Bplan

Business Plan for Click Clique Compute rs

November

2008

This document is presented in part of the requirements for the course completion by the author.

Business Plan

Catholic University of Eastern Africa Faculty of Commerce Department of Accounts and Finance Unit: Entrepreneurship Unit Code: CMM 321 Business Plan

Lecturer: Mrs. Margaret Ndanu

Presented by: Terrence Chanzu

Presented on: 19th November 2008

Reg. №: CBA/2818/06/07

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Contents Contents................................................................................................. ....................3 Executive Summary............................................................................................ ........5 Objectives............................................................................................................... .5 Mission.................................................................................... ................................6 Keys to success.......................................................................................................6 Business Description..................................................................................................7 a)Background of the owner.....................................................................................7 b)Nature of the business.........................................................................................7 c)Product /Services................................................................................... .............10 d)Entry Strategy.................................................................................. ..................11 e)Growth Strategy............................................................................. ....................11 Marketing Plan............................................................................................. .............13 a)Potential Clients.................................................................................................13 b)Competition.................................................................................................... ....13 c)Pricing Strategy............................................................................... ...................14 d)Sales Tactics....................................................................................... ................15 e)Advertizing and Promotional Strategy................................................................16 f)Distribution Strategy...........................................................................................17 Organizational Plan.............................................................................................. .....18 a)Organizational Structure....................................................................................18 b)Key Management Personnel...............................................................................20 c)Other Personnel...................................................................................... ............20 d)Supporting Advisory Services / Business Supporting Services...........................21 a)Production facilities and Capacities....................................................................23

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b)Important factors for success of the service delivery process............................24 Financial Plan................................................................................................... .........25 a)Amount Required............................................................................................. ...25 b)Sourcing Capital.................................................................................................25 c)Payback......................................................................................... .....................25 d)Working Capital Requirement.............................................................................25 e)Revenue................................................................................... ..........................26 f)Expenses.................................................................................................... .........26 g)Pro Forma Cash flow Statement.........................................................................26 h)Pro Forma Balance Sheet...................................................................................28 i)Pro Forma Profit and Loss / Income Statement....................................................29 j)Sales forecast and Break-even level....................................................................31

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Executive Summary Click Clique Computers is in the process of being formed as a sole proprietorship owned and operated by Terrence Chanzu. This plan is written as a guide for starting and managing this new business and will also serve as the basis for a separate, detailed marketing plan. The following is a summary of the main points of this business plan. •

The objectives of CCC are to generate a profit, grow at a challenging and manageable rate, and to be a good citizen.

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The mission of CCC is to provide fast and reliable technical assistance to small office computer users.

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The keys to success for CCC are marketing and networking, responsiveness and quality, and generating repeat customers.

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The initial primary service offered will be hourly technical aid, although silver and gold subscriptions will be considered in the future growth.

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The local market for this business, while not new, is wide open for new and expanding computer cyber café and software & hardware businesses.

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An initial financial analysis of the viability of this venture shows outstanding promise and results. Several sources note that the computer cyber café and software & hardware business is easy to start, requires little up-front capital, and has the potential to be quite lucrative in today's high tech world.

In conclusion this plan projects rapid growth and high net profits over the next three years. In implementing this plan, and in conjunction with a comprehensive and detailed marketing plan, will ensure that Click Clique Computers rapidly becomes a profitable venture for the owner.

Objectives The objectives of this business plan are: 1. To provide a written guide for starting and managing this computer cyber café business; a strategic framework for developing a comprehensive tactical marketing plan. 2. The scope of this plan is to provide detailed monthly projections for the current plan year and yearly summaries for the following two years.

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The objectives of Click Clique Computers are: i.

Profit - To generate sufficient profit to finance future growth and to provide the resources needed to achieve the other objectives of the company and its owner. (Net profit of at least 45% of sales in first year).

ii.

Growth - To grow the business at a rate that is both challenging and manageable, leading the market with innovation and adaptability.

iii.

Citizenship - To be an intellectual and social asset to the community and environment. (The director will contribute 5 hours per week as volunteer; contribute 5% of pre-tax profits to charity).

Mission Click Clique Computer’s mission is simple and straightforward: •

Purpose - CCC exists to provide fast, reliable technical assistance to local business/small office/home office computer users. CCC sells solutions & results!

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Vision - By providing fast response, informed expertise, and consistently high quality solutions, CCC generates enough satisfied repeat customers to provide a stable retainer base. This generates sufficient profit to provide a comfortable living for the owner.

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Mission - The short term objective is to start this company quickly and inexpensively, with a minimum of debt. The long term objective is to grow the company into a stable and profitable entity that the owner can easily and comfortably manage.

Keys to success The keys to success for Click Clique Computers are: a) Marketing and Networking b) Responsiveness (being an on-call computer paramedic with fast response time). c) Quality (getting the job done right the first time, offering 100% guarantee).

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Business Description a) Background of the owner The owner of the business will be Terrence Chanzu. I’m a 21 year old single male living in Nakuru town. I am presently a student in the Catholic University of Eastern Africa, undertaking a degree course in commerce – the accounting option – and in my third year. My other academic qualifications include; getting 534 marks in my KCPE exams while in Lions primary school in Nakuru. Thereafter, I joined Kakamega high school for my secondary school education where I got a B in the final national exams. I then undertook a Diploma in Business and Information Technology in Strathmore University – Nairobi. I do not have any major business experience, but I do work part time in the family owned bar, by balancing its books of accounts. The amount to be invested in the business will be 1.4 million shillings. The source of most of the business’ financing will come from the family. Approximately, both my parents and my bother will provide about 700,000 shillings for start-up capital and the rest of the extended family will chip in the other remaining 300,000 shillings. That’s how the 1 million out of the total 1.4 million will be obtained. The balance of 400,000 shillings will be raised through the Kenyan government youth fund, set aside in the Constituency Development Fund (CDF). Plans to acquire the necessary experience will come from me. As I have the necessary knowledge of how to manage, interconnect and network computers, I will involve myself in most of the day to day running of the business. This will be though running and maintaining the computer systems, and eventually, at the end of the day, balance its financial books (accounting). I will not, however, be the one at the counter all day, as I will hire a cashier who will be the one to collect the business’ daily income

b) Nature of the business The business will be known as “Click Clique Computers” and will be a sole proprietorship, owned and managed by me. It will be located next to the Merica Hotel, which is conveniently situated near the Nakuru town center. There are new storied office buildings coming up in this area, therefore it should be relatively easy to acquire an office to carry out the operations of the business at the location. The benefits of the location include:

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•

The location is also suitable because there is ample security. This is because of the close proximity of the hotel, which is known to host tourists, dignitaries as well as other people who visit the town.

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There is also adequate availability of infrastructure. This can be noted through the closeness of transport facilities, ranging from taxis, passenger vehicles (matatus) and busses. This is a plus for the business’ accessibility.

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Availability of ready electricity, water and sewerage facilities at the venue. Therefore, lighting and drainage services will be provided efficiently.

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Quantity of competition is quantified as limited.

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The demographic in this area is excellent as the target market of the business is already established and ready to be penetrated.

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There is high potential for growth in the business location.

The probable challenges of hiring the office include; • The pricing of the rent for the offices, which are said to be on the steady rise due to the rising cost of living. • There are also other computer/internet cyber cafés in the area which will offer competition to my business, although not in high numbers. • Other charges, for example electricity, water, internet service provider costs are on the rise and therefore the business will have to generate enough income to cater for these expenses. They will be further discussed in my marketing strategy, the third chapter which appears a little later in this business plan. The business will be a sole proprietorship without a limited liability status for the first few years of its operations. This will be to enable for its growth over the time period and establishment of its services and emerge as a market leader in the town. The advantages of this type of business structure are; • Easier decision making on my part, as there will be no need to consult anyone else. • The profits will be solely enjoyed by me. The challenges I expect to encounter are; • The source of financing may prove to be a difficult task to accomplish, because of the number of youths applying for the Youth Fund are in high numbers. • Incase of losses, I will bear the brunt of their impact.

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•

Since the projected business will lack limited liability, this will place pressure on other assets that may not be attached to running the business.

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Major Activities of the Business The business will offer the following services: • A cyber café which will give clients a reliable and fast connection to the “outside” world through the internet. • Offer computer services through consulting, repairing, updating and software installations. • The business will also be a genuine software retailing spot dealing in purchase, sale and refurbishing of computer software. • Upon expansion and growth, the firm will venture into computer hardware repairing, upgrades and sales of computer parts. Potential Clients The business will target almost all demographics; from teenagers, youths, middleaged people to the old. This is because the internet is a source of information and communication. Therefore, in this interconnected world, the need for constant communication and information has never been higher. That’s why it’s referred to as a global village. The potential clients are those who will be around the town centre and the business location; there are no actual ages, gender, social or economic status of clients I am targeting. Anyone and everyone will be welcome to try out our services.

c) Product /Services Click Clique Computers will offer cyber café services with a difference. It will provide internet, e-mail, and computer inter-connectivity solutions to clients within the business premises and its environs at the early stages of its conception and establishment. It will be different form other competitors in the vicinity because I will employ the use of: • New and faster computer machines with the latest software and operating systems. • The deployment of new communication technology; i.e. fiber optic – this is a faster means of linking the computers in the business with others in different parts of the world (internet), therefore boosting communication and exchange of information tenfold, as well as upload/uplink and download/downlink speeds. This is a step further than the market leader in the town. • Upon successful establishment of the business, we will offer wireless connectivity to the environs at a fee therefore maximizing our capacity to attract and maintain clients. • Offering of technical help and assistance to clients.

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•

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Expanding the business functions to also involve buying and selling of genuine computer hardware and software. This will solve the problem of counterfeit, faulty and often, in the long run more expensive material. The availability of a generator in the building will always ensure that there is power even in the event of power failure, thus clients will be able to save their work within an appropriate span of time.

d) Entry Strategy To be able to penetrate the market successfully, we will inform the potential clients of our opening via flyers that will be distributed around the town centre. There will be also the use of colorful banners, hanging from the side of the building. The use of friends and relatives as referees who will vouch for the business to others through word of mouth, to encourage potential customers to try the cyber café. To out-do the competition; We will be offering lower charges than the prevailing market rates. We will charge .50 cents per minute instead of the current 2 shillings a minute. We will be serving coffee on the first month of the successful launch of the business. This will attract the first batch of consumers who will – from thereon – serve as goodwill ambassadors. New and faster computer machines with the latest software and operating systems will be installed & introduced to the business. The deployment of new communication technology; i.e. fiber optic – this is a faster means of linking the computers in the business with others in different parts of the world (internet), therefore boosting communication and exchange of information tenfold, as well as upload/uplink and download/downlink speeds. This is a step further than the market leader in the town. Upon successful establishment of the business, we will offer wireless connectivity to the environs at a fee therefore maximizing our capacity to attract and maintain clients. We will offer technical help and assistance to clients. Expand the business functions to also involve buying and selling of genuine computer hardware and software. This will solve the problem of counterfeit, faulty and often, in the long run more expensive material. The availability of a generator in the building will always ensure that there is power even in the event of power failure, thus clients will be able to save their work within an appropriate span of time. This is unlike the kind of system implemented by the competition.

e) Growth Strategy In the computer world, it is always advisable to stay in touch with the trends of technology. I will ensure the business is at par with the rest of the globe when it comes to the software and hardware elements in the market. This is shown by my desire to utilize fiber optic cables in my business, there-by setting a standard to be

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emulated by the competition. Fiber optic cables are much faster than the traditional copper wired coaxial cables (which are in use at the moment) when it comes to data transfer. They are even faster than satellite communication. This will be advanced by the Kenya govt. mission to use the EASSY fiber optic cable to link E. Africa to the rest of the world. Using of new and faster machines will undoubtedly overwhelm the competitors. This is because, as I have noticed, they use old slow machines with the aim of making their clients wait for long periods of time to carry out simple tasks e.g. sending email. Through this method, they stand to gain because, the longer the client takes, the more money they (entrepreneurs) make as the billing is done per two shillings per minute.

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Marketing Plan a) Potential Clients Our target market will be the locals who are in need of fast access to the internet, computer services or software. This type of demographic is not well defined as its broad in nature. It encompasses anyone who knows how to use a computer and its programs, within any age bracket, level of income, educational achievements, occupation, religion – or beliefs, values and culture – among other classifications. Business wise, we will target: • Home Office Businesses - the largest and fastest growing segment, this segment is obviously defined as small businesses that are based primarily out of the owner's home. This is not the same as simple home computer users, which sources warn are not a viable market segment for computer consulting. • Small Businesses - defined as businesses with 1 to 99 employees, this is the second largest and fastest growing segment in Nakuru town. At maximum capacity, our business should be able to cater to upto thirty clients ata-time. There will be a waiting room positioned near the entrance to serve the extra/excess customers. It shall be having magazines and newspapers that will be used to keep the waiting entertained. This high capacity to hold clients will be an added advantage. To retain the customers, we will invest in the business new machines that will guarantee speed in carrying out tasks. The implementation and use of fiber optic cables connectivity to the internet. The competition in the area has not yet utilized this type of technology. Then, upon generation of revenue, the business will expand its services from a plain cyber café to an I.T firm that will provide software and hardware solutions. All the above reasons will ensure that word of the venture will spread quickly around the town thereby promoting the business.

b) Competition The competition in the area include several cyber cafés – notably four in number – that offer the same services to the business I am proposing. Below are examples of a brief analysis of CCC's main competitors. 1. Competitor 1: [name omitted] Top strength - A very memorable name that will stick in customer's minds. Primary weakness - a focus primarily on one outdated operating system (not used by modern and up-to-date businesses).

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2. Competitor 2: [name omitted] Top strength - Longevity and experience, someone who has been in the business locally a long time. Primary weakness - Slow response and an unwillingness to take on new customers. Both are located near the town center; hence they have a familiar market base and an already established clientele. Even though they are not large, in terms of number of employees or customers, their main threat comes from their already large appeal to their consistent customers through the use of membership statuses. Through this they are able to extend to people their services by giving them an option of signing in as members either monthly or annually, at a reduced overall charge. My business will strive to break into this cadre of clients by introducing our own membership option, where users will be able to subscribe to either the silver option or the gold membership option. With the silver option, subscription will be monthly, whereby clients will pay a fee after which they’ll be handed a username and password that will be valid to them for that duration. They will be able to access our services – unlimited – for upto 540 hours a month. This will be at a reduced price when compared to the regular service. The gold option will be similar to the silver one but will be for duration of upto a year. Although its cost may seem higher, when compared to the regular and silver options, it is much cheaper and comes with benefits. CCC's competitive edge is that the owner already has a significant number of high quality relationships with current and potential clients. In essence, CCC has already overcome the barriers to entry in the consulting field and is simply in the process of formalizing the business. The value proposition offered by my business is quite simple: timely and practical solutions for client's computer problems and/or upgrades, all at a very reasonable and competitive rate. Most important, CCC offers a 100% satisfaction guarantee, thus building and retaining the client's confidence. These highlights will surely attract new customers and win over others form our competitors.

c) Pricing Strategy Click Clique Computers will adopt an entry pricing strategy rather than price matching strategy. A survey of local computer cyber café businesses revealed the following: • Per minute Rate Pricing - The average price charged was 2.00 KShs per minute.

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• • •

Hourly Pricing - Based on the expected minimum number of hours, the average was 100 KShs. Monthly Pricing - Based on a daily rate (30 days x 8 hours x KShs 2.00/hour) Annual Pricing - Based on a monthly rate (12 months x 30 days x 8 hours x KShs 2.00/hour)

Our pricing will be different to what the competition is offering in that we will be cheaper i.e. we are contemplating lowering the market price by 75%! This means that our basic charge will be 0.50 cents to the minute. The costs of factors utilized to produce the service that will be considered are: • Electricity that will be used. • Cost of implementing the network service i.e. cost of the fiber optic cables. • Charges and bills leveled by our ISP (Internet Service Provider) • Rent charged by the landlord for the office. • Other factored services such as water and sewerage costs. Methods of: • Offering credit terms: will depend on the client’s credit worthiness, relationship with the business this means, “Is he/she a supplier or a consumer?” The frequency of the consumer’s appearances at the business premises will form a bond with the inter-business relationship. • Offering discount: this will depend on how long the duration the consumer has utilized the service. • Offering after-sales services: these services will be offered once we get our hardware services off the ground.

d) Sales Tactics Sales strategy for Click Clique Computers is simple and straightforward: customer satisfaction! Happy customers will be repeat customers, and they will provide referrals to new customers. • Sales forecast figures are based on industry figures for the typical growth of a computer cyber café startup and reflect repeat business generated through meeting customer needs. • Sales programs must be based on the notion that business is driven on customer demand when problems arise. While some business can be generated by soliciting customers to upgrade their systems and software, by and large the bulk of the business will be emergency technical aid. Most of the textbooks and experienced business people who contributed to the research for this plan suggested some combination of the following four marketing

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strategies. These are especially suited for a modern high tech business such as computer cyber café and appliances investment. 1. Strategy 1 - Networking & Referrals - Using existing contacts and clients to build a larger network of potential clients. 2. Strategy 2 - Web promotion - Using a web page to showcase the business' skills and knowledge, providing an "electronic brochure" as well as useful technical information free of charge. 3. Strategy 3 - Advertising - Traditional methods such as Yellow Page advertisements, newspaper classified and display adverts, local television cable access advertisements. 4. Strategy 4 - Non-traditional - Creative and unique advertising such as door hangers, bumper stickers, flyers, banners, etc. The geographical area that I intend to sell the business services will be the town center and its environs. This is due to the location of the premises, availability of infrastructure

e) Advertizing and Promotional Strategy Strategy Promotional Pyramids • Strategy 1 - Networking & Referrals - Using existing contacts and clients to build a larger network of potential clients. • Strategy 2 - Web promotion - Using a web page to showcase the owner's skills and knowledge, providing an "electronic brochure" as well as useful technical information free of charge. • Strategy 3 - Advertising - Traditional methods such as Yellow Page ads, newspaper classified and display ads, local television cable access advertisements. • Strategy 4 - Non-traditional - Creative and unique advertising such as door hangers, bumper stickers, etc. The primary promotion strategy for CCC will be directly in line with the strategy pyramids mentioned above. The lead strategy will be to focus on cultivating existing relationships, using known networking techniques to develop referrals and new customer leads. In addition to this, will be a blend of web based marketing, traditional public relations and media marketing. The ultimate promotion strategy, however, will be in guaranteeing customer satisfaction: happy customers will generate repeat and new business.

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Other important marketing program for CCC is to get the word out, through a combination of the following: • Sending a letter of announcement and brochure to all existing contacts and customers. • Following the well-established steps of a public relations campaign (press releases, announcements, etc.). • Developing and purchasing "grand opening" announcements in the local news media. The above methods of promotional strategies are essential because of the target market. Informed and interconnected clientele.

f) Distribution Strategy Click Clique Computers will focus on the following to establish and grow the business: • Four main promotion and distribution strategies: networking and referrals, web based promotion, traditional media advertising, and some non-traditional promotion methods. • A value proposition of timely and practical solutions, at a reasonable rate, coupled with a 100% guarantee. • A competitive edge based on cultivating existing customer relationships. • A comprehensive and detailed marketing and sales strategy. The distribution strategy will be improved as the business grows and expands thus introducing Wi-Fi as well as WiMax services. These will enable clients to access our services as though they were in the premises when they, in-fact, aren’t! These services will be available at the vicinity of the building and the neighboring hotel at a fee. Thus enabling the business to distribute its services over a wider area compared to competitors.

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Organizational Plan a) Organizational Structure The Click Clique Computers investment will be managed by the founding person – Terrence Chanzu, whose individual areas of expertise cover many of the functional aspects of the business. The organizational structure is very simple. I will be the director, responsible for the accounting, distribution management and delivery systems. The structure has the director at the apex. My duties will be to coordinate the organizations activities, authorizing payments, hiring and dismissal of employees and an overall overseer. My service and contribution to the business will be voluntary. The accounts clerk will be responsible for overseeing the cash collection and expenditures. My hired employee (hired according to the information technology skills he/she possesses) will be responsible for customer service, sales and the general administration of the business. Together we will be responsible for product/service selection, sales and marketing. He/she will also be the receptionist. The reception will act as the first desk to attend to our customers as well as payment point. The cleaner/janitor will be responsible for the general cleanliness of the premises and will be required to perform his/her delegated duties at the end of the day. The technician/receptionist will be paid a monthly salary of 10,000 KShs a month, as well as commissions depending on the amount of clients served and the profits realized. The janitor will be paid a daily wage of 300 KShs per day upon completion of the day’s chores. Since the director’s (also the owner) duties are voluntary, I will be only banking the profits and investing the income for the expansion of the business to the levels mentioned previously. Below is the organization structure for Clique Click Computers:

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Director/Owner

Receptionist/Technician

Accounts Clerk

Janitor/Cleaner

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b) Key Management Personnel Director I have an in-depth knowledge of technological factors as well as developing trends in the information technology industry. Through the business I will gain experience in sales and management, specifically in the consumer industry. I have also developed numerous industry contacts and an intimate knowledge of the market.

c) Other Personnel Technician/receptionist They should be well versed in knowledge of computers and computer systems as well as software and hardware handling. Their duties will involve the following: • Configuring the computer systems and the peripheral devices. • Maintaining the internal computer network. • Collecting payments from clients for the services rendered. • Opening and closing the business premises. • Answering clients’ questions and serving them as their delegated duties instruct them to. The salary will be 10,000 KShs per month. Accounts Clerk Their main task will be to balance the books as per the accounting period. This will be overseen and periodically undertaken by the director of the business. The accounts clerk will not be paid because I will place a family member to carry out this task and report to me on a regular basis. Cleaner/janitor His/her main job will be keeping the premises as clean as possible on a day to day basis excluding Sundays because the business will be non-operational to provide for observation religious activities and practices. The/she will receive a wage payment on a daily basis upon completion of assigned tasks.

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d) Supporting Advisory Services / Business Supporting Services Banking Services The business will enlist the services of Family bank Nakuru Branch. It will be a current type of account, allowing the business to transact through non-paper methods of payment, namely; credit and debit cards, cheques, overdrafts, automatic teller machines (ATM’s) among other services. Banking offers a secure way of keeping the organizations liquid assets (cash) as well as a convenient way to issue and receive payments to various business entities. Legal Services These refer to the licenses, fees, bills, tax returns and charges incurred while establishing or running the business. These will be paid to the concerned local government and central government agencies to ensure that the business is operating within the legal framework of the area and our country. Book-keeping and Accounting services The above services will be overseen by me (the director) and a family member on a regular basis. This is to cut on costs of hiring a professional accountant. The expenditure will be overcome because of my accounting basics and therefore are unnecessary. My institution will be linked to societal issues such as ignorance, communication ad exchange of information. Ignorance will be tackled through making available sources of knowledge and information from all over the world - at high speeds – to scholars, students, teachers and people in the education system enabling them to gather more information than the books available in the Town Library. Communication will be improved as events, news as well as travelling information (such as maps) will be available to the tourists staying in the nearby Merica hotel. Letting them document their stay while in Kenya and exchange it with their peers across continents. The fulfillment of services for CCC is provided by the owner. The ultimate deliverable is the owner's expertise and problem solving ability, coupled with an open mind and ease of communication that will result in the customer's complete confidence in immediate and lasting results. Technology is, of course, vital to the success of Clique Click Computers. It is imperative that the owner stay up-to-date on the latest technological developments in the computer industry. In addition, it will be important to devote a reasonable

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portion of each year's revenues toward upgrading the equipment and software used by CCC in its normal operations.

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Operational Plan Here, the business operations and how they will be carried out are described.

a) Production facilities and Capacities For the smooth and effective execution of its duties, CCC will require the following facilities; • Computers • Printers • Copiers • Computer tables and chairs • Scanners • Stationery • Binders • Room • An Internet Service Provider (ISP) The expected costs to be incurred in acquisition of these equipment and machines are; Item (KShs) • 30 Computers @20,000 600,000 • 2 Printers @ 10,000 20,000 • 1 Copiers @ 45,000 45,000 • 30 Computer tables & chairs 150,000 • 2 Scanners @ 10,000 20,000 • Stationery 20,000 • 5 year Subscription to I.S.P Broadband 400,000 • 1 Binders 7,000 • Business operating license 8,000 • 2 month’s pre-paid rent 30,000 Total 1,300,000 The machinery and equipment will be purchased in cash but the room will be rented at a cost. Production Strategy Requirements for the running of the business; • Electricity • Internet service provider • Water • Computers, printers, scanners among the above listed peripherals.

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b) Important factors for success of the service delivery process Click Clique Computers will need to focus on networking with local computer stores and local business organizations (such as Chamber of Commerce and local SBDC) to develop strategic alliances. Such organizations, which may not be customers in themselves, will be valuable in providing leads to new customers. The value proposition offered by Click Clique Computers is quite simple: timely and practical solutions for client's computer problems and/or upgrades, all at a very reasonable and competitive rate. Most important, CCC offers a 100% satisfaction guarantee, thus building and retaining the client's confidence. Sales strategy for CCC is simple and straightforward: customer satisfaction! Happy customers will be repeat customers, and they will provide referrals to new customers. Sales forecast figures are based on industry figures for the typical growth of a consulting startup and reflect repeat business generated through meeting customer needs. Sales programs must be based on the notion that business is driven on customer demand when problems arise. While some business can be generated by soliciting customers to upgrade their systems and software, by and large the bulk of the business will be emergency technical aid. Regulations Affecting Operations Business permits and licenses will be obtained from the local government authorities. Their expenses are accounted for in the financial plan. Seeing as the business of investing in an internet cyber café is bordering on the importing of immorality among other social vices, my business will take precautions so as to protect young ones and our culture by: • Restricting and forbidding access to such sites and information. • Appropriately punish offenders. • Putting in place measures within the computer system to disallow viewing of such content.

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Financial Plan a) Amount Required Capital for start-up amount, to be invested in the business, will be 1,400,000 shillings The business projects the gross margin to be at approximately 20% - 25%. Sales projections for the first year are KShs 1,500,000 increasing to KShs 1,700,000 in second year and KShs 1,800,000 in subsequent years.

b) Sourcing Capital The source of most of the business’ financing will come from the family. Approximately, both my parents and my bother will provide about 700,000 shillings for start-up capital and the rest of the extended family will chip in the other remaining 300,000 shillings. That’s how the 1 million out of the total 1.4 million will be obtained. The balance of 400,000 shillings will be raised through the Kenyan government youth fund, set aside in the Constituency Development Fund (CDF).

c) Payback As noted above, most of the business capital will be raised from family ties; therefore the payback period will be generated from the profits realized upon successful start-up and growth of the business. This will be discussed privately and agreed upon among the involved parties.

d) Working Capital Requirement The company is raising KShs 1.4 million for the purpose of growth and operations. This funding will cover operating expenses and product development during this period. The following is a breakdown of how the funds will be used. Expenses: Advertising Legal Fees Office Working Capital Miscellaneous Sub-total Product Development: Total

Costs (in KShs): 50,000 10,000 40,000 100,000 50,000 250,000 1,150,000 1,400,000

Nature and Limitation of Projections This financial projection is based on sales volume at the levels described in the revenue section and presents, to the best of management's knowledge and belief, the company's expected assets, liabilities, capital, revenues, and expenses. The

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projections reflect management's judgment of the expected conditions and its expected course of action, given the hypothetical assumptions.

e) Revenue The company's revenue is derived primarily from subscriptions. Revenue projections are based on the future period sales in the comparable market nationwide, based on industry average. The exact numbers can be found in the Sales forecast table.

f) Expenses The company's expenses are primarily those of salaries, sales commissions, and administrative costs. Other expenses are based on management's estimates and industry averages.

g) Pro Forma Cash flow Statement 2009 2010 2011 Cash Received Revenue 120,375 220,500 230,400 Cash from Receivables 260,168 580,535 690,403 Subtotal 380,543 810,035 920,803 Additional Cash Received Sales Tax, VAT 12,280 13,200 16,575 New Current Borrowing 0 10,000 30,000 New Other Liabilities (interest-free) 20,000 0 0 New Long-term Liabilities 0 0 400,000 Sales of Other Current Assets 0 0 0 Sales of Long-term Assets 0 0 430,000 New Investment Received 0 100,000 0 Subtotal Cash Received 380,543 810,035 920,803 Expenditures Expenditures from Operations Cash Spending 30,000 Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT Paid Out 16,575 Repayment of Current Borrowing Other Liabilities Principal Repayment

2009 20,000 200,739 220,739

2010

2011 10,000

400,702 410,702

400,365 430,365

12,280

13,200

10,000 14,000

0 0

0 0

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Long-term Liabilities Repayment 0 Purchase Other Current Assets Purchase Long-term Assets Subtotal Cash Spent

0 0 0 220,739

150,000 90,000 0 0 400,000 410,702 430,365

Net Cash Flow Cash Balance

150,803 160,228

390,332 550,560

490,438 1,040,998

2

h) Pro Forma Balance Sheet 2009

2010

2011

Assets Current Assets Cash Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation 250,000 Total Long-term Assets Total Assets

160,228 550,560 1,040,998 100,958 190,923 200,720 0 0 0 270,186 750,483 1,250,718

0 0 0 270,186

Liabilities and Capital Current Liabilities Accounts Payable 30,577 Current Borrowing Other Current Liabilities Subtotal Current Liabilities 30,577

50,000 50,000 0 750,483

2009

0

0 1,250,718

2010

30,484

250,000

2011

30,423 0

0

0 30,484

0

0 30,423

Long-term Liabilities Total Liabilities 30,577

0 30,484

0

0 30,423

Paid-in Capital 20,050 Retained Earnings Earnings Total Capital Total Liabilities and Capital

20,050

(10,625) 210,652 700,011 230,277 480,359 500,080 230,702 720,061 1,220,141 270,186 750,483 1,250,718

Net Worth of the business

230,702

720,061

20,050

1,220,141

2

i) Pro Forma Profit and Loss / Income Statement Sales

2009 49,500

93,600 Direct Cost of Sales Other Total Cost of Sales

60,598 0 60,598

Gross Margin Gross Margin % 86.67%

Expenses Salaries Sales and Marketing Expenses 40,680 Depreciation Leased Equipment Utilities Insurance 20,200 Rent 15,100 Salary Taxes Total Operating Expenses Profit before Interest and Taxes Earnings before Interest Taxes DA Interest Expense Taxes Incurred 17,066 Net Profit 50,080 Net Profit/Sales 53.50%

2010

0

2011 90,000 110,997 0 110,997

120,477 120,477

420,902 86.67%

780,003 810,123 86.67%

228,000 20,475

228,000 228,000 40,500

0 0

10,000 20,000 0 0 10,500 1,025 1,025 10,800 20,000 15,100 9,090 110,865

0

15,100 10,800 130,525

310,037 310,037 0 7,760

23,277

47.02%

10,872 130,977

640,478 640,478 0 16,120

670,147 670,147

48,359

53.73%

2

2

j) Sales forecast and Break-even level The sales figures shown below include the projection based solely on hourly rate, during the first year of business. Yearly figures for subsequent years include the growth of retainer and project consulting income as business grows. 2009 Unit Sales (KShs in, 000) Hourly Rate Silver subscriptions Gold subscriptions Other Total Unit Sales 10,174

Unit Prices (KShs in, 000) Hourly Rate Silver subscriptions Gold subscriptions Other Sales (KShs in, 000) Hourly Rate 86,400 Silver subscriptions Gold subscriptions Other Total Sales 93,600

6,060 0 0 0

2010

2011

10,152 50 100 60 120 0 0 6,060 10,163

2009

2010

2011

75 0 0 0

75 0 600 0

75 0 600 0

49,500

10,152

86,400

0 0 0 49,500

0 3,600 0

2009

2010

Direct Unit Costs (KShs in, 000) Hourly Rate Consulting Silver subscriptions Gold subscriptions Other

0.00 0.00 0.00

0.00 79.98 0.00

Direct Cost of Sales (KShs in, 000) Hourly Rate Silver subscriptions Gold subscriptions Other

60,598 0 0 0

0 480 0

10.00

0 7,200 0 90,000

2011 10.00

10.00 0.00 79.98 0.00

110,517 0 960 0

110,517

2

Subtotal Direct Cost of Sales 120,477

60,598

110,997

2