TECHNICAL UNIVERSITY OF KENYA

NAME EUPHEMIA ATIENO SAOLA

REGISTRATION NUMBER 109/05645

TASK BUSINESS PLAN

PRESENTED TO MADAM WANJALA COURSE BACHELOR OF ENGINEERING ELECTRICAL AND ELECTRONICS (TELECOMMUNICATIONS OPTION)

Table of Contents

CHAPTER ONE............................................................................................................................3 Business description................... .....................................................................................................3 Business name and address..............................................................................................................3 Business Location............................................................................................................................3 Form of Business Ownership...............4 Type of business...4 Products and Services......................................................................................................................5 CHAPTER TWO...9 Marketing plan.........9

CHAPTER THREE.....................................................................................................................19 Organization and management plan...............19 Organizational structure.....20 Remunerations and incentives.......23

CHAPTER FOUR ......26 Operation/Production plan.............................................................................................................26

CHAPTER FIVE........................................................................................................................30 Financial plan.....30 Cash flow projection..........31

APPENDIX A: FORMULAS......................................................................................................30

CHAPTER ONE
1.0 BUSINESS DESCRIPTION Executive Summary The number of working parents- including single-parent families with both parents employed is climbing, creating an ever-growing need for quality child care, thus I will build a business caring for them without focusing much on academics. That is a home day care. Introduction The basic work I will be doing will be caring for these children with much responsibility and serious commitment. I will be responsible for their safety and well-being. I will also play a key role in their overall development and may well be someone they'll remember in their entire lives. The open enrollment for infant care (8 weeks - 36 months), Toddler care (2 - 5 years of age) and Before and After school (6 years and up). 1.1 BUSINESS NAME: PRECIOUS MOMENTS CHILD DAY CARE The name of the business will be Precious moments child day care . The name will try to signify the type of care that will be offered to the children. It tells people about my philosophy of child care. It is also easy to spell and to remember. Moreover it isn't an overused name for a child care or similar to any child care center around my business locality. 1.2 BUSINESS LOCATION AND ADDRESS This business will be located at Greenspan estate in Donholm area of Eastlands Nairobi. It will be accessible through the Jogoo or Outering Road. Clients using public service can access the mall from the Central Business District (CBD), using matatus number 33 plying the Jogoo Road route and alight at the Caltex Fuel Station where you can easily get another that will take you to the entrance of the estate. These ones are number 19/60 that you can pick from the OTC bus stop or Muthurwa Bus Stop as well. It will be strategically located to serve people around Dohnolm, Komarock, Kayole and Umoja. This will be a suitable location for the day care since the demographic data around the area shows where the future demand will lie that is majority of the childhood population is currently at pre-school age, thus the demand for school-age child care services. Moreover the labour force
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participation rates of women around this area play a role in determining the need of child care services. Security is also adequate around the area which will give the parents a peace of mind whenever the children are in the day care.

1.3 FORM OF BUSINESS OWNERSHIP Precious moments will be a partnership business between my husband and I. This is so because it being partnership it will be relatively easy to start-up that is:

There is less paperwork (in comparison to business structures like Trusts and Companies) It will be inexpensive capital cost will be shared There will be less government interference and regulation (at least in comparison to a
Company) It will offer more privacy (in comparison to the reporting requirements of a Company) it being a family business There will be less need for hiring lawyers, accountants, and other consultants (at least in comparison to a Trust or Company) There will be broader management base (compared to that of a Sole proprietorship), which also means a wider pool of expertise, shared risk (which can be both good and bad) and more sources of capital There may be tax planning advantages (such as income splitting)

1.4 TYPE OF BUSINESS The nature of the business is a start-up kind. It is intended to commence on 5th January 2015. This is so since it will be the beginning of the year where most children are believed to start their academic years. It will be operating from Monday to Friday. Precious Moments will provide corporate clients' employees with nurturing, innovative child care services for their children to play, learn and thrive throughout the day. We will pride ourselves on being a leading trusted care in Kenya. Our center will offer our corporate partners' employees real peace of mind, allowing them to focus on their work, knowing that their loved ones are under expert care in a safe and nurturing environment. Part of our mission will include improving the work/life balance of Parents, making us a cornerstone for numerous employee wellness strategies.

1.5 PRODUCTS AND SERVICES The services offered will be as shown in the table:

Service offered A safe nurturing kid-friendly environment Nutritional meals and snacks. Daily report

Service type

Age group

With enough toys, beds, chairs For all age groups and table for each child. Breakfast, snacks, lunch. It will involve how the child faired on each particular day. For all age-groups For all age-groups

Fun, activities, games and crafts.

Toys, birthday celebration bicycle riding swimming singing games. Drawing and colouring

For all age groups 6 years and up 6 years and up 5 years and above. 5 years and above. For all age-groups 5 years and above.

Transportation

To and from homes To and from their schools

Homework assistance

For children who attend child 5 years and above care before and after school.

Potty training. Diapers changing and baby washing Bible study and Quaran study Bible and Quaran stories, singing, study of good and simple living studies.

Toddler care(2years-4 years) Infant care (8 months- 36 months) 5 years and above

Two annual field trips

To the museum, national 5 years and above. parks, children playgrounds, snacks companies like house of manji.

1.6 JUSTIFICATION OF OPPORTUNITY Some of the factors that inspired me to start this business in the region are: Large increase over the last twenty years in the numbers of employed mother with young children has more than doubled the number of young children in non-parental care. Thus accessible, affordable and quality child care benefits the social and financial needs of parents and educational and development needs of the children. My business locality is surrounded by rich families who have no problem spending some of their income on child care. The child care is also needed since more than 12 million childen under the age of six receive some type of regular child care or early education from someone other than a parent. There is also a need of child care to the children since 90% of children's brain growth takes place before they enter kindergarten. Quality preschool improves the ability of the children to do well in school. Unavailability of child care in that locality has created a need for one. 1.7 INDUSTRY The business will be a service industry that comprises establishments primarily engaged in providing day care of infants or children. These establishments generally care for preschool children, but may care for older children when they are not in school and may also offer pre -kindergarten educational programs The industry is an inspiration to me because of the following reasons: Personal considerations

I have passion for helping young children and their parents.

I enjoy the independence and responsibility of being my own boss. I have the time, knowledge, skills and motivation to make a small business succeed.
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 I will have the time to learn the skills I need or I will be willing to hire people to provide
the skills you lack.

You are comfortable with the financial risk involved until your business gets established.
Family considerations

The income from a child care business will help support my family. I will be able to save on my own child care costs.
You can be home with and care for your own children.
Help for parents

I will be helping parents support their families by making more child care available. Parents need to know that their children are in a safe, healthy and learning environment.
Community need.

You help local businesses by supporting workers who need child care.
Your small business supports the local economy by making purchases, buying services,
paying taxes and paying salaries.

Your community may be lacking certain types of child care, such as care for infants and
toddlers, school-age children, mildly ill children, or children with special needs. Discounts and credit terms will be offered to potential customers to strengthen the entry strategy to the business. During entry, as a manager I will advertise job vacancies and invite competent individuals to apply. Interviews for those who qualify will be done and training them if necessary. I will acquire business license and permits from the relevant authorities before venturing into the business. To promote the services, I will advertise through the media and bill boards located at strategic points and also visiting various houses to create awareness. I will charge my customers at a relatively lower cost so that they are attracted more. This will assist me to cope up with upcoming competitors and therefore remain in business. For growth enhancement, all the profits realized will be used to assist the business grow. The manager will increase the number of employees in order to increase the level of production to the business growth. The supervisor will be responsible for ensuring that the job is done at all time to improve performance therefore leading to the business growth. I will be carrying out market

research regularly to determine the desires of the customer. This will help in widening the scope of business therefore assisting in its growth. The business' future is maximization of profit through branches across the country putting up facilities for seminars and conferencing by the year 2018. 1.8 GOALS OF THE BUSINESS Short term goals The business organization will help in creation of jobs either directly or indirectly to the people in the area. This will help to improve their standard of living and help them plan their future. The business will ensure that all the children around this region. Long term goals Maximization of profit through branches across the country putting up an institute for crafts men and technicians and other facilities for seminars and conferencing by the year 2018.

CHAPTER 2
2.0 MARKETING PLAN Marketing plan is used in any business enterprise to determine the performance of the business. It involves bringing in the goods and services to the market with an aim of making profits. The Services offered in the business will be of high quality to attract customers. 2.1 CUSTOMER PROFILE This includes residents of Donohlm, Komarock, Kayole and Umoja estates. All these customers will have to be served with high quality services so as they are retained by the enterprise. Majority of families around these region are middle class thus the services offered will be affordable in accordance to their income and in accordance to their children's age. For example Infants will require much care as compared to toddlers thus their fee will be higher. 2.2 MARKET SHARE The survey carried out showed that the market is growing at a sufficient rate to allow another new business to develop. PRECIOUS MOMENTS DAY CARE did a lot of research in the area of proposed business location using various techniques which include: Market survey This is a systematic tool which can be used to reduce risks and improve the probability of business to succeed. It shows that the market growth is favorable. Interviews This was done to know the views of customers. Interviews were conducted with a selected sample of people through face to face interviews, telephones depending on the nature of the question. The area has a high population, good infrastructure hence the number of people who require my is high. It's about 1000 customers who are interested in my products and services.

Table representing market share Segment Total Population Target Population 300 50 100 150 Computation Market share

Individual (total): 1000 Infants Toddlers 150 350

300/1000*100 50/150*100 100/150*100 150/500*100

30% 33.33% 66.67% 30%

6years and above 500

The segment

:represents the type of customers that will be served.

The total population : represents the total population of customers around my business locality. The target population: represents the number of customers I intend to serve. Computation Market share : represents calculation of market share. : represents the percentage of the customers to the total population.

2.3 COMPETITION The competitors can be are classified into two groups:

Direct competitors Indirect competitor

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Direct competitors 1) BY GRACE ACADEMY P.O. Box 849-40100 Donholm-Nairobi. Tel 057-2020801

2) Lequde Day Care and Nursery P.O Box 595-40601 Komarock-Nairobi. Tel 0723616241 Indirect competitors 1) Mtitha House girls Association. 2) Mama Ian's Nunnies. Analysis for competitors competitors Internal strength Internal weakness External business opportunity By Grace Acadamey Large kindergarten High charges No good site Constant flow of skilled laborers.
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External business threats Offers only learning opportunities

Wide experience of market Standard services Well trained staff Lequde Day Care and Nursery Wide experience

for business Deals only with children above 5 years Poor management Prices are high

Access to good learning skills.

and minimal day care services

Get free transport Availability of annual trips

Their services are considered poor.

Mtitha House Girls Association

Large number of customers The house girls offer cheap services

Poor communication network. Their services don't offer trust assuarance.

Strategic geographical position.

Mama Ian's nunnies

Large market

No great impact The nunnies High charges can move around the whole

PRECIOUS MOMENTS DAY CARE

Skilled workers close to my business Offers variety of services. Dealing in a

Means of transport to various destinations Advertisement can be

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Access to current technology Government policies are favorable.

Surplus from government and sponsors to my competitors insec

number of children's agegroups. Good business site

challenging

Access to loans from micro finance ready market. Good network through social media

2.4 ADVERTISING AND PROMOTION Advertising Before the commencement of my business, there will be public awareness of its commencement through the radio, television, posters, gazettes and magazines. Radio This will be done through different channels i.e. Citizen, Kiss FM and KBC radio. Through this advertising every service will be known by the customer. This will be done any particular time of the year e.g. 4-8 times. Each station costs roughly ksh 2000 per week. From the research that I got from the above competitors, I have decided to emulate some of their tactics in this trading profession so that I can fetch some of their customers through high quality and affordable services that are not available in the already existing dealers. Television Due to popularity of citizen, I will use it as the only channel because this type of advert is expensive and will be done maybe twice a year. This will cost ksh 9,500 per advert. Posters Posters will be the mostly and frequently means used because of their cheap advertising cost. They will be displayed at different corners of the streets bearing the name of my business, by
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location, address, telephone, fax number and also email address, services together with their prices and charges , discount offered and brief terms. They will be made as short and brief to the point as possible. Approximately 1000 posters can be used per year at ksh 5 per poster costing a total of ksh 5000. Gazettes This will be done twice per year and it will be through the daily Nation Gazette and the East African Standard. A single cost advertisement costs Ksh 2,500. Public Rallies Advertising through public rallies will be performed after 3months .The estimated cost of advertising will be ksh 8000 per year. Promotion

Price Reductions: Prices will be reduced by 8%, less for the first twenty customers. Soft loans: This will be given to employees as a motivation. This will make them work to their best, thus increasing the production and in turn increase the sales. Discounts: quantity discounts will be rendered to customers. This will indirectly motivate customers to opt for services for my business.

2.5 PRICING STRATEGY Price is a value expressed in monetary. This is the amount of money needed to acquire some combination of a product and services. It affects firm's competitive position and the share of the market. Objectives of pricing

To achieve target return To stabilize prices To improve and maintain our market,

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To cope up with competition To maximize price

The things that are considered to arrive at the price of the commodities and services Cost of product The price of services will go hand in hand with the cost of services encountered. Competitors The price of the service will be 1% less than the normal price i.e. competitors' prices in order to beat up the competitor. Profits and profits margin There will be reasonable prices or charges so as to obtain maximum reasonable profits. This will be a subject to verification every end month. Government policy The price setting up of the services will indirectly include the amount of taxes paid for that services. Total expenses During the price set up all services will partially include amount or expenses incurred e.g. salaries, wages, taxes, rent and electricity. 1) Materials cost 2) The price of the services will be directly proportional to the cost of the services. Demand If the demand of the product .in the market is high, the price will be high and vice versa 3) Supply If the amount of services supplied to the market is high, the price of the service will be low and vice versa.
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4) Uniqueness of the services Any new service produced in my business will be charged reasonably high before my competitors starts producing them. 5) Business promotion cost All expenses incurred during promotion period will be indirectly be inclusive in the market price of the services. PRICING METHODS Season pricing This setting the price of products and services according to seasons Non-Bargaining pricing There will be no bargaining between the buyer and the seller negotiating that is to reach a consensus. Penetration pricing This is the lowering of price below competitors to increase your share in the market. Competition oriented pricing Business set prices after careful consideration of the competitive market structure. The business can provide services at a lower or higher price in line with the competition. Psychological pricing A product price is set at a full number. The price setters feel that such a price has an apparent psychological significance for the customer perspective. 2.5.3 PRICE TABLE: SERVICES Nutritional meals and snacks Fun, activities, games and crafts PRICES 2000 shillings per month. 2000 shillings per month
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Transportation Tutorial or homework assistance. Necessities like diapers, water, pottys, chairs, tables and beds e.t.c Annual field trip Medical fee

1000 per month 1000 shillings per month 2500 per month

800 shillings per trip 2000 shillings per month

2.6 SALES TACTICS Direct Selling Methods

Coming face to face with the potential clients Interrogating the customers enquiries Location the potential customers. Learning the customers attitude towards the services Advertising the services at the counter Giving advisory services to customers services on the stage Meeting to customers objectives.

Indirect Selling Methods

Public announcement of services through the television Public announcement of services through the radios Advertising the business services through the posters Calling for exhibitions selling services at a reasonable cheap

2.7 DISTRIBUTION STRATEGY The distribution channel of my products will include:

Business Representatives: These will be through on-line or through a team of members of the business in line of sales. They will be required to promote sales through negotiating with the customers, since one will not have to pay for all the service.
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Mode of transport

Road Transport This will be used to transport the children to and from their homes. It will also be used to transport older children to and from their schools for those needing child care before and after school. The approximate cost of transport through this means will cost Ksh 800 per month

PROBLEMS ASSOCIATED WITH DISTRIBUTION

Accidents It will be hard to predict an accident on the way which will be a huge loss for the business and the children's families

Poor Infrastructure and Communication Poor road conditions such as pot holes, mud, rough and bumped roads would delay the children to their schools and homes. In communication there are interior places where there is a problem.

Strategies to overcome the challenges: For muddy and untarmarked roads, employ the uses of four wheel drive vehicles. Different vehicles can be used to transport the children to their various destinations. Well experienced drivers will be employed so as to avoid issues like accidents.

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CHAPTER 3
3.0 Organization and management plan

As described earlier in the business description, Precious Moments is a patnership form of business significantly meaning that both parties will be in charge of the business have several duties and responsibilities which are very crucial and needs to special attention . These will be as follows:

Hiring and recruiting and firing of employees:

It will be our duty and responsibility to enroll new employees to assign recruitments and to hire new employees. For one to succeed through our enrollment they must have the desired qualifications and have passed the interior interview which we will be conducting with the help of some of our staff. Recruitment of new members will be through direct interview whereby one will be required to come face to face with the interviewers for examination and also indirect interview whereby applications will be invited through letters a, telephones , or emails . After enrollment one will go further training through a trainer assigned for that duty. The manager will be the chief legal advisor of the any matter arising in the business, should be directed to me whatever the circumstance and my decision will be final

I will be chief organizer of the staff members, duties and responsibilities

I will be the overall in charge of all business operations in relation to contracts, sales, purchases, installation and maintenance I will be the one to decide on salaries and allowances of m employees I will be entitled to not less than Ksh 45,000 per month from the profits, putting into consideration the business progress.

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ORGANISATION STRUCTURE

Board of Directors

Chief Director

Co-Chief Director

Business Manager

Secretary

Accountant

Child care Teacher

Child care Nurse

Child Attendant

Cook

3.1 BUSINESS MANAGER(S) AND QUALIFICATIONS Qualifications: 1. Diploma or degree holder in managerial skills. 2. Experience of about 3 years in the related skill 3. Age 26-30 years. 4. Computer literate. 5. Good communication skills. 6. Other qualifications will be added advantage. Duties and responsibilities: 1. Will be the co-actor when the directors aren't around. 2. Senior Supervisor. 3. Assisting in recruiting new employees.

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3.2 PERSONEL, NUMBER, QUALIFICATIONS AND DUTIES.

PERSONEL Business manager

NUMBER QUALIFICATION 1 Diploma or degree holder in managerial skills. Experience of about 3years in a related field. Age 2630years. Good communication skills. Computer literate. Diploma in secretarial studies. Computer Literate. Age 21-28years old. Perfect communication skills. Priority given to ladies. At least a certificate from KASNEB. Aged 20-26years old. At least 2years experience. Good communication skills.

DUTIES AND RESPONSIBILITIES My co-actor when am not around. Supervising senior technician. Assisting in recruiting new employees.

Secretary

Receiving phone calls and forwarding to respective personnel. Welcoming clients before meeting senior officers. Signing contracts. Directing clients. Keeping business records. Recording all transactions performed inflows/outflows.

Business accountant

Bus driver.

Aged 22 years and above. Transportation of children to and Posses a commercial from their homes. Will carry out any Driver's Licence with P transportation needed. (Passenger) and S (School bus). Endorsements in a clean driving record. Pass a pre-employment criminal backround check and drug test. A diploma holder in early childhood. Ladies will be highly prioritized At least 2 years experience Helping children who attend other schools with their homeworks.

Child care teacher

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Child's nurse

Degree or Diploma of Higher Education in nursing. At least 2 years experience. Good Communication skills.

Assessing, planing and carrying out ursibg care requirements. Writting clinical records of every child.

Child attendant Cooks

Certificate in early children. Will be carrying out all services Well competent in child care. involving child care. Has a good personality. Certificate in catering. Kitchen responsibilities.

3.3 RECRUITMENTS, TRAINING AND PROMOTION.

Government agencies e.g. ministry of labor and human resources Colleges and Universities Private employment agencies Walk in e.g. to companies / organizations, and request for jobs Patnership source of recruitment

3.3.1 RECRUITMENT PROCESS

Advertising through the newspaper leaflets and posters vacancies Collection of application letters Sorting out the application and selecting those who have met the requirements Posting interview appointment letters to those who have made qualified Sending the regrets to those who did not make meet the requirements Conducting interviews to the applicants Selecting the successors Introducing the new employees to the new members of staff

3.3.2 TRAINING Methods of Training

Indoor Seminars This is where business employs an expert to train the workers on different skill son working

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On the job Method The business will employ workers who will be trained as they do their work; they gain knowledge and skills as they continue working

Off the job Method This is whereby the trainees are given leave to go and train elsewhere. They can be sent to a college or big companies or take a course

Reading Workers can also gain knowledge through reading journals, magazines, and books which are related to the trade area

3.3.3 ADVANTAGES OF TRAINING There is a high performance of the business There is uniformity of the procedure since every person is well skilled The workers are less supervised Development of manpower There is economy use of materials and equipment since all laborers are well trained on how to use the equipments Enables workers to deal with complex issues 3.4 RENUMERATION AND INCENTIVES N0 1 1 1 2 1 9 1 Staff members Business Manager. Secretary Business Driver Child Care teacher. Child nurse. Child Attendant Cook Total Basic salary 30000 20000 5000 15000*2 15000 7000*9 5000 168000
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allowances Total per month 10000 5000 3000 5000*2 3000 3000*9 2000 60000 40000 25000 8000 20000*2 18000 10000*9 7000 228000

Total per year 480000 300000 96000 240000*2 216000 120000*9 84000 2736000

LEGAL ASPECTS 3.5 LICENSES PERMITS AND BY LAWS License permits and by laws are the legal documents which a business must abide with. They are issued by the government officers to the business; it's a basis requirement for any business to operate LICENSE The business will be registered with the register of companies, whose department falls under the attorney general. BY LAWS These are rules and regulations set by the local authority concerning business enterprises. The business will ensure reviewing of license to prevent the disruption by the local authority High safety standards will be maintained.

LICENCE Business license Electrical license

CONTACTS Nairobi city Council P.O Box 30075 Nairobi Ministry of energy Nairobi P.O Box 30582 Nairobi. Town council telephone 020310112 www.attorneygeneral.co.ke

AMOUNT PAID (ksh) 5,000 1,500

Contract license Certificate of registration Total cost

1,500 1,800

9800

3.6 SUPPORT SERVICES Names of services transport Water and sewerage Health/medical Electricity Postal Cost per month Ksh) 18,000 3,000 2,500 2,000 200
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Total cost per year (Ksh) 216,000 36,000 30,000 24,000 4,000

Legal/advisory services Banking Mobile/telephone Security Advertisement Stationeries Repair and maintenance Garbage Email services Total cost

2000 500 2,000 4,000 55,000 1,000 2,000

24,000 6000 24,000 48,000 660,000 12,000 24,000

200 200 92,600

2400 2400 1,111,200

Contacts of service providers Transportation Mr. Karanja P.o. Box 166 Nairobi. Telephone: 0714754233 Health / Medical Getrudes Children's Hospital P.o. Box 595-40601 Nairobi Telephone: 0723616241 Email: getrudedistricthospital@gmail.com Electricity Kenya Power and Lighting Company P.o. Box 45 Nairobi tel 0733111322 Water and Sewerage Nairobi Town P.o. Box 432 Telephone: 0788643781

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CHAPTER 4
4.0 OPERATIONAL/PRODUCTION PLAN This is the technical part that takes care of the aspects of the business that results in the final product or services for the customers. Careful planning is required to ensure that the output is acceptable and of good quality that customers will be willing to spend their money on. The partnership will ensure planning and control strategies to ensure that "PRECIOUS MOMENTS" provides the best services to the customers. The business will be opening at 8:00am and closing at 5:00 pm on daily working hours There will be cleaning every morning for 15 minutes before opening time. The secretary will take the position of the reception where all clients and customers pass through. 4.1 PRODUCTION FACILITIES AND CAPACITY These are the materials that will be need in running of the business Materials/ equipment Tables quantity Source name and address 10 JOBAO HARDWARE P.O BOX 261 NAIROBI Chairs 10 NYAGOBEI HARWARE P.O BOX 431 NAIROBI Benches 125 LUHYIA GENERAL WORKS P.O BOX 134 NAIROBI First Aid kit 1 GETRUDES HOSPITAL P.O BOX101 NAIROBI Shelves 2 K.K FURNITURES P.O BOX 42 MADIANY KITCHEN FACILITIES GAS COOKER 700 2 KAMKUNJI SERVICES P.O BOX 42 NAIROBI TUSKYS SUPERMARKET 100 8,000 7000 16,000 900 1,800 5000 5000 1,000 125000 400 4,000 Unit price 800 Total cost 8000

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P.O BOX 134 NAIROBI Computers 3 P.K COMMUNNICATIONS P.O BOX 12 NAIROBI Total 217300 20,000 60,000

4.2 PRODUCTION STRATEGY These are the factors that will be considered so as to increase the profit every year: there will be constant supervision and good teacher to child ratio. This is so that the care giver are capable of watching the children at all times even during sleep. The teachers will be creative and intelligent with early childhood certificates. The enviroment will be safe and healthy. PRECIOUS MOMENTS will happily share its policies on everything from immunization, to hand washing, dealing with sick children and diaper changing. PRECIOUS MOMENTS will be welcoming to parents and their ideas. There will be a focus on learning environment that is stocked with rich variety of age appropriate materials and toys. The daily and weekly schedules will have a lot of activities like art, music, outdoor play and homework doing. PRECIOUS MOMENTS will have high standards and desire to improve. COST OF LABOUR PER MONTH This is the amount of money that the proprietor intends to spend every month on remuneration of the employees.

N0 1 1 1 2

Staff members Business Manager. Secretary Business Driver Child Care teacher.

Basic salary 30000 20000 5000 15000*2

allowances Total per month 10000 5000 3000 5000*2 40000 25000 8000 20000*2

Total per year 480000 300000 96000 240000*2

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1 9 1

Child nurse. Child Attendant Cook Total

15000 7000*9 5000 168000

3000 3000*9 2000 60000

18000 10000*9 7000 228000

216000 120000*9 84000 2736000

OVERHEAD COST These are the expenses that the business will incur on a monthly basis or otherwise, expenses incurred as operational costs, mostly for amenities, energy and other utilities that support the efficient running of the business.

Names of services transport Water and sewerage Health/medical Electricity Postal Legal/advisory services Banking Mobile/telephone Security Advertisement Stationeries Repair and maintenance Garbage Email services Total cost

Cost per month (ksh) 18,000 3,000 2,500 2,000 200 2000

Total cost per year (ksh) 216,000 36,000 30,000 24,000 4,000 24,000

6000 500 2,000 4,000 55,000 1,000 2,000 2400 200 200 92,600 2400 1,111,200 24,000 48,000 660,000 12,000 24,000

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4.4 REGULATIONS AFFECTING OPERATIONS There are government policies that affect and regulate the working of the business. These include; TAXATION LAWS (ACT CAP 470) The proprietor will obtain both the VAT and pin numbers from the Kenya revenue authority to ensure payment of taxes to the government. The employees shall be registered as by the income tax department. HEALTH AND SAFETY (ACT CAP 247) It is a requirement that in all operations public health must be maintained. Every employee is required to obtain a medical certificate from any registered district hospital that he or she is fit for the job. EMPLOYMENT (ACT CAP 226) The following by-laws will be adhered to concerning the welfare of the employees. The Set of rules of contracts and dismissal notices terminating services of the employee. Involvement on remuneration, offs, leaves and favorable working conditions for the employees. Workmen shall be compensated in case of death or incapacity resulting from accidents while performing duties. ENVIRONMENTAL CONSERVATION (ACT CAP 283) The enterprise shall adhere to the rules of NEMA by ensuring that waste materials are disposed properly to avoid pollution of the environment. workers will be advised to observe environmental conservation by not making a lot of noise and disposing of waste. The partnership shall ensure that the enterprise meets all the legal requirements to avoid interruption and disturbances during operations.

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CHAPTER 5
5.0 FINANCIAL PLAN This section outlines the various expenses to be incurred, expected income from various sources and how it will be spent. 5.1 Pre-operational cost These are costs incurred before the business comes into operation. These will include various material costs and equipment as well as legal documents to ensure smooth running of the business. Items Tables Chairs Benches First Aid kit Shelves Kitchen Facilities Gas Cooker Computers Electricity Insurance Internet services installation 12000 Water installation Telephone installation Business registration Total 5,000 5,000 3,000 250,300 Cost (ksh) 8000 4,000 125000 5000 1,800 7000 16,000 60,000 2,000 8,000

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5.2Estimation of Working capital This is the total amount required to start an enterprise and financing for all the expenses Working capital= current assets- current liabilities Items Cash at bank Cash in hand Creditors Short term loan Debtors Working capital Amount (kshs) 150000 50000 450000 800000 200000 1,425,000

5.3 CASH FLOW PROJECTION FOR MEDIQUIP SYSTEM SERVICES FROM APRIL 2015 TO MARCH 2016
cashinflow april may june july august september october november december january february march total beginningbalance 59500 74800 96000 124600 163600 206900 253800 305200 359600 418600 484300 2546900 cashsales 180000 185000 190000 200000 210000 215000 220000 225000 230000 235000 240000 245000 2575000 debtors 9000 10000 11000 11500 12000 12500 13000 13500 14000 14500 15000 15500 151500 cashatbank 50000 50000 total inflow 239000 254500 275800 307500 346600 391100 439900 492300 549200 609100 673600 744800 5323400 cashoutflow cashpurchases 90000 94000 95000 96000 97000 98000 99000 100000 101000 10200 103000 104000 1179000 creditors 3000 3000 3100 3100 3200 3100 3100 3500 3500 3400 3400 35400 rent 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 30000 wagesandsalaries 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 600000 allowances 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000 promotions 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000 telephoneandpostage1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400 electricity 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000 water 300 300 300 300 300 300 300 300 300 300 300 300 3600 advertisement 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000 loanrepayment interest onloan licenseandpermits 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 30000 transport 10000 10000 9000 11000 10000 10000 11000 11000 12000 12000 10000 11000 127000 insuarance 4000 4000 mislleneous 1000 1200 1300 1300 1400 1500 1500 1500 1600 1500 1400 1400 16600 total cashoutflow 176500 179700 179800 182900 183000 184200 186100 187100 189600 190500 189300 191300 2220000 net 59500 74800 96000 124600 163600 206900 253800 305200 359600 418600 484300 725500 3272400

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5.4 PROFORMA BALANCE SHEET OF PRECIOUS MOMENTS DAY CARE AT ENDING 2015, 2016 AND 2017 Item Current assets Cash in bank Cash in hand Debtors Stock Sub total Current liabilities Creditors Sub total Long term liabilities Bank loan Owner equity Net profit Sub total Total liabilities 135840 608470 699160 1234155 2090710 271680 392120 759260 1391220 2297000 271680 582820 795300 1405300 2638500 510000 1346400 616000 1634000 650000 1784000 100000 585860 68000 1274000 1987680 170000 628000 75000 1300000 2168000 200000 750000 90000 1450000 24900000 1st year 2nd year 3rd year

5.5 PRO-FORMA STATEMENT FOR PRECIOUS MOMENTS DAY CARE AT YEAR ENDING 2016, 2017, 2018 Item Income Total income Expenses Wages and salaries Rent Water 576000 70500 10950 684000 70000 12000 744000 108000 14000
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1st year

2nd year

3rd year

8164400

2598000

2690000

Telephone Electricity Advertising Stationery Transport Depreciation Loan payment Repair and maintenance Insurance Legal expenses Total expenses Net profit before tax Provision for tax (15%) Net profit after tax

41850 40400 22500 16200 5800 9000 135840 12000

45000 42000 26000 18200 62000 18000 217680 14500

48000 4500 30000 20000 70000 30000 217680 18900

48000 10000 1051240 720360 21200 699,160

68000 19000 1316380 775260 16000 759260

83000 21000 1449580 810000 14700 795300

5.6 Break even analysis Calculation of break-even points Break-even point is the level of operation at which the business neither sustains a loss of makes of profit. A profit margin is expected by the business if production is above this level. It is the point at which the business will only able to meet variable costs and fixed costs only. Break-even point measures the intensity of marginal profit as a percentage of sales also known as marginal profit ratios (mpr) it is calculated as Break-even point (BEP) = fixed costs * sales Sales - variable cost

The greater the volume of sales from the break-even points the more the margin of safety.

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Break-even point for the first year ending 4TH JANUARY 2016 Item Fixed costs Furniture and fittings Computers Insurance Licenses Total fixed costs Variable costs Advertising Costs of services(labor) Telephone Electricity Water General expenses (transport) Total variable cost BEP= 382500* 4721487 4721487-1032385 =489,541.57 5.7 Calculation of profitability ratios Gross profit ratios This expresses gross profit as a percentage of sales. It is calculated for the first three years of operation. Gross profit is the difference between revenue generated from services and the cost of the services provided. It is calculated as follows; Gross profit ratio (GPR) = gross profit * 100 Services =2478887*100 4721487 =52.5%
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Amount

184170 98000 56000 14500 382500

46260 87200 12305 16570 4800 81250 1032385

The calculations above depicts that the market for services offered by the business is high and prosperous. This creates a bigger chance for the business to capture a larger market share by improving on services rendered further and offering the best prices for the commodities sold. It indicates the possibility of a stable market share. Net profit ratio Net profit ratio is the difference between the gross profit and the expenses incurred. Net profit ratio shows the profit generated by sales and it is calculated as below Net profit ratio= profit before interest and tax*100 Services =922102*100 4721487 =19.53% 5.8 Desired financing This is the capital required to start and keep the business operational for some time. Item Pre-operational costs 4753529.75 Working capital 5846470.25

Total desired financing ksh 10,600,000

5.9 Proposed capitalization Bank loan Owner's equity Contributions 7500000 1300000 1800000

TOTAL INVESTMENT ksh 10,600,000

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APPENDIX A: FORMULAS 1. Working capital= current assets- current liabilities 2. Break-even point (BEP) = fixed costs * sales Sales - variable cost 3. Gross profit ratio (GPR) = gross profit * 100 Services 4. Net profit ratio= profit before interest and tax*100 Services

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