,000
700,000

= 3.3

Quick ratio = current asset - stock

current liability

= 2,300,000 – 400,000
700,000

= 2.7

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