BUSINESS PLAN

MWILU’S METAL RECYCLING AND

MODIFICATION

INSTITUTION: MERU INSTITUTE OF BUSINESS STUDIES

PRESENTER BY: MULI ANTONY MWILU

INDEX NUMBER: 3041090108

ADM NO: CAE/1422/23

CENTRE CODE: 304109

COURSE CODE: 1503

PAPER CODE:

COURSE: CERTIFICATE IN AUTOMOTIVE AUTOMOTIVE

ENGINEERING

SUPERVISOR: MR.JOSEPH

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILLMENT OF CERTIFICATE IN AUTOMOTIVE
ENGINEERING

i
EXAM SERIES: NOVEMBER 2024 SERIES

ii
 DECLARATION

Declaration by the candidate

I declare that this plan is an original product of my personal work in the field of my study. No one else
has ever presented it for any academic award in any other institution.

PRESENTER BY: MULI ANTONY MWILU

INDEX NUMBER: 3041090108

Signature................................................ Date.................................................

Declaration by the supervisor

This plan has been submitted for examination purpose with my approval as Meru Institute of Business studies
supervisor.

SUPERVISOR:

MR. JOSEPH

Signature............................................. Date.....................................

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 DEDICATION
This business plan is highly dedicated to my lovely parents for their upbringing me to be who I
am and their contribution in financing my education throughout the course

MAY GOD BLESS YOU ALL

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 ACKNOWLEDGEMENT

I would like to send my sincere gratitude to people who contributed to publication of this booklet
by providing kind of assistance I needed.

I also wish to extend my gratitude’s to my parents, my best teachers, who led me believe very
early in life that could be and do anything I set in mind to do, and special thanks goes to my
supervisor who tirelessly guided me.

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 TABLE OF CONTENTS
DECLARATION…………………………………………………………………………………i

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

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

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

EXECUTIVE SUMMARY............................................................................................................. 1

1.1 BUSINESS DESCRIPTION..................................................................................................... 1

1.2 MARKETING PLAN................................................................................................................1

1.3 OPERATION PLAN................................................................................................................. 2

1.4 OPERATIONAL PLAN............................................................................................................2

1.5 FINANCIAL PLAN.................................................................................................................. 2

CHAPTER TWO.............................................................................................................................3

2.0 BUSINESS DESCRIPTION..................................................................................................... 3

2.1 BUSINESS NAME....................................................................................................................3

2.2 BUSINESS LOCATION AND ADDRESS.............................................................................. 4

2.2.1 MAP........................................................................................................................................5

BUSINESS LOCATION SKETCH MAP.......................................................................................5

2.3 FORMS OF OWNERSHIP....................................................................................................... 6

2.3.1 TYPE OF OWNERSHIP........................................................................................................6

2.4 PRODUCTS AND SERVICES IN THE BUSINESS...............................................................7

2.5 JUSTIFICATION OF OPPORTUNITY................................................................................... 7

2.6 THE INDUSTRY...................................................................................................................... 8

2.7 GOALS OF THE BUSINESS................................................................................................. 9

2.8 ENTRY AND GROWTH STRATEGY....................................................................................9

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

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3.0 , MARKET PLAN....................................................................................................................11

3.1 MARKET GOALS.................................................................................................................. 11

3.2 POTENTIAL CUSTOMERS.................................................................................................. 11

3.3 COMPETITION...................................................................................................................... 12

3.3.1 MARKET SHARE............................................................................................................... 14

3.4 ADVERTISEMENT AND PROMOTION STRATEGY....................................................... 14

3.5 PRICING STRATEGY........................................................................................................... 15

3.6 SALES TACTICS................................................................................................................... 15

3.7 DISTRIBUTION STRATEGY............................................................................................... 16

CHAPTERFOUR.......................................................................................................................... 17

4.0 , ORGANIZATION AND MANAGEMENT PLAN...............................................................17

4.1 BUSINESS MANAGEMENT AND QUALIFICATION.......................................................17

4.2 PERSONNEL NUMBER AND DUTIES............................................................................... 18

4.3 RECRUITMENT, TRAINING AND PROMOTIONS...........................................................20

4.4 REMUNERATION AND INCENTIVES............................................................................... 21

CHAPTER FIVE........................................................................................................................... 22

5.0 , OPERATIONAL PLAN.........................................................................................................22

5.1 PRODUCTION FACILITIES AND CAPACITIES............................................................... 22

5.2 GROUND PLAN OF THE BUSINESS..................................................................................24

5.3 PRODUCTION STRATEGY..................................................................................................24

5.5 REGULATIONS AFFECTING OPERATION.......................................................................27

5.6 LICENSE PERMITS AND BY LAWS.................................................................................. 28

5.7 SUPPORT SERVICES............................................................................................................29

CHAPTER SIX..............................................................................................................................31

6.0 THE FINANCIAL PLAN........................................................................................................31

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6.1 PREOPERATIONS COST......................................................................................................31

5.2 WORKING CAPITAL............................................................................................................ 32

6.6 BREAK EVEN LEVEL.......................................................................................................... 35

6.7 EXPECTED PROFITABILITY RATIONS............................................................................36

6.8, DESIRED FINANCING........................................................................................................ 37

6.9, PROPOSED CAPITALIZATION..........................................................................................37

vii
i
 CHAPTER ONE

EXECUTIVE SUMMARY

1.1 BUSINESS DESCRIPTION

In this chapter details location of the business, is located in Meru County, Makutano town just
forth five kilometers from Meru town. The business is under sole proprietorship and the owner of
the business is sole proprietorship.

The product services offered are suspension system repair and maintenance and engine overall.
The business employs modern tools and equipment in operation with qualified personnel to
provide customers with the best quality services. The industry continues as well as expanding to
become established firms.

The main goals of the business were to attain a profit of over 800,000 annually and quality
services provided to many customers and opening the business across the country. Before the
business commencing advertisement is done through newspaper and posters to reach mass of
people. The theme is free service offer to customers with miner faults as a means of attracting
customers.

1.2 MARKETING PLAN

Under this, the following are discussed, the potential customer and the population growth of the
market share each of the Generator competition and stages set to overcome the competition
existence.

The market expectation is expected to cover areas like Timau, Nkabune,Mutuati , and Kiirua.
The major competitors mentioned are Mutindwa Auto Generator, Sun-shine Generator and
Ingco Auto Generator.

The firm will employ all the machines and equipment to ensure time is utilized, good, quality
services at fair price are offered and competent employees are required to the firm the
business will employ both direct and indirect distributors.

1
1.3 OPERATION PLAN
In this chapter the aspect of the employee are dealt with different angle. This included duties
qualification and recruitment, responsibilities, selection, motivating employees and training
strategies laid to cab the changing technology

There is also remuneration and incentives of employees in terms of payment. Legal

information are required in the business such as permits, license and by laws before starting
any business.
The business employs banking services, insurance services, post service, telephone water
and electricity for the smooth and effective operation.

1.4 OPERATIONAL PLAN

This chapter deals with facilities and their capacity. It describes the quality of each item.
These facilities include adjustable spanner, hand operation grease gun, Arc welding machine,
battery charging machines and equipment, voltmeter chemical fire extinguishers filler gauge,
ordinary pressure Gauge office chairs, cabinet and type writer.

The operation is also featuring in this chapter as follows reception, work shop manager job
guard, services and payment receipt issue. The regulations affecting the operations are also
described in this chapter.

1.5 FINANCIAL PLAN

In this chapter contains the description of fund service including owner’s equity, relatives,
friends and family contribution and loan from the bank. E.g. Equity bank. Also in the working
capital estimate, pre-operational cost incurred, proforma statement, balance sheet, cash flow
projected. The break-even level is 180,347.00

The calculations are also done for the

following Gross profit - 125%

Return on equity – 10.8%

Return on investment – 160.7%

The desired financing – 842,000

The proposed capitalization- 1,970,000

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 CHAPTER TWO

2.0 BUSINESS
DESCRIPTION Introduction

This chapter entails the following: Business name, Business location, address form of
ownership, production and service in the business, justification of opportunity, industry, goals
of the business and entry into growth strategy

2.1 BUSINESS NAME

The Business will be a sole proprietor type and its name will be Mwilu’s Metal Recycling and
Modification and the owner chooses the name for its simplicity and its collection of his names.
That is Geofrey Muli. Combining together reads Mwilu’s Metal. The business will deal with
all kinds of services as per the customer requirement.

BUSINESS LOGO

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2.2 BUSINESS LOCATION AND ADDRESS
The proposed business will be allocated in Meru County, Makutano town just Forty five
kilometers from MERU town. It will be operating opposite shell petrol station operating for
24 hours. This will help the business to have more generators to be serviced throughout the day.

The premises is a permanent building and it has enough space for parking and a conducive shade
for the customers to rest while waiting their generators. This building has electricity, WATER
AND TELEPHONE SERVICES. There is availability of security because the premises is next
to Kinoru police station.

The means of communication is also very effective since it is situated along a tarmac road which
will facilitate a smooth running of the business. Rent for the premises is only Ksh.5500 per
month and from the people comment operating in the same building the owner of the premise has
no intension of increasing the rent for they have been paying the same amount for the last five
years.

Electricity supply, water and telephone bills are charged separately and according to the
meter reading,

The following is the business contact;

Mwilu’s Metal Recycling and modification

PO. BOX 140.

MERU.

Telephone;0712464322.

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 2.2.1 MAP

BUSINESS LOCATION SKETCH MAP

KINGSLEY COLLEGE
MERU HIGH
SCHOOL

MERU INSTITUTE OF BUSINESS

STUDIES
MUTINDWA AUTO
MOTORS

SHELL PETROL STATION

KINORU POLICE
STATION
MWILU’S METAL RECYCLING
AND MODIFICATION

MERU DISTRICT
COMMISSIONER

5
2.3 FORMS OF OWNERSHIP
This business will be formed under sole proprietorship. This means that the proprietor has
enough technical to know about the management of such business.

The owner of the proposed business will contribute ksh.700,000 to finance the project. He
intends to rent s premise which rental as KSH4000 per month. The building is required with
electricity and piped water.

Description Contribution (ksh) Contribution (%)

Owners’ Equity 700,000 60
Family 400,000 20
Friends 300,000 10
Relatives 300,000 10
Total 1,600,000 100%

2.3.1 TYPE OF OWNERSHIP.

The business will be sole proprietorship kind of business. He decides the business to be sole
proprietorship because of the following advantages

i. Simplicity of the formation

A sole proprietor can undertake any lawful business activity for profit nature. The proprietor has
to develop an idea set the goals and then develops it into profitable operations.

ii. Personal incentive

A sole proprietor takes a personal interest for the success of a business. In this way, he
can maximize his profit.
iii. Independence
The owner is independent and so can put his plans into action since he does not have to
consult any other person. He may change the nature of his business as he wishes to adopt
it to the changing market management.
iv. Flexibility management

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 The fall authority rests with single proprietor. He can make prompt decisions in carrying
out policies, changing the methods of production, reducing or increasing the price of the
commodities and delegating responsibilities.
He can also take quick action for increasing the production activities of the workers by
giving them incentives,

2.4 PRODUCTS AND SERVICES IN THE BUSINESS

The business will offer the following services to the customer.

a) Engine over haul

The performance of the engine is being disorganized first before final decision of overhang
the engine.

In case the engine does not require complete overhaul only faulty parts will be disorganized
removed and replaced by new one or repair. Regular cleaning and checking of the engine will
also be done.

b) Suspension system repair and maintenance

This includes repair and servicing of all kinds of suspension system and checking the
centre bolts, servicing shackles and replacing of the bushes.

2.5 JUSTIFICATION OF OPPORTUNITY

Generators repair service industry has a high potential generating income for economic growth.

The manager of the business feels that the kinds of a venture chosen will be no doubt succeed
because the technical know-how having in the field of generators technology, skill and practical
experience acquired will be able other personnel to provide the customers the best quality
services.

The site to which the business is located contributes greatly to satisfy the kind of business
opportunity since it is in the term and near highway where targeted customers are.

7
With the advancement of the technology, the manufactures are producing more complicated
generators which the Jua- kali Generators are not able to service.

The proprietor takes this as advantage to MWILU’S METAL RECYCLING AND

MODIFICATION that will employ modern tools and equipment in its operations and with the
qualified personnel to beat these competitors.

According to the research carried out by the proprietors showed that 2/3 of the people around this
area who owe personal generators are not satisfied with services they are being offered by these
existing Generators.

2.6 THE INDUSTRY

Mwilu’s metal Recycling and Modification is fully under the generator- industry. This industry
ranges from small Jua -Kali Generator to big established generators manufacturing companion.

Generators technology, however, has continued to develop from those early times and a great
change has at the increased compound to the generators we have at the current times. These
changes have been done in all modern generators, right from the body transmission suspension,
noise regulation, braking, and any other system within a generator.

They have put much emphasize in the development of the engine as a unit and the transmission
whereby in the gearbox and differential unit.

The future of the industry is clearly defined as new technology will continue to advance, this
is to say Mwilu’s metal Recycling and Modification stands a very good chance to grow within
the advancing technology as well as expanding to become an established firm in future.

The generator industries which have expanded are Toyota Kenya and D.T Dobie. Therefore
generator services industries have proved a major income generating especially in terms
where generators are involved in almost all activities.

The local technicians have been trained new technologies and some have been sponsored to
manufacturing industries in different countries e.g. China, India and Japan in order to cope with
new.

8
2.7 GOALS OF THE BUSINESS
The proposed business will have the following goals.

SHORT TERM GOALS

i. The firm aims at satisfying the needs of her customer in relation to the quality of
service being offered.
ii. Ensuring that the machine and equipment required are purchased in the year
before the commencement date.

LONG TERM GOALS

I. The Mwilu’s metal Recycling and Modification aims at ensuring smooth running
of the business by making a good duty assignment to employees
II. The business aims at expanding its firm by installing modern machines and
equipment and open branches as much as possible.
III. The firm aims at training their employees to improve the capabilities in performing
their duties thus utilizing available labour force.

2.8 ENTRY AND GROWTH STRATEGY

Before the business fully starts its operational, it will advertise through the posters and
newspapers so as to reach mass people. Posters will be put along the main tarmac roads, Tea
factories, sawmilling and pineapple processing factory which are available within that area when
even at the market places to inform customers of the existing business and the kind of services it
will offer.

The owner of the business is also planning to offer free services to customer with minor faults as
a means of attraction and retailing customers. The business will offer the services at a reasonable
and competitive price.

9
The business will assess the current prices being charged by the existing similar business and
reduced a small percentage of those prices so as to attract more customers.

Another free service which the business will offer is generator cleaning free of charge. The
owner of the business is also planning to open new branches within three years where he will
introduce another services so as to facilitate the requirement of the customers.

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 CHAPTER THREE

3.0 , MARKET PLAN

INTRODUCTION

This chapter entails the following: market goals potential customers’ competition, advertisement and
promotion strategy and distribution strategy

3.1 MARKET GOALS

SHORT TERM GOALS

i. Having good characters and discipline among the workers

ii. Improving the facilities that are used to store the medicines.
iii. Improves the products to increase the profit yield.
iv. Recruiting of various workers for efficiency operation
v. To ensure punctual in the business

LONG TERM GOALS

i. Competition to the sustainable business growth

ii. providing quality products and services to the customers
iii. Its goal of expanding the growth of the business
iv. Assist of overcome crisis that business encountered
v. Creating job opportunities

3.2 POTENTIAL CUSTOMERS

The location of this proposed business has made strategic to potential customers. This is
because the town surrounding this business has many schools few factories parastatal companies
such as Kenya Tea Development Agency, Kenya Post and Telecommunication, Hospital. The
customers are schools, factories and petrol stations which are described below.

a) Institutional customers

Schools such as Meru High School, Kaaga Girls High School and Meru institute of
business studies have school generators. This will also form the main targeted group of
business
11
customers to the proposed business who dependent on generator as a source of power during
electricity breakdown since they are not more than three kilometers away from the Generator.

b) Commercial customers

The major retarget customers are Tea Factories and pineapple processing factories which are
eight hundred metres away from the premises business.

These factories have generators for generating power during electric shortage so as to enhance
continuous production

c) Petrol station

The Shell petrol station which is opposite the business premise will greatly contribute to
Generators. The petrol station uses generator as a source of power during electricity shortages.
Maintenance and repair of the generator will be done by the premise

3.3 COMPETITION
There are many competitors at Meru as a whole and it is so risk to start a such a business when
it is clear that there are many established Generator in the town.

These competitors will be manly the Jua – kali people who are currently spread all over the town.
These competition are Mutindwa Auto-work, sun shine, INGCO Automobile Generator.

i. Mutindwa Auto-work

This is well established Generator which has been in existence for more than six years. It is
situated at Meru Makutano Junction road which is one kilometer away from the proposed site
of the Mwilu’s metal Recycling and Modification

ii. Ingco Automobile Generator

The owner of the business was formally an employee at one of the tea factory in the area. It is
situated two kilometers away from MWILU’S METAL RECYCLING AND MODIFICATION

iii. Sun-Shine Generator

12
Owned who is both the mechanic and a business man. Sun-shine Generator is situated an half
kilometer away from the proposed site of the business.

COMPETITION STRENGTH WEAKNESS

Sun-shine Generator - The charges are fairly and - Most of his employees are
so attracts more customers Jua- kali men
- The business is located at - There is no good security
a strategic point where to in the premises.
good transport and - The business opens late
communication. and closes early
- The owner of the business
has technical..............on
generators mechanics
Mutindwa- Auto-works - The owner of the - Due to lack of managerial
Generator is very skills, the business
influential man who normally face financial
knows how to talk to problems
customers. - The owner of the business
- The business has been in has the Jua – Kali
operation for five years technology as he never
hence it has gained went to any vehicle
population training centre
- This business offers credit - This business is also
to his customers as away irregular since sometimes
of retaining its potential they open late and at
customers times they do not open
Ingco Automobile Generator - The business is situated at - Few employees are willing
a strategic position where to work in the business
at has good access to due to aims of underpay.
customers. - The services charges are
- The owner of the business very high.

13
 is well known especially - The owner of the business
by his colleagues is so strict such that the
- Most of its employees are employees do not have any
well trained and have freedom of speech on the
experience in generator running of the business
mechanics that is the owner has no
motivation.

3.3.1 MARKET SHARE

Mwilu’s Metal Recycling and Modification will be located in a strategic point where it will
have access to a very large percentage of its market share about 20% of the business customers
which is an indication of great encouragement of the proposed business.

From the data collected, it was found that the population of the Meru town is 20,000 persons and
out of this population statistical analysis show that the potential customers were found to be
40% of the total population. According to the research carried out, majority of this customers
come from parastatal bodies, factories and transit generators transporting goods to various towns
.

The total Generator sales for each of the competitors’ is to be ksh12,000 per month. burying up
a total of Ksh.36,000 for the three contributors which sun-shine Auto works and Ingco
Automobile Generator. Within one year, the proposed business will have the total average sales
to be Ksh.900,000 when the business becomes fully operations, it will aim at getting 65% of
this total sales.

3.4 ADVERTISEMENT AND PROMOTION STRATEGY

Promotion methods

The proposed business will employ free services promotions like generator cleaning which
will attract more customers. This promotion offered to customers who are regularly setting
services in MWILU’S METAL AUTOMOBILE GENERATOR.

Advertisement

14
The advertising methods of the name of the business will include;

a) Sun-Posts

The sun-posts will bear the name of the business, address, telephone, location and services. It
will be placed at the main road junction.

b) Posters

Posters will pin at a strategic point before the business starts so as to inform the public of the
new business.

The posters will contain the following.

i. Name of the business

ii. Location of the business
iii. The products and services offered
iv. When the business will star on operation.
c) Requital meetings

The owner of the business will organize with the requital heads so that as they held their
meeting, barazas fund raising and he/she will set a chance to give to adherence.

3.5 PRICING STRATEGY

The pricing of products and services is an essential activity I any business. Inorder to make and
maximize profit as well set price is detailed to ensure a good that will cater fort the amount
spent in expenses.

Environment Policy

This will include taxes imposed on the permits, insurance and other requirements. These factors
will arise. The factors will raise the cost of service hence resulting cost price rise.

3.6 SALES TACTICS

The proposed business will employ the direct method selling in order to reach potential
customers effectively.

15
This business has employed direct contact with customers so as to understand them better. To
know the preference like attitude of the customer sake as for the services offered by the business
are concerned. It will also enable the business to know whom the business can offer sales or
services in credit term.

RECRUITMENT, RETAINING AND REMUNERATION SALES STAFF.

The business will recruit new employees through advertisement, interview and posters. It will
advertise the available posts and qualification in regional meetings through local regional
leaders. Also the owner will interview the meeting orally as per the posts.

3.7 DISTRIBUTION STRATEGY

The business will employ both direct and indirect distribution. In the direct channel of
distribution, the customer will be allowed in by security personnel who will direct him to the car
park. The customer will be directed to Meet the manager in his office and explain all his relevant
problems concerning his/her vehicle and directs the generators to the department concerned with
the problem diagnosed for repair.

In the indirect channel of distribution, he owner of the vehicle will go directly to the workshop
after being allowed to enter in and take to the mechanic who will direct him to the right
department where he/she will be served.

The mechanics prepares a report on what has been done on the vehicle is handled over to the
owner.

The manager will make sure that he will retain his customers by offering credit facilities to
them. Those that he is sure they are creditworthy. Also through washing the vehicle after
service. Also through free inflation of the tyres. Again by testing the vehicle to make sure that it
is in good condition.

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 CHAPTERFOUR

4.0 , ORGANIZATION AND MANAGEMENT PLAN

INTRODUCTION

This chapter entails the following: organization structure, management personnel and other
business personnel

4.1 BUSINESS MANAGEMENT AND QUALIFICATION

The proposed business will be having a manager who will be directly involved in the running of
the business and all operation through planning, organizing and coordinating the entire business
enterprise for the successful and profitable business.

The following are the qualification that the business intent to look for a manager.

POSITION QUALIFICATION
MANAGER 1. Should be 28-32 years
2. Should be married
3. Should be having experience of at least two years
4. Should be Certificate holder in Motor- vehicle,
automotive, engineering with the managerial skills from
recognized
institution.

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4.2 PERSONNEL NUMBER AND DUTIES
POSITION NUMBER DUTIES
MANAGER One i. He will be responsible for the employed salary
ii. He will be the overall Generator manager
iii. Planner – he will be responsible for all the activities to
be planned in the business on daily basis and ensure that
the services are directed to customers effectively.
iv. Organizer- He is responsible for purchasing of the
materials recruiting procedure for the personnel as well
as dividing the work as per specialized among the
employees
v. Controller- He is responsible for the control of running
for the business that is by injecting the performance and
advertising his employees
vi. Coordinator- His responsibilities are for coordinating
and reconciling of individual, social and organization
interest of all the employees.
SUPERVISOR ONE i. He should be time conscious
ii. He should have ability to set achieve personnel
objectives
iii. He should be good aiming and quick in decision making
ELECTRICIAN TWO - They will be in charge of charging process and repairing
electrical systems and equipments.

MECHANICS THREE - They will be serving and repairing vehicle

OFFICE TWO - To deliver and collect nails need be
CLEANER - To wash the generators for the customers
- To ensure that all the workshop are maintained cleaned
throughout
WATCHMEN TWO - They will be in charge of the security in the firm. e, g by
identifying any visitor entering the firm.
TOTAL ELEVEN

18
 ORGANIZATION CHART

MANAGER

WORK SHOP FARMER SUPERVISOR

ELECTRICIAN
MECHANICS OFFICE WATCHMAN
CLEANER

19
4.3 RECRUITMENT, TRAINING AND PROMOTIONS

POSITION RECRUITMENT TRAINING PROMOTION

METHODS
MANAGER Interviews The business will After three and half
The interview will be carried intends to have his years there will be an
at the business premises employees attending increment of salary .
seminars
WORKSHOP Friends & relatives Seminars Giving adherence
SUPERVISOR The manager may ask them to salary
assist him in deploying
personnel who are qualified
indifferent department in the
workshop
OTHER Interviews Short course Issuing overalls to the
PERSONNEL employee
Creating completion
among worker by
providing gifts to the
best mechanism.

20
4.4 REMUNERATION AND INCENTIVES
POSITION REMUNERATION INCENTIVES
Manager Free medical cover
Foreman House allowance
Electrician Bonuses
ED1 Mechanic / Driver Travelling allowances
EDI Mechanic Paid leaves
GD 2 Mechanics Paid leaves
QD 2 Cleaners Meals
WATCHMAN Gifts
TOTAL

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 CHAPTER FIVE

5.0 , OPERATIONAL PLAN

This chapter shows how MWILU’S METAL RECYCLING AND MODIFICATION will
produce its products and services

5.1 PRODUCTION FACILITIES AND CAPACITIES

MWILU’S METAL RECYCLING AND MODIFICATION will require the following at the
start of its operation.

Major Items Number Capacity Cost Mode of Installation

Purchase
Adjustable 2 Medium Large 3000 Cash 1 week
spanner
Cutting pliers 2 Medium 2500 Cash 1 week
Gauge 2 4500 Cash 1 week
Round Nose Pliers 1 Small medium 2300 Cash 1 week
Filter gauge 1 Small / medium 1500 Cash 1 week
Grease gum 1 Small 2500 Cash 1 week
Pipe wrench 1 Medium/ large 1200 Cash 1 week
Wheel wrench 1 Medium 4200 Cash 1 week
Ordinary pressure 2 Large Cash 1 week
Set rings of 1 Small medium 3000 Cash 1 week
spanner Large
Spanner 1 Large 12000 Cash 1 week
Set of distributors 2 Small medium Cash 1 week
Battery charging 1 Small medium Cash 1 week
100
Screw drivers 1 150,200$300mm 2000 Cash 1 week
Machine and 1 25000 Hire purchase 2week
equipment
Voltmeter 1 Medium 1500 Cash 1 week

22
Plug cleaning $ 1 Medium 1200 Hire purchase 2week
testing equipment
Arc welding Medium 30000 Hire purchase 2week
machine
Compression 1 Medium 12000 Cash 1 week
gauge
Engine stand 1 Large 28000 Cash 1 week
Work bench 3 Large 35000 Cash 1 week
Value resealing kit 1 Medium 4000 Cash 1 week
Hydraulic jack 2 medium 30000 Hire purchase 2week
Overall 10 Medium 10,000 Cash 1 week
Timber Medium 60,000 Cash 2 weeks
Office chair 4 Small 12,000 Cash 1 week
Paper punch 1 Small 250 Cash 1 week
Stapler 1 Medium 500 Cash 1 week
Type writer 1 Medium
Office table 2 Medium
Cabinet 1 Medium
Sand bucket 1 Large
For petrol fire 1
Tongue mensh 1 Medium large
Chemical fire 1 Large
Extinguisher 1
Engine timing 1 Medium
Equipment 1

23
5.2 GROUND PLAN OF THE BUSINESS

Watchman

Toilet
Manager office

Workshop

General store Water tank

5.3 PRODUCTION STRATEGY

The average production cost for MWILU’S METAL RECYCLING AND MODIFICATION

A) Monthly production costs

DESCRIPTION AMOUNT
Raw materials 52,000
Labour cost 12,000
Operating expenses 16,000
TOTAL 80,000

24
 B) Average monthly production capacity

DESCRIPTION AMOUNT
1. ENGINE OVER HAULINE 60,000
Petrol 60,000
Diesel 80,000

8
8
10
2. SUSPENSION REPAIR
leaf spring 50,000
Mac-Pherson strut 70,000
Wesh bone 60,000

5
7

3. BREAK SYSTEM REPAIR

Drum break unit 80,000
Disc break unit 70,000
Power Assisted 50,000
TOTAL 580,000

C. product design and control

Mwilu’s metal Recycling and Modification will try and produce more quality products even
through machines and equipment at the beginning the business will attain them as the business
continues operation.

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As the business has become a stable and generate enough source of income. It will open a
spare part shop to sell to customers and also attracting more customers who will boast the
business.

Quality Control

The services given to the customer should be made sure that they are of high standard and
should be maintained this through checking and testing of the generator by checking fuel system
and break system.

Before the generator is handed over to the customer it is washed and make sure that everything
in generator was processing is returned i.e good for the owner.

5.4 OPERATION PROCESS

Mwilu’s metal Recycling and Modification production is as follows.

RECEPTION

WORKSHOP

JOB GUAD

SERVICE

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 i. Workshop manager

To check the car and direct the customer to the job guard

ii. Job guard

To list down the required materials before giving services

iii. Payment and receipt issue

This is the final stage where payment is made and issuing of receipt.

5.5 REGULATIONS AFFECTING OPERATION

A Government regulation is the back born of the business of each business

The proposed business will abide by the all at government rules for its smooth running so as to
accomplish its set goals which are expressed below.

i. Health regulation

The working condition of the business should be made favorable by cleaning, collecting all
the rubbish in the compound like used tins and chips which might cause injuries to the
workers or customers health standards good advantage and proper ventilation should be
considered in order to experience good production in the area of the business.

ii. Environment regulation

To maintain the environment, the premises should have dust pit for disposal of waste and
dust bins will be provided to ensure that litter does not spread around.

iii. Security

Employees should be having insurance policy incase insured by machine, The premises should
be insured against fire.

iv. Trading license

Before the commencement of the business, the license should be acquired from the local
government for its smooth operation.

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 v. Building regulations

The proposed business is bulky following building set by the government. This building has
been partitioned into sections but was not grow enough room for ventilation.

The employee will ensure that there is good sanitation. The owner of the business will also,
ensure that the fire extinguisher is always filled and inspected for safety purposes.

5.6 LICENSE PERMITS AND BY LAWS

As a legal requirement to any business that is to be started within a particular region, has to pay
some amount to the municipal council and other legal authorities the owner of Mwilu’s metal
Recycling and Modification, will undertake some of the legal requirement.

LICENSE

This is a legal requirement for the start of any business which is obtained from country council
within the county the business jurisdiction. The business trade license will get from Meru
District head quarter at a fee of 2500.

PERMITS

It will be certificate of registration fee from the registrar of the business name act. The trading
permit will be get from county council of Meru and Makutano town at a cost of Ksh2,000

BY-LAWS

The business will formulate its By-laws and will be appointed the premise.

The following will be required the employee to adhere to them strictly. They includes

i. Labour regulation Act 233

Labour regulation act requires every employee of the purpose business to be register.

ii. Health and safety regulation act Cap 242.

Health regulation ac entails that maximum cleanliness of employee should also be maintain
in the processed business safely of employee and should also be maintained.

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 iii. Employment regulation act cap 226

This employment regulation act entails the rule and regulations which should be adhered to
employment Acts advocate for equity and fairness to the workers should be given good
remuneration as per work done.

iv. Environment regulation acts 124

Environmental regulations acts entail consideration and project measures. It should be

undertaken to protect our national environment population should be evidence initially
extremely.

5.7 SUPPORT SERVICES

The owner of the business premise should employ the following for the smooth and effective
operation of the business

i. Insurance services

The business will insure its structure, tools, equipment products and services and employs are
insured against risk and uncertainty. Information concerning insurance for the business s to
be obtained from AMACO insurance company.

ii. Post services / telephone

The posters will have postage at Nakuru postage office. The Kenya telecommunication and post
services is to provide telephone services and installation and letter posting services to the
business.

iii. Banking services

The business will apply banking services from equity BANK Nakuru 3000 metres away
from the business. The business deposits money and operates a current account.

The bank will provide services such as provision of loan keeping enterprise financial and
giving dividends.

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 iv. Water and electricity

The council has big water project tame supply and half kilometers away from the business. The
payment fee and monthly charges depend on the amount of water individual use.

The electricity supply is well equity all over the place. It is only installed by the Kenya
power and lightening company asset paying ksh.30,000.

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 CHAPTER SIX

6.0 THE FINANCIAL PLAN

This chapter mainly deals with the financial aspects of Mwilu’s metal Recycling
and Modification takes places as the business and be progressive.

6.1 PREOPERATIONS COST

These are cost incurred before the business starting its operations.

ITEM COST (KSH)

Business premises 600,000
Insurance 2500
Consultancy 1500
Business license and permits 6,000
Electricity and water deposit 3500
Legal fees 2,000
Telephone 4500
Tools equipment 75000
Repairs and maintenance 3500
Personal expenses 8000
Advertisement 2500
TOTAL 709,000

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5.2 WORKING CAPITAL
This is the estimated amount of capital for MWILU’S METAL RECYCLING AND
MODIFICATION for one operation

ITEMS TOTAL COST

Stock 350,000
Cash in hand 25,000
Cash in bank 150,000
Debtors 15,000
Total current assets 540,000
Creditors 25,000
Short term loans 35,000
Total current liabilities 60,000

Total working capital = total current assets – total current liabilities

540,000-60,000

= 480,000

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Mwilu’s metal Recycling and Modification proforma income for the year ending Dec, 2024

PARTICULARS AMOUNT
Sales 1400,000
Stock 350,000
Grass Profit 1750, 000
Expenses 120,000
Wages & salaries 30,000
Insurance 12,000
Telephone 15,500
Loan 180,000
Repair & maintenance 264,000
Advertisement 230,000
TOTAL EXPENSE 415,000

Net profit before tax 660,500

Tax at 10%

10x 660500 =
100
Net profit after

tax 660500-

66050

= 594450
PROFOMA BALANCE SHEET

PAUL’S BALANCE SHEET

MWILU’S METAL RECYCLING AND MODIFICATION proforma balance sheet as at
1st January 2024 and up at end of 31st Dec 2024 of the business operation.
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AS AT January 2020 AS AT DEC 2020
Fixed assets Ksh/Ksk
Tools & machine 352 000
& equipment
Less depreciation...........................35200 313130
At 10%
352,000 35200 316 800
AS AT JANUARY 2020 AS AT DEC 2020
Current assets
Stock 4200,000 4200,000
Debtors 120,000 120,000
Cash in hand 240,000 240,000
Cash in bank 1800,000 1800,000
6360,000 6360,000

Current liabilities
Creditors 240,000
Short term loan 430,000

720,000

5,956,800-594450

Financed by owners Equity 5,362,350

Net profit 594,450
Long term liabilities
Loan from equity bank 180,000

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6.6 BREAK EVEN LEVEL
This is the level at which in the business neither earns basic nor incur losses.

Variables costs Cost ksh.

Telephone bill 15,900

Electricity & water bill 30,000

Advertisement 23,000

TOTAL VARIABLE COSTS 68,900

a) Contribution margin = total sales – total variables

1400, 000-68900

= 1, 3311,100

b) Contribution margin % = contribution margin x 100

Sales
= 1331100 x100
1400,000

= 95.08%

d) Determination of fixed cost

Items Amount (Ksh)

Wages & salaries 120,000
License 30,000
Insurance 12,000
Total 162,000

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e) Break even level = total fixed cost x 100
Contribution margin

= 162,000x 100
95.1

= 70,347.00

6.7 EXPECTED PROFITABILITY RATIONS

i. Cross profit percentage = Gross profit x 100
Sales

= 1750,000 x 100
1400,00

= 125%

ii, Return on equity = Net profit after tax x 100

Owner’s equity

= 580, 140 x 100

5376,660

= 10.8%

Returns on investment = Net after tax x 100

Total investment

= 594,450 x 100

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 370,000

=160.7 %

6.8, DESIRED FINANCING

ITEM AMOUNT

Pre- operational cost 20,000

Working capital 470,000

Fixed assets 352,000

842,000

6.9, PROPOSED CAPITALIZATION

The proposed capitalization of MWILU’S METAL RECYCLING AND MODIFICATION
is going to include total investment owner contribution, relatives, friends and family

ITEM AMOUNT KSHS

Total investment 370,000
Owners contribution 600,000
Relatives 300,000
Friends 300,000
Family 400,000
1,790,000

MWILU’S METAL RECYCLING AND MODIFICATION.

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