STRATEGIC BUSINESS PLAN

IMPORTED COOKING GAS BUSINESS (ZAMBIA TO KENYA)

INTRODUCTION

The business will mainly specialize in the distribution and sale of liquefied petroleum gas (LPG), which will primarily be acquired from Zambia and sold to local distributors in Kenya.

With the ever rising cost of electricity, it is becoming increasingly difficult for many urban homes in Kenya to use it for cooking. This makes cooking gas (LPG), the most reliable, affordable and efficient means of cooking in many urban and some rural Kenyan homes. Given the high demand of LPG in urban areas, the sale of cooking gas is a lucrative business idea. LPG is among the cleanest, versatile and modern fuels on the market.

Cooking gas is among the products whose market is yet to be fully exploited in Kenya. The current market for LPG in the country is underdeveloped, although it is particularly attractive for urban and peri-urban households where penetration is higher given the lower availability of firewood, the ease and efficiency of LPG distribution and retail due to the greater population density.

Data from the Kenya National Bureau of Statistics shows that although LPG prices increased while those of kerosene went down sharply in the last quarter of 2014, the use of LPG actually rose by nearly 50%. This trend was attributed to an increase in disposable income and changing lifestyles among consumers. This shows that LPG is more favourable than the less cleaner sources of energy such as kerosene and firewood or charcoal. Getting into an LPG business would be a good and timely opportunity to cash in on this growing demand.

OBJECTIVES

The objectives of the business include:

  1. To import 48 tons of LPG on the first shipment
  2. Establish strong relationships with the supplier in Zambia and local distributors in Kenya.
  3. Identify other viable and hopefully cheaper suppliers in the continent in order to minimize the business’ operating costs.
  4. Maintain effective communication throughout the supply chain to avoid unnecessary delays.

KEY SUCCESS FACTORS

  1. Striving to minimize operating costs in order to compete favourably with both domestic and international retailers.
  2. Offering competitive prices to retailers.
  3. Leveraging fast and effective communication to minimize unnecessary delays thereby enhancing our reliability, which will translate to customer satisfaction and loyalty.

 

 

COMPANY OWNERS.

The enterprise will be a partnership between the entrepreneur (Stella Wanjiku) and the investor (Bernard Nyaga Rukungu).

START-UP SUMMARY

The start-up cost of the business consists primarily establishing an account receivable system and an effective distribution system. With your help, I hope to invest

START-UP REQUIREMENTS  

Legal Requirements

  1. Company Registration
  2. Tax compliance certificate
  3. License from Energy regulatory commission of Kenya
  4. Transport Permit
  5. Certificate of Origin
  6. Manufacturers Certificate

 

PRO FORMA INCOME STATEMENT (USD)    
REVENUE
Revenue per ton $     1,400.00
Quantity (in tons) 48
    Total Revenue $   67,200.00
COST OF GOODS SOLD
Cooking gas (LPG)
Purchase Cost per ton $         670.00
Quantity (in tons) 48.00
Total Purchase Cost $   32,160.00
GROSS PROFIT $   35,040.00
OPERATING EXPENSES
Transpiration
Number of Trailers (24 tons per trailer) 2
Cost of hiring Trailers ($ 4000 per Trailer) $     8,000.00
Insurance (2% of purchase cost) $         643.20
Salaries and Wages $           30.00
TOTAL OPERATING EXPENSES $     8,673.20
NET PROFIT $   26,366.80
Prevailing Exchange Rate 100.00
TOTAL FUNDS REQUIRED
Total Purchase Cost      32,160.00
Total Operating Expenses          8,673.20
     40,833.20

STRATEGIC BUSINESS PLAN

PRO FORMA INCOME STATEMENT (KSH)  
REVENUE
Revenue per ton        140,000.00
Quantity (in tons)                    48.00
    Total Revenue        6,720,000.00
COST OF GOODS SOLD
Cooking gas (LPG)
Purchase Cost per ton            67,000.00
Quantity (in tons)                    48.00
Total Purchase Cost      3,216,000.00
GROSS PROFIT        3,504,000.00
OPERATING EXPENSES
Transpiration
Number of Trailers (24 tons per trailer)                      2.00
Cost of hiring Trailers ($ 4000 per Trailer)        800,000.00
Insurance (2% of purchase cost)            64,320.00
Salaries and Wages              3,000.00
TOTAL OPERATING EXPENSES        867,320.00
NET PROFIT        2,636,680.00
Prevailing Exchange Rate                  100.00
TOTAL FUNDS REQUIRED
Total Purchase Cost      3,216,000.00
Total Operating Expenses        867,320.00
     4,083,320.00

STRATEGIC BUSINESS PLAN
STRATEGIC BUSINESS PLAN

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