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    Mar 9 th, 2020
    Jobs & Education-Jobs in Kenya No Comments

    Business Plan

    What’s a Business plan?

    A business plan is simply an expression of an entire business model. For instance in architecture a smaller prototype that represents a bigger idea or product is built to give a picture of the practical phenomena. The model represents the larger phenomena. Therefore your business plan represent your business. It’s a system of “business parts” that from the entire business, so to speak.

    Every individual part affects every other part. In a business, products land themselves to various kinds of marketing therefore targeting certain kinds of people and can be monetised in certain kinds of ways. The small parts work together to achieve a major objective.

    It is very important to express the model in a business plan. Your business plan should be sensible organised ideas that translate to a product able to generate money effectively and efficiently on a large scale.

    • The most important part of your business plan is the product or service you are selling. Without it there is nothing else. The product must be delivered in a high level of quality, a efficient degree of quality to win a competitive edge in the larger market
    • Your target market is the second most important. Who will be the consumer of this product or service. A very clear description of your target market must be well outlined on your business plan in terms of demographics e.g. sex, gender age etc., psychographics e.g. What are their needs, what are their hobbies, do they have passion, what gets them to spend ons stuff like what you’re selling, what they are looking for. Once you understand them then you can figure out a marketing strategy.
    • A marketing strategy shows how you are going to reach your consumers at an affordable cost without compromise on quality and convert your market to customers
    • The financials is a big part of the business plan. If you can create your product, market it to the right people and who later become your customers and do this cost effectively, then your representation of a business plan is ideally workable to generate profit.

    Your business plan has to express this business model.


    A business plan should be smart, clear, simply expressed and sensible to potential investor

    Here is a sample business plan for you 

    Executive Summary


    Ajab is a start-up coffee and bakery retail establishment located in Westlands Nairobi. Ajab expects to catch the interest of a regular loyal customer base with its broad variety of coffee and pastry products. The company plans to build a strong market position in the town, due to the partners’ industry experience and mild competitive climate in the area.

    Ajab aims to offer its products at a competitive price to meet the demand of the middle-to higher-income local market area residents and tourists.

    The Company

    Ajab is incorporated in Kenya. It is equally owned and managed by its two partners.

    Mrs. Janet K has extensive experience in sales, marketing, and management. Mr. David Wekesa  brings experience in the area of finance and administration, including a stint as chief financial officer with both Weston Hotel and the Java coffee store chain.

    The company intends to hire two full-time pastry bakers and six part-time baristas to handle customer service and day to day operations.

    Products and Services

    Ajab offers a broad range of coffee and espresso products, all from high quality Kenya grown local coffee beans. Ajab caters to all of its customers by providing each customer coffee and espresso products made to suit the customer, down to the smallest detail.

    The bakery provides freshly prepared bakery and pastry products at all times during business operations. Six to eight moderate batches of bakery and pastry products are prepared during the day to assure fresh baked goods are always available.

    The Market

    The retail coffee industry in Kenya has recently experienced rapid growth. The cool climate in Nairobi and its sorroundings stimulates consumption of hot beverages throughout the year.

    Ajab wants to establish a large regular customer base, and will therefore concentrate its business and marketing on local residents, which will be the dominant target market. This will establish a healthy, consistent revenue base to ensure stability of the business. In addition, tourist traffic is expected to comprise approximately 35% of the revenues. High visibility and competitive products and service are critical to capture this segment of the market.

    Financial Considerations

    Ajab expects to raise Ksh.11,000,000 of its own capital, and to borrow Ksh.10, 000,000 guaranteed by the KCB Bank as a ten-year loan. This provides the bulk of the current financing required.

    Ajab anticipates sales of about Ksh.49,100,000 in the first year, Ksh.56, 700,000 in the second year, and Ksh.65, 500,000 in the third year of the plan. Ajab should break even by the fourth month of its operation as it steadily increases its sales. Profits for this time period are expected to be approximately Ksh.1,300,000 in year 1, Ksh.3,600,000 by year 2, and Ksh.4,600,000 by year 3. The company does not anticipate any cash flow problems.


    Ajab aims to offer high quality coffee, espresso, and pastry products at a competitive price to meet the demand of the middle- to higher-income local market area residents and tourists.

    Keys to Success

    Keys to success for Ajab will include:

    1. Providing the highest quality product with personal customer service.
    2. Competitive pricing.

    Company Summary

    Ajab is a bakery and coffee shop managed by two partners. These partners represent sales/management and finance/administration areas, respectively. The partners will provide funding from their own savings, which will cover start-up expenses and provide a financial cushion for the first months of operation. A ten-year KCB loan will cover the rest of the required financing. The company plans to build a strong market position in the town, due to the partners’ industry experience and mild competitive climate in the area.

    2.1 Company Ownership

    Ajab is incorporated in Kenya. It is equally owned by its two partners.

    2.2 Start-up Summary

    Ajab is a start-up company. Financing will come from the partners’ capital and a ten-year KCB loan.

    Start-up Expenses  
    Legal Ksh.300,000
    Premise renovation Ksh.2,000,000
    Expensed equipment Ksh.4,000,000
    Other Ksh.100,000
    Start-up Assets  
    Cash Required Ksh.7,000,000
    Other Current Assets Ksh.1,200,000
    Long-term Assets Ksh.6,500,000
    TOTAL ASSETS Ksh.14,700,000
    Total Requirements Ksh.21,100,000


    Start-up Expenses to Fund Ksh.6,400,000
    Start-up Assets to Fund Ksh.14,700,000
    Non-cash Assets from Start-up Ksh.7,700,000
    Cash Requirements from Start-up Ksh.7,000,000
    Additional Cash Raised Ksh.0
    Cash Balance on Starting Date Ksh.7,000,000
    TOTAL ASSETS Ksh.14,700,000
    Liabilities and Capital  
    Current Borrowing Ksh.0
    Long-term Liabilities Ksh.10,000,000
    Accounts Payable (Outstanding Bills) Ksh.100,000
    Other Current Liabilities (interest-free) Ksh.0
    TOTAL LIABILITIES Ksh.10,100,000
    Planned Investment  
    Janet Ksh.5,500,000
    David Ksh.5,500,000
    Other Ksh.0
    Additional Investment Requirement Ksh.0
    Loss at Start-up (Start-up Expenses) (Ksh.6,400,000)
    TOTAL CAPITAL Ksh.4,600,000
    Total Funding


    Market Analysis Summary

    Ajab’s focus is on meeting the demand of a regular local resident customer base, as well as a significant level of tourist traffic from nearby highways.

    4.1 Market Segmentation

    Ajab focuses on the middle- and upper-income markets. These market segments consume the majority of coffee and espresso products.

    Local Residents

    Ajab wants to establish a large regular customer base. This will establish a healthy, consistent revenue base to ensure stability of the business.


    Tourist traffic comprises approximately 35% of the revenues. High visibility and competitive products and service are critical to capture this segment of the market.

    4.1.1 Market Analysis

    The chart and table below outline the total market potential of the above described customer segments. 

    4.2 Target Market Segment Strategy

    The dominant target market for Ajab is a regular stream of local residents. Personal and expedient customer service at a competitive price is key to maintaining the local market share of this target market.

    4.2.1 Market Needs

    Because Nairobi has a cool climate for eight months out of the year, hot coffee products are very much in demand. During the remaining warmer four months of the year, iced coffee products are in significantly high demand, along with a slower but consistent demand for hot coffee products. Much of the day’s activity occurs in the morning hours before ten a.m., with a relatively steady flow for the remainder of the day.

    4.3 Service Business Analysis

    The retail coffee industry in the Kenya has recently experienced rapid growth. The cool climate in Nairobi stimulates consumption of hot beverages throughout the year. Coffee drinkers in the Kenya are finicky about the quality of beverages offered at the numerous coffee bars across the country. Despite low competition in the immediate area, Ajab will position itself as a place where customers can enjoy a cup of delicious coffee with a fresh pastry in a relaxing environment.

    4.3.1 Competition and Buying Patterns

    Competition in the local area is somewhat sparse and does not provide nearly the level of product quality and customer service as Ajab. Local customers are looking for a high quality product in a relaxing atmosphere. They desire a unique, classy experience.

    Leading competitors purchase and roast high quality, whole-bean coffees and, along with Italian-style espresso beverages, cold-blended beverages, a variety of pastries and confections, coffee-related accessories and equipment, and a line of premium teas, sell these items primarily through company-operated retail stores. In addition to sales through company-operated retail stores, leading competitors sell coffee and tea products through other channels of distribution (specialty operations).

    Larger chains vary their product mix depending upon the size of each store and its location. Larger stores carry a broad selection of whole bean coffees in various sizes and types of packaging, as well as an assortment of coffee- and espresso-making equipment and accessories such as coffee grinders, coffee makers, espresso machines, coffee filters, storage containers, travel tumblers and mugs. Smaller stores and kiosks typically sell a full line of coffee beverages, a more limited selection of whole-bean coffees, and a few accessories such as travel tumblers and logo mugs. During fiscal year 2000, industry retail sales mix by product type was approximately 73% beverages, 14% food items, eight percent whole-bean coffees, and five percent coffee-making equipment and accessories.

    Technologically savvy competitors make fresh coffee and coffee-related products conveniently available via Jumia Food online. Additionally, onlinel order catalogs offering coffees, certain food items, and select coffee-making equipment and accessories, have been made available by a few larger competitors. Websites offering online stores that allow customers to browse for and purchase coffee, gifts, and other items via the Internet have become more commonplace as well.

    Strategy and Implementation Summary

    Ajab will succeed by offering consumers high quality coffee, espresso, and bakery products with personal service at a competitive price.

    5.1 Competitive Edge

    Ajab’s competitive edge is the relatively low level of competition in the local area in this particular niche.

    5.2 Sales Strategy

    As the chart and table show, Ajab anticipates sales of about Ksh.49,100,000 in the first year, Ksh.56,700,000 in the second year, and Ksh.65,500,000 in the third year of the plan.

      YEAR 1 YEAR 2 YEAR 3
    Unit Sales      
    Espresso Drinks 135,000 148,500 163,350
    Pastry Items 86,000 94,600 104,060
    Other 0 0 0
    TOTAL UNIT SALES 221,000 243,100 267,410
    Unit Prices Year 1 Year 2 Year 3
    Espresso Drinks Ksh.3.00 Ksh.3.15 Ksh.3.31
    Pastry Items Ksh.1.00 Ksh.1.05 Ksh.1.10
    Other Ksh.0.00 Ksh.0.00 Ksh.0.00
    Espresso Drinks Ksh.405,000 Ksh.467,775 Ksh.540,280
    Pastry Items Ksh.86,000 Ksh.99,330 Ksh.114,726
    Other Ksh.0 Ksh.0 Ksh.0
    TOTAL SALES Ksh.491,000 Ksh.567,105 Ksh.655,006
    Direct Unit Costs Year 1 Year 2 Year 3
    Espresso Drinks Ksh.0.25 Ksh.0.26 Ksh.0.28
    Pastry Items Ksh.0.50 Ksh.0.53 Ksh.0.55
    Other Ksh.0.00 Ksh.0.00 Ksh.0.00
    Direct Cost of Sales      
    Espresso Drinks Ksh.33,750 Ksh.38,981 Ksh.45,023
    Pastry Items Ksh.43,000 Ksh.49,665 Ksh.57,363
    Other Ksh.0 Ksh.0 Ksh.0
    Subtotal Direct Cost of Sales Ksh.76,750 Ksh.88,646 Ksh.102,386

    Management Summary

    David has extensive experience in sales, marketing, and management, and was vice president of marketing with both ……….

    6.1 Personnel Plan

    As the personnel plan shows, Ajab expects to make significant investments in sales, sales support, and product development personnel.

    PERSONNEL PLAN amounts in ’00
      YEAR 1 YEAR 2 YEAR 3
    Managers Ksh.100,000 Ksh.105,000 Ksh.110,250
    Pastry Bakers Ksh.40,800 Ksh.42,840 Ksh.44,982
    Baristas Ksh.120,000 Ksh.126,000 Ksh.132,300
    Other Ksh.0 Ksh.0 Ksh.0
    TOTAL PEOPLE 10 10 10
    Total Payroll Ksh.260,800 Ksh.273,840 Ksh.287,532

    Financial Plan

    Ajab expects to raise Ksh.11,000,000 of its own capital, and to borrow Ksh.10,000,000 guaranteed by the KCB as a ten-year loan. This provides the bulk of the current financing required.

    7.1 Break-even Analysis

    Ajab’s Break-even Analysis is based on the average of the first-year figures for total sales by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk. Ajab should break even by the fourth month of its operation as it steadily increases its sales.

    Monthly Units Break-even 17,255
    Monthly Revenue Break-even Ksh.3,800,336
    Average Per-Unit Revenue Ksh.222
    Average Per-Unit Variable Cost Ksh.35
    Estimated Monthly Fixed Cost Ksh.3,200,343

    7.2 Projected Profit and Loss

    As the Profit and Loss table shows, Ajab expects to continue its steady growth in profitability over the next three years of operations.

      YEAR 1 YEAR 2 YEAR 3
    Sales Ksh.491,000 Ksh.567,105 Ksh.655,006
    Direct Cost of Sales Ksh.76,750 Ksh.88,646 Ksh.102,386
    Other Ksh.0 Ksh.0 Ksh.0
    TOTAL COST OF SALES Ksh.76,750 Ksh.88,646 Ksh.102,386
    Gross Margin Ksh.414,250 Ksh.478,459 Ksh.552,620
    Gross Margin % 84.37% 84.37% 84.37%
    Payroll Ksh.260,800 Ksh.273,840 Ksh.287,532
    Sales and Marketing and Other Expenses Ksh.27,000 Ksh.35,200 Ksh.71,460
    Depreciation Ksh.60,000 Ksh.69,000 Ksh.79,350
    Utilities Ksh.1,200 Ksh.1,260 Ksh.1,323
    Payroll Taxes Ksh.39,120 Ksh.41,076 Ksh.43,130
    Other Ksh.0 Ksh.0 Ksh.0
    Total Operating Expenses Ksh.388,120 Ksh.420,376 Ksh.482,795
    Profit Before Interest and Taxes Ksh.26,130 Ksh.58,083 Ksh.69,825
    EBITDA Ksh.86,130 Ksh.127,083 Ksh.149,175
    Interest Expense Ksh.10,000 Ksh.9,500 Ksh.8,250
    Taxes Incurred Ksh.3,111 Ksh.12,146 Ksh.15,650
    Net Profit Ksh.13,019 Ksh.36,437 Ksh.45,925
    Net Profit/Sales 2.65% 6.43% 7.01%

    7.3 Projected Cash Flow

    The cash flow projection shows that provisions for ongoing expenses are adequate to meet Ajab’s needs as the business generates cash flow sufficient to support operations.

    PRO FORMA CASH FLOW Amounts in ’00
      YEAR 1 YEAR 2 YEAR 3
    Cash Received      
    Cash from Operations      
    Cash Sales Ksh.491,000 Ksh.567,105 Ksh.655,006
    SUBTOTAL CASH FROM OPERATIONS Ksh.491,000 Ksh.567,105 Ksh.655,006
    Additional Cash Received      
    Sales Tax, VAT, HST/GST Received Ksh.0 Ksh.0 Ksh.0
    New Current Borrowing Ksh.0 Ksh.0 Ksh.0
    New Other Liabilities (interest-free) Ksh.0 Ksh.0 Ksh.0
    New Long-term Liabilities Ksh.0 Ksh.0 Ksh.0
    Sales of Other Current Assets Ksh.0 Ksh.0 Ksh.0
    Sales of Long-term Assets Ksh.0 Ksh.0 Ksh.0
    New Investment Received Ksh.0 Ksh.0 Ksh.0
    SUBTOTAL CASH RECEIVED Ksh.491,000 Ksh.567,105 Ksh.655,006
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations      
    Cash Spending Ksh.260,800 Ksh.273,840 Ksh.287,532
    Bill Payments Ksh.143,607 Ksh.186,964 Ksh.237,731
    SUBTOTAL SPENT ON OPERATIONS Ksh.404,407 Ksh.460,804 Ksh.525,263
    Additional Cash Spent      
    Sales Tax, VAT, HST/GST Paid Out Ksh.0 Ksh.0 Ksh.0
    Principal Repayment of Current Borrowing Ksh.0 Ksh.0 Ksh.0
    Other Liabilities Principal Repayment Ksh.0 Ksh.0 Ksh.0
    Long-term Liabilities Principal Repayment Ksh.0 Ksh.10,000 Ksh.15,000
    Purchase Other Current Assets Ksh.0 Ksh.0 Ksh.0
    Purchase Long-term Assets Ksh.0 Ksh.20,000 Ksh.20,000
    Dividends Ksh.0 Ksh.0 Ksh.0
    SUBTOTAL CASH SPENT Ksh.404,407 Ksh.490,804 Ksh.560,263
    Net Cash Flow Ksh.86,593 Ksh.76,301 Ksh.94,744
    Cash Balance Ksh.156,593 Ksh.232,894 Ksh.327,637

    7.4 Balance Sheet

    The following is a projected Balance Sheet for Ajab.

    PRO FORMA BALANCE SHEET amounts in ’00
      YEAR 1 YEAR 2 YEAR 3
    Current Assets      
    Cash Ksh.156,593 Ksh.232,894 Ksh.327,637
    Other Current Assets Ksh.12,000 Ksh.12,000 Ksh.12,000
    TOTAL CURRENT ASSETS Ksh.168,593 Ksh.244,894 Ksh.339,637
    Long-term Assets      
    Long-term Assets Ksh.65,000 Ksh.85,000 Ksh.105,000
    Accumulated Depreciation Ksh.60,000 Ksh.129,000 Ksh.208,350
    TOTAL LONG-TERM ASSETS Ksh.5,000 (Ksh.44,000) (Ksh.103,350)
    TOTAL ASSETS Ksh.173,593 Ksh.200,894 Ksh.236,287
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities      
    Accounts Payable Ksh.14,574 Ksh.15,438 Ksh.19,907
    Current Borrowing Ksh.0 Ksh.0 Ksh.0
    Other Current Liabilities Ksh.0 Ksh.0 Ksh.0
    SUBTOTAL CURRENT LIABILITIES Ksh.14,574 Ksh.15,438 Ksh.19,907
    Long-term Liabilities Ksh.100,000 Ksh.90,000 Ksh.75,000
    TOTAL LIABILITIES Ksh.114,574 Ksh.105,438 Ksh.94,907
    Paid-in Capital Ksh.110,000 Ksh.110,000 Ksh.110,000
    Retained Earnings (Ksh.64,000) (Ksh.50,981) (Ksh.14,544)
    Earnings Ksh.13,019 Ksh.36,437 Ksh.45,925
    TOTAL CAPITAL Ksh.59,019 Ksh.95,456 Ksh.141,381
    TOTAL LIABILITIES AND CAPITAL Ksh.173,593 Ksh.200,894 Ksh.236,287
    Net Worth Ksh.59,019 Ksh.95,456 Ksh.141,381

    7.5 Business Ratios

    The following table represents key ratios for the retail bakery and coffee shop industry. These ratios are determined by the Standard Industry Classification Eating Places.

    Sales Growth 0.00% 15.50% 15.50% 7.60%
    Percent of Total Assets        
    Other Current Assets 6.91% 5.97% 5.08% 35.60%
    Total Current Assets 97.12% 121.90% 143.74% 43.70%
    Long-term Assets 2.88% -21.90% -43.74% 56.30%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 8.40% 7.68% 8.42% 32.70%
    Long-term Liabilities 57.61% 44.80% 31.74% 28.50%
    Total Liabilities 66.00% 52.48% 40.17% 61.20%
    NET WORTH 34.00% 47.52% 59.83% 38.80%
    Percent of Sales        
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 84.37% 84.37% 84.37% 60.50%
    Selling, General & Administrative Expenses 74.74% 71.43% 71.39% 39.80%
    Advertising Expenses 0.49% 1.76% 6.87% 3.20%
    Profit Before Interest and Taxes 5.32% 10.24% 10.66% 0.70%
    Main Ratios        
    Current 11.57 15.86 17.06 0.98
    Quick 11.57 15.86 17.06 0.65
    Total Debt to Total Assets 66.00% 52.48% 40.17% 61.20%
    Pre-tax Return on Net Worth 27.33% 50.90% 43.55% 1.70%
    Pre-tax Return on Assets 9.29% 24.18% 26.06% 4.30%
    Additional Ratios Year 1 Year 2 Year 3  
    Net Profit Margin 2.65% 6.43% 7.01% n.a
    Return on Equity 22.06% 38.17% 32.48% n.a
    Activity Ratios        
    Accounts Payable Turnover 10.79 12.17 12.17 n.a
    Payment Days 27 29 27 n.a
    Total Asset Turnover 2.83 2.82 2.77 n.a
    Debt Ratios        
    Debt to Net Worth 1.94 1.10 0.67 n.a
    Current Liab. to Liab. 0.13 0.15 0.21 n.a
    Liquidity Ratios        
    Net Working Capital Ksh.154,019 Ksh.229,456 Ksh.319,731 n.a
    Interest Coverage 2.61 6.11 8.46 n.a
    Additional Ratios        
    Assets to Sales 0.35 0.35 0.36 n.a
    Current Debt/Total Assets 8% 8% 8% n.a
    Acid Test 11.57 15.86 17.06 n.a
    Sales/Net Worth 8.32 5.94 4.63 n.a
    Dividend Payout 0.00 0.00 0.00 n.a