MT.

ELGON GRAIN MILLERS

P.O BOX 32

KAPSOKWONY

TELEPHONE 052 – 325020

MOBILE NO. 0728973221

PRESENTER : LINDI J. KORORIA

INDEX NUMBER : 503201138

PAPER NUMBER : 307 / B

COURSE CODE NUMBER : 2404

CENTRE : KITALE TECHNICAL TRAINING INSTITUTE

PRESENTED TO : THE KENYA NATIONAL EXAMINATIONS COUNCIL

IN PARTIAL FULFILLMENT FOR THE WARD OF A

DIPLOMA IN APPLIED BIOLOGY

EXAMINATIONS SERIES : NOVEMBER 2009

SCHOOL CODE : 503201

TABLE OF CONTENTS

DECLARATION

ACKNOWLEDGEMENT

DEDICATION

EXECUTIVE SUMMARY

CHAPTER ONE

1.0.0 BUSINESS DESCRIPTION

1.1.1 BUSINESS NAME

1.2.0 LOCATION OF THE BUSINESS AND ADDRESS

1.3.0 FORM OF OWNERSHIP

1.4.0 TYPE OF BUSINESS

1.5.0 PRODUCTION AND SERVICE TO BE OFFERED

1.6.0 JUSTIFICATION OF THE BUSINESS

1.7.0 INDUSTRY

1.8.0 BUSINESS GOALS

1.8.1 SHORT TERM GOALS

1.9.0 ENTRY AND GROWTH STRATEGY PLAN

CHAPTER TWO

2.0.0 MARKET PLAN

2.1.0 CUSTOMERS POTENTIAL

2.2.0 MARKET SHARE AND SIZE

2.3.0 COMPETITION ANALYSIS

2.4.0 PRICING STRATEGY

2.5.0 SALES STRATEGY

2.6.0 SELLING TACTICS

2.7.0 ADVERTISING AND PROMOTION STRATEGY

2.8.0 DISTRIBUTION STRATEGY

CHAPTER THREE

3.0.0 ORGANIZATION AND MANAGEMENT

3.1.0 ORGANIZATION CHART

3.2.0 KEY MANAGEMENT TEAM / PERSONNEL

3.3.0 RECRUITMENT, TRAINING AND PROMOTION

3.3.1 RECRUITMENT

3.3.2 TRAINING

3.3.3 PROMOTION

3.4.0 REMUNERATION AND INCENTIVES

3.4.1 REMUNERATION

3.4.2 INCENTIVE

3.4.3 LICENSE / PERMITS

3.5.0 LICENSE

3.5.1 PERMITS

3.5.2 BY – LAWS

3.5.3 SUPPORTIVE AND ADVISORY SERVICES

3.6.0 BANKING

3.6.1 AUDITING

3.6.2 INSURANCE SERVICE

3.6.3 LEGAL MATTERS

3.6.4 SECURITY

3.6.5 WATER SUPPLY

3.6.6 ELECTRICITY SUPPLY

3.6.7 POSTAL SERVICES

CHAPTER FOUR

4.0.0 PRODUCTION OPERATION PLAN

4.1.0 PRODUCTION FACILITIES AND CAPACITY

4.1.1 ELGON GRAIN MILLERS OFFICE FACILITIES

4.1.2 INDUSTRY EQUIPMENT

4.2.0 BUSINESS LAYOUT

4.3.0 REPAIR AND MAINTENANCE

4.3.1 PLANNED MAINTENANCE

4.3.2 BREAK DOWN MAINTENANCE

4.3.3 DEPRECIATION

4.4.0 PRODUCTION STRATEGY

4.4.1 PRODUCTION DESIGN AND DEVELOPMENT

4.4.2 MONTHLY LABOUR REQUIREMENTS

4.4.3 MONTHLY LABOUR REQUIREMENTS

4.4.4 MONTHLY PRODUCTION COST

4.5.0 PRODUCTION PROCESS

4.6.0 PRODUCTION, OPERATIONAL STRATEGY

4.6.1 LABOUR FORCE

4.6.2 TIME OF OPERATION

4.7.0 REGULATION AFFECTING OPERATION

4.7.1 ENVIRONMENTAL PROJECTION

4.7.2 HEALTH SOCIETY FOR WORKERS

4.7.3 FIRST AID KIT

4.7.4 FIRE EXTINGUISHER

4.8.0 INTERNAL RULES OF THE BUSINESS

CHAPTER FIVE

5.0.0 FINANCIAL PLAN

5.1.0 PRE – OPERATIONAL COST

5.2.0 PROJECTED CASH FLOW STATEMENT

5.3.0 WORKING CAPITAL ESTIMATION

5.4.0 PROJECTED CASH FLOW STATEMENT FOR YEAR 1

5.5.0 PROJECTED CASH FLOW YEAR 2

5.6.0 PROFORMA INCOME STATEMENT OR PROFIT AND LESS ALL

5.7.0 PROFORMA BALANCE SHEET

5.8.0 BREAK – EVE ANALYSIS ESTIMATION

5.9.0 DESIRED FINANCE

5.10 PROPOSED CAPITALIZATION

PERFORMANCE RATIO ESTIMATION

APPENDIX
ACKNOWLEDGEMENT

I PASS MY SINCERE GRATITUDE TO THE DEPARTMENT OF APPLIED Biology

for the efforts they made to make my project successful. My sincere appreciation also

goes to my husband Mr. Rotich for guidance during the starting of the course. Finally I

thank my group members for the cooperation they had to make work easier.
DEDICATION

I sincerely dedicate this report to my parents for the financial assistance they have me. I

also dedicate this report to my sister for the moral support.

DECLARATION

I declare that this report is my own composition and has never been produced by any

person.
 EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

The proposed business name will be located in KAPSOKWONY TOWN IN MT.

ELGON DISTRICT. It will be dealing with buying grains like maize, wheat and

millet direct from the farmers and then process them into flour.

ELGON INDUSTRY is also sole proprietorship business with the following

address

ELGON GRAINS MILLERS INDUSTRY

P.O BOX 32

KAPSOKWONY

MOBILE NUMBER 0728973221

TELEPHONE 052-325020

2.0 MARKETING PLAN

The main objectives of customers will be individual institution and commercial

who includes, schools hospitals, colleges and others.

The market prosperity are beyond doubts since it has a market share of 80 %

which is actually the highest market share in the market.

The business will actually meet challenges from the competitors. ELGON

INDUSTRY has laid its own strategies such as pricing strategy sales. Selling

tactics, advertising and promotion strategy. Distribution strategy as its aims is to

capture the maximum market share in the existing market.

3.0 ORGANIZATION PLAN

This section reveal the internal environmental of the business. This section

recognize its personal specially there requirements, qualification, duties and their

responsibility in the organization. It gains short the recruitment, training and

promotion employees remuneration. Salary and inventories

Supporting and advisory service i.e. insurance, license permits by – laws,

banking, auditing, legal matters and security will enable me business to grow into

a big industry.

4.0 PRODUCTION

This is where the proposed business intends to provide quality goods and services

to its customers. This section include, production, facilities and capacity required

in maintenance and repair production strategies used production and repair

production strategies used production process and government requirement for the

operation of the business. The proposed business intends to their 306,800 for

production facilities and a total production list of Kshs 207,000 in the course of

operation.

5.0 FINANCIAL PLAN

This is the critical part of the business plan as the owner tries to allocate and

utilize a project of Kshs 442,800 and working capital 215,000

Also the plan provides all financial performance of the whole operation and it

reveal the estimate and propose financial plan

 CHAPTER ONE

1.0.0 BUSINESS DESCRIPTION

The business opportunity is an attractive project which the owner has accepted as

a basic for the investment decision. The owner has scanned the basis feature of

the area and its resources inventory. Thus this is where the owner has considered

the population. The occupational patterns social and economic background of the

people.

Also the owner has surveyed the present of trading and the business in the area

with the reference to the interregional and the needs for the industrial goods as

well as services.

The business has also considered the targeted group which will be dependent

upon that is a actual the target group in terms of the opportunities strength and

weakness and also the financial resource. The existing in the surrounding area e.g.

availability of maize whets and millet will invariably signify the presence of the

business opportunity.

More so the business opportunity has a market shift, this means that consumed

that have growth potential as a result of increased population change in

purchasing power and change, in living styles. Thus indicate, the presence of the

business.

Again the services sector that the business opportunity will deploy includes

service establishment e.g. service facilities to workshop, and other establishment

to cater for the industrial needs and services e.g. professional resources e.g.

accountants managers secretarial engineering etc.

1.1.0 BUSINESS NAME

The business name will be registered under the name ELGON INDUSTRY.

Therefore the owner wishes to submit this name to the registered of business

names for its registration.

It is not a name an existing company neither government department. The name

itself gives occur indication of what the enterprises is about

1.2.0 LOCATION OF THE BUSINESS AND ADDRESS

ELGON INDUSTRY will be located in Kapsokwony Town for situating the

business here is that there is no any other milles around Kapsokwony Town

making people to walk to Eldoret in order to obtain grains flour e.g. Unga Ngano,

Sifted maize flour and millet flour for “ Uji” IN addition there is higher security

because the business is near the police station. There us availability of electricity,

good road, and water supply.

Kapsokwony Town was chosen as the best location for the business having the

following reasons

 Part of the town where the business is to be located has been carefully

considered because it is centrally located within the maize, wheat and millet

growing zone e.g. Tran - Nzoia District Uasin Gishu District Bungoma

District.

 The inhabitation of this area are mostly farmers and a small extend business

people who needs a pace to sale their product.

 The place provides a junction to three common majorly used road i.e Kimilili

– Kaptama – Kibuk when addressing the business uses the following address.
 ELGON GRAINS MILLERS INDUSTRY

P.O BOX 32

KAPSOKWONY

TELEPHONE

1.3.0 FORM OF OWNERSHIP / BUSINESS OWNERSHIP

The business will be a sole proprietorship owner and managed by LINDI

KORURIA. The proprietor shall be the managed of the business and all

instruction shall be obtained from her.

1.4.0 TYPE OF BUSINESS

As the name indicate ELGON GRAINS MILLERS INDUSTRY, the business

will be dealing with buying of maize wheat and millet direct from the farmers and

grinds into flow and in them packed in small bags which will be sold.

The by – products proceed during the processing will be packed into bags and

sold to the farmers to feed their livestock.

1.5.0 PRODUCTS AND SERVICES TO BE OFFERED

The business will undertake the processing of grains into flour.

ELGON INDUSTRY falls under the processing industry this is evident from the,

fact that maize wheat and millet in large quantities further the industry falls under

Agricultural sector which at least covers most of the parts of the country i.e.

almost 80 % of Kenyan population will depend on agriculture.

1.6.0 JUSTIFICATION OF OPPORTUNITY

The area where the business will be located has a high population and it is the

central point between the four district e.g. Uasin – Gishu, Tran – Nzoia Bungoma
and Mt Elgon meaning that the business will eventually earn good return. The

other factor is the experience which the proprietor has e.g. managerial skills and

auditing skills.

The idea of starting the business in processing the grains into flour come up with

after witnessing how the maize wheat and millet farmer are discriminated in

Agricultural sector. It was through wise to take the advantage to meet their

demand and the desire of the community itself to set up the fore said business.

More so from visibility study carried out in Kapsokwony town there is no grains

millers industry this therefore favours this kind of business.

Market study also is the favourable opportunity for this kind of business plus

personal finances resources i.e. 50 bags of maize which the owner will start with

loans from bank own savings and with the help of relatives indicates a clear

opportunity of getting into the business.

Also due to economic status of many people easily availability of personal as

occasioned by the prevail high unemployment rate which will ensure recruitment

of qualified personnel that the service required.

The research was done and it was found that such a business had never existed in

Kapsokwony town and thus it was encouraged because the business was going to

meet the desires and demand of the above district / named districts and the nation

of Kenya as whole. The establishments of the business will improve the living

standard of people.
1.7.0 INDUSTRY

ELGON GRAINS MILLERS INDUSTRY falls into the Agricultural industry

thus this is very important for economic development in the country. The

government invest a large amount of money in this sector. The ELGON

INDUSTRY will liase with the ministry of Agriculture Ministry of Industries and

directorates of industrial Training (DIT) for the successful operational of the

industry.

1.8.0 GOALS OF THE BUSINESS

The ultimate goal of ELGON INDUSTRY is to make profit which will be re –

invested in the business for expansion and diversification to other area in Tran –

Nzoia Uasin – Gishu, Bungoma and other nation as whole ELGON INDUSTRY

require short and long term goals

1.8.1 SHORT TERM GOALS

 To crate employment opportunities

 To improve the standard of the living

1.8.2 LONG TERM GOALS

 To increase profit through operational and production efficiency and market

expansion

 To generate and disseminate appropriate technologies packages for farmers

1.9.0 ENTRY AND GROWTH STRATEGY PLAN

The business shall use strength and weakness opptunitues and threats as its entry

and growth strategy thus this method involves evaluating inside and outside the

organization by the manager owner who ia supposed to be very keen on this

strengths and weakness within the business and the outside for threats and

opportunities

the short coming of the business will be overcome by the owner .the proprietor

will use skimming as pricing techniques ,hence the customer are charged lower

prices to enter into the market easily . due to the right choice of the business a

great number of customers will be extend to make purchase from the business

due to a slightly lower price than other competitors and the goods and servicing

techniques shall also be added

the business shall also stock high quality flow for the welfare of people as well as

lower quantity in relation to lower class .there shall be quick and good

packaging ,offer ,discount and sales promotion through ranging goods goods for

an attraction of more customers

the overall consideration in this area of entry plan is that the proprietor shall

ensure that entrepreneurial skills ,managerial skill and technical skill capital and

machinery and tools are acquired in order to make operation successful

 CHAPTER TWO

2.0.0 MARKET PLAN / SURVEY

Market plan / survey is systematic tool which can be used to reduce and improve

the probability of the owner of the business

It is also the systematic assessment of the market condition to establish whether

the demand is real or imaginative

2.1.0 CUSTOMERS POTENTIAL

The potential customers of ELEMI INDUSTRY will be of people around the

intended area of operation these include. Wholesale supermarket, retailers and

those people who require the products since the location of the proposed business

is within reach of fole district i.e. Uasin – Gishu, Tran -Nzoia, Bungoma and Mt

Elgon District itself. The business intends to attract customers who will acquire

the product as middlemen at cheaper price in bulk and sell them to make profit.

The business will also credit to these customers at an agreed date and the amount

of goods and services to be offered. The strength location of the business is also

near many boarding secondary school, Hospitals and Village polytechnics which

most of its students rents houses around the area of proposed business, thus this

will enable the business to sell its products

2.2.0 MARKET SHARE SIZE

Kapsokwony Town as the area of operation has a population of about more than

50,000 people and the business intends to attract close to 40,000 people. Hence,

the market share retroflection is calculated as shown below.

 Market share = Assumed population x 100
Total Approximated population

40,000 x 100
50,000

= 80 %

From the calculation above a market of 80 % reflect a positive practice of the

proposed business.

2.3.0 COMPETITION ANALYSIS

In any business environment competition is inevitable but too mean of it may lead

to collapse of the enterprise therefore the ability of the owner is to cope with

growth and survival

The already established competitors dealing with grains millers in Eldoret i.e.

Dolce, Unga millers Limited has been rated. Also the business of those

competitors are not running in professional manner due to lack of present

technology.

By identifying competitors advantages gathering data and comparing differences

through data analysis thus weakness identified during this feasibility study were

 They don’t have trained employed

 They do not advertise their goods

 They buy the grains in low price and sell their products in high prices.

 They provide expensive goods and services by overcharging the customers

due to their dominance in the market

 They product low quality product.

  To overcome the above weakness the management will cope with the change

and competition will increase chances of grown and survival of the business

It will be achieved by :

 Providing reasonable priced service by fixing lower prices at small profit

margin to attract more customers hence this will facilitate high turnover for

maximum profit.

 Advice the farmer on the new technology which they will apply to harvest

more grain

 Provide qualified employee and experienced personnel to cater for the jobs

available.

 Reading business journals newspaper, their sales literature and testing their

products in order to be aware of the current business trends of the competitors

 Interact with potential customers and supply to what is new on the market.

 Comparing prices with that of competitors so that the business can have the

better one.

2.4.0 PRICING STRATEGY

The pricing of the flour and other products will be largely depend on the cost of

the raw materials labour and transportation this above all the profit 120 % should

be realized e.g. the purchase of one hundred bags of grain each cost 1,000 /=

which will cost 100.00 plus the transport cost of 10,000 thus the pricing will be

120 x 100,000
100

= 132,000
 From the above calculation a profit of 20,000 is realized but during high sale,

seasons on additional profit of 18 % should be added.

2.4. SALES STRATEGY

The price of the products manufactured will depend upon quality and quantity of

flour

The owner will be forced to produce different weight of the flour for instance.

200 Kg will be sold a 12.50

500 kg will be sold at 25.00

1 kg will be sold at 50.00

2 kg will be sold at 100.00

3 kg will be sold at 250.00

10kg will be sold at 500.00

50 kg will be sold at 250.00

CALCULATION

1 BAG OF 90 KG BOUGHT AT Kshs 1000 together with transport cost equal to

Kshs 1,100 will produce about 150 Kg of flour 1 kg of flour cost Kshs 50.00

150 Kg of flour costs

150 kg x 50

= 7,500

The cost of the product will be as shown below.

 Total price of goods bought 100,000.00

Transport cost 10,000.00

Total costs 110,000.00

Add 23 % profit margin 22,000

Total sales 132,000

2.5.0 SELLING TACTICS

The selling tactics done will be by

 Offering free sample of customers e.g. stickers, calendar

 Supply will be on time as agreed with customer

 A discount of 10 % will be allowed if at all customer buy goods worth

50,000.00

2.6.0 ADVERTISING AND PROMOTION STRATEGY

The owner of the business will advertise its products through posters, newspaper

business cards all vernacular ratio station and sign posts.

This methods is slightly cheap compared to electronic computers i.e. internet.

Signposts will be placed at major or junction within the town. Business card will

be given to potential customers because of the address, telephone, numbers

location and type of goods, sold, thus customers will use it incase they want to

contact, posters will be posted to the nearing towns, institution and other places.
2.7.0 DISTRIBUTION STRATEGY

The owner of the business will apply the following means of transport by road.

 Tow lorries

 Three pick up (two will be hired)

 Two tractors

 Salesman will be trained on commission and for the contract of marketing and

distribution of products. This is to avoid idle work – force and unnecessary

costs during the business operation seasons.

 Relabeled distribution will be used to distribute to both long and short

distance. Thus the channel to be used will be as follows.

Producer Wholesales Retailer Consumer

Producer
Consumer

Producer Agent Consumer

Producer Agent Wholesalers Consumers