OL’LESSOS TECHNICAL TRAINING INSTITUTE

BUSINESS PLAN

RESENTED BY : VINCENT MALOVA

INDEX NUMBER :

COURSE CODE :

PAPER NUMBER : 307 B

SUPERVISOR :

PRESENTED TO : THE KENYA NATIONAL EXMANITAION

COUNCIL IN PARTIAL FULFILLMENT FOR THE

AWARD OF DIPLOMA IN LAND SURVEY.

EXAM SERIES : NOVEMBER 2016

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DECLARATION
I declare that this business plan is purely my original work and has never been submitted to any
examination council for any award.

CANDIDATE’S NAME :

DATE : ........................................

SIGNATURE : …………………………..

SUPERVISOR’S NAME

DATE : ………………….............

SIGNATURE : …………………………..

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DEDICATION
I wish to dedicate my sincere gratitude to my lovely sisters ,brothers and my dearest parents
fortheir moral and financial support they gave me.

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ACKNOWLEDGEMENT
My sincere appreciation goes to my supervisor who guided while I was writing these plan

I am also grateful to numerous authors whose source i consulted. I am not able to acknowledge
each one individual as most of their names are not available.

GOD BLESS YOU ALL.

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TABLE OF CONTENTS

DECLARATION.............................................................................................................................................. ii

DEDICATION ............................................................................................................................................... iii

ACKNOWLEDGEMENT ................................................................................................................................ iv

CHAPTER ONE ............................................................................................................................................. 1

Executive summary ..................................................................................................................................... 1

Business description...................................................................................................................................... 1

Organisation and managment plan ................................................................................................................ 1

Operation & Production plan ........................................................................................................................ 3

Financial plan ................................................................................................................................................ 3

CHAPTER TWO .......................................................................................................................................... 4

2.0 Business description............................................................................................................................... 4

2.1 Business name ........................................................................................................................................ 4

2.2 Business location and address ................................................................................................................ 4

2.3 Form of ownership ................................................................................................................................. 6

2.4 Type of business .................................................................................................................................... 6

2.5 Products/Service .................................................................................................................................... 6

2.6 Justification of opportunity ..................................................................................................................... 6

2.7 Industry .................................................................................................................................................. 7

2.7.1 Industry trends .................................................................................................................................... 7

2.7.2 Industry characterisitcs ............................................................................................................... 7

2.7.3 Industry future ............................................................................................................................. 8

2.8 Goals of the business ............................................................................................................................. 8

2.9 Entry and Growthh strategy .................................................................................................................. 8

2.9.1 Entry strategy ............................................................................................................................ 10

2.9.2 Growth strategy ......................................................................................................................... 10

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CHAPTER THREE .................................................................................................................................... 11

3.0 Marketing plan ..................................................................................................................................... 11

3.1 Customers ............................................................................................................................................ 11

3.1.1 Characteristics of potential customeArs.................................................................................... 11

3.1.2 Factors influencing customers .................................................................................................. 11

3.2 Market share......................................................................................................................................... 12

3.3 Competitors .......................................................................................................................................... 13

3.3.1 Operating methods .................................................................................................................... 13

3.1.2 Location .................................................................................................................................... 13

3.3.3 Profitability of the competitors ................................................................................................. 13

3.3.4 Premises ..................................................................................................................................... 14

3.4 Methods of promotion and advertising ............................................................................................... 14

3.4.1 Product development................................................................................................................. 14

3.5 Pricing strategy .................................................................................................................................... 15

3.6.0 Pricing tactics ............................................................................................................................ 15

3.7.0 Distribution strategy.................................................................................................................. 15

CHAPTER FOUR ....................................................................................................................................... 17

4.0 Organizatin and mangemnt plan .......................................................................................................... 17

4.1 Organization structure and operations ................................................................................................. 17

4.2.0 Personnel and duties.................................................................................................................. 17

4.2.1. General Manager ...................................................................................................................... 17

4.2.2 Assistant manager ..................................................................................................................... 18

4.2.3 Sales and marketing manager ................................................................................................... 18

4.2.4 Accounts clerk .......................................................................................................................... 19

4.2.5 Production Manager .................................................................................................................. 19

4.3 Recruitment, employement and training .............................................................................................. 21

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4.4 Renumeration and incentives ............................................................................................................... 21

4.5 Legal requirements............................................................................................................................... 22

4.6 Support services ................................................................................................................................... 22

4.6.1 Postal and Telecommunication ................................................................................................. 23

4.6.1 Insurance ................................................................................................................................... 23

4.6.3 Legal assitance or servies .......................................................................................................... 23

CHAPTER FIVE ......................................................................................................................................... 24

5.0 OPERATION PLAN ........................................................................................................................... 24

5.1 Production facilities adn capacity ........................................................................................................ 24

5.2 Production/operaional strategy ........................................................................................................... 25

5.3 Production/operation plan .................................................................................................................... 25

5.4 Production costing ............................................................................................................................... 25

5.4.1 Labour costing .......................................................................................................................... 25

5.4.2 Overheads cost .......................................................................................................................... 26

5.5 Regulationss affecting operations ........................................................................................................ 27

5.5.1 Health Regulations .................................................................................................................... 27

5.5.2 Business regulations.................................................................................................................. 27

CHAPTER SIX ........................................................................................................................................... 28

6.0 Financial plan ....................................................................................................................................... 28

6.1 Pre-operational cost ............................................................................................................................. 28

6.6. Calculating of break-even points ........................................................................................................ 30

6.7 calculating of profitability ratio ........................................................................................................... 33

6.8 Desired financing ................................................................................................................................. 33

6.9 Pmalobaosed capitalization .................................................................................................................. 33

CHAPTER SEVEN ...................................................................................................................................... 34

7.0 Potential risks ....................................................................................................................................... 34

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APPENDIX 1............................................................................................................................................. 35

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CHAPTER ONE

Executive summary

MALOBA DAIRY FARM will be a sole pmalobarietorship kind of business. It will be

situated within Mumias trading centre. The business targets a market from Mumias

traders, schools and Mumias town. The personnel to be invoved will be eight employees

comprising of the manger, assistant manager, accounts clerk, secretrary and others.

Business description

The pmalobaosed business will belong to dairy farming industry. It will be offering fresh

milk and other products to its customers. It will be located 2 km along MUMIAS-

BUNGOMA highway.

marketing plan

The potential customes are domestic customers living around that community and

Mumias town. The customers live within 20 kms from the farm. The business will ensure

high quality milk, affordable price, good communication and quality service. The major

competitors are Bungoma dairy farms. They are located within the distance of 10km, the

busines will be advertised through posters, Sayari radio and signboards. I am intending to

cope withe my competitors by ensuring services offered to users is of hig quality, milk

production will be improved and readily available and also ensure affordable prices.

Organisation and managment plan

The key personnel of the pmalobaosed business are the general manage (owner) who will

manage all activities in the farm and ensure that are run smoothly. Following this, her

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 assistant manager; will identify the customers and where they are located as well as

ensure products reach this customers on time and in good condition.

Accountants clerk;

will be keeping records and control finance.

Security men:

The key personnel who will provide security in the firm

Herdsmen and Milkmen:

Will feed the cows and operate on the shamba, also cleans cows and ensure envronment

is clean.

Finally, the driver, will be packing and transproting milk together with production manager to

the idefie

Sketch schowing organizational structure

General Manager (owner)

Assistant (owner)

Secretary

Sales & marketing Manager Production Accounts

Manager Clerk

Security men Driver Herds men Milk men

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Operation & Production plan

The business will begin with buying the five dairy cows from one of the agricultural

farm. The four-hectares, I will acquire from my parents part of the land will be cultivated

for planting the Napier grass. The other portion will be established with buildings i.e. cow

sheds, administrative offices and remaining is grazing field. The cows will be reared for

six months when artificial insemination will be introduced which by November 2008 will

have calved down some facilities to be occured including milking cans buckets knapsack

sprayer, farm tools e.g. Jembe. They will be milked twice a day in order to serve

customers effectively. The business both to retailers and wholesalers.

Financial plan

The amount needed as start up capital ksh 900,000, the purpose is buying the the five

dairy cows, salary for employees, facilities adn tools, rawa materials e.g. dairy feeds and

other expenses liek transport cost, telephone i.e. overheads cost. The above amount will

be obtained from personal savings, relatives and parents, expected profit is 45% of total

investment.

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CHAPTER TWO

2.0 Business description

The business will engage in milk production and i will be the owner of the business i.e. sole

pmalobarietorship business. The business will be located within Namgoi trading centre in nandi

county and will be registered under the dairy farming industry. The business will be a start up

withe sh. 900,000 as a starting capital.

2.1 Business name

The business will be registered under the following name ‘MALOBA Dairy Farm’ the name was

derived from the owner’s name. The name because of it’s uniquenes, is easy pronounciation or

easy to read as well it is an attractive figures.

2.2 Business location and address

The business will be located along Bungoma - mumias Road 2kms from the trading center at

Mumias location Nandi county. I chose this location because of the accessibility of good

communication networks.

The business will be contacted through the following address:-

MALOBA DIARY FARM

P.O. BOX 399

MUMIAS

TEL: NO0714695514

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The reason of choosing this loction also is because of good infrustructure and customers

availability.

BUSINESS LOCATION MAP.

Petrol station

Maloba Dairy Farm

Munias town

BUNGOMA – MUMIAS HIGHWAY

Schools Bus stage

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2.3 Form of ownership

The form of ownership will be a start-up sole pmalobarietorship type of busines, after i pursue

my Diploma course in Land survey in november , 2016. I intend to start-up in Jan 2016

Start-up business skills will determine efforts towards the business success.

2.4 Type of business

The pmalobaosed business is a sole pmalobarietorship where I will be the owner. the business.

And later it will form a company.

2.5 Products/Service

The business will specialize mostly on production of fresh milk for the first three years then

other products will be introduced e.g. cooking fats, mal-milk.

Currently the products ae not readily available but it is intended to produce products which will

be of high quality and customers choice.

2.6 Justification of opportunity

This involves my personnal factor, abilities to come up withe a business idea, gather the

necessary resources and proceed to initiate teh business. I have come up with business ideas

which will raise the standards of living. Also my personal interest to start-up the business will

lead towards the success of my business. As well the good health will facilitate the technical,

entrepreneural and managerial skills, in addition, my personnal experience in like to the business

will help me stabilize business.

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2.7 Industry

The business belongs to Farming Industry and it is found to be a medium size operation, in the

area it provides products in fairly large scale due to the man-power employed and profits are

promising: it increases as time goes. Previous years the industry is increasing making maximum

profit from its products due to increase in population and quality products gives on developing.

2.7.1 Industry trends

The industry is expanding and the owner intends to icrease capital to 1,500,000 from the profit

obtained after the first five years in operation if this industry is well supported adn carefully put

into consideration by parent body it will make a concrete industry. The business history tells that

in the few yeas bakc, there was a dairy farm in that community and it collapsed after a short

operation due to a insecurity, mismanagement, which is currently by now securing in the are,

promising and the business is good venture in.

2.7.2 Industry characterisitcs

The industry has high demand inside and as well outside the district. It is speciafically

characterized by the following.

 Good management will facilitate rapid growth of the business as mismanagment

will lead to down fall of the busines.

 Enough capital will help meet all the business requirments for business to run

well for business to run well.

 Business is situated in an area where it is well accessd by roads and other

communications. As well as the area is rarely prone to natural disasters like

flooding because it is highly drained.

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2.7.3 Industry future

Generally the industry have to expand and establish itself fully. It will be improved where it

demands improvement. It will be recognized and competitive because the population is

rapidly increasing and the business will as well become decentralized so as to serve both

distant and home customers.

Then future looks favouralby for my business.

2.8 Goals of the business

The goals of my business are divided into tow categories, short and logn term goals.

Under long term goals the following shall have been attained at the fifth year of operation.

 Maximize its profit to tune of 100% and capital increased over 1.5 million shilling

 Improve services delivery by purchasing in another business van.

 Business to join on partnership

 Imprve any living standard by venturing in other business

Under short-term goasl I intend to cal for holiday workshop where some officers from

teh distict are to attend e.g. agricultural officer, Nandi District and is goidn to discuss

on agricultur generally in the current century.

 Increase productivity by purchaisng more dairy cows.

 Attractmore customers by offering quality products and affordable prices.

2.9 Entry and Growthh strategy

My business intends to offer quality services to customers, the staff ae offered free training on

how to have good public relations with customers. Tis customers will be retained by offering

them incentives, special discount, credit facilities to few honest. The business is well stable in

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terms of finances. The gathered capital is enough to run teh business. Products will have market

because of its quality as well the environment is favourabvle to the business.

Above statemen is represented below:-

Area Strength Weakness Opportunities Threads

Marketing -Population favour- -In -Increase -Sfiff competition

milk supply experienced demand of milk -Natural

-Use of modern milk competitors production. calamities hampers

technologies in -High cost in -Fairly network production

packaging staffing system

Production -Modern technology -Facilities are -Regular -High cost of

in processing expensive induction to operation

staff enhance

efficiency

Finance -Ready capital -Limited -quick decision -Embelzzlements

-No loans rapid finance making of funds by

-No sharing of employees

profits

Environmen -Good infrustructure -Rural urban -Accessibility -Electricity black

tal setting -Adequate security migration outs amperers

-Cool environment -Change in milk processing

climate

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2.9.1 Entry strategy

The information about venturing into the business will be advertsied through signports place at

namgoi Juntion and a poster place at chebarbar trading center. Newspapers and radio since the

business is believed to run smoothly. Agricultural officers from the district and workers who are

my customers are invited to attend on opening ceremony in the farm special offers to be offered

to every invited guest each shall have a cup of fresh milk and customers are given take away

milk with free packaging e.t.c.

Some of these invited guest will be agrricultual officers from outside the district and as well

district officers. I expect them to open it officially and legalize the business as well as address the

people on imprortance of agricultur in general. Special documents are only given to those

customers who make a purchase of more than tow litres daily it will last for the fast one month.

2.9.2 Growth strategy

From the swot analysis it will experience stable financial support from the investment already

made. Favourable conducive environment for dairy farming and good infrustucture. Since the

starting capital was from my own savings the land given by my parents. Market and demand of

these products are existing because of increase in population leading to high consumption rate of

milk. Form one above observation i will expand the business by increasing number of dairy

cows, by intending to receive loans from bank. As well improve on production of milk e.g.

adding processing units of milk by purchasing advanced machines for processing improve on

facilities. From these observations i declare the business will be a profit gnerating business.

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 CHAPTER THREE

3.0 Marketing plan

Marketing plan is a service of systematic activities aimed and providing goods and services in

order to satisfy customer needs and to make profit.

3.1 Customers

My customers vary considerable,y, some of them buy for consupmtion purposes, others buy in

wholesale prices which they will transport to distant customers. My potential customers are the

two high schools. Mumias Boys Secondary schools marcle school, residents of namgoi centre

and mumias trading centre. They are located within the business premises a distance 4-5km from

the farm, my customers are both wholesalers and retailers.

3.1.1 Characteristics of potential customeArs.

The following are key characteristics of my potential customers:-

- the general income is low, middle class: this does not matter so mcu because even the prcice of

my products are affordable to all class.

- The age doesn’t matter provided that the customers are able.

- Most of them are christians hence they are trusted towards my business.

3.1.2 Factors influencing customers

The followign are some of those factors tht influence customers to prefer on any busienss

products:-

- Affordable prices

- Qualified staff quality production and services

- Packaging is suitable for local and distant customers

Business is located on an highway i.e. Bungoma -silibwet highway

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 - Long operating hours

- Advertisement is by use of posters posters, sign-boards, newspapers and leaflets of

posters are hanged at mumias centre and silibwet centre.

- The employees are hardworking and phyiscally and mentaly healthy.

- Offering of discocunts do frequent customers as well as other free as other free

transportation services to thee customers

- Others include high demand and profits.

3.2 Market share

The market share for my business will capture a total of 60% under the total industry size.

These shares will come out of the quality produts, improved serivices because of qualified

competent staff employed.

The business intends to cover areas like Mumias and Serrem trading centre.

The market share is represented as in the following pie-chart under industry size i.e.

MALOBA and Wanga .

90
80
70 akelo
dairies
60
50
wanga
40
30
20 homeland

10
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

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 MALOBA = 60 x 360 = 2160

Homeland = 25 x 360 = 900

100

Wanga = 15 x 360 = 540

100

3.3 Competitors

My competitors are like Homeland and Wanga dairy firms, they are situated of 10mk away from

mine. The following are some of the descriptions of my competitors.

3.3.1 Operating methods

Their prices are relatively hgh compared to mine although they operate in long hours like mine

but they don’t co-ordinate well to customers. Although my products are in small scale i normally

even sell at a credit to trusted customers. My busines has good reputations, employees are trained

free.

3.1.2 Location

Location of my business is along the highway unlike of the competitors inside the village, thus it

is not accessible. This highway is not busy daily hence no traffic jam hence easy movemen of

customers.

3.3.3 Profitability of the competitors

Due to quality products offered by my business has captured customers in the neigphouring

schools and trading centres and this will limit the competitors from getting ready market for tier

products and this will facilitate me attain muchprofits.

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3.3.4 Premises

My business premises is not big enough tha can withstand a large population of Mumias and

silibwet town. Therefore,I intend to increase the production by increasing the number of dairy

cows, expand the four hectares of shamba, this is earning a loan after a 5th year of operation. The

premise is permently owned and accessible by means of transport this will enable my customers

to use any meansto reach teh premise.

3.4 Methods of promotion and advertising

Advertising programme is important to my busienss, it makes my customers awre and updates

them and builds imgage of the business. Means of advertising are both printed and word spoken

since teh population is general. This advertisement will cost 200 kenya Shillings twice a year.

The conteents of this advertisements include: the name of the business. Location and products

available for sale. These advertisemnt willtaget students and teachers of Tenwek and Bungoma

high schools, silibwet town. It captures the portion of the market.

3.4.1 Product development

Some of the distinctive features intending to come up withe are sweats made from milk products,

powdered mill. The size and shape will be designed as well as the quality of the products, which

will prolong the span of milk products.

The business will intend to offer cash discount to prominent customers. Also improve on suitable

equipment for milk processing, pricing of these products will be highly considered and has to be

constant to in order to penetrate the market.

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3.5 Pricing strategy

Pricing strategy of my business will depend on economic growth. When itis high the price of my

products becomes slow and vice versa i.e price will increase followign inflation gigures at theat

time.

3.6.0 Pricing tactics

The products will be made available to custoemrs thoguhout by selling directly to nearby

custoemr sand use of salsmen to distant custoers by use of firms business van. Also can use

wholesalers to sell teh prdocts who are located outside the town , because can have big orders

from schools, big hotels e.t.c

Credit facilites are only offered to most known and trusted customers, paying depenss on quality

or products price for credit fell is a bit higher than actual price hence this will discourage frequtn

creditors. These credit facilties is only offered by sales maanger only with a permission

authorites.

Qualities of sales people are:-

 Have general knowledge aout business plannning

 Certificate in sales and marketing

 Twenty years and abovee

 Good health

3.7.0 Distribution strategy

I will transport my products to customers or market place where customers can buy through the

following methods:-

 use of salesmen to sell direct to customers

 Sale to wholesalers.

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  Retailers already operating the business.

I have choosen above channels because its expenses is not costly and its benefits much.

This is because they are:-

 Ready available

 Buy in fair prices that enables to earn some profit

 Due to its reliability i.e they are daily bread to my business hence promotes expansion.

Although it has benefited me also there were some problems affecting the growth, these are:-

 Some customers ae located in in accessible parts hence delay in distribution

 Poor infrastructure expecially during rainy season

 Inadequate means i.e business owns one business van which will not be possible to make

full distribution as well can be prone to mechanical problem.

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CHAPTER FOUR

4.0 Organizatin and mangemnt plan

4.1 Organization structure and operations

A well managed and organized business will make effective and efficient goals. The following

is a diagram illustrating duties and responsibilities of Hecheko Dairy Farm.

General manager

Assistant manager

Sales & Accounts

Production Secretary Clerk
Marketing
manager General General
manager

Herdsmen Milk men Security Driver

men

4.2.0 Personnel and duties

The key personnel involved in MALOBA Dairy Farm is as illustrated by the structure above.

4.2.1. General Manager

Since the business is owned by the owner then I will be the manager and my duties will be: to

ensure that teh business is running on smoothly. i.e. making decisions, co-ordinate all activities

in the firm, recruit and remunerate new employees and settle any difference, e.g. either emergin

from external or internal envrionment of the business.

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Qualification of the manager.

i) since i am the manager currently I am undertaking a Diploma in electrical

Engineering.

ii) Skills on entrepreneurship education

iii) Two years experience in farm managemnt

4.2.2 Assistant manager

Duties and responsibilities

i) Delegate duties toline workers

ii) Co-ordinate between the manager and line workers

Qualification

i) Good managerial skills

ii) Three years experience in managerial work

iii) 25 year and above

iv) Certificate in supplies management.

4.2.3 Sales and marketing manager

Duties and responsibilities

i) Identify the customers by doing the research

ii) Advertise the business and depend on it

Qualifications:

i) 25 years and above

ii) Experience in same post

iii) Certificate holder in sales and management

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 iv) Pulic relation withe potential customers and entire environment by having good

language

4.2.4 Accounts clerk

Duties and responsibities

i) Control business finance by preparing financial statements

ii) Produce annual financial plan

iii) Keep records

Qualification

i) 22 years and above

ii) Experience withe same post

iii) Certifcate in diploma accounts

iv) Trustworthy

4.2.5 Production Manager

Duties and rsponsibilities

i) Identify quality feeds for the cows

ii) Ensure products are in good condition and reach customer on time

iii) Products are of right quality

iv) Hands over cash to acconts clerk

Qualifications

i) 22 years and above

ii) Good public relations

iii) Diploma in supplies and managment

Others include:-

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 Security men

Duties and responsbilities

i) Guarding the farm premise

ii) Guarding the farm equipment and facilities

iii) Make direction to customers during the day

Qualifcations

i) Should have graduated from one of the security companies

ii) 28 years and above.

Grounds Fmen (Herdsmen/Milkmen)

Duties and responsiblities

i) Provide clean environment for the busines

ii) Milking, spraying and feeding the cows

iii) Operating on the farm i.e. work on nappier grass

iv) Report to top managment on any changes in the farm e.g. sick cow

Qualification

i) 20 years and above

ii) Hardworking

iii) Health physically and mentally

Driver

Duties and responsibilities

i) Transproting products to the market

ii) Transporting farm input from the market e.g. animal feeds

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Qualifcation

i) Should be over 20 years

ii) Posses valid driving license

iii) Three years experience

4.3 Recruitment, employement and training

In any given organization personnel is considered as a key factor because it will facilitated an

organization to atttain its goals MALOBA Dairy Farm is not left behind hadwaroking

employees are being motivated e.e. their salaries raised, offering them gifts as well as allow them

to have a short leave.

Through advertisment new employees are recruited, they are interviewed, those who qualify are

to be trained and orientation is made to them to make them familiar withe teh farm.

4.4 Renumeration and incentives

Remuneration of workers in MALOBA Dairy Farm is according to their conduct qualifications

in this manner following table shows how personnel involved are remunerated.

Title Vacancy Salary Total

G. Manager 1 8,000 8,000

Ass. Manager 1 7,000 7,000

Secretary General 1 5,000 5,000

Production manager 1 5,000 5,000

Sales & Marketing manager 1 5,000 5,000

Accounts clerk 1 5,000 5,000

Security men 1 2,000 6,000

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Heardsmen 1 2,000 4,000

Milk men 1 2,000 4,000

Driver 1 2,000 2,000

Total 51,000

The personnel involved in MALOBA Dairy Farm will be motivated by giving them some of the

incentives which will be based on both monetary and non-monetery i.e. hardworking employees

will be gvein advanced salaries, overtime payment given, some milk to take away and also allow

to have 10.00 o’clock tea. Also given chances to express their grievances and social facilties liek

darts, pool to refresh themselves after work. They are even allowed to have retirement benefits.

4.5 Legal requirements

In this case my business will obrain the license from Bungoma County. Before issued with any

business shoud meet legal requirements i.e. will be considered under production of agricultural

products. If in any case such legal requirements are not well observed the busines will be closed

down till another legal requirement is complied with.

4.6 Support services

For efficeint and smooth running of MALOBA Dairy Farm, will acquire various supporting

advisors adn services from other firms, the following are some of them:-

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4.6.1 Postal and Telecommunication

This will enable he farm to communicate to th e customers. It is through telephone and mobile

phones.

4.6.1 Insurance

My business will be insured against risks, for this case it will obtaine insurance cover from UAB

Insurance Company at BUNGOMA town. Other services will include power supply, water

supply and security.

4.6.3 Legal assitance or servies

MALOBA will get assitance from Kigen Advocates, NDANAI house. They will assist the

busines incase of any legal proceedings, signing of contracts. In addition, for health services i.e

medical check up will be given out at Mumias District.

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CHAPTER FIVE

5.0 OPERATION PLAN

MALOBA Dairy Farm like any other busienss needs some operatios, this involveds processing

adn swelling of milk. Some users can be offered freee samples.

5.1 Production facilities adn capacity

The table below shows by summary on some of the facilities to star and run the business.

Equipment, tools and permits Method of acquisition Amount

Land Donation -

Building Purchase 120000

Office equipment Purchase 30000

Dairy cows Purchase 85000

Knupsack sprayer Purchase 3000

Busines van Purchase 200000

Milking cans Purchase 7000

Buckets Purchase 500

Wheelbarrows Purchase 1500

Lactormer Purchase 2000

Famrm tools Purchase 1600

Aprons Purchase 400

Measuring cylinders Purchase 1500

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5.2 Production/operaional strategy

I being the manager of MALOBA Dairy Farm, will ensure that the production is increasing in

the farm by offfering quality services, cows being well managed, maintain the employees

personnel by paying prompmly salary and allowances also improve on equipment and toools for

processing. In five years time my production goals willinclude some of the follwoign:-

- Increase number of productivity by purchasiing more dairy cows

- Improve the already existingh products output is more than the input to make my

busienss pmalobaorious

5.3 Production/operation plan

This concerns withe the proxcedure to be followed when processing materials to finance

products. In any field such steps must be undertaken as in this case the folowing is the procedure

of processing in Maloba Dairy Farm

5.4 Production costing

5.4.1 Labour costing

This involves expenses needed to pay those who are invoved in the prodution process as it is

shown in the following table.

Particulars Cost
Manager 51000
Overheads 73000
Raw materials 43000
Total cost of production 167,000

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Labour cost

Personnel Slary per month

Manager 80000

Secretary 5000

Production manager 5000

Assitant manager 7000

Sales and marketign manager 5000

Account clerk 5000

Security men(3) 2000

Herds men (2) 2000

Milk men 2000

Driver (1) 2000

5.4.2 Overheads cost

This is the amount required for the management of the business and other expenditures that is

consided for smooth running of the business.

Overheads Amount

Manager salary 24,000

Licenses 2000
Advertisment 2000
Insurance 2000
Telephone bills 3000
Repair and maintenance 10000
Fuel transport 30000
Totals 73000

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5.5 Regulationss affecting operations

5.5.1 Health Regulations

Health regulations must be observed in every environment by all people. I will ensure that good

health is observed by all personnel within the busines premises, this should be observed epecially

in the daiy shed. I will purchase gloves and gumboots, deworming drugs, spary for cleanig the

cows as well as aprons won when milking and milking jelly.

5.5.2 Business regulations

My business will establish a building to carry out its managment work and also storage purposes.

I will ensure that they are well set such that it has some managers offices, processing unit, dairy

cows milking shed and resting place. A watchman will b e emmployed to keep security. These

building will be organized insuch a manner tha a good hygiene should be observed always. It

will be surrounded with a strong fence and have one locakbel main gate. In addition, this

building will be ensured that all are inside the farm and guarded alwasy.

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CHAPTER SIX

6.0 Financial plan

This section of the business will telll whether it’s making profit or loss. It’s a too,l, which iused

to access the perfomance of the business.

6.1 Pre-operational cost

These are the expenses or cost incurred before the start-up of the business operation MALOBA

Dairy Farm come up with the following operation costs.

Item Costs(ksh)

Building 120000

Furniture and equipment 45000

Dairy cows 85000

Advertisement 4000

Licenses 4000

Transport 11000

Initial row materials 43000

Electricity networking 177000

Total 500000

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6.5 PREPARATION OF PROFORMA BALANCE SHEET.

This shows the assets, liabilities and capital of the business at the end of the trading period.

Maloba dairy Farm opening balance sheet as at 1st Jan 2017

Assets Liabilities

Current assets Owners equity 850,000

Cash at hand 100,000

Cash at bank 300,000

Fixed assets

Building 120,000

Vehicle 200,000

Furniture 30,000

Dairy cows 85,000

Tools & Equipment 15,000

Total of fixed assets 450,000

Total assets 850,000

Owners equity = assets – liabilities

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Maloba Dairy Farm Proforma closing balancesheet as at 31sth dec. 2018

assets Liabilities

Opening balance 579,100 Ownersh equity 438,100

Cash at hand 79,100 Add net profit 177,500

Cash at bank 500,000 Total liailities 615,600

Fixed assets

Buildings 120,0000

Vehicle 200,000

Furniture 30,000

Tools and equipments 15,000

Total fixed assets depreciation 10%

365,500

36,500

Total 616,600

Ownersh equity = Assets – Net Profit

6.6. Calculating of break-even points

Step 1: List of expenses

Licenses 8,000

Insurance 2,000

Advertisement 4,000

Electricity 16,200

Telephone 612,000
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Salaries 2,100

Miscellaneous 2,100

Transport (fuel) 129,000

Water 9,500

Total 796,600

Step 2:

Separating variables

i) Variable expenses

Items Cost

Electricity 16,200

Telephone 13,300

Transport (fuel) 129,000 129,000

Water 9,500

Miscellaneous 2,100

Total 170,100

ii) Fixed Expenses

Item Cost

Licenses 8,000

Insurace 2,000

Advertisement 4,000

Salaries 612,000

Total 626,000

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Step 3

Divide variables by total salaries

170,000 x 100 = 10.7%

1,590,100

Step 4

Subtract from 100% then divided % above

100 -10.7 = 89.3%

89.3 / 626,000

100

100 x 626,000 = 701,007.8

1,590,100

Break even point = 701,007.8

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6.7 calculating of profitability ratio

Return on sales (ROS)

a) 1st year ROS = Profit

Sales

= 177,500

1,590,000

= 1:0.1

b) Return on Assets =R.O.A

1st year ROS = Net Profit

Total Assets

= 177,500

850,000

= 1:0.2

6.8 Desired financing

The owner of the business should indicate the source of the pmalobaosed capitalization.

Source Amount

Personal savings 300,000

Relatives & parents 600,000

6.9 Pmalobaosed capitalization

Pre-operational costs + estimation of working capital

500,000 + 400,000 = 900,000/=

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CHAPTER SEVEN

7.0 Potential risks

The following are some of the problems face in the business operation:-

a) Competition

Due to improved technology and improved standard of learning many people lose

employement. Then they resort to start business to earn profit that enhance living

standard, some of thes business include: Dairy farming. It this occurs i will be forced to

reduce on my productivity so tha canhave market as well reduce price to attract more

customers hence prfotit as well will redu e.

b) Disease outbreak

A certain disease might break in the area e.g. tsetse fly outbreak, this can either kill the

animal or reduce the productivity.

c) Insecurity

In this area security isnot 100% although i will ensure thatthe farm will be well guarded

but it will not be enoug. Raiders from neighbouring community like Pokot, ?Tugen migh

rain th land and seweep everything, this is a great loss.

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APPENDIX 1

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