1J I T I H A D A : K e n y a ’ s N a t i o n a l B u s i n e s s P l a n C o m p e t i t i o n

MINISTRY OF INDUSTRIALIZATION

GUIDELINES FOR PARTICIPATION

2011-2012

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BACKGROUND INFORMATION ON JITIHADA BPC

Introduction

JITIHADA is the brand name for the Kenya National Business Plan Competition, which was launched in 2009. It is a subcomponent of the Micro, Small and Medium Enterprises (MSME) competitiveness project, a World Bank funded initiative under the Ministry of Industrialization. The primary objective of the project is to increase productivity and employment in the MSME sector in Kenya. The Second Phase of Jitihada (JITITADA II) is running from July 2011 to June 2012. JITIHADA II lays emphasis on value addition in the MSME.

Value addition

Value addition is improvement and enrichment of a product or service before the product is offered to customers. JITIHADA II is placing emphasis on entrepreneurs who take raw materials and turn them into a better and more customized product or service through the processes of manufacturing.

For example a caterer will use flour and other food products to transform them into a cake, buns, etc. A fish farmer will harvest different types of fish to extract oil from them or use fish skin to make thread. A carpenter on the other hand will transform timber into wood products. All these are aspects of manufacturing.

JITIHADA II defines manufacturing as the physical or chemical transformation of materials or components into new products. The work can be performed by power-driven machines or by hand. It can be done in a factory or even at home. The products can be sold at wholesale or retail.

JITIHADA II also recognizes manufacturing as assembly of component parts of manufactured products, activities of units primarily engaged in maintenance and repair of industrial, commercial and similar machinery and equipment, and manufacture of specialized components and parts of, and accessories by and attachments to, machinery and equipment, as well as recycling of waste materials.

CATEGORIES OF MANUFACTURING

The following are some examples of manufacturing processes that are recognized by JITIHADA II. The list is not exhaustive, however.

Manufacturing food products and beverages

Production, processing and preservation of meat, fish, fruit, vegetables, oils and fats

• Production,processingandpreservingofmeatandmeatproducts

• Processingandpreservingoffishandfishproducts

• Processingandpreservingoffruitandvegetables

• Manufactureofvegetableandanimaloilsandfats

Manufacture of dairy products

• Manufactureofdailyproducts;whichincludesmilkprocessing,grading,filtering,testingorchillingfreshmilk,production of ghee, cheese or curd, ice cream, casein or lactose.

JITIHADA BUSINESS PLAN COMPETITION: GUIDELINES FOR PARTICIPATION

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Manufacture of grain mill products, starches and starch products, and prepared animal feeds

• Manufactureofgrainmillproducts;grain,rice,vegetablemillingandmanufactureofbreakfastfoods,manufactureof prepared blended flour and dough

• Manufacture of starches and starch products; starches from maize, rice, potatoes, manioc, other vegetablematerial

• Manufactureofpreparedanimalfeeds;manufactureofpreparedpetfoodfordogs,cats,fishandthemanufactureof prepared farm animals feeds.

Manufacture of other food products

• Manufactureofbakeryproducts

• Manufactureofsugar

• Manufactureofcocoa,chocolateandsugarconfectionery

• Manufactureofmacaroni,noodles,couscousandsimilarfarinaceousproducts

• Manufactureofother foodproducts;coffeeroasting,nut roasting, teaandmateextracts,artificialhoneyandcaramel, soups, spices, sauces, vinegar, pizza, food for infants

Manufacture of beverages

• Distilling,rectifyingandblending,ofspirits;ethylalcoholproductionfromfermentedmaterials

• Manufactureofwines

• Manufactureofmaltliquorsandmalt

• Manufactureofsoftdrinks;productionofmineralwaters

Manufacture of tobacco products

• Manufactureofcigarettesorcigars,pipetobacco,chewingtobaccoorsnuff,manufactureofhomogenizedorreconstituted tobacco.

Manufacture of textiles

Spinning, weaving and finishing of textiles

• Preparationandspinningoftextilefibre;weavingoftextiles;reelingandwashingofsilk,degreasing,carbonizingor fleece dyeing of wool.

• Finishingoftextiles;bleaching,dyeing,calendaring,napping,shrinkingorprinting.

Manufacture of other textiles

• Manufactureofothertextiles,exceptapparel

• Manufactureofcarpetsandrugs

• Manufactureofcordage,rope,twineandnetting

• Manufacture of other textiles narrow woven fabrics, labels, badges, ornamental trimmings, braids, tassels,pompons, wadding of textiles, textiles winks, fabrics coat with gum, tracing cloth.

Manufacture of knitted or crocheted fabrics and articles

• Productsareknittedorcrochetedfabricsbyhandormorecomplicatedmachines.

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Manufacture of wearing apparel; dressing and dyeing of fur

• Manufactureofwearingapparel,exceptfurapparel

• Dressinganddyeingoffur;manufactureofarticlesoffur

Tanning and dressing of leather; manufacture of luggage, handbags, saddler, harness and footwear

• Tanninganddressingofleather

• Manufactureofluggage,handbags,saddler,harnessandfootwear

• Manufactureoffootwear

Manufacture of Wood and of products of wood, and cork except furniture; manufacture of articles of straw and plaiting materials, Straw and Plaiting Materials

• Sawmillingandplanningofwood

• Manufactureofveneersheets,plywood,laminboard,particleboardandotherpanelsandboards

• Manufactureofbuilders’carpentryandjoinery,woodencontainers

• Manufactureofwoodencontainers

• Manufactureofotherproductsofwood;manufactureofarticlesofcork,strawandplaitingmaterials

Manufacture of paper and paper products

Manufacture of pulp, paper and paperboard

• Manufactureofpulp,paperandpaperboard

• Manufactureofcorrugatedpaperandpaperboardandofcontainersofpaperandpaperboard

Manufactured of other articles of paper and paperboard; carbon-paper, envelopes, letter cards, filter blocks, slabs, paper boardsPublishing, printing and reproduction of recorded media

Publishing

• Publishingofbooks,brochures,musicalbooksandotherpublications,

• Publishingofnewspapers,journalsandperiodicals

• Publishingofrecordedmedia

• Otherpublishing;publishingofphotos

Printing and service activities related to printing

• Printing;newspapers,magazines,periodicals,journals

• Serviceactivitiesrelatedtoprinting;bookbindingandmanufactureoflooseleafbinders.

Reproduction of recorded media;

• Reproduction of records, audio, video, computer tapes frommaster copies, reproduction of floppy, hard orcompact disks oven products

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Manufacture of coke, refined petroleum products & nuclear fuel

• Manufactureofcokeovenproducts

• Manufacturedofrefinedpetroleumproducts

• Processingofnuclearfuel

Manufacture of chemicals and chemical products

• Manufactureofrefinedpetroleumproductsandprocessingofnuclearfuel

• Manufactureofbasicchemical,plasticsinprimaryformsandsyntheticrubber

• Manufactureofpesticidesandotheragro-chemicalproducts,fertilizers,nitrogencompounds

• Manufacture of paints, varnishes and similar coatings, printing ink andmastics, pharmaceuticals, medicinalchemicals and botanical products

• Manufactureofsoapanddetergents,cleaningandpolishingpreparations,perfumesandtoiletpreparations

• Manufactureofman-madefibres,rubbertyresandtubes;retreadingandrebuildingofrubbertyres,andotherrubber products

Manufacture of other non-metallic mineral products

• Manufactureofglassandglassproducts,non-structuralnon-refractoryceramicware

• Manufactureofcement,limeandplaster,Cutting,shapingandfinishingofstone

Manufacture of metal products and metal working service activities

• Manufacture of basicmetals, basic iron and steel, casting ofmetals, basic precious and non-ferrousmetals,structural metal products, tanks, reservoirs and steam generators

• Manufacturemetalcontainers,steamgenerators,forging,pressing,stampingandroll-formingofmetal;powdermetallurgy

• Manufactureoffabricatedmetalproducts,cutlery,handtoolsandgeneralhardware

Manufacture of machinery and equipment

• Manufactureofpumps,compressors,tapsandvalves,bearings,gears,anddrivingelements

• Manufactureofovens,furnacesandfurnaceburners,liftingandhandlingequipment

• Manufactureofagriculturalandforestrymachinery,machineryformining,quarryingandconstruction,machineryfor food, beverage and tobacco processing, and machinery for textile,

• Manufactureofoffice,accountingandcomputingmachinery,electricalmachineryandapparatus,accumulators,primary cells and primary batteries, and other electrical equipment

• Manufactureofradio,televisionandcommunicationequipmentandapparatus,televisionandradiotransmittersand apparatus for line telephony and line telegraphy

Manufacture of medical, precision and optical instruments, watches and clocks

• Manufactureofmedicalappliances,instrumentsandappliancesformeasuring,checking,testing,navigatingandother purposes,

• Manufactureofmotorvehicles,trailersandsemi-trailers,bodies(coachwork)formotorvehicles,andmotorcycles.

• Manufactureofmusicalinstruments,gamesandtoys,jewelleryandrelatedarticles

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Recycling

• Recyclingofmetalwasteandscrap,non-metalwasteandscrap.

THE JITIHADA MISSION

As such, the mission of Jitihada is to run and manage a Business Plan Competition (BPC) whose effort is to: Promote and support entrepreneurship and the development and growth of sustainable and globally competitive MSMEs, thus creating wealth and increasing employment, incomes and economic opportunity for the people of Kenya.

THE JITIHADA PARTNERSHIP

The contract for JITIHADA I was signed between the Kenya Institute of Management led consortium and the Ministry ofIndustrializationon24thFebruary2009.Othermembersoftheconsortiuminclude:TechnoServe/Kenya(TNS/K)andTheJomoKenyattaUniversityofAgricultureandTechnology/InstituteforHumanResourceDevelopment(IHRD/JKUAT)

JITIHADAI took place between May 2009 and March 2010. We appreciate your participation and support as Board membersinJitihadaPhaseOne.ThesecondphaseofJitihadawassignedinMay31st2011anditwillfocusonthemanufacturing sector and will be implemented within 12 months till June 2012.

The program will be implemented in all the eight provinces, thereby giving equal opportunities to the majority of Kenyanstoparticipate.Thecompetitionisdesignedtoincorporate3Stages,namely:

Competition Stage I

This stage involves the launching of the competition on 24 August 2011. Participants will be called upon to apply by filling in an application form and pay a fee of Ksh. 1000. After applications have been received, initial screening and evaluation of business ideas will be conducted. The eligible forty percent of the competition entrants will be identified to proceed to the next stage.

Competition Stage II

After successful completion of stage one, successful entrants will receive a variety of business development services through training and seminars. They will be trained in entrepreneurship and industry with focus on manufacturing and value addition, and will receive individual mentoring and support to build their business plans and develop winning business plans that will compete at the national level.

Judging at this level will be done by a panel from the private sector and written feedback on the business plans will be provided to the participants. The best three business plans at the national level will be awarded prizes. The top entrepreneur will receive a prize of Kshs 1 million, while the second and third best winners will receive Kshs. 750,000 and Kshs. 500,000, respectively. Special awards of Kshs. 250,000 each will go to the best woman entrepreneur and social entrepreneur. Winners will be given award prizes in the National price giving Gala.

To encourage interaction and enhance relations, alumni associations will be registered and feedback encouraged from the participants. A JITIHADA II directory bearing contacts of all stakeholders will be compiled. Thereafter, a final report will be prepared and aftercare services shall be ongoing into the next stage.

Post-competition

In this final stage, feedback on Jitihada process from all stakeholders, as well as review design, process, training curriculum and materials shall be captured. Further targeted aftercare services will be implemented and follow-up with participants to assess impact (business income, growth in assets, employment creation, loan application and repayment) will be conducted. Aftercare services will involve providing linkage with financial institutions, incubation and linkage to business development services

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1. ELIGIBILITY CRITERIA

The general criteria for participation in the competition include the following:

1. Any resident over the age of 18 that seeks to invest in Kenya by starting a new business venture, or expanding or diversifying an already existing one, within the manufacturing sector and the value adding chain.

2. Existing business which have less than 99 employees at the time of application

3. Contestantsmayeitherbeentrepreneur,soleproprietor,association,limitedcompanyorinpartnership.

4. No employees of the JITIHADA consortium may participate.

5. The content of all submissions must be the original work of the individual submitting the idea

GUIDELINES FOR JITIHADA II, NATIONAL BUSINESS PLAN COMPETITION

Rules for Participation

1. All participants are expected to pay a fee of Ksh. 1000 with the Application form

2. Onlyonesubmissionofanewbusinessplanperapplicationformispermitted.Theplansshouldnotexceed50 pages.

3. All submissionsmust focuson themanufacturing sector and the value adding chain,whosedetails areoutlined above.

4. Ideas must represent the original work of the contestants. Participants are required to fill in the confidentiality agreement and the declaration in the business plan and the application form respectively. No software generated business plan will be accepted.

5. If the business venture has received funding from any outside sources, the contestants should indicate it in their business plans. The participants must also indicate if they have submitted the same business plan to financial institutions and donors

6. a) Submitted ideas are protected in the spirit of non-disclosure, where all entry materials will be treated as company confidential. The only persons with access to the entry materials will be judges and select members of the organizing committee. Materials will not be distributed to any other party, unless requested by the participant. No other special provisions are made to protect intellectual property.

b) The judges, trainers, mentors and the organizers will take utmost care in handling entries with confidence and integrity. Your business idea and business plan will be treated in the strictest confidence. Allorganizers,sponsors/judgesandmentorsarehighlyrespectedprofessionalswhoregularlydealwithconfidential information in the course of their work. However, the protection of intellectual property is the ultimate responsibility of each participant

7. Alldeadlinesandguidelinesforsubmissionsmustbeadheredto.NOlatesubmissionswillbeaccepted.Anysubmissions that are greater in length than specified will not be considered.

8. Submitted business plans shall under no condition change after submission.

9. Theconsortiumreservestherighttodisqualify,initssoleandabsolutediscretion,anyentrant/businessplanfrom the competition at any time (before or after a judging round or the award of any prize) for any reason. Reasonsfordisqualificationmayinclude,butarenotlimitedto,plagiarism,misappropriationorinfringementof the intellectual property of others, and any failure to comply with these rules and regulations. Disqualified entrants shall forfeit any and all prizes awarded to them.

10. Beforethewinnermayreceiveanymonetaryprize,he/shemustagreetothetermsandconditionsintheWinner’sAgreement.Howeverwinnersareundernoobligationtoacceptfinancingfromanyinstitution.

11. Prize money is granted only to the winning business entity.

12. English shall be language used for all aspects of the Competition, including for the submission of Business Ideas and Business Plan and all presentations at the Finals.

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JUDGING PROCESS

• Judgingofentrieswillbeperformedbyapanelofindependentjudges,consistingofprofessionalsandbankinginstitutions involved in entrepreneurship. Judges will include successful entrepreneurs, venture capitalists, investors,orprofessionalserviceprovidersworkingwiththeventurecommunity;

• Anyentryissubjecttominimumcriteriaintermsofmarketpotential,viability,andotherfactors,asdeterminedbythejudgingpanel’sexperience;

• Thejudgeswillevaluatetheplansnotasdocuments,butasvisionsforpotentialnewventuresand,assuch,focusontheidea,itspotentialforeconomicsuccessandthelikelihoodofachievingthatsuccessbasedupontheteam’splanandexperience;

• Thecompetitionwillevaluateboththeinnovativenessoftheideaandthequalityoftheplanbeingevaluated;

• Judgingwillbefair,objectiveandtransparent.Alldecisionsrelatedtoevaluationsshallbefinal;thescoringshallhoweverbeavailableforreviewbyanindependentpanel.ThereareNOopportunitiesforparticipantstoappeal.

EVALUATION PROCESS AND CRITERIA

Stage I

Initial verification of submitted documents to assess:

• Presentationofthecompany

• Productsandservices

• Salesandmarketingstrategy

• Operationsstrategy

• Businessmodel

• Financialprojections

• Initialinvestmentssalesforecasts

• Willingnesstoinvestintheproject

• Environmentalandsocialimpact

Stage II

Evaluations by two independent judges to asses as above as well as:

• Competitiveadvantages

• Sensitivityanalysis

• Costsandexpenses

• Long-termobjectives

• Costsandcountermeasures

• Jobcreationandprofitpotentialafter1yearofoperation

Stage III

Oralpresentationtoapanelofjudgestoselectthewinnersbasedonthefollowingcriteria:

• Presentationofthecompany

• Managementteamqualifications

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• Competitiveadvantages

• Businessmodel

• Financialprojections

• Sensitivityanalysis

• Initialinvestment

• Institutionalandindividualwillingnesstoinvest

• Environmentalandsocialimpact

JITIHADA AWARDS

TobeawardedonlyattheNationalLevel

Award Value (Kshs.)

First Prize 1 million

Second Prize 750,000

Third Prize 500,000

Special Awards*

Best Woman Entrepreneur 250,000

Social Entrepreneur 250,000

*Special awards are expected to be contributed by private sector sponsors.

GUIDELINE FOR WRITING YOUR BUSINESS PLAN

Brief Description of a Business Plan

A Business plan is a written document that describes the goals and objectives of a business and lists the steps that will be taken to achieve those goals and objectives.

Structure of a Business Plan

1. Cover Page

• NameOfBusiness

• Address

• NameOfPresenter

• OrganizationPresentedTo

• DateOfPresentation

2. TableOfContents

3. ExecutiveSummary

Givesabriefsummary(overview)oftheentiredocumentandhighlightsthemainissues/points.

4. StatementOfPurpose

Outlinethepurposeofthebusinessplan

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5. Business Description

A brief description of the business

Main Features

• BusinessLocationandAddress:whatisthebusinesspostaladdress

• BusinessOwnership:indicatethenatureofyourbusinesswhetheritisaSoleProprietorship,Partnership,RegisteredCompany

• Products/Services:indicatethemainproductsand/orservicestheorganizationoffers

• Industry:whatsubsector/industrywillyourbusinessoperateunder.

• Justification:Whatisthemainaimforthechoiceofthebusinessopportunity?

• Goal:indicateboththeshorttermandlongtermgoalsofyourbusinessventure.

• EntryandGrowthStrategyoftheproposedventure/businessopportunity.

6. Marketing Plan

Howdoyouplantomarketyourproducts/services?

Main Features

• PotentialCustomers

• Competition:lookat

• Whowillbeyourcompetitors?

• Whataretheirstrengths?

• Whataretheirweaknesses?

• Howdoyouintendtocapitalizeontheirweaknesses?

• Marketshare:whatistheexpectedtotalmarketshare

• Pricingstrategy:howwillyoupriceyourproducts/services

• Advertisingandpromotionstrategy:howwillyouattractyourcustomers.Indicate:

• Initialstrategy

• Longtermstrategy/futureplans

• Distributionstrategy

• Salestactics:Overthecounter,Telephoneselling,ThroughsalespeopleandMulti-levelmarketing

• Anyothertactic

7. OrganizationAndManagement

• OrganizationalStructure

DrawTheOrganizationChartOfYourProposedBusiness

• ManagementTeam

IndicateTheCompositionOfYourManagementTeam,ItsQualifications/Post,DutiesAndResponsibilities.

• OtherPersonnel

WhatOtherPersonnelWillYouRequire?

• Recruitment&Training

HowWillYourRecruitAndTrainYourStaff?

• Remuneration/Incentives

HowWillYouRemunerateThem?

– Salary/Wages

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– Fringe Benefits

• SupportServices

WhatSupportServicesWillYouRequire?

• Licenses/Permits

WhatLicenses/PermitWillYouRequire?

WhoWillProvideTheLicenses/PermitsAndAtWhatCost?

8. Operational/ProductionPlan

HowWillYouOperateYourBusiness?

Main Features

• ProductionFacilitiesAndCapacityUtilization

• WhatMachines,EquipmentAndToolsWillBeRequired?

• WriteABriefDescriptionOnTheCost,CapacityAndSupplierOfTheRequiredMachinesAndEquipment.

• ProductionStrategy

• MaterialRequirement(Month/Year)

• MaterialCost

• Source

• ProductionDesignAndDevelopment

• HowDoYouIntendToDesignAndDevelopYourProduct?

• WhatWillItCostYouToDesignAndDevelopYourProducts?

• WhatIsYourEstimatedCostOfProduct/Service?

• DirectMaterialCost+DirectLabourCost+Overheads

• RelevantRegulation

• WhatPatentAndTrademarksWillYouRequire?

• WhatWillBeTheCostOfObtainingThePatentTrademarks?

• WhatOtherLegalRightsWillYouSeek?

9. RiskReductionStrategies:

HowWillYouAnalyseAndReduceBusinessRisks?

Main Features

• FutureBusinessRisks

• CounteractsMechanisms

10. Exit And Harvest Strategies:

Identify Exit Strategies Which Include:

Main Features

• TypeOfExit/HarvestStrategy

• InitialPublicOffering

• PrivateSale

• ManagementBuyOut

• AdvantagesOfUsingStrategy

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11. Financial plan

Howwillyouobtainandusebusinessfinance?

Main features

• Pre-operationalcost

– Whatwillbeyourpre-operationalcosts?

– Whatwillbeyourproposedcapitalization?

– Your own contribution

– Funds from borrowing sources

– Total investments

• Workingcapitalrequirements

– Whatwillbeyourworkingcapitalrequirement?

• Pro-formaincomestatement

– Prepare your pro-forma income statement for the first three years for year ending 2009-2011.

– Show the annual income you expect from your business.

– Listalltheexpensesyouexpecttoincur.

– Show your net profit or loss for the year.

• Pro-formabalancesheet

– Prepare your pro-forma balance sheet at start up and at the end of the first two years of operation.

• CashFlowProjection

– PrepareYourProjectedCashFlowStatementOnAMonthlyBasisForTheFirstYearOfOperationAndForTheNextTwoOnAQuarterlyBasis.

• DesiredFinance

– HowDoYouExpectToFinanceYourOperations?

• Capitalization

• WhatIsYourInitialCapitalizationForExistingBusiness

• WhatIsYourProposedCapitalization

• Break-EvenLevel

– UnitsYouCanSellInAGivenPeriodWithoutMakingProfitOrLoss.AtThisPointYouWillOnlyBeAbleToMeetYourVariableAndFixedCostsOnly.

• ProfitabilityRatios

– HowDoYouMeasureYourProfitability?

12. Appendix

AnyUsefulAndRelevantInformationSuchAs:

• Maps

• Data

• CopiesOfLicenses(CopiesOfCompanyRegistration/IncorporationCertificates)

• CopiesOfCollateral

• OfficialCorrespondence

• CurriculumVitaeForOwners/Managers