bizness plan ayeeeee.docx
TRANSCRIPT
CHAPTER ONE
BUSINESS DESCRIPTION
1.1. SPONSOR
The business is sponsored by Evanson Njoroge aged 28yrs. He holds a Bachelor of
Science in Information Technology from Jomo Kenyatta University of Agriculture and
Technology (JKUAT) and a Diploma in Business Management from Strathmore
University. He is a professional I.T consultant and previously worked with Safaricom as
Database Administrator and with Access Kenya Group as Systems Analyst. He is very
social and likeable hence will easily lure customers into his business premises. He also
likes creating contacts and networks and this will be helpful to the business when it
needs partnerships for expansion and growth. He intends to contribute Ksh270, 000 for
the business.co partner contribution is 300,000ksh. He also hopes to get a loan of
ksh440, 000 from Stima SACCO and raise ksh250000 from family, friends and well-
wishers. He will therefore contribute 21.5% of the amount needed while co partner
contribute 23.9% to run the business for the first four months comfortably without any
profits.
1.2. BUSINESS NAME
The business name will be ‘Prevans’. The name is derived from the combination of both
the proprietor's first name prefix and his wife's." Pr" is the prefix of proprietor's wife first
name Pretty and "Evans" is the prefix for proprietor's first name Evanson. The business
has not yet been registered, but the proposed location has already been established. The
suppliers of the machines and equipments have also been identified and their prices are
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quite competitive, considering that they are offering high quality state of the art
equipments in the market. The business should start operating by April 2016
1.3. BUSINESS LOCATION AND ADDRESS
Deciding an optimum location for the business is a strategic and an important one. A
good location goes a long way in making the business successful. The location needs to
be carefully chosen. Some places have advantages over the others. The business will be
located in Garden City Mall, Nairobi County. The location is very accessible by road
transport since there are public vehicles going to and from Nairobi town all the time.
There are four police posts within the radius of 3kms, so this will guarantee safety and
security for all the business stakeholders. The Mall hosts over seven banks including
Equity Bank, which the business will seek to be its financial advisor and lender.
Moreover, the mall hosts every single industry such as hotels, Safaricom, cabs operators,
banks, hospitals etc. Garden City is just a stone thrown away from Thika Road Mall
(TRM) and Mountain Mall. Thika road hosts prospective fast-rated growing estates and a
center of enterprise hence customers for the business are guaranteed.
1.4. FORM OF OWNERSHIP
Prevans Barber Spa is a partnership entity that will be co-owned by Evanson Njoroge
and his fiancée Rachael Njoroge. Rachael Njoroge has 10 years experience in the hair
and spa industry. She has as a result continues to stay on top of the latest styles, trends
and products. Rachael has worked as a stylist, then as a manager where she managed 16
stylists in a prestigious upscale salon.
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Mr. Evanson Njoroge - is the managing director of SYM consulting, a Technology
Consulting Firm. Mr. Njoroge is a pioneer and innovator with over 6 years experience in
the computer, e-business and telecommunications industry. Mr. Njoroge has a proven
record of accomplishment of success in launching new business and directing operations
for small and medium size enterprises. To achieve our objectives, Prevans Barber Spa is
seeking loan financing that.
The following table1.shows the financial contribution of the business:
SOURCE AMOUNT %
Evanson Njoroge (co-
owner)
270000 21.5%
Rachael Njoroge (co-
owner)
300000 23.9%
STIMA SACCO loan 440000 34.9%
Family and friends 250000 19.7%
Total capital investment 1,260,000 100
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1.5. PRODUCTS AND SERVICES
Prevans will be providing both services and products to meet our customers’ needs. The
services offered by the Prevans can be divided into three areas, which are shown below
hair: cutting hair, washing, , ironing, high hair, curls, color, straightening, permanent,
hair treatments and extensions; face: Facial cleansing, make-up and permanent Eyelash;
body: Acrylic nails, manicure, pedicure and waxing.
1.5.1. Strategies to address the market
Web page creation and use of social networks: see the Internet and advertising on
social networks as tools for innovation, creating in this way a distinction with rivals from
the market and offering better quality than competitor’s content. Service brochure,
logo/slogan with advertising to be included, and a planned website would form part of
the literature for sales. The entrepreneur intends to be updating adverts regularly on the
business website to reflect changing trends in the market. Note that sales literature is an
ideal means of keeping customers informed of the services available and any adjustment
to the service. It therefore helps to maintain existing customers as well as attracting
others to the business. Going by the drivers of internet economy, Prevans Barber Spa
intends to adopt the philosophy of equipping customers with vital information
concerning hair care and massage. The entrepreneur believes that information is always
of greatest value to both the client and the business.
1.5.2. Services
Prevans Barber Spa is considered an upscale, full-service Barber Spa. We offer a wide
range of services that include: Hair: cuts; relaxers; shampoo; conditioning; curling;
reconstructing; Nails: manicures; pedicures; polish; sculptured nails
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1.5.3. Future Products and Services
Prevans Barber Spa believes in power of consistent market research. As consumer
demand changes, the business should also adjust products and services to meet and
exceed customer expectation. The business will engage the market with a view of
monitoring changing trends in terms of needs and preference. In this way, Prevans will
be in position to remain in touch with the reality especially knowledge about ever-
changing consumer behavior. Such attribute ensures competitiveness and sustainability
in the midst of competition and unfavorable environment. The business will retain
customers and attract others due to provision of relevant services that match customer
demand. In other words, customer demand is the prime determinant of future products
and services at Prevans Barber Spa.
Prevans Barber Spa will, upon commencement of operations sell a wide range of beauty
products. We will be providing quality hair, nail, and skin care products. Prevans Barber
Spa has an exclusive contract with Joico to sell their top quality products. In addition, we
will have other name- brand products for sale to meet customer needs. The products will
include shampoos, conditioners, mousse, hair spray, nail polish, nail files, skin
conditioners, and cleansers, facial masks, and other such beauty products. What will set
Prevans apart from the competition is our commitment to providing all of these products
and services in one convenient location.
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1.6. INDUSTRY
The industry analysis means which review the Economic forces, Social forces and
as well as Political forces or action. In Economic, forces affect the consumer level of
disposable income. In economic forces we study that how economic forces going to
effect the opportunities, in this force one have to evaluate who has money to spend and
who is trying to cut costs. Therefore, the economic forces are very much important while
opening the firms or any type of business. In Social forces, it means changing in the
social provides the opening for a new firm's on an ongoing basis. In Political, action
provides the basis for new business opportunities.
The industry is now starting to realize that the traditional barbershop needs to be
added to their list of major types. The Kenyan market has catered to men since
establishment of the first barbershop. The traditional barbershop in Kenya is starting to
expand its services to include massage, facials, manicures and pedicures based on the
changing market demand. High standards of grooming have always been a tradition in
most developed and developing economies. Most visitors from industrialized countries
such as US and Europe require standardized Spa service. In addition, the ever-rising
middle class has become a viable target for these high-end Barber Spas in Kenya. With
this information in mind, establishment of such line of business is an essential step to
helping the industry meet the growing need in the market.
1.7. JUSTIFICATION OF BUSINESS OPPORTUNITY
The traditional barbershop of years past have been traditionally been replaced by unisex
salon's and spa's which focused mainly on women. Professional men are more health and
style conscious, especially men who have achieved a modicum level of professional
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success. They are willing pay for products and services that are geared specifically
toward men. Beauty is an inherent aspect of human nature. There is a need to provide
beauty services to satisfy the human need for beauty. Create employment. The business
will employ eight qualified staff to help in the running of the day-to-day activities and to
make the business a success.
The following highlights show the window of opportunity in satisfying this need:
There is high demand for professional hair services.
Ensure maximum satisfaction of highly esteemed customers’ needs.
Provide employment opportunities in hairdressing to local residents.
A well-versed community set up to accommodate the business and attract
customers in a short time.
Ready market as the average Nairobi residents visits beauty parlor at least
fortnight.
Poor enhanced self-image in the society-prompting search for good looks by
individuals guaranteeing a ready market.
Prevans Barber Spa will have the state of art equipment, apparatus and air
conditioned rooms to the comfort of our customers
Natural attraction to beauty by people of all walks of life creating a perpetual
need to search for the same.
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1.8. BUSINESS GOALS
Business goals are part of the planning process. They describe what a company expects
to accomplish over a specific period. Businesses usually outline their goals and
objectives in their business plans. Goals might pertain to the company as a whole,
departments, employees, customers, or any other area of the business. The business
vision is to be the best Prevans Barber Spa in Nairobi by 2018.
1.8.1. Short Term Goals
The short-term goals of the business include the following:
To provide quality and affordable hair cut and spa services to its customers
To evaluate management team every quarter
To create employment by engaging committed and qualified staff
1.8.2. Long term goals
To increase our market share by 40% by 2019
Receive at least 90 percent positive customer feedback regarding our services by 2018
Awarding an employee of the year award to the employee who provides the most
creative input during the year in terms of practical ideas to improve the enterprise
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1.9. ENTRY AND GROWTH STRATEGY
1.9.1. Entry Strategy
The entry strategy of the proposed business is laid down through a series of activities,
which include; carrying out advertisements through radio two days in a week for a month
prior to the opening of the business. This is target at reaching over 50% of customer
within lower income areas within Nairobi. The advertisements will cost about Kshs. 3000
per month; Advertisement in the daily national News Papers for one month. The
advertisements will be placed in the ‘Daily Nation’ and the ‘Standard’ on Mondays,
Wednesdays and Fridays of each week. The adverts are expected to cost the business
Kshs. 4,000. This is aimed at creating a strong customer brand; Print business cards and
supply to friends prior to opening of the business to increase our distribution list. The
business will make provision of Kshs. 2000 for printing business cards every three
months; Printed T. Shirts with the name of the business and location to be given to our
initial customers for publicity purposes. This is aimed at increasing customer satisfaction
and a strong brand. This will have a one-time cost implication on the business of Kshs.
3000; a discount of 20% will be rewarded to those customers who refer at least three
customers. This will aid the business in attracting and retaining loyal customers;
Qualified and professional staff will be recruited to ensure quality service delivery. This
will ensure quality is maintained hence customers are satisfied with the services given
1.9.2. Growth Strategy
In recent times there has been increased Rural to Urban migration leading to more people
settling in Nairobi. This is projected to push the Beauty industry towards the path of
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growth in one to two years. In addition, the economy is projected to expand to close to
10% by end of 2019. This will definitely increase the purchasing power of the city
dwellers. To reap from the prospects, Prevans Barber Spa plans to invest back 75% of the
profits in the first 2 years. Prevans barber spa best growth potential is in terms of daytime
employment. The total daytime business population in a three-mile radius is 42,759 with
the residential population at 59,251. The total daytime business population in a five-mile
radius is 109,867 with the residential population at 161,848. The nearby business parks
also have an ample supply of land for future office development. An even more
predictable source of daytime employment growth is the planned expansion of existing
companies because of completion of Thika road superhighway.
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1.10. SWOT ANALYSIS
Table 2: SWOT analysis of proposed business
SWOT Analysis for Prevans Barber ShopInternalStrengths Weaknesses
1. Technological skills2. Successful relationship marketing 3. Innovative sales techniques4. Leading brands5. Skilled workforce6. Modern designs7. Exclusive products8. Special equipment9. The customer can reserve and pay
online10. Quick response-no red tape11. Low overheads-good value12. Able to change direction quickly13. Unique brands protected by sole supply
agreements.
1. Low customer retention2. Financial limitations/unreliable cash
flow3. Limited services4. New entrants in the market5. Competition between discounts
proposed by other barber shops and ours6. No market Presence7. Shallow skills base8. Vulnerable to staff turnover
ExternalOpportunities Threats
1. Local government wants to work with local businesses
2. Increased geographic coverage3. Leverage the growth of the internet to
enhance business 4. Reasonable prices5. The spa market increased by 19% in
20146. Possibility of expansion of our services
in major suburbs7. Competitors slow to adapt to new
technologies8. Expanding sector with many
opportunities for growth
1. Changing fashion trends may shift consumer interest in our product range
2. Government regulations3. Rents increasing above projections
putting pressure on our margins 4. Increasing costs5. Web competition in terms of visibility6. Easily accessible home equipment7. Vulnerable to large competitor action8. Will technology change beyond our
ability to adapt?
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CHAPTER TWO
2.0. Marketing Plan Objectives
A marketing plan is a comprehensive blueprint, which outlines an organization's overall
marketing efforts. A marketing process can be realized by the marketing mix, which is
outlined in step 4. The last step in the process is the marketing controlling
This marketing plan emphasizes grooming services provided by Prevans barber spa.
Prevans barber spa believes that two opportunities offer the greatest opportunity to enter
the market, differentiated from the competitors and taking advantage of the growing
target market. First, we must differentiate our services by tailoring to professional males.
Providing a masculine environment to include colors, décor and total atmosphere will
increase the probability of repeat business. Within the first year, the number of customers
will be a quantity to support all fixed and variable cost.
Differentiation and Positioning
Prevans barber spa will differentiate from its competitors by providing a male centered
environment that emphasizes quality and helpful service on a consistent basis.
Marketing Strategy
Three related target markets were identified for Prevans barber spa with the following
strategies:
Target Market 1 Single Professional Males
The first target market for Prevans barber spa is a single professional male in the Raleigh
area. The marketing tactics directed at this target market is as follows:
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* Product – Bundled services
* Place – Downtown business district
* Promotion – Flyers
* Promotion – Radio
Product – Bundled Services. Prevans barber spa will offer bundled services as to show
value for the prices. Bundles will include a haircut, shampoo, conditioning, and scalp and
face massage, hot towel, styling, and cologne at a minimum. It bundle will add more
services for the increased price. Customers will receive free touch ups between
appointments with selected bundles.
Place – Downtown business district. Prevans barber spa will be located in garden estate
along Thika road superhighway. The nightlife for this area has been firmly established
and the Prevans barber spa plans to become a part of both the business and nightlife
culture.
Promotion – Flyers will be given out in everywhere along Thika road superhighway.
Promotion – Radio. Teasers will be utilized on local radio shows that show a large
following by our target market. The teasers will be to draw attention to the salon.
2.1. CUSTOMERS
Prevans will focus on the professional male. An Internet study revealed that 85% of
professional men had personal hair grooming services performed during the workday.
The space at The Mall fits the demographics for our business. Applied Geographic
Solutions estimates that 59,251 people live within a three-mile radius of our facility and
42,759 work there. They estimate 161,848 live within a five-mile radius and a population
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of 109,867 works there. Totaling 6,206 businesses located 15 business parks within a
seven-mile radius.
2.1.1. Customer Profile
Prevans barber spa typical client will be:
Between the ages of 30 and 55
Income levels of $25,000 to $40,000
2.2 MARKET SHARE
The beautification industry is economically stable. However, our market share is on the
rise with an increase in disposable income as more men join the workforce. Industry
trends show that as time becomes more limited, people want faster, easier and more
economical services all in one location. Customers are more educated and more
demanding of quality service. Our market area includes Garden estate Thika road and
surrounding environs. Now, there are four major competitors within 100 Meters
proximity from the proposed location of prevans barber spa.
Prevans barber spa hopes to capture 8% of market share in the first year. This is assumed
to translate to each of the other four firms losing two percent of their current market
share to result in the following scene:
Elegant Beauty Salon Market share = 33%
Beauty Care spa Market share =22%
One Touch Hair Therapy Market share = 19%
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Executive Hair Salon Market share =18%
Prevans barber spa Market share = 8%
The figure 2.0 below illustrates the proposed scene in the market.
The figure 2.0: the proposed scene in the market
Elegant Beauty Salon
33%
Beauty Care Hair Salon 22%
One Touch Hair Therapy
19%
Executive Hair Salon18%
prevans barber
spa
Source: Author(2015)
The 8% market share shall give the proposed business 4,000 customers annually
calculated as follows: (8% X 50,000). The service cannot be quantified in units; however,
the business expects to earn an average of Kshs. 300 per client in a month. This reflects
total sales revenue of Kshs. 200,000 per month.
2.3. COMPETITORS
Competitive Summary
Prevans barber spa wants to set itself apart from other barbershop that may offer only one
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or two types of service. Prevans barber spa realized from talking to clients, that they
desire all of the services that we are proposing, but they remain frustrated because they
must get their hair done at one place, and nails at another. Although the focus of Prevans
barber spa is hair services, we do plan to offer our clients the convenience of all these
services in one location.
There are a number of barbershop and spa like ours, but they are mainly in the low
income parts of Nairobi surrounding areas. Our business atmosphere will be a relaxing
one where clients can seat back and be pampered. Coffee and soft drinks will be offered
to clients as they enter for service. Televisions will be located in the waiting and hair-
drying areas
2.4. SALES TACTICS
Sales tactics
Prevans barber spa shall employ personal selling tactics by the use of the employees. The
employees include beauticians, shampoo persons and hairdressers who will all participate
in personal selling. The employees will be paid a monthly salary. The salaries of the
employees will be revised upwards by 20% annually for motivation.
2.5 ADVERTISING AND PROMOTION STRATEGIES
2.5.1 Advertising Strategy
Prevans barber spa will make use of different methods of advertising. Through the flyers,
business cards and the brochures, the image of our services will be portrayed. The advert
will create a picture in our customers mind that, our services are of high quality, unique
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and low priced. The brochure will also illustrate an excerpt of a hair that is done at our
place. The business will be advertising after every four months, while the flyers will be
after every three month. The advertising cost per month shall be Kshs. 12,000 calculated
as follows.
Table three advertisement medium and unit cost
Frequency Unit cost, Kshs. Amount, Kshs.
Print media 4 1000 4000
Radio 5 600 3,000
Flyers 400 5 2000
Business cards 600 20 3000
Total 12,000
This arrangement will enable the business to be advertising the business throughout the
year without duplicating the advertising costs. The proprietor will be in a position to
judge on the effectiveness of the advert through the number the business receive in a
particular month after relating it with the method of advertising used. Beside increased
sales volume, it will be possible to evaluate the number of customers making repeat
purchase as well as rate of enquires for our services.
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2.5.2 Promotion Strategy
In order to promote Prevans barber spa especially during the first year, the business will
perform hairdo without charges for the first customer who visits on the first day of the
week (i.e. Monday for this case). This will go on for the first six months and will act as
free samples, which will be, performed our business premises as a campaign towards
popularizing the business. The promotion cost will add up to Kshs 30,000 per year as
shown below:
1 customer X 50 weeks X Kshs 600 = Kshs 30,000/=
To measure the effectiveness of this campaign, the business will be taking record of the
number of clients who are served the free sample and come back for the services.
2.6 PRICING STRATEGY
Pricing
The brand-name hair products will range in cost from 500ksh 4000ksh. These costs
will not vary from other competitors. This is because there is a standard price that
salons may charge for these products. Our mark-up will be approximately 60% above
cost for a retail price range of 2000ksh – 5000ksh. This is standard pricing in
comparison to the competition. Our services will average 2000ksh, with a range of
500ksh for a hair trim to 2000ksh for a complete beauty package (hair, massage,
facial, manicure, and pedicure). These prices are lower than our competitors’ pricing.
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Our pricing strategy will be similar to that of our competitors. We will charge neither
beyond our rates, nor substantially under, standard prices for our services. We will be
paying our employees a straight percentage of their total individual client sales plus a
bonus–that is more than our competitors are. This will allow us to hire the best
employees, and have a built-in motivational factor that will keep them empowered to
enhance their opportunity.
2.7 DISTRIBUTION STRATEGY
2.7.1. Channels of Distribution
During the first two years of operation, every employee in the business will contribute
towards the sales force. This will happen mainly spreading the news on prevans barber
spa to the friends and neighbors in their respective estates. Since we will be dealing with
services, potential clients will be required to come for the services at the business
premises. Therefore, our business will not account for any transport costs.
2.7.2. Distribution Problems and Solutions
The business will start small and deliver the services at its premises. Customers will be
expected to come for the hairdressing services. In this regard, there will be no taking the
service to clients’ residences, though this might be considered later when the business
picks up and grows. Therefore, the business does not anticipate any problems that might
occur due to distribution logistics within the three first years of operation.
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CHAPTER THREE
3.0 ORGANIZATION PLAN
The owner who shall have the title of ‘Supervisor’ shall manage prevans barber spa. The
other employees will include a Beautician, a Shampoo person and three Hairdressers who
shall all be reporting to the Supervisor. In total, the proposed business shall employ six
people at the start of operations. All the employees shall be hired on permanent basis and
paid a monthly salary, which shall be reviewed after every six months
3.1 Organization Chart
The figure 3.1 below shows the organizational chart
Figure 3.0: Organization Chart
Source: Author (2015)
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SUPERVISOR
Professional Shoe-ShinersHair Stylish/Barbers/
Aesthetician/Massage Therapist
Receptionist
As shown in figure 3.1 above, the business propose to have one supervisor, one
beautician, one shampoo person and three hairdressers with the supervisor at the top of
the hierarchy.
3.2 THE MANAGEMENT TEAM
The business will be under the management of the supervisor. The proprietor shall
assume the position of the Supervisor and will be responsible for managing all the
operations of the proposed business including planning, organizing, coordinating and
directing business operations. The duties and responsibilities of the proprietor as
supervisor and manager of the business will be as follows:
Prepare and review business policies including procedures and process and
communicate the same to the other employees.
Organize and facilitate capacity development programmes for employees
Conduct performance appraisal for employees
Organizing for business marketing activities
Division of work among the workers
Undertake budgeting of all business activities and ensure effective utilization of
the business resources for maximum returns
Resolve conflicts among employees and be in charge of harmonious industrial
relations between the employees and management
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Ensuring prompt procurement of all items required for operations
Keeping books of account
Following up on debtors and reviewing credit policy of the business
Supervising the other employees
Making both tactical and strategic decisions
Hiring and firing of staff
Rewarding the employees by paying them emoluments
3.3 OTHER PERSONNEL
Receptionist Job Description (1 position)
Welcome clients as they arrive in the salon and provide them with required
information
Determine clients’ needs for hair cutting and styling and suggest possible
solutions
Maintain knowledge of industry trends and popular hairstyling techniques to keep
updated with current fashions
Take telephone calls and respond to inquiries put forth by callers
Schedule appointments and ensure that any cancellations or readjustments are
taken care of
Make follow up calls to clients to remind them of their appointments
Determine which hair stylist will be suitable for a client in question
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Ensure that hair stylists understands what clients want to have done with their hair
Provide clients with information on products and techniques used during hair
cutting and styling activities
Ask clients if they are allergic to any hair products and ensure that hair stylist is
aware of this information
Take and record clients’ contact information in the salon database
Operate the cash register, take payments for services rendered and issue change
and receipts
Ensure that the cash drawer or register is balanced at the end of the day
Maintain positive work relationships with vendors to ensure that sufficient salon
supplies are available
Handle hair salon supplies and equipment inventory activities
Hair Stylish/Barbers Job Description (5 positions)
Determine clients’ individual requirements by conferring with them in detail
Provide information to clients regarding the type of care treatment prudent for
them
Cut or trim hair using clippers and scissors
Provide bleaching, coloring, waving and straightening services
Perform blow-dry services
Shave and trim moustaches and beards
Shape, cut, adjust and curl wigs as required by clients
Operate cash registers
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Perform limited reception duties
Sell salon or barber shop’s retail products
Provide advice to clients regarding hair products and care
Provide appropriate post-cutting guidelines
Ensure appropriate cleanliness of work areas
Maintain and sanitize hair cutting tools and salon instruments
Provide facials and manicures
Manage hair oiling and massage services
Provide demonstrations to trainees
Train newly hired hair stylists in a proactive manner
Maintain appointment calendars and customer databases
Professional Shoe Shiners (2 positions)
The Shoe Shine Attendant is responsible for guest satisfaction by performing
services to the best of their ability and maintaining all Shoe Shine standards throughout
all procedures.& Appointments will occur at reserved time with no delay and all walk
ups will be taken as expeditiously as possible.
The Shoe Shine personnel will maintain the cleanliness of the Shoe Shine stand in
a professional manner at all times and follow all established protocols and checklists to
enhance the operation and client experience.
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Skills / Requirements
Essential Duties and Responsibilities include the following. Other duties may be
assigned.
Maintains all work related areas in accordance with Prevans Shoe Shine standards
Maintains equipment and supplies on a daily basis
Assists in training Shoe Shine services to new employees
Provides demonstration services and assists in service training for other hotel
personnel
Assists in other areas as needed
Reports any service glitches immediately
Performs any or all duties as assigned by management
Meets or exceeds retail and revenue goals
Follows uniform and grooming guidelines
Works varying shifts based on business needs including holidays and weekends
Communicates lost and found items to appropriate area immediately
Demonstrates full knowledge of the Shoe Shine’s standards and the products
used, their benefits, and is able to communicate these to guests
Provides excellent service to all guests
Follows all established protocols for the proper and consistent execution and does
so within specified timelines and without deviation
Assists guests with retail product selections and educates them on correct use
Greets all guests and displays knowledge of services available
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Makes all guests feel welcome and takes ownership of simple requests
Reads log books, communications board and memos daily and is responsible for
information contained therein
Completes all established checklists accurately
Assists in inventory control as needed
Actively learns products, their uses, and associated benefits
Education and/or Experience: High School Diploma or equivalent required.
Computer Skills: Basic PC skills preferred.
Other Qualifications:
Must be reliable, trustworthy and posses a pleasant personality
Must have excellent customer service and communication skills
Ability to work harmoniously with others and be a team player
Ability to handle pressure and difficult situations
Presents a professional and well-groomed appearance at all times
Must be able and willing to work a flexible schedule, including weekends,
evenings and holidays
Language Skills:
Must be able to read, write, speak and understand English. Knowledge of multiple
languages is a plus.
Physical Demands:
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While performing the duties of this Job, the employee is regularly required to stand,
bend, lean and walk for up to 10 hours; use hands and fingers to handle, or feel; reach
with hands and arms and talk or hear. The employee must regularly lift and /or move up
to 25 pounds. Specific vision abilities required by this job include close vision, distance
vision, color vision, peripheral vision, depth perception and ability to adjust focus.
Work Environment: While performing the duties of this job, the employee is regularly
exposed to secondary smoke. The noise level in the work environment is usually
moderate to loud.
Aesthetician/Massage Therapist (2 positions)
To get qualified employees, the proprietor will invite applications from all interested
persons. She will put posters on strategic places including Ashley Beauty College notice
board and Odeon Cinema job search gallery. This will enable us to attract as many
applicants as possible, from where we will get those with the required skills and
qualifications.
3.4 RECRUITMENT, TRAINING AND PROMOTION
To evaluate the performance of prevans barber spa employees, the proprietor shall
employ various methods including:
Quality of the end results
Average time taken to attend a customer
Ability to meet challenges inherent with their tasks
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Suggestions from the customers which will be done through mounting a
suggestion box within the business premises
Evaluation mechanisms are expected to cost the business about Kshs 10,000
every year. The business will also have training programmes for employees at
least once per annum. This is because of emergence of new styles emerging in the
market and training would keep our salon abreast to the latest fashions. Training
will always be done by inviting a consultant to the business premise. This will
enable very little interruption on the normal operations of the business. The
business shall make a provision of Kshs. 30,000 for training per annum. The
business will provide incentives to the employees, which are expected to have
annual cost implication as mentioned below:
Tea Kshs 25,000
Bonus Kshs 50,000
Total incentives Kshs. 75,000
3.5 LICENSE, PERMITS AND BY-LAWS
The business will fully adhere to the government regulations, policies concerning
operating, and running a business. The business shall obtain the following licenses and
permits: Business name registration: As an entrepreneur the first thing that will be done
is to register is the business name and this is done under state registration of legal entity,
statistical, and tax registration.
28
This is done at the Centre for Public Registration and involves a process of company
name reservation, which lasts 7 days but can be renewed for a similar period. Doing this
should take about 3 days and would cost ksh 100 per name reservation.
Single business permit: The license will be obtained from the County of Nairobi and is
issued by the Licensing officer. The fee to apply for a business permit varies by type of
business, number of employees, and size of the company’s premises. It will cost ksh.
10,000 for the single business permit which is payable once a year. The process of
obtaining a business permit takes a period of 5 days.
Transport Business License (TBL): This will be obtained from the from the Kenya
Revenue authority. This is in line with the traffic rules and regulations that will show that
the motorbikes are fit to be on the roads. This will be charged at ksh. 4,000 per year.
3.6 SUPPORT SERVICES
Bank: The manager will open an account with Barclays Bank Moi Avenue branch. This
is because the bank is conveniently located; opposite the business premises. The bank
also offer good package for the business and also offers business loans to its customers.
They charge a monthly account maintenance fee of ksh 200 and the minimum account
balance is ksh. 1,000. Other services that will be sought for from the bank are money
transfers, cheque clearance, paying employees and banking money.
Company legal officer/lawyer: The business shall use Mohammed and Co. Advocates as
its legal advisor. They are located at Nation Centre, Kimathi Street in Nairobi. The
services to be rendered by the legal time shall include drafting employee contracts and
advising and updating on any legal aspects that may affect the running of the business.
The charges for this service will be payable once a year at the cost of ksh. 20,000.
29
Global Links Solutions will audit the business’s books of accounts once a year at the cost
of ksh. 15,000 per year Frontier Business Solutions will act as the business advisor for
the business at a service charge of ksh. 10,000 per year
The business will also insure itself with Blue Shield Insurance Ltd. Charges are projected
to be Kshs. 20,000 annually. Other supporting services that the business will require
include auditing from AKA Auditors at Kshs. 20,000 annually and training services from
Angel Beauty College at Kshs. 30,000 annually.
Bank: The manager will open an account with Barclays Bank Moi Avenue branch. This
is because the bank is conveniently located; opposite the business premises. The bank
also offer good package for the business and offers business loans to its customers. They
charge a monthly account maintenance fee of ksh 200 and the minimum account balance
is ksh. 1,000. Other services that will be sought for from the bank are money transfers,
cheque clearance, paying employees and banking money.
Company legal officer/lawyer: The business shall use Mohammed and Co. Advocates as
its legal advisor. They are located at Nation Centre, Kimathi Street in Nairobi. The
services to be rendered by the legal time shall include drafting employee contracts,
advising, and updating on any legal aspects that may affect the running of the business.
The charges for this service will be payable once a year at the cost of ksh. 20,000. Global
Links Solutions will audit the business’s books of accounts once a year at the cost of ksh.
15,000 per year. Frontier Business Solutions will act as the business advisor for the
business at a service charge of ksh. 10,000 per year. Other support services will be
insurance cover for the premises with Britam Insurance Company at the cost of ksh
35,000 per year.
30
The business will also engage Orange Telkom as its internet provider at a cost of ksh.2,
000 per month. Cleaning services will be outsourced and to be done by Pine Wood
Cleaners at a rate of ksh. 2,500 per month. Garbage collection services will be provided
by the premise’s management and will be charged at ksh 1,000 per month. Kenya Power
and Lighting Company will provide electricity at a cost of ksh. 1,200 per month
31
CHAPTER FOUR
OPERATIONAL PLAN
The Nairobi City County with a charge of ksh will provide water. 500 per month
4.1 OPERATIONAL FACILITY AND CAPICITY
Description of the Machinery and Equipments Required for Operations
The table 4.1 below shows the machinery and equipment required for operations
Item
Sou
rce
Cos
t P
er U
nit
Un
its
Req
uir
ed
Inst
alla
tion
Cos
ts
Tot
al C
osts
Dat
e R
equ
ired
Kshs Kshs Kshs
Spray can
Best-lady
Cosmetics
3,000
3
-
9,
000 01/1/2016
Dryer
Best-lady
Cosmetics
12,000
5
-
60,
000 01/1/2016
Blow Dry Machine
Best-lady
Cosmetics
8,000
4
-
32
,000 01/1/2016
Movable Lockers Furniture 120 01/01/2016
32
Item
Sou
rce
Cos
t P
er U
nit
Un
its
Req
uir
ed
Inst
alla
tion
Cos
ts
Tot
al C
osts
Dat
e R
equ
ired
Kshs Kshs Kshs
Palace 30,000 4 - ,000
Table
Furniture
Palace
4,000
1
-
4,
000 01/1/2016
Furniture
Furniture
Palace
5,000
20
-
100
,000 01/1/2016
Loose Tools (e.g.
Scissors and rollers) Supermarket
-
-
-
20,
000 01/1/2016
Total
345
,000
Description of the Machinery and Equipments Required for Operations
Source: Author (2015)
Prevans will completely own all tools and equipment needed in operation of the business. Therefore, there will be no any hired or
leased tools. Plans for Maintenance and Repairs for Machinery & Equipment To maintain and repair the machinery and equipments,
prevans will hire the services of a reputable firm. The provisional firm to provide this service will be Saloquip Continuance Ltd,
located along Ronald Ngala Street in Nairobi City. This is a reputable firm, which has been in the business of repair and maintenance
33
for 12 years. Monthly maintenance and repair costs are projected to be Kshs 30,000. The decision to outsource repair and maintenance
costs is prudent for the firm since it will save on costs and get maximum quality. Prevans will use machineries and equipments with
spare parts that are available locally. The supplier of the spare part will be the Euro Spares located along the River Road in Nairobi
City Centre. Since spare parts are expensive, it will be prudent for prevans to provide or set aside some money on monthly bases to
cater for these expenses. This provision will amount to Kshs 2,000 monthly.
Other Equipments Required
Item Source
Cost Per
Unit
Units
Required
Installation
Costs
Total
Costs Date Required
Kshs Kshs Kshs
Computer Davetech
20,0
00
1
-
20,00
0 01/1/2016
Television Swahir Entertainment
14,0
00
1
-
14,00
0 01/1/2016
Radio Swahir Entertainment
8,0
00
1
-
8,00
0 01/1/2016
DVD Player Swahir Entertainment
5,0
00
1
-
5,00
0 01/1/2016
Other Office
Equipments Tuskys Supermarket
10,0
00
-
-
10,00
0 01/1/2016
Total
57,00
0
34
Table 4.2: Other Equipments Required
Source: Author (2015)
4.2 OPERATION STRATEGY
Table 4.2.1 Monthly Material Requirements
Item
Sou
rce
Qu
anti
ty
Cos
t
per
L
iter
Fre
qu
ency
R
equ
ired
Tot
al C
osts
Liters Kshs Kshs
Conditioner Best-lady 17 120 Once a month 2040
Disinfectant Best-lady 20 100
Once a month 2,000
Hair Gel Best-lady 25 100
Once a month 2,500
Hair Oil Best-lady 16 400
Once a month 6,400
Hair Relaxer Best-lady 32 300
Once a month 9,600
Shampoo Best-lady 25 100
Once a month 2,500
Styling Spray (Cans) Best-lady 25 100
Once a month 2,500
Treatment oil Best-lady 25 300
Once a month 7,500
35
TOTAL 35,040
Monthly Material Requirements
Source: Author (2015)
4.3. OPERATION PROCESS
All the above-mentioned raw materials are readily available in the market and therefore the business will not experience any shortages
in the supply of raw materials. These materials will always be bought on monthly bases and at ago unless there is unanticipated
diminution in any of the materials. This arrangement will enable the business to save carriage in costs. The materials will be supplied
to the business premises at the supplier’s cost.
Monthly Labor Requirement
The business will employ the following employees to commence its operations. All these employees will provide direct labor and
include a supervisor, shoe shiner, Hair Stylish/Barbers/ Aesthetician/Massage and a receptionist.
The cost of direct labor is as calculated below:
Receptionist = 1 X 12,000 = 12,000.00
Shoe shiner = 1 X 7,000 = 7,000.00
5Hair Stylish/Barbers/= 5 X 10000 = 50,000.00
Total direct labor cost per month = 69,000 .00
36
Indirect labor cost includes:
Supervisor = 1 X 18,000 = 18,000.00
Total indirect labor cost= Kshs. 18,000.00
Total labor cost= Total direct labor + total indirect labor cost
+Kshs. 69000+ Kshs. 18000= Kshs. 87,000
4.3.3 Monthly Operation Expenses
The table 4.4.1 below shows the monthly expenses.
Monthly Production Expenses Amount (Kshs.)Monthly Labor Requirements 87,000.00 Water 1,000.00 Electricity 3,000.00 Stationery 416.67 Maintenance 2,500Advertising 3,000.00 Promotion 2,500.00 Insurance 833.33Telephone 2,500.00 Rent 10,000.00 Interest expenses 2083.00Support Services 6,141.00 Total 127,225
Monthly Expenses
37
Source: Author (2015)
Calculating the Cost of Production-As indicated in section 2.3 Pricing strategy, the cost of offering the service per customer would cost the business Kshs. 219.22. This includes all the direct and indirect costs. Since the business expects 20 clients per day, the cost of providing the service in a given period is calculated as follows:
Cost per day Kshs. 219.22X 20= Kshs. 4384.54
Cost per week= Kshs. 4384.54X6= Kshs. 26,307
Cost per month= Kshs. 26,307X4= Kshs. 105,228
4.4 GOVERNMENT REGULATIONS
Table 4.4.2. Government regulations
Permit/License Required Source Amount Kshs
Name search and business registration Registrar of Companies 1,000
Trading license City Council of Nairobi 10,500
Stamp Duty KRA Times Tower 500
City council Approval Nairobi City Council 2,000
Register with VAT office KRA, Times Towers -
Register with NSSF NSSF building community -
Register with NHIF NHIF building community 14,000
Government Regulations
38
In addition to the permits, the business will be required to pay local taxes which include employment taxes for all the employees as
well as the V.A.T. before the business commences, the city council of Nairobi will have to approve whether the premises is fit for
operating the business of a salon it. This approval will cost Kshs 2,000 upon which the entrepreneur will be awarded with a certificate
of approval. There will be no any other approval required for us to begin the business. Other regulations that are likely to affect our
business will be proposals made by the Minister for Finance affecting products that are raw materials for our business.
39
CHAPTER FIVE FINANCIAL PLAN
5.1 FINANCIAL ASSUMPTION
Assumptions made on the costs:
The costs are the current market prices and they are expected to remain unchanged until December 2016 when the proprietor will
incur them.
The deposit for rent will be for two months and the proprietor will be paying one-month rent in advance.
The business will pay tax of 15% on profit before tax, and this percentage is expected to remain constant for the first three years of
operation.
The service revenue will grow by 30% per year.
The direct costs are assumed to increase by 10% while the indirect cost will increase by 30% per annum.
The direct costs include the costs of direct labor and direct material. This is computed based on the calculation in section 2.3:
Pricing strategy. The direct cost per customer is Kshs. 91.80 X 6240 customers per annum= Kshs. 572,832.
The number of customers is calculated at 20 per day, 20X6 days =120 customers per week and 120X52 weeks = 6240 customers
per year.
The indirect cost per customer was calculated to be Kshs. 127.4 per customer. Therefore annual indirect cost is calculated as Kshs.
127.4X6240 =Kshs. 795,163
40
The indirect cost includes the cost of all overhead expenses such as indirect labor, interest expenses, operating expenses, and
support services.
5.2 PRE-OPERATIONAL
Table 5.1: Pre-operational costs.
Cost component Amount (Kshs.)
Machine and equipment 345,000
Other equipment 57,000
Fixture and fittings 100,000
Materials 100,000
Deposit for rent 20,000
Deposit for water 1,000
Deposit for electricity 3,000
Advertisement campaigns 20,000
Hiring employees 23,000
Business licenses and permits 14,000
Transport and Communication 10,000
TOTAL 693,000
Source: Author (2015)
41
5.3. WORKING Capital Working capital will be calculated as follows: Working capital= Current Assets-Current Liabilities At start-
up the working capital shall be =Kshs. 307,000
5.4. PROJECTED CASH FLOW
The table 5.4.1 below shows the cash flow projection for the first year of operations.
ITEMS JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DECReceipts KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS
Bal b/f524,608
589,215 653,822 718,430 783,037 847,645 912,253 976,861 1,041,4681,106,076
1,170,684
Capital 1,000,000 - - - - - - - - - - -
Service revenue 200,000200,000
200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
Total receipts 1,200,000724,608
789,215 853,822 918,430 983,0371,047,645
1,112,253 1,176,861 1,241,4681,306,076
1,370,684
PaymentsTaxation 11,645 11,645 11,645 11,645 11,645 11,645 11,645 11,645 11,645 11,645 11,645 11,645Machines and equipments
402,000 - - - - - - - - - - -
Fixtures and fittings 100,000 - - - - - - - - - - -Salaries and wages 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000Deposits 24,000 - - - - - - - - - - 48,000Material requirements 35,040 35,040 35,040 35,040 35,040 35,040 35,040 35,040 35,040 35,040 35,040 35,040Permits and licenses 14,000 - - - - - - - - - - 5,000Support Services 5,308 5,308 5,308 5,308 5,308 5,308 5,308 5,308 5,308 5,308 5,308 5,308Interest on loan 3,750 3,667 3,583 3,498 3,411 3,324 3,235 3,146 3,055 2,963 2,871 2,776Principal paid 6,649 6,732 6,816 6,901 6,988 7,075 7,164 7,253 7,344 7,436 7,528 7,623
Total payments 675,392135,393
135,393 135,393 135,392 135,392 135,392 135,392 135,392 135,392 135,392 188,392
42
Net cash 524,608589,215
653,822 718,430 783,037 847,645 912,253 976,861 1,041,468 1,106,0761,170,684
1,182,291
43
5.5 PROFORMA PROFIT AND LOSS ACCOUNT
The table 5.5 below shows the projections for the profit and loss account.
ITEM 2016 2017 2018Kshs Kshs Kshs
Service revenue 2,400,000 3,120,000 3,432,000Direct costs 572,832 630,115 693,127Gross profit 1,827,168 2,489,885 2,738,873
Overhead expensesIndirect costs 795,163 238548.9 71564.67Depreciation 100,400 60,320 48256Total expenses 895,563 298,869 119,821
Profit before tax 931,605 2,191,016 2,619,053Tax (15%) 139,741 328,652 392,858Net profit after tax for the year
791,864 1,862,364 2,226,195
Cumulative profits 791,864 2,654,228 4,880,422Table 5.2: profit and loss account
Source: Author (2015)
5.6 PROFORMA BALANCE SHEET
table5.6. Presents the projected balance sheet of Prevans Barber Spa
Jan-2016 Dec-2016 Dec-2016 Dec-2016ASSETS Kshs Kshs Kshs KshsFixed AssetsMachine and equipment 402,000 402,000 402,000 402,000Fixtures and fittings 100,000 100,000 100,000 100,000Total value at cost 502,000 502,000 502,000 502,000Less accumulated depreciation 100,400 160,720 208,976Net Book value of assets 502,000 301,600 241,280 193,024
Total fixed assets 502,000 301,600 241,280 193,024
44
Current assetsCash 474,000 1,310,756 3,175,785 5,327,098Deposits 24,000 48,000 30,000 35,000Debtors - 46,000 22,400 25,300Total Current assets 498,000 1,404,756 3,228,185 5,387,398
TOTAL ASSETS 1,000,000 1,706,356 3,469,465 5,580,422
Financed byLoan 300,000 214,491 115,237 -Family and friends 100,000 100,000 100,000 100,000Owner's equity 600,000 600,000 600,000 600,000Net profit(loss) 791,864 2,654,228 4,880,422TOTAL EQUITY 1,000,000 1,706,356 3,469,465 5,580,422
Table 5.6: Balance sheet
Source: Author (2015)
5.7 BREAK EVEN PROFIT
Gross profit in the first year (indicated in the profit and loss account is Kshs. 1,827,168
Gross profit margin= (1,827,168/2,400,000) 100= 76%
Total Overhead for the first year= Kshs. 895,563
Breakeven level of sales= (overhead expenses/gross profit margin) X100
=Kshs. (895,563/76) X100= Kshs. 1,176,329
5.8 PROFITABILITY RATIO
The proprietor projects the following profitability ratios for the business in the first three years of
operation.
The calculations are as follows:
Gross margin= (Gross profit/service revenue) X100
Return on equity= (Profit after tax /owner’s equity) X100
45
Table 5.8.Return on assets= (profit after tax add interest/investment) X100
Year Gross Profit Margin Return on equity Return on assets
2016 76% 46% 158%
2017 79.8% 54% 371%
2018 79.8% 40% 443%
5.9 DESIRED FINANCING
Table 5.9 desired financing
As at start up the business will require Kshs 1000000
Item Amount (Kshs.)
Pre-operational costs 693,000
Working capital 307,000
Total 1,000,000
5.10 PROPOSED CAPITALIZATION
The following table5.10 shows the financial contribution of the business:
SOURCE AMOUNT %
Evanson Njoroge (co-owner) 270000 21.5%
Rachael Njoroge (co-owner) 300000 23.9%
STIMA SACCO loan 440000 34.9%
Family and friends 250000 19.7%
Total capital investment 1,260,000 100
46
5.1.1 CRITICAL RISKS AND PROBLEMSThe proposed business might experience a number of risks and problems, which might hamper
operations from time to time. The risks include:
Water shortages: the continued drought and depletion of major forests in the country has led
to drying up of water towers. This has resulted in major water problems in the country. If this
situation goes zone, then the business will be at great risk of water shortages since in will
depend on water to provide hair relaxing services to its customers.
To avert this risk, the business will have a large water tank of about 1000 litres to store water
for use when the taps will dry up.
Power failures: the same water problem highlighted above has contributed to power
shortages since power generation id hydro-based. The business will depend on electricity to
blow-dry client’s hair and shortage of it will mean hating of business operations. The greatest
risk here is blackouts, which might occur in the process of treating client’s hair.
In response to this risk, the business will have in place a generator for use when power fails.
Occupational accidents: accidents at the work place such as fire due to electric fault can
occur without warning. The proprietor will ensure that all exit doors are easily reachable and
never locked for easier evacuation of the building in case of fire.
47
APPENDIX
LOAN REPAYMENT SCHEDULE
MonthBeginning
Bal (Kshs)
Monthly payment
(Kshs)
Interest (15%
p.a) (Kshs)
Principal
paid (Kshs)
Principal Bal
(Kshs)
1 300000 10399 3750 6649 293351
2 293351 10399 3667 6732 286619
3 286619 10399 3583 6816 279803
4 279803 10399 3498 6901 272901
5 272901 10399 3411 6988 265913
6 265913 10399 3324 7075 258838
7 258838 10399 3235 7164 251675
8 251675 10399 3146 7253 244422
9 244422 10399 3055 7344 237078
10 237078 10399 2963 7436 229643
11 229643 10399 2871 7528 222114
12 222114 10399 2776 7623 214491
13 214491 10399 2681 7718 206774
14 206774 10399 2585 7814 198959
15 198959 10399 2487 7912 191047
16 191047 10399 2388 8011 183036
17 183036 10399 2288 8111 174925
18 174925 10399 2187 8212 166713
19 166713 10399 2084 8315 158398
20 158398 10399 1980 8419 149979
21 149979 10399 1875 8524 141454
22 141454 10399 1768 8631 132824
23 132824 10399 1660 8739 124085
24 124085 10399 1551 8848 115237
25 115237 10399 1440 8959 106278
26 106278 10399 1328 9071 97208
48
MonthBeginning
Bal (Kshs)
Monthly payment
(Kshs)
Interest (15%
p.a) (Kshs)
Principal
paid (Kshs)
Principal Bal
(Kshs)
27 97208 10399 1215 9184 88024
28 88024 10399 1100 9299 78725
29 78725 10399 984 9415 69310
30 69310 10399 866 9533 59778
31 59778 10399 747 9652 50126
32 50126 10399 627 9772 40354
33 40354 10399 504 9895 30459
34 30459 10399 381 10018 20441
35 20441 10399 256 10143 10297
36 10297 10399 129 10270 0
49
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Hutt, M. D. & Speh, T. W. 1995.Business Marketing Management. California : Harcourt
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Padgett, D. 1998. Qualitative Methods in Social Work Research: Challenges and Rewards.
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Ranjit, K. 2005. Research Methodology: A Step-by-Step Guide for Beginners.
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51