BUSINESS PLAN

NAME OF THE BUSINESS: SHALICIAH HOTEL SATISFACTION

CONTACTS: P.O BOX 224,

NAKURU- ELDORET HIGHWAY,

TEL: 0795 051 034

emilyshally19@gmail.com

PRESENTED BY: EMILY M. SHALLY

INDEX NO: 2021150911

COURSE CODE: 1802

PRESENTED TO: KENYA NATIONAL EXAMANATIONS

COUNCIL

INSTITUITION: THE NYERI NATIONAL POLYTECHNIC

SUPERVISOR: MADAM DARLEN

SERIES: JULY, 2020

DECLARATION
I, Emily Shally hereby declare that this work has never been presented to the Kenya National
Examination council by anybody else in my level of examination for the award of any certificate.
DEDICATION

I would like to dedicate this business plan to my family Mr. and Mrs. Mbwabi, my brothers and
sisters for the financial support all the way through my studies. I also dedicate it to my
classmate who have assisted me with information of writing this document. Lastly I want to
dedicate this document to my supervisor Madam Darlen for his guidance all through my
compiling of this business plan.
ACKNOWLEDGEMENT
I would like to acknowledgement the support given by my parents both morally and financially
since the journey of my education and through my course. God bless you.

NAME OF STUDENT EMILY SHALLY MBWABI

INDEX NO: 2021150911

SIGN__________________________DATE___________________________

NAME OF SUPERVISOR MADAM DARLEN

SIGN__________________________DATE_________________________

TABLE OF CONTENTS
DECLARATION………………………………………………………………………………………………………………………….……… ii

DEDICAITON…………………………………………………………………………………………………………………………………… iii

ACKNOWLEDGEMENT……………………………………………….………………………………………………………….………... iv

EXECUTIVE SUMMARY………………………………………………………………...……………………….…………………………. V

Chapter One

1.1 BUSINESS DESCRIPTION..............................................................................................................8

1.2 THE BUSINESS NAME..................................................................................................................8
1.3 BUSINESS LOCATION...................................................................................................................8
1.4 FORM OF OWNERSHIP................................................................................................................9
1.5 TYPE OF BUSINESS.......................................................................................................................9
1.6 PRODUCTS AND SERVICES..........................................................................................................9
1.7 JUSTIFACATION OF OPPORTUNIY...............................................................................................9
1.8 INDUSTRY..................................................................................................................................10
1.9 GOALS OF THE BUSINESS..........................................................................................................10
1.10 ENTRY AND GROWTH...............................................................................................................10
Chapter Two

2 MARKETING PLAN.............................................................................................................................11
2.1 POTENTIAL CUSTOMERS...........................................................................................................11
2.2 MARKET SHARE.........................................................................................................................12
2.3 COMPETITION...........................................................................................................................13
2.4 METHOD OF PROMOTION AND ADVERTISEMENT...................................................................14
2.5 PRICING STRATEGY....................................................................................................................15
2.6 SALES TACTICS...........................................................................................................................16
2.7 DISTRIBUTION STRATEGY.........................................................................................................16
3 ORGANIZATION & MANAGERIAL PLAN............................................................................................17
Chapter Three

3.1 MANAGEMENT TEAM...............................................................................................................17

3.2 BUSINESS MANAGER.................................................................................................................17
3.3 OTHER PERSONNEL...................................................................................................................18
3.3.1 CASHIER.............................................................................................................................18
3.3.2 CHEF...................................................................................................................................18
3.3.3 WAITERS/ WAITRESSES.....................................................................................................18
3.3.4 STOREKEEPER....................................................................................................................19
3.3.5 MANAGEMENT STRUCTURE..............................................................................................20
3.4 RECRUITMENT, TRAINING AND PROMOTION..........................................................................21
3.4.1 RECRUITMENT...................................................................................................................21
3.4.2 TRAINING...........................................................................................................................21
3.4.3 PROMOTION......................................................................................................................22
3.4.4 REMUNERATION AND INCENTIVE.....................................................................................22
3.5 LICENSES, PERMITS AND BY-LAWS...........................................................................................23
3.5.1 BY LAWS............................................................................................................................23
3.6 EXTERNAL SUPPORT SERVICES..................................................................................................25
3.6.1 BANKING SERVICES...........................................................................................................25
3.6.2 LEGAL SERVICES.................................................................................................................25
Chapter Four

4 PRODUCTION AND OPERATION PLAN..............................................................................................26

4.1 PRODUCTION FACILITIES AND CAPACITIES...............................................................................27
4.1.0 PRODUCTION FACILITY......................................................................................................27
4.1.1 MATERIALS FOR PRODUCTION.........................................................................................28
4.1.2 UTILITY FOR PRODUCTION................................................................................................28
4.2 PRODUCTION STRATEGY...........................................................................................................28
4.2.0 PRODUCTION CONTROL....................................................................................................28
4.2.1 QUALITY CONTROL............................................................................................................28
4.2.2 LABOUR CONTROL AND UTILIZATION...............................................................................29
4.2.3 TIME CONTROL AND WORKING SCHEDULE......................................................................29
4.2.4 PRODUCTION COST...........................................................................................................30
 4.2.5 PURCHASING POLICY.........................................................................................................31
4.2.6 INVENTORY CONTROL.......................................................................................................31
4.2.7 PRODUCTION PROCESS.....................................................................................................31
4.3 PRODUCTION LAYOUT AREA.....................................................................................................33
4.3.0 FACTORS AFFECTING THE PRODUCTION PROCCESS.........................................................33
4.4 REGULATION AFFECTING OPERATIONS....................................................................................33
4.4.0 HEALTH REGULATION........................................................................................................34
4.4.1 SAFETY REGULATIONS.......................................................................................................34
4.4.2 ENVIROMENTAL REGULATION..........................................................................................34
4.4.3 LICENSES AND PERMITS REQUIRED..................................................................................35
4.4.4 FACTORY ACT.....................................................................................................................35
Chapter Five

5 FINANCIAL PLAN...............................................................................................................................35
5.1 BOOKS OF ACCOUNTS...............................................................................................................36
5.2 PRE-OPERATIONAL COSTS.........................................................................................................36
5.3 ESTIMATION OF WORKING CONTROL......................................................................................37
5.4 PROFOMER INCOME STATEMENT ON YEARLY BASIS FOR THE YEAR 2021, 2022,2023...........38
5.5 SHALICIAH HOTEL PROJECTED CASH FLOW STATEMENT FOR YEAR 31 ST DEC 2021,2022,2023
40
5.6 PROFORMA BALANCE SHEET FOR THE FIRST YEAR..................................................................41
5.6.1 BALANCE SHEET FOR YEAR 1.............................................................................................42
5.6.2 BALANCE SHEET FOR YEAR 2.............................................................................................43
5.6.3 BALANCE SHEET FOR YEAR 3.............................................................................................44
5.7 BREAK EVEN ANALYSIS..............................................................................................................45
5.8 TOTAL CONTRIBUTION MARGIN RATIO....................................................................................46
5.9 DESIRED FINANCING.................................................................................................................47
5.10 PROPOSED CAPITALIZATION.....................................................................................................47
5.11 PROFITABILITY RATIO................................................................................................................48
Appendix……………………………………………………………………………………………………………………………………………….48
 CHAPTER ONE

1 EXECUTIVE SUMMARY

1.1 BUSINESS DESCRIPTION

The proposed business will be located along Nakuru- Eldoret Highway. Basically, the business
intends to offer all kind of services to people around the town i.e. different variety of foods,
drinks and accommodation. The entrepreneur preferred to start this business because of good
infrastructure, gap in the market and security. The form of ownership is sole proprietorship.

1.2 THE BUSINESS NAME

Since the business is a sole proprietorship, the name of the business will be Shaliciah Hotel.
Summarily, I am a person of good character with high level of professionalism and I believe the
name will give the business my identity.

1.3 BUSINESS LOCATION

The business will be located at Nakuru- Eldoret Highway. The road is a 180km stretch located
opposite Njoro Street. The area is favorable for food and beverage services due to the high
traffic of both private and public vehicles.
 i. Target group: The high population of clients will be the users of the always busy Nakuru-
Eldoret Highway.
ii. Infrastructure: The highway and feeder roads are well constructed making the location
easily accessible by road.
iii. Security: The are several police posts and police check up points around the area thus
providing adequate security to the establishment.

1.4 FORM OF OWNERSHIP

The business will be a sole proprietorship. Being the manager, I will be entitled to all business
benefits and losses in the event they occur and will be the sole decision maker.

1.5 TYPE OF BUSINESS

The business will be dealing with food services and accommodation devoid of middle men and
brokers. The enterprise will get its products from surrounding businesses in order to keep the
running cost low.

1.6 PRODUCTS AND SERVICES

The business will be offering different kind of products and services to the customers. These
products are accommodation services, food and beverages. The hotel will aim to expand from
sole proprietorship to franchises located around the country.

1.7 JUSTIFACATION OF OPPORTUNIY

There are no many hotels in the area and customers will get my services as they visit and go
around their business in the locality. There is adequate security and also a high traffic of
travelers which will keep the business afloat. In my estimation, the establishment will require
extra hands thus providing employment opportunities to local youths.
1.8 INDUSTRY
The intended business will operate under food and beverages. Other services will include
Sauna, steam bath, swimming pool, gym and accommodation. The Hotel will run 24hours due
to high demand from the travelers.

1.9 GOALS OF THE BUSINESS

The business will have both the long term and short term goals in the course of running the
establishment.

SHORT TERM GOALS

i. To create employment
ii. To make profit
iii. Provide high quality services
iv. To meet customers’ needs

LONG TERM GOALS

i. To expand the business by offering more services
ii. Establishing a website to help market the business.

1.10 ENTRY AND GROWTH

To make the business successful, our core objective will be to offer high quality products and
services at an affordable price. This will help us attract and maintain more customers.
Advertising will also be key part of our market strategy as we try to sell the business to new and
potential customers.
 CHAPTER TWO

2 MARKETING PLAN
The market set out to analyze plan and implement available marketing control plan. Aggressive
advertising and sales promotion campaign using simple methods like distribution of brochures
and personal selling will be used. It will also involve offering quality services to satisfy customer
needs and this will help the business attract more customers and penetrate the market.

2.1 POTENTIAL CUSTOMERS

The proposed business will target potential customers within the town and also surrounding
towns. The target customers will include;

I. Individual customers

These are people working within the town and would desire to have breakfast as many of them
wake up early to report at work in time thus lacking enough time to prepare breakfast at their
homes.

II. Business people

These are men and women who have businesses within the town and would need to use the
facilities at the hotel when they hold seminars and workshops.

III. Travellers

The hotel will seek to provide accommodation to persons who are traveling using the Nakuru-
Eldoret Highway and are in need of a place to rest or spend the night.

IV. Youths

The business will provide entertainment especially on weekends and holidays mainly targeting
the youth. They like spending night outs dancing and watching international football matches.

2.2 MARKET SHARE

The business aim at capturing 40% of customers in the market by doing better than competitors
and attracting more customers. The business will achieve this by use of new technology,
marketing skills and by providing quality services. A research carried out showed that already
existing hotels could not cater for the large number of people in the town. Existing hotels are
located away from the town center thus giving us a market advantage with a projected market
share of 45% compared to the percentage of other competitors. i.e. Home Park centers 40%
Soma hotel 35% Kikwetu Foods 20% and Ken chiq 15%. The consumers make up to
approximately 75% of the market population thus giving Shaliciah hotel a great competitive
advantage from the startup which if carefully monitored and with quality management can
result in a larger market volume and growth in the financial atmosphere.
 Market Share

Home Park Soma Hotel Kikwetu Foods Ken Chic

2.3 COMPETITION
The business has big threats to its success especially at the initial stage. My competitors include
both direct and indirect competitors. Direct competitors are those dealing with the same
products and services that we plan to provide while indirect competitors are those dealing with
different products that are meant to complement our intended products. To be able to
compete favorably, we have decided to carryout research regarding our competitors with an
aim of identifying their strength and weaknesses and it is as follows;

i. Home Park Centre

Strength
- It has large compound
- It is located strategically within the town thus easily accessible.

Weakness

- It charges high prices on its products thus all customers can’t afford.
- Security is a concern around their establishment

ii. Soma Hotel

Strength
 - Its staff are well trained on how to treat customers.

Weakness

- Offering stale food.

- No parking

iii. Kikwetu Foods

Strength
- Best in traditional meals.
- Car wash services for their customer.

Weakness

- It is small thus encouraging congestion.

iv. Kenchic
Strength
- Best in fried chicken.
Weakness
- It does not have much products to offer
- Lacks parking space

2.4 METHOD OF PROMOTION AND ADVERTISEMENT

As the business penetrates the market, product prices will be reduced slightly to attract
customers. This will be reviewed upwards as more customers learn about our services. The
proprietor will seek to use local advertising tools as a cheap and effective form of
advertisement. There will be promotion that will run for three weeks from the date of
commencement. Free products will be on offer depending on the time of service. i.e. breakfast
will be accompanied with free fruit for the customer while lunch will be accompanied by a free
glass of juice and in the evenings coffee will be free whenever a snack is ordered and vice versa.
A dinner for two will be at a discounted rate. This will also help create awareness through
customers who have received discounts at the hotel.

The following approaches will be used to advertise the business.

Posters

Colorful posters will be placed all over the town and beyond town areas where they can be
easily seen. They will show the new business name, location, product sold, services offered to
the customers, working hours of the business.

Hand bills

These are small printed papers which are given to individuals describing the product and
services offered. Name of the business and location.

Signboard

These signs will be placed along the road informing the travelers of our products and services
and how far ahead the hotel.

Calendars

These will be shared with our early new customers and the surrounding businesses as it is a
relatively cheap method of advertising.

Social Media

It is the cheapest of all forms of advertisement and the most effective tool of reaching diverse
audience and increasing sales and building your brand.

2.5 PRICING STRATEGY

The business will be able to set the prices of products and services by comparing the prices of
every competitor. It will also consider selling products and services at a very fair price and the
competitors to attract and retain more customers. The price will also be determined by
customers’ demand. Services with high demand may have high price than those with lower
demand. The main method of calculating the selling price of my product and services will be
based on the number of customers I receive and the cost of acquiring raw materials from the
market. I do not intend to offer any service or product on credit because some creditors might
not be willing to pay and get away thus creating bad debts.

2.6 SALES TACTICS

There will be a team of sales personnel who will be placed within the hotel premises. Their
work will be to effectively drive sales and look into customers needs. As a way of motivating
them, on top of their salaries, the hotel will offer them commission based on their sales per
day. Training will be offered on each quarter of the year. Buffet methods will be used to serve
customers. This method is very efficient as it is easy for a customer to check on the varieties of
the day. A customer policy will be designed and hanged on the wall to guide relations between
the staff and the customer. It will also outline how our services are carried out in the course of
the business. It also reduces time spent on asking the waiters for the menu. The menu will be
placed near the buffet table quoting the prices of all meals on display. There will also be two
waiters in the dining room who will be assisting the customers in need be basis and ensure that
the room is always organized. There will be two persons to facilitate the services of the meal
and beverages. Payment will be done before having the meals.

2.7 DISTRIBUTION STRATEGY

In the course of our operations, Shaliciah hotel will deal with variety of products to ensure that
we meet our customers needs. These products will be categorized into;

Manufactured goods- these are goods that must be processed for consumption e.g sugar,
cooking oil, wheat flour maize flour sugar, rice, margarine etc.

Raw goods- these are goods that need no processing. The likes of onions, tomatoes and milk
that you can directly from the producer.
The channel of distribution will be as follows;

Manufacturer- they process the raw materials to become ready for consumption e.g. flour,
sugar, rice, and so more sell to distributors or whole sellers and direct consumers.

Wholesalers- they buy goods in large quantities from the wholesalers and sell them in small
quantities to consumers.

Retailers- they get their products from wholesalers and subdivide them into smaller products
that meet the needs of different consumers.

Consumer- they are the one who consumes goods as well as end the distribution chain.

CHAPTER THREE

3 ORGANIZATION & MANAGERIAL PLAN

3.1 MANAGEMENT TEAM

The business will have several personnel. It will be headed by the owner acting as the manager.
Emily Shally will act as both the proprietor and manager. There will be a chef and six other
employees. The chef will have at least a Diploma in Food and Beverage while the rest of the
employees should have at least a Certificate in Catering and Hospitality or a related field.

3.2 BUSINESS MANAGER

By the time the business will be opening, the manager who will also be the business owner will
be required to be maintain high level of professionalism and integrity. The academic
qualifications of the manager will be a Certificate in Food and Beverage. the manager will have
the following roles;

- To conduct interviews for the recruitment of ne staff.

- To schedule activities
- Manage the finances of the hotel
- Assume liability of the business transactions.
- Ensure that employees observe business rules and regulations.
- To make decisions on behalf of the business.

3.3 OTHER PERSONNEL.

3.3.1 CASHIER
The Cashier will be in charge of receiving payments on behalf of the business and keep all the
books of accounts and records for the business. He will deposit money into the business
account at end of shift. The Cashier should have three years working experience in a busy hotel
business. Should be computer literate and have knowledge of accounting package.

3.3.2 CHEF
The chef will be writing and trying out recipes and give instructions to cooks on how to make
special food. The chef will be in charge of the kitchen by maintaining a clean and safe working
environment. The chef should be a holder of at least a Diploma in Food Production with 2 years
of working experience in a busy hotel.

3.3.3 WAITERS/ WAITRESSES

The attendants will tend to the needs of the walk in customers. They will be in charge of taking
orders and ensuring the comfortability of the employees. They should have at least a Certificate
in Food and Beverage.
 3.3.4 STOREKEEPER
The storekeeper will be in charge of the store. She/he will be tasked with inventory
management, ordering and issuance of items. The qualifications for a storekeeper will be
Diploma in store keeping, computer literate and two years working experience.

TABLE

Office holder Qualification and experience Duties and roles

Sales man/lady Certificate in sales and marketing. Putting posters, bill boards, issuing
flyers, marketing the business to
Three years working experience of
target customers.
marketing a hotel business
Should forward orders from outside
the hotel.

Cleaners Should at least of form four level of Should ensure that the floor is always
education clean in the kitchen and service area,
widow doors and washrooms all the
time

Security guard From form four level of education trained Maintenance of security during the
under security agencies day and night for the business and its
environment.
Two years’ experience
3.3.5 MANAGEMENT STRUCTURE

MANAGER

CHEF

WAITERS STOREKEEPER CASHIER

 CLEANER WATCHMAN SALES LADY

3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1 RECRUITMENT
The staff will be recruited based on level of education and qualifications and working
experience to attract competent candidates’ colorful advertisement will be put on newspapers
and employment agencies. Later on advertisement will also be posted on the hotel website.
The hiring will take the following process;

- Identifying of the task to be performed. The responsibility of the performer and the
skills required.
- Drafting advertisement in the newspaper to attract applications from potential
candidates who meet the qualifications.
- Shortlisting of candidates.
- Invitation for interviews.

3.4.2 TRAINING
The selected candidates will be trained for two weeks in the hotel. They will be trained
according to their duties and roles and the computer programmers that shall be used. Training
will improve the skills of the employees and keep them up to standard of working in a big hotel
as well as using the equipment’s like dish washer, dough mixer. This will enhance coordination
among employees and also the quality of both product and services.

3.4.3 PROMOTION
In order to motivate the employees and as a matter of appreciation, Shaliciah Hotel will offer
promotion to its employees on merit. If the business meets its sales target and realize an
increase in profit, there will be an increment on salaries as a token of gratitude. As the business
diversifies, there will be need to increase staff thus promoting others. i.e. Opening another
branch will require a manager who will be picked from the existing staff.

3.4.4 REMUNERATION AND INCENTIVE

As a sign of appreciation and motivation, there is always a need for any given business to
recognize the performance of its employees. To maintain the best personnel, a good
remuneration will be considered. The remuneration package will be arrived at after researching
out how our competitors pay their employees. The labour laws governing staff remuneration
will be considered too.

The table below shows the basic salary of every employee each month and allowances.

Job No. of Basic Salary Allowance Medical Total Ksh.

Description Employees
Allowance

Manager 1 18,000 Commission 1000 19000

Chef 1 15,000 Commission 1000 16000

Storekeeper 1 13,000 Commission 500 13500

Waiters 3 9,000 Commission 500 9500

 Security 1 6,000 Commission 500 6500
Guard

Cleaners 1 6,000 Commission 500 6500

The business will provide incentives to the employees to motivate them to work harder in order
to achieve the set business goals. It will offer incentives as follows;

- Adequate salary paid on time

- Free breakfast and other meals to employees.
- Annual staff party
- Transport and other allowances will be given to employees while out for business.
- Overtime rates paid on time.

3.5 LICENSES, PERMITS AND BY-LAWS

The business will abide fully by the set guidelines including acquisition of all licenses that allows
a business to operate in Kenya. Under the public law, all the food handlers should go for
medical examination to determine if they should handle food for members of public. Hence all
members should go to the county health centers for medical checkup after every six months
where they are given health certificate. Therefore, the owner will have to visit the government
agencies and there will be issued the licenses which will allow the business owner to conduct
the business within Nakuru County. This will be authorized by the government of Kenya to start
the business. Other cost implication that will come along with acquiring a license are health
check-up, fire extinguishers, safety installations.

3.5.1 BY LAWS
The business will ensure it follows all the bylaws as enshrined in the constitution and other laws
enacted by the parliament of Kenya.
 a. Income Tax

The tax paid by a business that is operating on a profit earned annually. It is paid directly to the
national revenue authority.

b. Employment Act

It fights for the rights of employees who gets an accident while at work. The act guarantees
compensation also to those who will get ill in the business. The employer must provide health
kits e.g. first aid kit for those who sustain minor injuries in the line of duty.

c. Public health Act

The act ensures that any business set will not pollute the environment and will not affect
surrounding people. It also protects the consumer from contaminated food. This also ensures
good sanitation, clean premises and a healthy working personnel as well as a proper waste
disposal.

Table

Requirements Description Source Fees Paid

1 Government regulations Trade license Ministry of 12500

Trade

2 Insurance NHIF NHIF 3000

3 Local authotity Collection of County 1000

Waste Government

4 Labour laws NSSF Ministry of 2000

Trade
3.6 EXTERNAL SUPPORT SERVICES
Before start of the business, consideration will be placed on strategies that will uplift the
business in case of difficulties.

3.6.1 BANKING SERVICES

Banking services will be provided by Equity Bank of Kenya. All cash earned during the business
days of operation will be banked every day. The same bank will also offer loan services as well
as produce financial statement when required to.

3.6.2 LEGAL SERVICES

Niko George & co. Advocate will be providing the business with legal services and debt
collection. Their services will be needed in all matters concerning the business e.g. when
borrowing loans, when claiming from insurance and when signing a contract between Shaliciah
Hotel and other parties.
 CHAPTER FOUR

4 PRODUCTION AND OPERATION PLAN

The business will use the modern and most appropriate technology in order to cope with the
changing trends in the industry and provide quality and faster services to customers. The
equipment and mechanization will be adequately taken care of since the spare parts are
available in the local market thus making it easier to repair in case of any breakdown. The
machines and equipments to be used by Shaliciah Hotel will be locally available to maintain and
the hotel will outsource the repair services from a reputable firm. The provision firm to provide
these services will be Renner limited which locate along Moi Avenue in Nairobi. This is because
this firm has been in the business for long and offers good maintenance repair services.
 IV.1 PRODUCTION FACILITIES AND CAPACITIES

Table

Item Quantity Cost Total

Furniture 148 1000 148,000

Office chairs 11 2000 22,000

Partitioning & refurbishment 3 20,000 60,000

Computers with ups 3 20,000 60,000

Utensils & cookers 100 1,000 100,000

Inventory 2 20,000 40,000

Internet & net working 1 20,000 20,000

Business vehicle 1 50,000 50,000

Rent 1 40,000 40,000

Contingencies - - -

Total - - 692,000

IV.1.0 PRODUCTION FACILITY

The business will operate on a rented premise. The premise will have one big one big room
which will act as the dining room. Another room will be partitioned and will host the cashier
and the manager. It will have 15 rooms for the lodging purposes. The rent will be Ksh. 1500 per
night. The premise comes with a big ground that can be used as car park.
 IV.1.1 MATERIALS FOR PRODUCTION
As the business expands, there is need to have space for future expansion in order to
accommodate the increasing number of customers and staff as well. We will identify local
suppliers who will supply the hotel with all its requirements for a smooth running.

IV.1.2 UTILITY FOR PRODUCTION

These include purchasing of all materials used and all overheads. Nawasco will be the primary
supplier of clean water to the premise and KPLC will provide electricity to the hotel. For
communication purposes, landline telephones will be used and various forms of media will be
used for advertising.

IV.2 PRODUCTION STRATEGY

IV.2.0 PRODUCTION CONTROL

All operations of the business will be controlled by the manager. She will assign duties all
around the premises including promoting and demoting staff. All payments will be received
only by the cashier. In order for the business to remain competitive and still retain its strict
performance standards.

IV.2.1 QUALITY CONTROL

The management will ensure that all products are bought from a well-recognized supplier to
make sure that the goods are of the right quality. The products will go through thorough
inspection to ascertain that it is of the right standards that are spelt out by the Kenya Bureau of
Standards. The health officers will be coming for inspection from time to time to ensure that
the health regulations are followed to the letter. Products will be checked for their expiration
date to ensure customers health is not threatened by our products.
 IV.2.2 LABOUR CONTROL AND UTILIZATION
The hotel will ensure maximum labour and utilization of employees. Employees will be required
to report on time on a regular basis. Employees doing same duties will be put under one area
for ease of supervision. Employment and related benefits will be on merit and adequate
training will be offered on every quarter of the year. Employees will be matched with their skills
to ensure satisfaction and motivation. Salaries will be paid on a monthly basis and will be
getting cash for any overtime done.

IV.2.3 TIME CONTROL AND WORKING SCHEDULE

the business will be operating for 24 hours all the days in a week for lodging and from 8:00am –
12:00pm for catering services. Cleaning will be done before 8:00am throughout the premises.
Employees will go for tea and lunch breaks at different intervals to ensure continuous flow of
the hotel operations. The working shift may be prolonged in the event of unanticipated work
flow.

Summary of Work Schedule

Time Monday- Sunday

7.00am- 8.00am Cleaning the hotel

8.00am- 1:00pm Work plus tea and lunch breaks

2.00pm- 6:00pm Preparation for dinner and entertainment

6:00 pm- 12:00 Work and preparation for clossing

 IV.2.4 PRODUCTION COST
This will include salaries for all employees and dues owed to all our suppliers. The prices will
differ from one season to another especially on holidays. The purchasing will be estimated at a
higher cost than normal.

Summary of the Production Cost

Item Description Material Labour Overhead Total Quantity Total

Cost Cost Cost Cost

Breakfast Sausage 30 25 10 65 250 16500

Bread 40 25 10 75 180 13500

Tea 20 15 10 45 50l 2250

Coffee 25 25 10 60 50l 3000

Eggs 25 15 10 50 150 7500

Milk 30 25 10 65 130l 1950

Meals Beef 180 50 20 250 20kg 5000

Chicken 350 50 20 420 10 6800

Chips 500 50 20 570 70kg 3990

Pizza 500 50 20 570 10 5700

Rice 300 40 30 370 7 2590

Drinks Picana 30 10 15 55 20 1100

Novida 25 15 10 50 20 1000

Soda 20 10 15 45 25 1125
 Beer 60 10 15 80 60 5100

Juices 60 10 15 80 90 7650

Redbull 50 10 15 75 50 3750

IV.2.5 PURCHASING POLICY

Procurement process will be initiated by the storekeeper through requisitions. This will depend
on items that have reached reorder level. All the payments will be done in cash through the
cashier. The products will go through inspection before any payment is made to the supplier
and goods received at the store. The products will come from prequalified suppliers to avoid
quality inconsistencies. Supply will be done monthly for non-perishable goods and weekly for
perishable goods. The cost of transportation will be incurred by the supplier. All the purchasing
records will be maintained by the cashier and the manager will audit the documents for
verification.

IV.2.6 INVENTORY CONTROL

The inventory control will ensure that sufficient products are available to meet the anticipated
demand so as to meet possible shortages. Stock taking will be carried out at end of every
month prior to stock filling. The minimum stock at any given time will be one half more than the
customers demand. Care will be taken to ensure that there is no excess stock at any given time
to reduce the expiry of the materials purchased. The management will set a certain level
depend on the package of each product when goods will need to be replenished.

IV.2.7 PRODUCTION PROCESS

The supplier will be supplying the raw materials. This includes potatoes, vegetable, fruits, milk,
egg, flour, cooking oil, sugar etc. each material will be prepared according to the meal or
product required for example to prepare fruit juice (passion), It has the following process;
  Washing- passion fruits from the market should be washed with clean water before
cutting and ready to blend
 Remove the required juice segment- separate the juice part from the cope
 Place the separated juice seeds to the blender add water and close the blender with a
lid
 Put on the blender and blend the juice
 Finally add sugar to the juice and stir until it mixes.

The production cycle will include;

1. Sourcing Products

The manger will identify appropriate areas where the products are going to be purchased.
Much of the raw materials will be sourced from the horticultural farmers around the area as
their prices will be fair due to low transportation cost.

2. Purchasing Requirements

The management will request potential suppliers to write a quotation quoting prices of the
products they are going to supply.

3. Payment of Suppliers

Payment will be done in cash on basis of delivery after inspection and confirmation that the
products have been delivered by the supplier.

4. Delivery of Products

The suppliers will cater for the transportation cost of the delivered goods.

5. Storage of Goods

The storekeeper will record all products received in the store and forward the documents to
the cashier for payment processing. He will also ensure that perishable goods are stored in the
refrigerator and fragile goods are kept in a safe place.
 IV.3 PRODUCTION LAYOUT AREA
Cashiers Managers
office
Area

Dinning

Car Hall
Kitchen
Park

Staff Store
changing room
Washrooms

IV.3.0 FACTORS AFFECTING THE PRODUCTION PROCCESS

 Skills- production process requires a skilled staff to operate the machine.
 Supplier- when the supplier fails to come on or to supply the required raw materials will
also interrupt with production process.
 Poor mixing of ingredients will result into poor production and these may lower the
profitability.

IV.4 REGULATION AFFECTING OPERATIONS

Before the staffs of operations there are government regulations that the firm will strive to
adhere to. The business will start off the operations after approvals and compliance to legal
requirements. Trade licenses are vital for smooth operations of the business. The business will
be registered by the registrar of the companies. The business ensures that the welfare and
working conditions of the employees’ issues are well addressed. Regulation on wages and
conditions of employment Act CAP 299 the business will comply with the provisions in respect
to remunerations and terms of employment of its employees as stipulated. The proprietor will
adhere to employment regulations by introducing employees to NHIF and NSSF and it will also
be prudent for the proprietor to prepare for any form of taxation by applying for a personal
identification number (PIN) with the Kenya Revenue Authority (KRA)

IV.4.0 HEALTH REGULATION

All members of the staff should go for medical check up to confirm that they are healthy to
perform the work especially those handling food. They should also be vaccinated against
contagious diseases for example tuberculosis and typhoid. Workers should also be physically fit
since this gives the customers confidence with the products and services.

IV.4.1 SAFETY REGULATIONS

The floors should be dry to avoid falling or slipping. There should be no naked electricity wires
to prevent fire and shock. Kitchens should be installed with fire extinguishers in case of fire
accidents. Workers should be in proper fitting clothes and their heads knives should be stored
safely in advance if not in use. An accident increases expenses and therefore is better to
prevent them.

IV.4.2 ENVIROMENTAL REGULATION

Workers should always be clean and in uniform to create a good environment when serving
customers. Sanitation and drainage should be properly built and directed to main hole. These
will prevent air pollution and spread of diseases and pest. Waste should also be disposed in a
proper manner. Example plastic papers should be burnt down. Potted flowers should be kept
on the door ways to bring in fresh air.
 IV.4.3 LICENSES AND PERMITS REQUIRED
The owner of the business will have to comply with a wide range of local and national
government and thus will have to adhere to these rules to avoid closure of the business.
Therefore, license will be issued which will allow the business to conduct the business within
the county.

IV.4.4 FACTORY ACT

The business will have to adhere to factory act which states that all companies under this
industry should have proper equipment which can perform work without causing injuries. The
factory act also states that all companies under the industry should be located in a clean
environment for health purpose. The act also states that the personnel should always wear the
appropriate cloths when conducting their duties, for example the head gears to prevent hair
from falling into food and gloves for chefs to avoid injuries like burns when holding hot pans.

CHAPTER FIVE

5 FINANCIAL PLAN
The financial plan consists of pre-operational and personal experience and a projected cash
flow to enable the business to operate within a meaningful budgetary guideline. The firm has a
realistic projected cash flow in the annual income. The repayment of borrowed funds will be
paid within three years with 10% interest while the cash flow projected shows a surplus during
the year of the loan repayment. A financial plan is a cause of action that the entrepreneur
intends to implement in order to achieve business objectives.
 5.1 BOOKS OF ACCOUNTS
The business will require keeping of accounts to ensure there will be a clear reflection of
business. They will include;

i. CASH BOOKS

They will be used to record all the payments received and the amount spent in the course of
running the business.

ii. JOURNAL

This will be used in the daily entry of items and transactions of the business.

iii. LEDGER

It will be used to indicate the items and materials purchased on important running of activities.

5.2 PRE-OPERATIONAL COSTS

Table

ITEMS AMOUNT (KSH)

Water 7,000

Electricity bill 3,000

Telephone 2,500

Advertising 4,100

Equipment’s & machines 70,540

Materials 45,990
 Furniture 10,000

Licenses & permits 6,500

Miscellaneous expenses 5,000

Total 169,630

5.3 ESTIMATION OF WORKING CONTROL

The initial costs incurred when starting up a business since the money will be used for
purchasing and pre-payment.

Summary of Estimated Working Capital

Table

Items Amounts

Salary 420000

Rent 12000

Water 6450

Insurance 3000

Advertising 3000

Stationary 3500

Legal fees 3000

 Electricity 11950

Total 468900

5.4 PROFOMER INCOME STATEMENT ON YEARLY BASIS FOR THE

YEAR 2021, 2022,2023

Table

Items Year 2021 Year 2022 Year 2023

Ksh Ksh Khs

Purchase 3,188,000 3,390,000 3,460,000

Less closing stock 400,000 300,000 600,000

Cost of goods sold 2,780,000 3,290,000 3.360,000

Operating stock 400,000 3,500,000

Goods available 3,790,000 3,960,000

Gross profit 5,402,000 13,510,000 7,675,000

Expenses

Salaries 420,000 452,000 504,000

 Telephone 11,900 12,000 12,000

Electricity 11,950 11,705 12,050

Transport 27,400 32,100 32,900

Repairs 2,000 4,000 14,000

Advertisement 3,000 5,000 4,000

Water 6,450 6,045 6,070

Miscellaneous 30,500 29,100

Legal fees 3,000 3,000 3,000

Insurance 3,000 3,500

Loan interest 123,996 123,996

Stationary 3,500 1,700

Total 532,700 695,946 746,766

5.5 SHALICIAH HOTEL PROJECTED CASH FLOW STATEMENT FOR

YEAR 31ST DEC 2021,2022,2023

Table
 Jan Feb march April May June July Aug Sep Oct Nov Dec

Balance 15320 53880 395580 40380 45740 56240 62090 60440 571440 62890 73440 73440 620840

Loan 210000 210000

Cash sales 100000 280000 243000 200000 263000 268000 265000 259000 261050 262000 284000 287000 3032550

R/ debtors 2400 6000 6000 5800 6200 3500 3000 1300 3500

Cash flow 366400 301300 302580 305380 309580 317240 324240 322390 325040 322440 341940 360940 3890990

Cash out

Purchases 65700 50000 60000 65000 62700 58000 60000 56000 59000 62000 63500 64500 166800

Salaries 139000 139000 139000 139000 139000 139000 139000 139000 139000 139000 139000 139000 2462990

Transport 20000 20000 25000 23000 24140 20000 25150 26000 28000 25000 25600 27500 48000

Electricity 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48400

Telephone 2880 2740 2740 2500 2500 2500 2500 2500 2500 3000 3000 3000 29880

Water 4000 3000 3000 2500 2500 2500 2500 2500 2500 3000 3000 3000 34000

Advert bill 78000 2500 80500

Insurance 10000 10000 20000

Permits 12000 12000

Rent 40000 40000 80000

Tax 5000 5100 6000 6100 5800 5400 6000 6000 6000 5000 5000 7000 63400

Loan 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 17500 210000
payment

Total 351080 247740 263000 265000 263840 261000 62090 254700 264600 265000 268000 270000 324100
outflow
15320 53580 395580 40380 45740 56240 62090 60440 57440 62690 73440 90940 657880
Balance b/d

5.6 PROFORMA BALANCE SHEET FOR THE FIRST YEAR

5.6.1 BALANCE SHEET FOR YEAR 1

Table

Assets Amount Liabilities Amount

Fixed assets Long term

Machines and 900000 Bank loan 200000

equips
70000
Furniture
970000 Owners’ equity 250000 450000

Short term
Current assets
400000 250000
Stock Relatives/friends
150000
Cash in hand
4049300 12814054
Cash at bank Net profits
4599300

Total assets 5569300 Total liabilities 5569300

 5.6.2 BALANCE SHEET FOR YEAR 2

Table

Assets Amount Liabilities Amount

Fixed assets Long term

Machines and Bank loan 200000

equips

Furniture
Owners’ equity 250000 450000

Short term
Current assets
250000
Stock Relatives/friends
500000
Cash in hand
150000 12814054
Cash at bank Net profits
11894054

12544054 13064054

Total assets 13514054 Total liabilities 13514054

 5.6.3 BALANCE SHEET FOR YEAR 3
Table

Assets Amount Liabilities Amount

Fixed assets Long term

Machines and 1000000 Bank loan 200000

equips
100000
Furniture
1100000 Owners’ equity 250000 450000

Short term
Current assets
600000 250000
Stock Relatives/friends
150000
Cash in hand
5778234 6928234
Cash at bank Net profits
6528234 7178234

Total assets 7628234 Total liabilities 7628234

 5.7 BREAK EVEN ANALYSIS.

Table

Fixed cost Year 2020 Year 2021 Year 2022

Salaries 420000 402000 504000

Legal fees 3000 3000 3000

Insurance 3000 3500 3500

Loan repayment 123996 123996

Variable costs

Telephone 11900 12000 12000

Electricity 11950 11705 12050

Transport 37400 32100 22900

Repairs 2000 4000 141000

Advertisement 3000 5000 4000

Water bill 6450 6045 6070

Miscellaneous 30500 29100 29550

 Stationery 3000 3500 1700

106700 99950 112270

5.8 TOTAL CONTRIBUTION MARGIN RATIO

YEAR 2020

Contribution = sales – variable costs

8190000-100700 = 8083300

8083300
C/S ratio = = 0.986
8190000

426000
Break-even point = = 432, 048.7
0.986

YEAR 2021

Contribution = sales – variable costs

16800000 - 99950 = 16700000

16700050
C/S ratio = = 0.9941
16800000

592496
Break-even point = = 596042.09
0.9941

YEAR 2022
Contribution = sales – variable costs

11035000-112270 = 10922730

10922720
C/S ratio = = 0.989826
11035000

634496
Break-even point = = 641017.71
0.98826

5.9 DESIRED FINANCING

For the proposed business to commence, it will require a total of ksh. 5,484,300 as follows;

Table

Item Amount

Pre-operatonal costs 459000

Working capital 459300

Total desired financing 5484300

5.10 PROPOSED CAPITALIZATION

The table below shows the proposed capitalization of Shaliciah hotel.

Table

Items Amount Remarks

Owners equity 250000 Cash

 Loans 200000 Cash

Grants from friends 250000 Cash

Total capitalization 700000

5.11 PROFITABILITY RATIO

Current ratio = Current Assets

Current
Liabilities

4.599300
2021= = 23:1
200000

12544054
2022= = 62.7:1
200000

6028234
2023= = 32.7:1
200000
APPENDIX:

Business Location