Table of Contents

CHAPTER ONE............................................................................................................................3
Business description................... .....................................................................................................3
Business name and address..............................................................................................................3
Business Location............................................................................................................................3
Form of Business Ownership...............4
Type of business...4
Products and Services......................................................................................................................5
CHAPTER TWO...9
Marketing plan.........9
CHAPTER THREE.....................................................................................................................19
Organization and management plan...............19
Organizational structure.....20
Remunerations and incentives.......23

CHAPTER FOUR ......26

Operation/Production plan.............................................................................................................26
CHAPTER FIVE........................................................................................................................30
Financial plan.....30
Cash flow projection..........31

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

CHAPTER ONE
1.0 BUSINESS DESCRIPTION
Executive Summary
The number of working parents- including single-parent families with both parents employed is
climbing, creating an ever-growing need for quality child care, thus I will build a business caring
for them without focusing much on academics. That is a home day care.
Introduction
The basic work I will be doing will be caring for these children with much responsibility and
serious commitment. I will be responsible for their safety and well-being. I will also play a key
role in their overall development and may well be someone they'll remember in their entire lives.
The open enrollment for infant care (8 weeks 36 months), Toddler care (2 5 years of age)
and Before and After school (6 years and up).
1.1 BUSINESS NAME: PRECIOUS MOMENTS CHILD DAY CARE
The name of the business will be Precious moments child day care . The name will try to signify
the type of care that will be offered to the children. It tells people about my philosophy of child
care. It is also easy to spell and to remember. Moreover it isn't an overused name for a child care
or similar to any child care center around my business locality.
1.2 BUSINESS LOCATION AND ADDRESS
This business will be located at Greenspan estate in Donholm area of Eastlands Nairobi. It will
be accessible through the Jogoo or Outering Road. Clients using public service can access the
mall from the Central Business District (CBD), using matatus number 33 plying the Jogoo Road
route and alight at the Caltex Fuel Station where you can easily get another that will take you to
the entrance of the estate. These ones are number 19/60 that you can pick from the OTC bus stop
or Muthurwa Bus Stop as well. It will be strategically located to serve people around Dohnolm,
Komarock, Kayole and Umoja.
This will be a suitable location for the day care since the demographic data around the area
shows where the future demand will lie that is majority of the childhood population is currently
at pre-school age, thus the demand for school-age child care services. Moreover the labour force
3

participation rates of women around this area play a role in determining the need of child care
services. Security is also adequate around the area which will give the parents a peace of mind
whenever the children are in the day care.

1.3 FORM OF BUSINESS OWNERSHIP

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

1.4 TYPE OF BUSINESS

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

1.5 PRODUCTS AND SERVICES

The services offered will be as shown in the table:

Service offered

Service type

Age group

A safe nurturing kid-friendly

With enough toys, beds, chairs For all age groups

environment

and table for each child.

Nutritional meals and snacks.

Breakfast, snacks, lunch.

For all age-groups

Daily report

It will involve how the child

For all age-groups

faired on each particular day.

Fun, activities, games and
crafts.

Transportation

Homework assistance

Toys, birthday celebration

For all age groups

bicycle riding

6 years and up

swimming

6 years and up

singing games.

5 years and above.

Drawing and colouring

5 years and above.

To and from homes

For all age-groups

To and from their schools

5 years and above.

For children who attend child 5 years and above

care before and after school.

Potty training.

Toddler care(2years-4 years)

Diapers changing and baby

Infant care (8 months- 36

washing

months)

Bible study and Quaran study

Bible and Quaran stories,

singing, study of good and
simple living studies.

5 years and above

Two annual field trips

To the museum, national

parks, children playgrounds,
snacks companies like house
of manji.

5 years and above.

1.6 JUSTIFICATION OF OPPORTUNITY

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

I have passion for helping young children and their parents.

I enjoy the independence and responsibility of being my own boss.

I have the time, knowledge, skills and motivation to make a small business succeed.
6

 I will have the time to learn the skills I need or I will be willing to hire people to provide
the skills you lack.
You are comfortable with the financial risk involved until your business gets established.
Family considerations
The income from a child care business will help support my family.
I will be able to save on my own child care costs.
You can be home with and care for your own children.

Help for parents

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

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

paying taxes and paying salaries.

Your community may be lacking certain types of child care, such as care for infants and

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

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

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

Table representing market share

Segment

Total Population Target

Population

Computation

Market share

Individual (total): 1000

300

300/1000*100

30%

Infants

150

50

50/150*100

33.33%

Toddlers

350

100

100/150*100

66.67%

6years and above 500

150

150/500*100

30%

The segment

:represents the type of customers that will be served.

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

: represents calculation of market share.

Market share

: represents the percentage of the customers to the total population.

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

Direct competitors

Indirect competitor

10

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

2) Lequde Day Care and Nursery

P.O Box 595-40601
Komarock-Nairobi.
Tel 0723616241
Indirect competitors
1) Mtitha House girls Association.
2) Mama Ian's Nunnies.
Analysis for competitors
competitors

By Grace Acadamey

Internal

Internal

External

External

strength

weakness

business

business

opportunity

threats

Constant flow

Offers only

of skilled

learning

laborers.

opportunities

Large
kindergarten

High charges
No good site

11

Wide experience
of market

Lequde Day Care

for business
Deals only with

Access to

and minimal

good learning

day care

skills.

services

Standard services

children above

Well trained staff

5 years

Wide experience

Poor

Get free

Their

management

transport

services are

Prices are high

Availability of

and Nursery

annual trips
Mtitha House Girls

Large number of

Poor

Strategic

Association

customers

communication

geographical

network.

position.

The house girls

offer cheap

Their services

services

don't offer trust

considered
poor.

assuarance.
Mama Ian's nunnies

Large market

No great impact The nunnies

High charges

can move
around the
whole

PRECIOUS

Skilled workers

Means of

Access to

Surplus from

MOMENTS DAY

close to my

transport to

current

government

CARE

business

various

technology

and sponsors

Offers variety of
services.
Dealing in a

destinations

Government

Advertisement

policies are

can be

favorable.

12

to my
competitors
insec

number of

challenging

Access to

children's age-

loans from

groups.

micro finance
ready market.

Good business
site

Good network
through social
media

2.4 ADVERTISING AND PROMOTION

Advertising
Before the commencement of my business, there will be public awareness of its commencement
through the radio, television, posters, gazettes and magazines.
Radio
This will be done through different channels i.e. Citizen, Kiss FM and KBC radio. Through this
advertising every service will be known by the customer. This will be done any particular time of
the year e.g. 4-8 times. Each station costs roughly ksh 2000 per week.
From the research that I got from the above competitors, I have decided to emulate some of their
tactics in this trading profession so that I can fetch some of their customers through high quality
and affordable services that are not available in the already existing dealers.
Television
Due to popularity of citizen, I will use it as the only channel because this type of advert is
expensive and will be done maybe twice a year. This will cost ksh 9,500 per advert.
Posters
Posters will be the mostly and frequently means used because of their cheap advertising cost.
They will be displayed at different corners of the streets bearing the name of my business, by
13

location, address, telephone, fax number and also email address, services together with their
prices and charges , discount offered and brief terms. They will be made as short and brief to the
point as possible. Approximately 1000 posters can be used per year at ksh 5 per poster costing a
total of ksh 5000.
Gazettes
This will be done twice per year and it will be through the daily Nation Gazette and the East
African Standard. A single cost advertisement costs Ksh 2,500.
Public Rallies
Advertising through public rallies will be performed after 3months .The estimated cost of
advertising will be ksh 8000 per year.
Promotion

Price Reductions: Prices will be reduced by 8%, less for the first twenty customers.

Soft loans: This will be given to employees as a motivation. This will make them work to
their best, thus increasing the production and in turn increase the sales.

Discounts: quantity discounts will be rendered to customers. This will indirectly motivate
customers to opt for services for my business.

2.5 PRICING STRATEGY

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

To achieve target return

To stabilize prices

To improve and maintain our market,

14

To cope up with competition

To maximize price

The things that are considered to arrive at the price of the commodities and services
Cost of product
The price of services will go hand in hand with the cost of services encountered.
Competitors
The price of the service will be 1% less than the normal price i.e. competitors prices in order to
beat up the competitor.
Profits and profits margin
There will be reasonable prices or charges so as to obtain maximum reasonable profits. This will
be a subject to verification every end month.
Government policy
The price setting up of the services will indirectly include the amount of taxes paid for that
services.
Total expenses
During the price set up all services will partially include amount or expenses incurred e.g.
salaries, wages, taxes, rent and electricity.
1) Materials cost
2) The price of the services will be directly proportional to the cost of the services.
Demand
If the demand of the product .in the market is high, the price will be high and vice versa
3) Supply
If the amount of services supplied to the market is high, the price of the service will be
low and vice versa.
15

4) Uniqueness of the services

Any new service produced in my business will be charged reasonably high before my
competitors starts producing them.
5) Business promotion cost
All expenses incurred during promotion period will be indirectly be inclusive in the
market price of the services.
PRICING METHODS
Season pricing
This setting the price of products and services according to seasons
Non-Bargaining pricing
There will be no bargaining between the buyer and the seller negotiating that is to reach a
consensus.
Penetration pricing
This is the lowering of price below competitors to increase your share in the market.
Competition oriented pricing
Business set prices after careful consideration of the competitive market structure. The business
can provide services at a lower or higher price in line with the competition.
Psychological pricing
A product price is set at a full number. The price setters feel that such a price has an apparent
psychological significance for the customer perspective.
2.5.3 PRICE TABLE:
SERVICES

PRICES

Nutritional meals and snacks

2000 shillings per month.

Fun, activities, games and crafts

2000 shillings per month

16

Transportation

1000 per month

Tutorial or homework assistance.

1000 shillings per month

Necessities like diapers, water, pottys, chairs,

tables and beds e.t.c

2500 per month

Annual field trip

800 shillings per trip

Medical fee

2000 shillings per month

2.6 SALES TACTICS

Direct Selling Methods

Coming face to face with the potential clients

Interrogating the customers enquiries

Location the potential customers.

Learning the customers attitude towards the services

Advertising the services at the counter

Giving advisory services to customers services on the stage

Meeting to customers objectives.

Indirect Selling Methods

Public announcement of services through the television

Public announcement of services through the radios

Advertising the business services through the posters

Calling for exhibitions selling services at a reasonable cheap

2.7 DISTRIBUTION STRATEGY

The distribution channel of my products will include:

Business Representatives: These will be through on-line or through a team of members of

the business in line of sales. They will be required to promote sales through negotiating
with the customers, since one will not have to pay for all the service.
17

Mode of transport
Road Transport
This will be used to transport the children to and from their homes. It will also be used to
transport older children to and from their schools for those needing child care before and after
school. The approximate cost of transport through this means will cost Ksh 800 per month
PROBLEMS ASSOCIATED WITH DISTRIBUTION
Accidents
It will be hard to predict an accident on the way which will be a huge loss for the business and
the children's families
Poor Infrastructure and Communication
Poor road conditions such as pot holes, mud, rough and bumped roads would delay the children
to their schools and homes.
In communication there are interior places where there is a problem.
Strategies to overcome the challenges:
For muddy and untarmarked roads, employ the uses of four wheel drive vehicles. Different
vehicles can be used to transport the children to their various destinations.
Well experienced drivers will be employed so as to avoid issues like accidents.

18

CHAPTER 3
3.0 Organization and management plan
As described earlier in the business description, Precious Moments is a patnership form of
business significantly meaning that both parties will be in charge of the business have several
duties and responsibilities which are very crucial and needs to special attention . These will be as
follows:
Hiring and recruiting and firing of employees:
It will be our duty and responsibility to enroll new employees to assign recruitments and to hire
new employees. For one to succeed through our

enrollment they must have the desired

qualifications and have passed the interior interview which we will be conducting with the help
of some of our staff. Recruitment of new members will be through direct interview whereby one
will be required to come face to face with the interviewers for examination and also indirect
interview whereby applications will be invited through letters a, telephones , or emails . After
enrollment one will go further training through a trainer assigned for that duty.
The manager will be the chief legal advisor of the any matter arising in the business, should be
directed to me whatever the circumstance and my decision will be final
I will be chief organizer of the staff members, duties and responsibilities
I will be the overall in charge of all business operations in relation to contracts, sales, purchases,
installation and maintenance
I will be the one to decide on salaries and allowances of m employees
I will be entitled to not less than Ksh 45,000 per month from the profits, putting into
consideration the business progress.

19

ORGANISATION STRUCTURE

Board of
Directors

Chief Director

Co-Chief Director

Business
Manager

Secretary

Accountant

Child care
Teacher

Child care
Nurse

Child
Attendant

3.1 BUSINESS MANAGER(S) AND QUALIFICATIONS

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

20

Cook

3.2 PERSONEL, NUMBER, QUALIFICATIONS AND DUTIES.

PERSONEL

NUMBER QUALIFICATION

DUTIES AND
RESPONSIBILITIES

Business
manager

Diploma or degree holder in

managerial skills.
Experience of about 3years
in a related field. Age 2630years. Good
communication skills.
Computer literate.

My co-actor when am not around.

Supervising senior technician.
Assisting in recruiting new
employees.

Secretary

Diploma in secretarial
studies. Computer Literate.
Age 21-28years old. Perfect
communication skills.
Priority given to ladies.

Receiving phone calls and

forwarding to respective personnel.
Welcoming clients before meeting
senior officers. Signing contracts.
Directing clients.

Business
accountant

At least a certificate from

KASNEB. Aged 20-26years
old. At least 2years
experience. Good
communication skills.

Keeping business records.

Recording all transactions
performed inflows/outflows.

Bus driver.

Aged 22 years and above.

Posses a commercial
Driver's Licence with P
(Passenger) and S (School
bus). Endorsements in a
clean driving record. Pass a
pre-employment criminal
backround check and drug
test.

Transportation of children to and

from their homes. Will carry out any
transportation needed.

Child care
teacher

A diploma holder in early

childhood. Ladies will be
highly prioritized

Helping children who attend other

schools with their homeworks.

At least 2 years experience

21

Child's nurse

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

Assessing, planing and carrying out

ursibg care requirements. Writting
clinical records of every child.

Child
attendant

Certificate in early children. Will be carrying out all services

Well competent in child care. involving child care.
Has a good personality.

Cooks

Certificate in catering.

Kitchen responsibilities.

3.3 RECRUITMENTS, TRAINING AND PROMOTION.

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

Advertising through the newspaper leaflets and posters vacancies

Collection of application letters

Sorting out the application and selecting those who have met the requirements

Posting interview appointment letters to those who have made qualified

Sending the regrets to those who did not make meet the requirements

Conducting interviews to the applicants

Selecting the successors

Introducing the new employees to the new members of staff

3.3.2 TRAINING
Methods of Training
Indoor Seminars
This is where business employs an expert to train the workers on different skill son working

22

On the job Method

The business will employ workers who will be trained as they do their work; they gain
knowledge and skills as they continue working
Off the job Method
This is whereby the trainees are given leave to go and train elsewhere. They can be sent to a
college or big companies or take a course
Reading
Workers can also gain knowledge through reading journals, magazines, and books which are
related to the trade area
3.3.3 ADVANTAGES OF TRAINING
There is a high performance of the business
There is uniformity of the procedure since every person is well skilled
The workers are less supervised
Development of manpower
There is economy use of materials and equipment since all laborers are well trained on how to
use the equipments
Enables workers to deal with complex issues
3.4 RENUMERATION AND INCENTIVES
N0

Staff members

Basic
salary

allowances Total per

month

Total per
year

Business Manager.

30000

10000

40000

480000

Secretary

20000

5000

25000

300000

Business Driver

5000

3000

8000

96000

Child Care teacher.

15000*2

5000*2

20000*2

240000*2

Child nurse.

15000

3000

18000

216000

Child Attendant

7000*9

3000*9

10000*9

120000*9

Cook

5000

2000

7000

84000

Total

168000

60000

228000

2736000

23

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

LICENCE

CONTACTS

AMOUNT PAID
(ksh)

Business license

Nairobi city Council P.O Box 30075 Nairobi

5,000

Electrical license

Ministry of energy Nairobi P.O Box 30582

Nairobi.

1,500

Contract license

Town council telephone 020310112

1,500

Certificate of
registration

www.attorneygeneral.co.ke

1,800

Total cost

9800

3.6 SUPPORT SERVICES

Names of services

Cost per month

Ksh)

Total cost per year

(Ksh)

transport

18,000

216,000

Water and sewerage

3,000

36,000

Health/medical

2,500

30,000

Electricity

2,000

24,000

Postal

200

4,000

24

Legal/advisory
services

2000

24,000

Banking

500

6000

Mobile/telephone

2,000

24,000

Security

4,000

48,000

Advertisement

55,000

660,000

Stationeries

1,000

12,000

Repair and
maintenance

2,000

24,000

Garbage

200

2400

Email services

200

2400

Total cost

92,600

1,111,200

Contacts of service providers

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

25

CHAPTER 4
4.0 OPERATIONAL/PRODUCTION PLAN
This is the technical part that takes care of the aspects of the business that results in the final
product or services for the customers. Careful planning is required to ensure that the output is
acceptable and of good quality that customers will be willing to spend their money on. The
partnership will ensure planning and control strategies to ensure that "PRECIOUS MOMENTS"
provides the best services to the customers.
The business will be opening at 8:00am and closing at 5:00 pm on daily working hours There
will be cleaning every morning for 15 minutes before opening time. The secretary will take the
position of the reception where all clients and customers pass through.
4.1 PRODUCTION FACILITIES AND CAPACITY
These are the materials that will be need in running of the business
Materials/ equipment

quantity Source name and address

Unit price

Total
cost

Tables

10

800

8000

400

4,000

1,000

125000

5000

5000

900

1,800

JOBAO HARDWARE
P.O BOX 261 NAIROBI

Chairs

10

NYAGOBEI HARWARE
P.O BOX 431 NAIROBI

Benches

125

LUHYIA GENERAL
WORKS
P.O BOX 134 NAIROBI

First Aid kit

GETRUDES HOSPITAL
P.O BOX101 NAIROBI

Shelves

K.K FURNITURES
P.O BOX 42 MADIANY

KITCHEN FACILITIES

700

KAMKUNJI SERVICES
P.O BOX 42 NAIROBI

100

7000

GAS COOKER

TUSKYS SUPERMARKET

8,000

16,000

26

P.O BOX 134 NAIROBI

Computers

P.K COMMUNNICATIONS

20,000

60,000

P.O BOX 12 NAIROBI

Total

217300

4.2 PRODUCTION STRATEGY

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

N0

Staff members

Basic
salary

allowances Total per

month

Total per
year

Business Manager.

30000

10000

40000

480000

Secretary

20000

5000

25000

300000

Business Driver

5000

3000

8000

96000

Child Care teacher.

15000*2

5000*2

20000*2

240000*2

27

Child nurse.

15000

3000

18000

216000

Child Attendant

7000*9

3000*9

10000*9

120000*9

Cook

5000

2000

7000

84000

Total

168000

60000

228000

2736000

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

Names of services

Cost per month (ksh)

Total cost per year (ksh)

transport

18,000

216,000

Water and sewerage

3,000

36,000

Health/medical

2,500

30,000

Electricity

2,000

24,000

Postal

200

4,000

Legal/advisory
services

2000

24,000

Banking

500

6000

Mobile/telephone

2,000

24,000

Security

4,000

48,000

Advertisement

55,000

660,000

Stationeries

1,000

12,000

Repair and
maintenance

2,000

24,000

Garbage

200

2400

Email services

200

2400

Total cost

92,600

1,111,200

28

4.4 REGULATIONS AFFECTING OPERATIONS

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

29

CHAPTER 5
5.0 FINANCIAL PLAN
This section outlines the various expenses to be incurred, expected income from various sources
and how it will be spent.
5.1 Pre-operational cost
These are costs incurred before the business comes into operation. These will include various
material costs and equipment as well as legal documents to ensure smooth running of the
business.
Items

Cost (ksh)

Tables

8000

Chairs

4,000

Benches

125000

First Aid kit

5000

Shelves

1,800

Kitchen Facilities

7000

Gas Cooker

16,000

Computers

60,000

Electricity

2,000

Insurance

8,000

Internet services installation 12000

Water installation

5,000

Telephone installation

5,000

Business registration

3,000

Total

250,300

30

5.2Estimation of Working capital

This is the total amount required to start an enterprise and financing for all the expenses
Working capital= current assets- current liabilities
Items

Amount (kshs)

Cash at bank

150000

Cash in hand

50000

Creditors

450000

Short term loan

800000

Debtors

200000

Working capital

1,425,000

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

31

5.4 PROFORMA BALANCE SHEET OF PRECIOUS MOMENTS DAY CARE AT

ENDING 2015, 2016 AND 2017
1st year

2nd year

3rd year

Cash in bank

100000

170000

200000

Cash in hand

585860

628000

750000

Debtors

68000

75000

90000

Stock

1274000

1300000

1450000

Sub total

1987680

2168000

24900000

Creditors

510000

616000

650000

Sub total

1346400

1634000

1784000

Bank loan

135840

271680

271680

Owner equity

608470

392120

582820

Net profit

699160

759260

795300

Sub total

1234155

1391220

1405300

Total liabilities

2090710

2297000

2638500

Item
Current assets

Current liabilities

Long term liabilities

5.5 PRO-FORMA STATEMENT FOR PRECIOUS MOMENTS DAY CARE AT YEAR

ENDING 2016, 2017, 2018
1st year

2nd year

3rd year

8164400

2598000

2690000

Wages and salaries

576000

684000

744000

Rent

70500

70000

108000

Water

10950

12000

14000

Item
Income
Total income
Expenses

32

Telephone

41850

45000

48000

Electricity

40400

42000

4500

Advertising

22500

26000

30000

Stationery

16200

18200

20000

Transport

5800

62000

70000

Depreciation

9000

18000

30000

Loan payment

135840

217680

217680

Repair and
maintenance

12000

14500

18900

Insurance

48000

68000

83000

Legal expenses

10000

19000

21000

Total expenses

1051240

1316380

1449580

Net profit before tax

720360

775260

810000

Provision for tax (15%)

21200

16000

14700

Net profit after tax

699,160

759260

795300

5.6 Break even analysis

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

33

Break-even point for the first year ending 4TH JANUARY 2016
Item

Amount

Fixed costs
Furniture and fittings

184170

Computers

98000

Insurance

56000

Licenses

14500

Total fixed costs

382500

Variable costs
Advertising

46260

Costs of services(labor)

87200

Telephone

12305

Electricity

16570

Water

4800

General expenses (transport)

81250

Total variable cost

1032385

BEP= 382500* 4721487

4721487-1032385
=489,541.57
5.7 Calculation of profitability ratios
Gross profit ratios
This expresses gross profit as a percentage of sales. It is calculated for the first three years of
operation. Gross profit is the difference between revenue generated from services and the cost of
the services provided. It is calculated as follows;
Gross profit ratio (GPR) = gross profit * 100
Services
=2478887*100
4721487
=52.5%
34

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

5846470.25

Total desired financing ksh 10,600,000

5.9 Proposed capitalization

Bank loan
Owners equity
Contributions

7500000
1300000
1800000

TOTAL INVESTMENT ksh 10,600,000

35

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

36