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 wellwishers. 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
1

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 fiance 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.

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

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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 competitors 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 everchanging 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.

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

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 Shop

Internal

Strengths

Weaknesses

1. Technological skills

1. Low customer retention

2. Successful relationship marketing

2. Financial
flow

limitations/unreliable

cash

3. Innovative sales techniques

3. Limited services
4. Leading brands
4. New entrants in the market
5. Skilled workforce
6. Modern designs

5. Competition
between
discounts
proposed by other barber shops and ours

7. Exclusive products

6. No market Presence

8. Special equipment

7. Shallow skills base

9. The customer can reserve and pay online

8. Vulnerable to staff turnover

10. Quick response-no red tape

11. Low overheads-good value
12. Able to change direction quickly
13. Unique brands protected by sole supply
agreements.

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External

Opportunities

Threats

1. Local government wants to work with

local businesses

1. Changing fashion trends may shift

consumer interest in our product range

2. Increased geographic coverage

2. Government regulations

3. Leverage the growth of the internet to

enhance business

3. Rents increasing above projections

putting pressure on our margins

4. Reasonable prices

4. Increasing costs

5. The spa market increased by 19% in

2014

5. Web competition in terms of visibility

6. Easily accessible home equipment

6. Possibility of expansion of our services

in major suburbs

7. Vulnerable to large competitor action

7. Competitors slow to adapt to new

technologies

8. Will technology change beyond our

ability to adapt?

8. Expanding
sector
with
opportunities for growth

many

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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, dcor 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

14

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

Joy Salon; 8%
Executive Hair Salon; 18%

Elegant Beauty Salon; 33%

One Touch Hair Therapy; 19%

Beauty Care Hair Salon ; 22%

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

16

Prevans barber spa wants to set itself apart from other barbershop that may offer only one
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 hairdrying 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

17

will create a picture in our customers mind that, our services are of high quality, unique
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

1000

4000

Radio

600

3,000

Flyers

400

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.

18

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.

19

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
bonusthat 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.

20

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
SUPERVISOR

Hair Stylish/Barbers/
Aesthetician/Massage

Professional Shoe-Shiners

Therapist

Receptionist

Figure 3.0: Organization Chart

Source: Author (2015)

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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
22

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

23

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

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)

24

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

Perform limited reception duties

Sell salon or barber shops 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

25

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.
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

26

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 Shines 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
27

Greets all guests and displays knowledge of services available

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

28

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:
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
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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

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
30

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.
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 companys 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
31

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.
Global Links Solutions will audit the businesss 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.
32

The charges for this service will be payable once a year at the cost of ksh. 20,000. Global
Links Solutions will audit the businesss 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.
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 premises 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

33

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

Kshs

Kshs

Best-lady
Spray can
Dryer
Blow Dry Machine
Movable Lockers
Table

Cosmetics
Best-lady

3,000

Cosmetics
Best-lady

12,000

Cosmetics
Furniture

8,000

Palace
Furniture

30,000

Date Required

Total Costs

Installation
Costs

Units Required

Cost Per Unit

Source

Item

The table 4.1 below shows the machinery and equipment required for operations

Kshs
9,
000

01/1/2016
60,

000

01/1/2016
32

,000

01/1/2016
120

,000
34

01/01/2016
4, 01/1/2016

Furniture
Loose Tools

Palace

Kshs
-

Kshs
000
100

5,000

20

,000

(e.g.

Scissors and rollers)

Date Required

Total Costs

Installation
Costs

Units Required

Cost Per Unit

Source

Item

Palace
Furniture

Kshs
4,000

01/1/2016
20,

Supermarket

000

01/1/2016
345

Total

,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
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

35

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
Cost
Item

Source

Per Units

Unit
Kshs

Required

Installation

Total

Costs
Kshs

Costs
Kshs

20,0
Computer

Davetech

00

20,00
1

14,0
Television

Swahir Entertainment

00

Swahir Entertainment

00

00

Equipments

00

Tuskys Supermarket

01/1/2016
8,00

5,0
DVD Player
Swahir Entertainment
Other
Office

01/1/2016
14,00

8,0
Radio

Date Required

01/1/2016
5,00

10,0

01/1/2016
10,00

01/1/2016
57,00

Total

Table 4.2: Other Equipments Required

Source: Author (2015)
4.2 OPERATION STRATEGY

36

Liters

Kshs

Conditioner

Best-lady

17

120

Disinfectant

Best-lady

20

100

Total Costs

Frequency
Required

Cost per Liter

Quantity

Source

Item

Table 4.2.1 Monthly Material Requirements

Kshs
Once a month
Once a month

2040
2,000

Once a month
Hair Gel

Best-lady

25

100

Hair Oil

Best-lady

16

400

2,500
Once a month
6,400
Once a month

Hair Relaxer

Best-lady

32

300

9,600
Once a month

Shampoo

Best-lady

25

100

Styling Spray (Cans)

Best-lady

25

100

2,500
Once a month
2,500
Once a month

Treatment oil
TOTAL

Best-lady

25

Monthly Material Requirements

Source: Author (2015)
4.3. OPERATION PROCESS
37

300

7,500
35,040

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 suppliers 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
Shoe shiner

=
=

1 X 12,000

1 X 7,000

5Hair Stylish/Barbers/=

5 X 10000

Total direct labor cost per month

12,000.00
7,000.00

50,000.00

69,000 .00

18,000.00

Indirect labor cost includes:

Supervisor

1 X 18,000

Total indirect labor cost= Kshs. 18,000.00

Total labor cost= Total direct labor + total indirect labor cost
38

+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
Monthly Labor Requirements
Water
Electricity
Stationery
Maintenance
Advertising
Promotion
Insurance
Telephone
Rent
Interest expenses
Support Services
Total

Amount (Kshs.)
87,000.00
1,000.00
3,000.00
416.67
2,500
3,000.00
2,500.00
833.33
2,500.00
10,000.00
2083.00
6,141.00
127,225

Monthly Expenses
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
39

Cost per month= Kshs. 26,307X4= Kshs. 105,228

4.4 GOVERNMENT REGULATIONS
Table 4.4.2. Government regulations

Permit/License Required
Name search and business registration
Trading license
Stamp Duty
City council Approval
Register with VAT office
Register with NSSF
Register with NHIF

Source
Registrar of Companies
City Council of Nairobi
KRA Times Tower
Nairobi City Council
KRA, Times Towers
NSSF building community
NHIF building community

Amount Kshs
1,000
10,500
500
2,000
14,000

Government Regulations
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.

40

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.
41

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

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
42

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)

5.3. WORKING Capital Working capital will be calculated as follows: Working capital= Current Assets-Current Liabilities At startup 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
Receipts
Bal b/f

JAN
KSHS

FEB
KSHS
524,60
8

MAR
KSHS
589,21
5

APR
KSHS
653,82
2

MAY
KSHS
718,43
0

JUN
KSHS
783,03
7
43

JULY
KSHS

AUG
KSHS

SEP
KSHS

847,645

912,253

976,861

OCT
KSHS
1,041,46
8

NOV
KSHS
1,106,07
6

DEC
KSHS
1,170,684

Capital

1,000,00
0

Service revenue

200,000

Total receipts
Payments
Taxation
Machines
and
equipments
Fixtures and fittings
Salaries and wages
Deposits
Material requirements
Permits and licenses
Support Services
Interest on loan
Principal paid

1,200,00
0

200,00
0
724,60
8

200,00
0
789,21
5

200,00
0
853,82
2

200,00
0
918,43
0

200,00
0
983,03
7

11,645

11,645

11,645

11,645

11,645

402,000

100,000
73,000
24,000
35,040
14,000
5,308
3,750
6,649

73,000
35,040
5,308
3,667
6,732
135,39
3

73,000
35,040
5,308
3,583
6,816
135,39
3

589,21
5

653,82
2

Total payments

675,392

Net cash

524,608

200,000

200,000

200,000

200,000

200,000

200,000

1,047,64
5

1,112,253

1,176,86
1

1,241,46
8

1,306,07
6

1,370,684

11,645

11,645

11,645

11,645

11,645

11,645

11,645

73,000
35,040
5,308
3,498
6,901
135,39
3

73,000
35,040
5,308
3,411
6,988
135,39
2

73,000
35,040
5,308
3,324
7,075
135,39
2

73,000
35,040
5,308
3,235
7,164

73,000
35,040
5,308
3,146
7,253

73,000
35,040
5,308
3,055
7,344

73,000
35,040
5,308
2,963
7,436

73,000
35,040
5,308
2,871
7,528

73,000
48,000
35,040
5,000
5,308
2,776
7,623

135,392

135,392

135,392

135,392

135,392

188,392

718,43
0

783,03
7

847,64
5

912,253

976,861

1,041,46
8

1,106,07
6

1,170,68
4

1,182,291

44

5.5 PROFORMA PROFIT AND LOSS ACCOUNT

The table 5.5 below shows the projections for the profit and loss account.
ITEM
Service revenue
Direct costs
Gross profit

2016
Kshs
2,400,000
572,832
1,827,168

2017
Kshs
3,120,000
630,115
2,489,885

2018
Kshs
3,432,000
693,127
2,738,873

Overhead expenses
Indirect costs
Depreciation
Total expenses

795,163
100,400
895,563

238548.9
60,320
298,869

71564.67
48256
119,821

Profit before tax

931,605
Tax (15%)
139,741
Net profit after tax for the
791,864
year

2,191,016
328,652

2,619,053
392,858

1,862,364

2,226,195

Cumulative profits
791,864
Table 5.2: profit and loss account

2,654,228

4,880,422

Source: Author (2015)

5.6 PROFORMA BALANCE SHEET
table5.6. Presents the projected balance sheet of Prevans Barber Spa

ASSETS
Fixed Assets
Machine and equipment
Fixtures and fittings
Total value at cost
Less accumulated depreciation
Net Book value of assets
Total fixed assets

Jan-2016
Kshs

Dec-2016
Kshs

Dec-2016
Kshs

Dec-2016
Kshs

402,000
100,000
502,000
502,000

402,000
100,000
502,000
100,400
301,600

402,000
100,000
502,000
160,720
241,280

402,000
100,000
502,000
208,976
193,024

502,000

301,600

241,280

193,024

Current assets
45

Cash
Deposits
Debtors
Total Current assets

474,000
24,000
498,000

1,310,756
48,000
46,000
1,404,756

3,175,785
30,000
22,400
3,228,185

5,327,098
35,000
25,300
5,387,398

TOTAL ASSETS

1,000,000

1,706,356

3,469,465

5,580,422

300,000
100,000
600,000

214,491
100,000
600,000
791,864
1,706,356

115,237
100,000
600,000
2,654,228
3,469,465

100,000
600,000
4,880,422
5,580,422

Financed by
Loan
Family and friends
Owner's equity
Net profit(loss)
TOTAL EQUITY
Table 5.6: Balance sheet

1,000,000

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 /owners equity) X100
Table 5.8.Return on assets= (profit after tax add interest/investment) X100
46

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
47

5.1.1 CRITICAL RISKS AND PROBLEMS

The 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 clients 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 clients 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.

48

APPENDIX
LOAN REPAYMENT SCHEDULE
Month
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32

Beginning

Monthly payment Interest

Bal (Kshs)
300000
293351
286619
279803
272901
265913
258838
251675
244422
237078
229643
222114
214491
206774
198959
191047
183036
174925
166713
158398
149979
141454
132824
124085
115237
106278
97208
88024
78725
69310
59778
50126

(Kshs)
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399
10399

(15% Principal

p.a) (Kshs)
3750
3667
3583
3498
3411
3324
3235
3146
3055
2963
2871
2776
2681
2585
2487
2388
2288
2187
2084
1980
1875
1768
1660
1551
1440
1328
1215
1100
984
866
747
627
49

paid (Kshs)
6649
6732
6816
6901
6988
7075
7164
7253
7344
7436
7528
7623
7718
7814
7912
8011
8111
8212
8315
8419
8524
8631
8739
8848
8959
9071
9184
9299
9415
9533
9652
9772

Principal Bal
(Kshs)
293351
286619
279803
272901
265913
258838
251675
244422
237078
229643
222114
214491
206774
198959
191047
183036
174925
166713
158398
149979
141454
132824
124085
115237
106278
97208
88024
78725
69310
59778
50126
40354

Month
33
34
35
36

Beginning

Monthly payment Interest

Bal (Kshs)
40354
30459
20441
10297

(Kshs)
10399
10399
10399
10399

(15% Principal

p.a) (Kshs)
504
381
256
129

paid (Kshs)
9895
10018
10143
10270

Principal Bal
(Kshs)
30459
20441
10297
0

REFERENCES

Doyle, P. 2002. Marketing management and strategy. 3rd. s.l. : Pearson Education Limited,
2002.
Henry, A. E. 2011.Understanding Strategic Management. 2nd. Oxford : OUP Oxford, 2011.
Hutt, M. D. & Speh, T. W. 1995.Business Marketing Management. California : Harcourt
College Publication, 1995.
50

Padgett, D. 1998. Qualitative Methods in Social Work Research: Challenges and Rewards.
London : SAGE Publications Ltd, 1998.
Ranjit, K. 2005. Research Methodology: A Step-by-Step Guide for Beginners.
2nd. London : SAGE Publications Ltd, 2005.

51

52