Business Plan

BUSINESS PLAN FORGENERAL BUILDING CONTRACTORSP.O.BOX 86612 -80100JOMO KENYATTA AVE.MOMBASA, [email protected]

PRINCIPAL MANAGERS

MOHAMMED TAHER HAMZA TAHERTel no. 0717452110 Tel no. [email protected]@gmail.com

Business description

General building contractors is a construction company which will be based in Mombasa Kenya which will be specializing in quality construction and civil works at reasonable prices. Our focus is to provide a personal service to Kenyans and give our customers personalized care and attention. Our specialised and well educated team will helps us to know how to satisfy our customer needs and help in bringing this country to better heights infrastructure wise

Business Finances.

The business will need 2 million to get the business up and running. The director will contribute Ksh 100,000 and contributions from family and friends will be Ksh 250,000 as well as a borrowed loan from CBA bank ksh 400,000.

DECLARATION

This business plan is our original work and it has not been submitted for any award in any institution.

NAMESREG SIGN

MOHAMMED TAHER CM/N/0136/9/09

HAMZA TAHER CM/N/0136/7/08 .

PRESENTED TO Mr. Ben

DATE..SIGNATURE.

Chapter 1: EXECUTIVE SUMMARYBusiness Description

The sponsors of the proposed business are partners and they are all currently residing in Mombasa County and who are currently unemployed. The name of the proposed business is General Building Contractors and it will start operating on 1st July 2012. It is located at Mombasa town Kenyatta Avenue and the official Postal address is General building contractors, P.O. Box 86612, Mombasa Kenya. Telephone No. 0717452110 / 0715452110 and email address [email protected]

The firm will specialize in government, public and private construction and civil works. The customers targeted will be mainly government organisation and the locals. The form of business is a partnership of two partners.

Organizational Plan.

The owners of the firm are both literate and are now undertaking a bachelor degree course in Building and Civil Engineering which will be completed by the end of the year. The management team will comprise of Board of Directors, the General Manager, Accounts manager, marketing and sales manager, and the Human Resource manager. The General Manager must have a Bsc in Civil engineering, computer literate, good interpersonal, leadership/managerial and communications skills. The accounts manager must be a CPA III holder, Diploma in business Administration have good public relations and be computer literate. Marketing and sales manager must be a CPA II holder and have a certificate in sales and marketing have good managerial skills and be computer literate. The firm will need only and employees to function as at the year 2014-2015 then licenses with time.

Production/Operational Plan.

The firms main activity is to do building works in all government organisations.The firm will incur monthly labour requirements of Kshs 161,000 and operating expenses of Ksh 182,000

The following are the regulation that will affect the firm both from the government and the local government

Table 1.1 Showing Government and By-Laws Regulations.

Type of requirement

Cost Kshs.

Income Tax

11,000

Certificate of Registration

1,000

Trade License

5,000

Single Business Permit

10,000

Insurance Cover

40,000

Health Permit

500

Total Kshs

67,500

Critical risks and assumptions.

The risks that the firm will encounter will be entry into the market during the early stages of the business due to it being new in the market and the other competitors have a strong hold to the customers. Also the economic instability can affect the business when the economy is not stable thus it causes inflation, political instability that will prevent people to invest and also reduce funding in the government

TABLE OF CONTENTS

Cover Page.1

Executive summary3

Table of contents6

Business description ..9

Background information9

Company location..10

Short term goals.12

Long term goals.12

Industrial trends and prospects12

Entry and growth.13

Entry strategy...13

Growth strategy14

Marketing plan...15

Potential customers15

Marketing analysis16

Competition17

Competitors strength \........................................................................................19

Competitors weakness19

Competitive advantage.19

Pricing strategy19

Sales tactics..2

Advertising and promotion strategy..21

Advertising strategy..21

Promotion strategy.22

Organization and management plan23

Organisational chart23

Board of directors23

General manager..24

Key management personnel.25

Accounts manager...25

Marketing and sales manager.26

Customer services and regulation manager.27

Human resource manager.27

Recruitment training and promotion.29

recruitment29

training and development30

promotion.30

remuneration and incentives30

liscence permit and by laws.31

support services...32

operational plan35

production facilities and capacities..35

operation strategy..35

external and internal factors affecting the firm38

government regulation.39

financial plan41

pre-operational cost..41

estimation of working capital....42

cashflow projection43

profomer p&l account44

profomer balance sheet...45

break even analysis.46

expected profitability ratios.47

desired financing 48

proposed capitalization48

Chapter 2: Business Description

2.1 Business 1

The name of the business was decided by the director of the business as General Building Contractors. It was decided as this because the company was to deal with all types of construction works.

2.2 Business Address and Location

The location of the business is in the main Island of Mombasa, opposite Mewa Hospital next to Malindi Salt Works. The address of the business is as follows:

General building contractors

P.O. Box 86612

Mombasa, Kenya

Email: [email protected]

Tel: 0717452110

MAP SHOWING LOCATION OF BUSINESS

(MAJENGOPRIMARY SCHOOL) (MALINDI SALT WORKS MOM ) ( MOMBASA MAIZE MILLERS) (GENERAL BUIDLING CONTRACTORS Ltd )

(RAILWAY LINE)

2.3 Form of Ownership

The business is a partnership business owned by two brothers, Hamza and Mohammed with a shareholding of 40% and 60% respectively.

2.4 Type of Business

The business is going to deal in;

1. Construction works and renovation works in all government parastatatals.

2. Manufacture, supply and fixing of cabro paving blocks.

2.5 Product/ Service

Services offered include;

1. Construction works from ground level.

2. Renovation of existing structures either from ground level or existing buildings.

3. Supply and fixing of paving blocks.

4. Masonry, carpentry, fabrication, paintwork and all other kinds of finishes.

Products offered include;

1. Paving blocks; 50, 60 & 80 mm quad, uni & flower design.

2. Waterproofing felt.

3. Kerbs, manhole covers, concrete pre-cast slabs

4. Doors & windows (wood finish).

The business has state of the art machinery from Italy. This consists of;

1. Batching plant for building and paving blocks.

2. All kinds of carpentry machinery.

3. Mechanical equipment to carry out earthworks, i.e. roller, excavator, different types of compactors plate, roller, drilling equipment.

The objective of the business is to become one of the largest suppliers of paving blocks in the country and be able to carry construction works of all financial strength in public, private and government parastatals.

2.6- Goals of the business

The objective of the business is to become one of the largest supplier of paving blocks in the country and be able to carry out constructions works of all financial strengths both in the public and private sectors and also the same to apply in government works.

Chapter three

3.1-Customers

In the constructions industry our customers at the moment include only government institutions

Paving blocks industry we have a number of customers. These are Container freight stations (CFCS), offices, residential estates and single houses and portions of roads in the town of Mombasa.

3.3- competition

GBC receives competition from other companies which have pre-qualified with government parastatals.

Main competitors being POMU contractors.

Our main competitors in the paving industry are Bamburi specials products.

3.4-advertisement and promotion

The company advertises by painting all its motor vehicles with the company logo and listing the works it carries out. It has also decorated the wall of its workshop in Changamwe with the name and paintwork showing what works it majors in.The company makes a point of advertising itself on a weekly basis using the Coastweek .

We also use our customers to spread the word around town and if they are satisfied with our works we encourage them to tell others about us to make us known in a short time all over the town. We are considering preparing a newsletter every three months which will show the works we have done and all that are in progress. When potential customers will visit us we shall show them this to advertise our products even better

3.5-Pricing strategy

The board of directors with the managers sat and came to a conclusion that our prices be as follows.

We will charge 25 shs for every sq metre of construction works; this will enable us to make a profit of 3 kshs for every sq metre. The company has decided that for major construction works it will charge 25 kshs more than the cost price depending on the price of the raw materials at that time of the year. The sub contractors will get there share from the cost price making the company get a net profit of 25kshs depending on the financial strengths of the job.

In the paving sector we decided to vary the prices according to the size of the block and GBC will ensure that our prices are not higher than that of our competitors. The lower the price the higher the sales the company will do. This will be an advantage to the firm to outdo the competitors who sale at a higher price.

All our prices will mainly depend on the suppliers selling price. This will be due to increase in tax by the government .Even though GBC will try to keep their prices as low as possible and definitely below the prices of their competitors.

Factors to Consider in Pricing.

Competitors Price

Operational cost

Producers retailing price.

Government regulations on the products (Tax).

3.6- sales tactics

We have a team of qualified sub-contractors who will bring jobs to the company and they get a commission of 2% on every job they bring and go through. We also allow credit facilities to our customers of 60 days if we have a good repo with them. The company is planning to spread the word using the mouth for now and then consider banners and posters around the town. The firm will employ personal selling tactics since it is new in the market and this is one of the strategies to win customers from the competitors. This will be an added advantage as their will be direct interactions with the customers.

CHAPTER FOUR

4.1- BOARD OF DIRECTORS

The board of directorts will include the two partners of the business who will receive all feedback from the general manager they shall employ

4.2-GENERAL MANAGER

The business will be managed by the general manager of the company who will maange all operations of the firm. If both of the directors is absent or out of the country the human resource manager shall take full control of the business.

The G.M shall be having the following responsibilities:-

Prepare the financial plan

Final in decision making

Payroll management

Prepare policies, rules and regulation

Analyse competitors

Qualifications of the G.M should be that the individual has a degree in BA, good decision making skills, be a good leader, have managerial skills and recommendable public relation and communication skills.it would be an added advantage if the individual has some qualification in accounts and computer package.

Starting salary would be between kshs 50000 per month including allowances of kshs 5000.

4.3- personnel

4.3.1 ACCOUNTS MANAGER

This person shall be in charge of recording all transactions that the business undertakes and report to the the general manager. This is the person who will receive payments from customers and furthermore issue invoices and bills to customers.

Qualifications

CPA 1

Diploma in business administration

Have public relation skills

Computer accounting programming

Auditing abilities

Finance management

The manager shall receive a basic salary of Kshs 30000 including allowances of 2000

4.3.2 -MARKETTING AND SALES MANAGER

Duties

This individual will advise the management team on various marketing plans and strategies to be put into practice.

Implement marketing and sales promotion strategies.

Prepare annual budget of the firm

Report to the general manager and accounts manager.

Ensure all customers are attended to properly and introduce more customers to the business

Qualifications

Diploma in sales and marketing

CPA

2 years experience in relevant field

Managerial skills

The sales and marketing manager will be paid a salary of kshs 30000 including allowance of kshs 5000 monthly

4.3.3- Human resource manager

Duties

The HR manager will be required to report to the general manager all activities when he/she is absent. That person will be responsible for the selection and recruitment of employees. Provide them with training if they require at all. Supervise all works in progress. Decide on salary payments and observe conduct of the employees.

Qualifications

Diploma in HR management

Customer relation skills

Counselling skills if at all required

Recommendable interpersonal skills

The HR manager will get a pay of kshs 25000 per month with extra allowances of 2000 monthly also include the following

1. Site supervisor/Foreman

2. Casuals working on site and production facility

4.4 TRAINING AND PROMOTION

The company will make a point that all employees are motivated at rendering excellent services to the company by the introduction of various promotions. The firm will introduce a sale incentive i.e. if any employee brings a job to the company, that specific employee will get a 2% share on the selling price.

4.5 LICENCES, PERMITS AND BY LAWS

The firm is required to have a certificate showing that the business is genuine and has registered with the Registrar of businesses of Kenya. The company will also require a certificate which shows that they have registered with the public works of Kenya.

The following details will be mandatory in order to obtain these certificates:-

(i) Name and Postal address of the owner

(ii) Name and postal address of the business

(iii) Personal identification Number (pin)

(iv) Details of the location of the business plus an email address

Other Acts include

Business registration Act

Local government Act i.e. operation license issued by local government.

Trade Act

Income tax Act

Employment Act

The licenses required to start the business with their prices

LICENSE

COST

Certificate of registration

10000

Business license

10000

Single business permit

10000

Total cost

30000

4.3.5-Support services

The firm requires support so as to make the operations of the business successful and smooth. This will only be possible using the following services, banking, insurance and a qualified lawyer. The details of the firms providing these services are given below .

a) Banking.

The business shall conduct its banking activities with commercial bank of Africa-CBA. They shall provide the firm with financial assistance regarding overdrafts and loans. They will give the company private banking services. They shall send their member who will evaluate the performance of the business and helps tackle issues regarding the business in their area of expertise.

Commercial Bank of Africa

Mombasa Moi Avenue

CBA building

P.O Box 90681-80100

Mombasa Kenya

Tel: +254 202224711

b) Insurance

The firm shall insure all of its machinery, premises and motor vehicles against accidents and fire. This shall be beneficial in such a way that after the accident is over it shall help to restore business activities faster. These services will be provided by Agravat Insurance Agencies at a premium of kshs 100000 per month.

Agravat Insurance Agencies

Legal mansion Building- 1st floor

P.O Box 90087-80100

Mombasa, Kenya

Tel: +254 41-222475

c) Lawyer

When the company will be required to sign contracts it will require a lawyer so as to handle the legal issues .Incase of any legal matters the firm shall obtain assistance from Y.A Ali Advocates

Y.A Ali Advocates

Baluchi building- 1st floor, Makadar rroad

P.O Box 1434-80100

Mombasa,Kenya

Mobile: +254 722275375

c) Internet services

To be provided by Africa online at kshs 5000 per month

d)Telecommunications services

To be provided by Orange Kenya at a fee of kshs 20000 per annum

Chapter five

5.0-Production plan

5.1-prduction equipment and facilities

The following equipment for general building contractors will be purchased n cash basis approximately two months before the company starts production.

Item

No

Unit cost

Total

Supplier

Desk

5

6000

30000

Fairdeal furniture

Chair

10

30000

300000

Fairdeal furniture

Computer

4

35000

140000

Crescent computers

Telephone

4

2000

8000

Orange Kenya

Photocopier

1

35000

35000

MIFI Solutions

Printer

2

7000

14000

Crescent computers

Utensils

1

10000

10000

Luminarc

Total

537000

TABLE SHOWING COST AND SUPLLIER FOR OFFICE ITEMS

MACHINERY AND EQUIPEMENT

The company will purchase a semi-auto batching plant of 15000 from an Italian firm Sparts Auto Ltd. They have requested for a long-term loan from their banking firm.

Item

No

Cost

Total

Mixer

2

75000

150000

Vibrator

2

40000

80000

Drill

4

10000

40000

Scaffolds

2

15000

30000

Masonry tool set

2 sets

15000

30000

Grinder

3

15000

45000

Reflectors

20

500

10000

Helmets

20

300

6000

Total

391000

Acquiring the equipment and materials

The equipment at General building contractors will be bought from different companies around the town. The management decided to do so as they could receive back-up service after they have started using them and they might cause any hitches.

In addition they compared the prices countrywide and realised that Mombasa was the most reasonable.

Storage facilities

The company decided to buy a yard in Mombasa, Changamwe area of 1 acre to carry out all of its production activities and storage of its equipment.

The batching plant for the paving blocks will be placed there and the readymade blocks will be stored there until required on site.

All equipment will be kept in a separate store with the workshop manager keeping a daily record of equipment used.

Production Strategy

The production will be divided into sections;

Building

Manufacturing

Building production will include the construction part. This will include all works carried outside the workshop. This would include all government parastatal sites.

Manufacturing will be done at the Changamwe yard. The production of the blocks will be done using the semi-auto batching plant. Production will start at 6:30 am; lunch break from 1-2 pm. They will be paid according to the production they do.

Production will be done at night if the company has orders that it cannot satisfy if production is done at a normal rate. The casual will be paid 15/= compared to the normal pay if they work overtime.

5.3: Production Process

These are the process that will be carried out to reach a final product;

PURCHASE OF RAW MATERIALS

MIXING THE DESIRED RATIO

ASSIGNING WORK TO THE LABOURERS

OBTAIN PROCESSED BRICK

BLOCK UNDERGO CURING FOR 21 DAYS

SOLD TO CUSTOMERS

5.3.1-Purchase of Raw Materials

The raw materials to be bought for manufacturing the blocks will be bought from different suppliers. All suppliers will be paid 60 days after purchase as per the agreement.

Cement will be bought from Athi Commercial. This will be 120 bags of cement per day bringing the total cost to 72000/=

Ballast will be purchased from KV Quarries at 60,000/= , 30,000/= for every 21 tonnes delivered.

Sand will be bought from an individual Rashid who will deliver 35 tonnes per day at 35,000/=

5.3.2 Mixing the delivered ratio

The mixing will be done automatically using the mixer. It will be controlled by automatic sensors.

5.3.3 Assigning Tasks to Workers

The workshop manager will assign the work to labourers. The machine operators will be assigned according to their capabilities and qualification. The labourers who will do the stacking of the blocks will be done separately.

Cleaning of the machine after every set is produced.

5.3.4 Curing Process

The blocks once obtained. They are placed in tanks made of concrete filled with water. These blocks are placed for 21 days. After every 7 days they are shifted from one tank to another.

5.4 Sales

Once the blocks are ready after being cured for 21 days they are ready to be sold to customers. The blocks will be sold at 950/= supply only and 1150/= supply and fix.

5.5 Regulations Affecting Production

5.5.1 Health Regulations

All workers will be required to be hygienic at all times. They will be required to have clean overalls whilst working on site and in the yard.

All workers will be covered with insurance in case of any accidents whilst working.

Labourers working where there is excessive dust will be provided with dust masks and those operating machinery will be required to wear gloves

Reflective vests will be necessary if working on site at night and also when production is done at night.

All casual and office staff will be required to have a medical check up every six months.

5.5.2 Safety Regulations

Fire extinguishers shall be placed in the four corners of the production area with an automatic fire protection system installed in the store area.

Personal protective equipment will be mandatory in the workshop premise.

5.5.3 Environment Regulations

The business shall ensure that production does not affect the neighbouring environment.

All waste will be collected and taken to a dumping site.

5.5.4 Precautionary Measures

All suitable measures shall be taken by the company to safeguard equipment, machinery, property and materials that are likely to cause any hazard or danger.

All workers will be required follow rules and regulation to avoid any kind of accidents that may cost the company.

Chapter six

6.0 Financial plan

6.1 Preparation of costs

The company will require a total financing of kshs 200000. This will be obtained from the following sources:-

Directors contribution --- 100000

Personal saving ---- 350000

Family and friends support ---- 250000

Loan from the bank --- 400000

The bank loan will be paid off at a span of two years. The company has made an agreement with the bank that it should charge a minimal interest rate of 2%.

6.2 Pre-operational cost

Description

Cost

Repair and maintenance

100000

Equipment

150000

Furniture and fittings

540000

Salary and wages

200000

Electricity installation

35000

Registration of premises

15000

Total

1045000

The estimated pre-operational cost will be accopunted for accoridiignly from the financing of the company. The balance will be then carried forward to working capital and saving accounts respectively.

6.3Working Capital calculation

Working capital = total financing pre-operational costs

2000000 104500

=955000

Estimation of working capital

Working capital = Current assets current liabilities

Balance sheet for the year ended 30th December 2015

Current Assets

Cash at hand/bank

955000

Closing stock

1400000

Debtors

100000

Total

1455000

Current liabilities

Creditors

300000

Total

300000

WC (Current assets current liabilities )

1455000- 300000

1155000


Current Assets

Cash at hand/bank

750000

Closing stock

300000

Debtors

60000

Total

1110000

Current liabilities

Creditors

100000

Loan on motor vehicle

450000

Total

550000


1110000-550000

560000


Current Assets

Cash at hand/bank

2000000

Closing stock

300000

Debtors

60000

Total

2400000

Current liabilities

Creditors

100000

Loan on motor vehicle (year 2)

150000

Total

350000


2400000-350000

2050000

Cash flow

Jan

Feb

March

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Cash at hand

555000

700000

800000

600000

400000

800000

1100000

700000

800000

300000

700000

11000

Sales

200000

100000

300000

150000

300000

500000

50000

300000

200000

400000

500000

30000

Cash flow for the year Jan-Dec 2014

Cash Out Flow

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Purchases

220000

Salaries

50000

50000

50000

50000

50000

50000

50000

50000

50000

50000

50000

50000

Incentives

6000

6000

6000

7000

6000

6000

5000

4000

3000

3000

3000

3000

Electricity

2000

2000

1500

1700

3000

4500

5000

6000

3000

3000

3000

3000

Water

1000

1000

800

700

650

500

550

1000

1000

1000

600

550

Internet

5000

5000

5000

5000

5000

5000

5000

5000

5000

5000

5000

5000

Miscellaneous

4000

3500

4000

2500

3000

4000

3000

3000

4000

5000

4000

4000

Break- even point for the year ended 30th December 2018 for General Building contractors

Fixed cost

Salaries

500000

Loan

150000

Insurance

100000

Permits/license

10000

Depreciation on machinery

100000

Total

860000

Desired capitalisation

This amount is estimated to be 100000. This will be used to purchase all assets for GBC. The same will be used to carry out all pre-operational costs.

Proposed capitalisation

To start GBC a total of 2000000 will be required. This will be obtained from

Directors contribution --- 100000

Personal saving ---- 350000

Family and friends support ---- 250000

Loan from the bank ------ 400000

Total 2000000

Business Plan

Documents

Transcript of Business Plan