Contents

BELLA DISCOUNTS............................................................................................................................................4

P. O BOX 332, 40100.....................................................................................................................................4

KISUMU.........................................................................................................................................................4
TEL : 0791955926.........................................................................................................................................4
PRESENTED BY: ADHIAMBO BELINDA OPELO...............................................................................4
INDEX NO: 7410040173.....................................................................................................4
COURSE CODE: 1908.....................................................................................................................4
PAPER NUMBER : 107...........................................................................................................................4
DEPERTMENT: BUSINESS STUDIES...........................................................................................4
PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN..................................................4
PARTIAL FULLFILMENT FOR AWARD OF...................................................................................................4
CERTIFICATE IN HUMAN RESOURCE MANAGEMENT...............................................................................4
SUPERVISED BY: M ADAM. MAKORI.................................................................................................4
INSTITUSION: THE KISUMU NATIONAL POLYTECHNIC,.........................................................4
P.O.BOX 143-40100,..................................................................................................................................4
KISUMU.......................................................................................................................................................4
NOVEMBER SERIES......................................................................................................................................4
CHAPTER ONE..............................................................................................................................................9
BUSINESS DESCRIPTION...................................................................................................................9
THE SPONSOR..................................................................................................................................9
1.2 NATURE OF THE BUSINESS.........................................................................................................9
1.3THE INDUSTRY...............................................................................................................................9
1.4 PRODUCT/SERVICES.....................................................................................................................9
1.5 BUSINESS GOALS AND OBJECTIVE...................................................................................................10
1.5.1 Short term goals and objectives...................................................................................................10
1.5.2 Long term goals and objectives....................................................................................................10
1.6 JUSTIFICATION OF BUSINESS OPPORTUNITY...................................................................................10
1.7 ENTRY AND GROWTH STRATEGY.....................................................................................................10
CHAPTER TWO...........................................................................................................................................11
 MARKETING PLAN............................................................................................................................11
2.3 market size......................................................................................................................................11
Market share before entry..................................................................................................................12
Market share after entry.....................................................................................................................13
CHAPTER THREE........................................................................................................................................14
3.0 ORGANISATION AND MANAGEMENT PLAN.........................................................................14
3.2 key management..........................................................................................................................14
3.5 Remuneration and incentives..........................................................................................................17
3.6 LEGAL REQUIREMENTS....................................................................................................................17
3.6.1 Licensing and permit requirements..............................................................................................17
CHAPTER FOUR..........................................................................................................................................19
PRODUCTION OF OPERATION PLAN.............................................................................................19
Production Facilities..........................................................................................................................19
Other equipment’s.............................................................................................................................20
4.2.0 Production service design and development................................................................................20
4.2.4 MONTHLY PRODUCTION COST.........................................................................................20
4.3.0 Production process......................................................................................................................21
4.4 REGULATION AFFECTING OPERATIONS...........................................................................22
CHAPTER FIVE............................................................................................................................................24
5.0 FINANCIAL PLAN........................................................................................................................24
5.1 PRE – OPERATION COSTS..........................................................................................................24
5.1. STARTING CASH.........................................................................................................................25
5.2 ESTIMATION OF WORKING CAPITAL.....................................................................................25
5.3.1 First Cash Flow.........................................................................................................................29
5.3.2 Second year Cash Flow.............................................................................................................30
5.3.3 Third Cash Flow.......................................................................................................................32
5.4 PROFORMA INCOME STATEMENT..........................................................................................34
5.5 PROFORMA BALANCE SHEET..................................................................................................35
480,000..................................................................................................................................................36
550,000..................................................................................................................................................36
5.6 BREAK EVEN ANALYSIS............................................................................................................37
5.7 PROFITABILITY RATIO..............................................................................................................39
5.8 DESIRED FINANCE......................................................................................................................41
5.9 PROPOSED CAPITALIZATION............................................................................................................42
 BELLA DISCOUNTS

P.O BOX 332, 40100

KISUMU
TEL: 0791955926
EMAIL: [email protected]

PRESENTED BY: ADHIAMBO BELINDA OPELO

INDEX NO: 7410040173

COURSE CODE: 1908

PAPER NUMBER: 107

DEPERTMENT: BUSINESS STUDIES

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULLFILMENT FOR AWARD OF

CERTIFICATE IN HUMAN RESOURCE

MANAGEMENT.

SUPERVISED BY: MADAM. MAKORI

INSTITUSION: THE KISUMU NATIONAL POLYTECHNIC,

P.O.BOX 143-40100,

KISUMU.

NOVEMBER SERIES
DECLARATION
I hereby do declare that this is my original work and has not been submitted to the Kenya
national examination council for the award by any other person.

Student name: Belinder Adhiambo

Signature…………………………………….

Date ………………………………………..

Supervisor’s declaration

Name of the supervisor: Madam. Shila

Signature …………………………………..

Date …………………………………..
DEDICATION

I dedicate this business plan to my boyfriend, Collince Bodo for his support and encouragement
he gave to me.
ACKNOWLEDGEMENT

I give special thanks to my parents who assisted me financially towards the launch of this
project.

I would also acknowledge my classmate and my supervisor madam shila who I worked with
hand in hand to ensure success of this this project.
EXERCUTIVE SUMMARY

BUSINESS DESCRIPTION

The business shall be sole proprietorship and its name will be Bella Discounts. The business will
be located in Kisumu county seme constituency Nyanza provide, Ogande village. Its
geographical location suits and targets the most market as it is accessible.

Marketing plan

The business will aim aggressively at marketing its goods and service in order to achieve
sizeable share of the market and sustain profitability. The business will serve all customers
despite their ethnicity. The customers will be subdivided into two categories namely: wholesalers
and retailers.

Organization and management plan

The chapter deals with the organization of business. It shows clearly the hierarchical
arrangement of various position department and persons. Its helps in locating authority and
responsibility formally and decides who to report to whom and under whose direction.

Operational and production plan.

This chapter deals with the acquisition of machinery tools and equipment that will be used
throughout the operation of the business. It also identifies the technicians in charge of repairs and
maintenance of those requirements. It gives clearly the layout of the business premises and how
the machines and equipment are arranged.

Financial plan

This is the mostly involves in ration cost. This includes pre-operational cost and expenses
incurred before the start of the business and how the business start operating, working capital,
cash flow, income statements and balance sheets are useful in determining the profit and loss of
the business
CHAPTER ONE

BUSINESS DESCRIPTION
THE SPONSOR
My names are Adhiambo Belinda Apelo from Homabay County in Ogande village, I am a
Christian, the proposed business will be owned by me. This is due to the knowledge I will gain
from the school of BUSINESS DEPARTMENT, HUMAN RESOURCE MANAGEMENT

I have never been involved in any business operation before, the capital to be invested in the
business shall be approximately 330,000 Kenyan shillings

1.2 NATURE OF THE BUSINESS

1.2.1 Business name and address
The business name will be named BELLA DICOUNTS

It will be located in Ogande village near a highway connecting Kisumu and homabay town in
kameer.it will be a sole proprietorship type of business since it will be managed me.

1.2.2 Business purpose

The business will be mostly dealing with selling of babies diapers in wholesale price

1.23 form of business ownership

It will be a sole proprietor type of business since it will be managed by me.

1.24 business location

It will be located in Ogande village near a highway connecting Kisumu and homabay town in
Kamer. The main reason for locating our business in homabay is that I have noticed that there is
high demand of babies pampers since the birth rate is also high security in that area.

1.3THE INDUSTRY
The business industry shall be under diapers organizations, that will be dealing with selling and
offering services related to babies pampers.

The size of the industry shall expand in accordance to the customers demand and the industry
supply either increasing or decreasing

1.4 PRODUCT/SERVICES
The business shall offer services that deal with the buying and selling anything pampers and
babies diapers in a wholesale price
1.5 BUSINESS GOALS AND OBJECTIVE

1.5.1 Short term goals and objectives

Renting another room /branch in the same area

Employing more than 20 employees to create easy time during working hours

1.5.2 Long term goals and objectives

The long term goal which is after 3 years we intend to open 5 branches in other places across the
country in 5 counties i.e. Mombasa baringo, kisumu,kisii and busia

1.6 JUSTIFICATION OF BUSINESS OPPORTUNITY

The proprietor is pursuing certificate in human resource management at the Kisumu national
polytechnic and it will acquire me with good communication skills to enable me communicate
well, there is clean water for drinking and general cleaning ,good infrastructure around and
adequate security is conducive to the business. There is also availability of many roads leading to
the market

1.7 ENTRY AND GROWTH STRATEGY

1.7.1 Entry strategy
It will be officially opened on 4th January 2021.i will use sign board to show customers that the
whole sale shop is operating

1.7.2 Growth strategy

The products increases in productivity and number of employees in the business by allowing
investors to invest in the business
CHAPTER TWO

MARKETING PLAN
The strategic features of Bella discounts lies on the nature of the business itself will be highly
motivated business employing most of the latest technology.

1.1 potential customers

The potential customers will include;

 retailers and wholesalers who will buy products from Bella

discounts in bulk and in small quantity
 they will purchase and resale to make profit
 the customers will be offered with discount after sale services
to retain our customers

competition
The company competitors are;

 base discounts
 vision discounts
 rich discounts

competitors strength weakness Opportunities Threats

Base discounts Established in the No good Located in a Located far from

market customer relation strategic place the center
Vision discounts Good customers No qualified Has been in the Few customers
relation employees market for long
Rich discounts Has good Not established in Located in the Stiff competitors
customers the market village
relation

The location of the competitors effect the business uncompetitive environment fuels pressure of
creativity, productivity and generating a higher quality of work

2.3 market size

Kisumu town is developing very fast and many investors are opting to stay in the town
surrounding. Most of the people will who work there stay around the market also there are
people migrating from near areas to the market to search for business opportunities to invest in
the market this people will have to buy diapers for their babies at Bella discount shop
Bella discount shop will share the market with its three competitor whereby it will occupy the
smallest share since it is just starting up the market will be shared as follows

Competitors Shares%
Base discounts 15%
Vision discounts 30%
Rich discounts 55%

Market share before entry

Sales
competitors Base discounts Vision discounts Rich discounts

15%

55%
30%
Market share after entry

Sales
Base discounts Vision discounts Rich discounts

17%

50%

33%

2.4 raising strategy and policy

On setting the prices of the products it is the company that set s its own fixed prices being a
retailer business and wholesale business at the same time will give discount to both retailers to at
least give discount to the consumers which will leave the business with a reasonable profit
margin

2.5 sales tactics

Personal selling will be employed where the potential customers will be informed and persuaded
to buy the products. There will be packing material that shall be used in order to attract more
customers items will be sold the counter when the business is still new therefore I will buy a
pickup which will help in supply of Bella discount products out of the market.

2.6 advertising and promotion strategy

This is the process of promoting products through the mass media, newspapers and magazine.
CHAPTER THREE

3.0 ORGANISATION AND MANAGEMENT PLAN

The manager will be head of the business and the staffs includes clerk, salesmen, and store
keeper

manager

human
marketing
finance manager resourece manager
manager

3.2 key management

Bella discounts will engage qualified and experienced personnel to manage the business
therefore they will be required to attain some qualification

1 Financial manager

Qualification

The candidate should have a diploma in finance banking from a recognized institution

Duties

1. make sure financial legal requirements are met

2. developing financial reporting system
3. helps in managing financial decision
4. the financial manager will have a basic salary of 10,000, house allowance, 2000,
medical allowance of 1000, per month total of 13000
2 human resource managers

Qualification

Holds a certificate in human resource management from any authorized institution

Should have a certificate in leadership and management skills

Duties

 maintaining accurate human resource records

 overseeing staff remuneration such as salary

The resource manager will have a basic salary of 12,000 with house allowance of 3,000 and
medical allowances of 1,500 totals of 16,500

3 marketing manager

Qualifications

Candidate should hold a diploma in sales and marketing

Should be registered In the Kenya national marketing board of professional marketing

management
3.3 other personnel

manager

human
finance marketing
resource
manager manager
manager

sales
security public
receptions represantai
guards relation
ve

1 cashier

Qualifications

Should hold a diploma in finance and banking in any recognized institution

Duties

 should issue change,receipts,refunds or ticket

 to keep reports in transaction
 to make sale referrals and introduce new sell product

2 receptionists

Qualification

Hold a certificate in secondary education with a mean grade of c plain

Should hold a diploma in hospitality management in any recognized instruction

Duties
Answers alarms and investigate disturbance in the organization premises.

3 sale representative
Qualification
Should have a diploma in sales and marketing

Duties
 coordinate sales effort with team members in the department
 establish ,develop and maintain positive business and customer relation

3.5 Remuneration and incentives

The workers will be paid according to the organization contract to the qualification and hierarchy
of power in the organization

The overtime will be calculated according to the work done in an hour my employee will be
motivated and given tokens.

Job title No of Salary per Benefits/ Total ksh

employees month allowances
Manager 1 13,000 4000 17,000
Marketing 1 12,000 3000 15,000
manager
Finance manager 2 10,000 3000 13,000
Human resource 1 10,000 3000 16,000
manager
Receptionist 1 10,000 6000 12,000
Cashier 1 9,000 3000 9,0000
Sales reps 1 8,000 1000 14,000
Teller 1 10,000 1000 9,000
Security 2 8,0000 3000 8,000
Total cost 128,000

3.6 LEGAL REQUIREMENTS

3.6.1 Licensing and permit requirements

I will make sure that licenses permits and laws are provide for the business which will motivate
its stability hence this the business license will cost ksh 2000

There will be also insurance against any disaster within the organization.
3.6.2 Policies
There will be policies that will be made so as to maintain discipline and ensure good co-
operation in the business

3.7 support services

There are services offered by public government or private sectors which will facilitate and
enable the business to be carried out successfully

The services are banking, telecommunication, and health services ,the use of telephone will be
used to acquire prices of the products and also to make orders for the products and also to make
orders for the products so that the delivery can be done door to door

The bank will be used to deposit the profits and also get loans if possible for the business to grow

There will be also be health covers for the workers so as to keep good health covers for the
workers.
CHAPTER FOUR

PRODUCTION OF OPERATION PLAN

Production Facilities
The business will require facilities that will enable it grow and run well different section perform
different duties and with different equipment

The table below shows the facilities that will be required for the business to run

Machinery tools and equipment’s

Item Date required Number cost Total
required
Computer 5/1/2021 10 100,000 100,000
Printer 5/1/2021 2 10,000 20,000
Fax machine 5/1/2021 2 12,000 25,000
High resolute 5/1/2021 1 15,000 15,000
image scanner
Office furniture 5/1/2021 20 30,000 30,000
Total cost 180,000

Repairs and Maintains

the machine that will require repair and maintenance are computers and the printers whereby the
computer will be maintained by organizing installation disks and cleaning up the cabling and the
everything in the computers while the printers shall be kept safe ate the safer place to avoid
damaging and also will be used for its purposes.

Business layout
Gate

Security office Parking lot

Cashier office Manager

The
Office
Store Sales marketing office &

Treasure
Other equipment’s
Item date quantity Unit cost Total cost
Cctv 2/6/2022 3 10,000 30,000
Bar code reader 6/3/2022 4 2000 8,000
Thermometer 7/4/2022 2 500 1000
Board 8/11/2022 1 1200 40,200

4.2.0 Production service design and development

A) Production design and development

Bella discounts will offer many customers an opportunity for sale, there will be production of
high quality products so as to meet customers wants and desire through this the enterprise will
have many customers ,products will also be produced and displayed in large quantity to meet the
customers demand.

4.2.4 MONTHLY PRODUCTION COST

ITEMS AMOUNT
Rent 12,000

Transport 6,000

Telephone 1,000

Labour 100,000

Insurance 2,000

Materials 7,300

Stationary 500

Water 400

Electricity 1,200

Repair and maintenance 6,000

Entertainment 1,000

Advertisement 3,000

Miscellaneous 1,000
Total 136,700

4.3.0 Production process

STEP ONE

Purchasing of the stock i.e. materials, tools and equipment to be sold and used in the buiness.

STEP TWO

Transportation of the purchased goods to the place of business.

STEP THREE

Unloading of the goods from the tracks and storing them in the store. Sound to be arranged in
shelves ready for sale.

STEP FOUR

Customers will be welcomed warmly into the premises so as to make their choice on purchase

STEP FIVE

Transactions (legal) will be made if the customer wants to buy items whereby he / she will be
issued with a receipt which consist of

(i) Name of the business

(ii) Name of the customer

The item bought

The date to which transaction was made

Signature of the salesman

STEP SIX

Packing of the purchased goods into cartoons or special bags and if transportation is needed,
special arrangements to be made between the organization and the customer.

STEP SEVEN

The customer leaves at his / her own will

STEP EIGHT

Replacing and purchasing of other items

When offering the services of repairs then the following steps will be taken for production

STEP ONE

Welcoming the customers to enjoy the services offered.

STEP TWO

To fault diagnose the gadget or equipment brought for service then advice accordingly.

Step three

Initiate payment over the work and agree on how to be paid

Step four

The customers to collect their items in good and working condition.

4.4 REGULATION AFFECTING OPERATIONS

For BELLA DICOUNTS to run well as it is dealing with already made goods, it will have to
adhere to regulation measures. The following are some of the regulations.

(a) Environmental protection

BELLA DICOUNTS business will participate fully in cleaning and conserving the environment.
The premises will be kept tidy and all it’s surrounding. The organisation will make sure that it
does not do anything to contract the environmental ac. Also all workers must be clean.

(b) Ventilation
The workshop and all offices will be well ventilated to allow fresh air in. this is to create a
comfortable working condition for the workers and also to give better conditions for storage of
source tools and equipment.

(c) SANITATION

BELLA DICOUNTS will build well trained sanitations like toilets and bathroom of standards.

(d) PROTECTION GARMENTS

The organization will purchase protection clothes for every worker in the premises. These
include apron or dust coat, helmets, boots gloves etc. The security men will be provided with
raincoats etc. these garments will protect the workers from harm when working within the
premises.

(e) First aid kit

There will be a first aid kit in every room to help when there is an injury case or any other
problem. This kit will contain pain killers, bandages, disinfectants cottons wool etc.

(f) Fire extinguisher

There will be fire extinguishers in each room to help in overcoming the menace of fire outbreak.
Every worker will be taught how to handle the situation and use the extinguishers.

(g) Safety protection

The organization will ensure that all workers are protected from oppressions and other harm.
They have to put on protective closings.
CHAPTER FIVE

5.0 FINANCIAL PLAN

Financial plan will be carried out by qualified personnel as it is very important. All business
transitions done will be shown in their specific records

5.1 PRE – OPERATION COSTS

The pre –operations cost are the sum of many required to cater for the materials and the
equipment before business operates. The pre – operational cost for RAMBA ELECTRICAL
HARDWARE will be tabulated as follows.

Description Cost (kshs)

registration and fittings 3,000

Furniture and fittings 15,000

Machine tools and equipment 120,000

Stationary 8,000

Electrical installation 20,000

Water installation 12,000

Salaries and wages 100,000

Transport 10,000

Advertisement 5,000

Stock 50,000

Miscellaneous 4,000

Banking 10,000

Insurance 3,000
Total 360,000
5.1. STARTING CASH

To start the business /= will be required by RAMBA ELECTRICAL HARDWARE from

personal savings, family and Friends contribution and bank loan i.e. Equity Bank. This will be as
follows.

Sources Kshs
Personal savings 330,000

Bank loan 450,000

Family and Friends contribution 120,000

Total 900,000

The begging cash will be = proposed capital – Pre – operational cost.

= 900,000 – 360,000 = 540,000 /=

5.2 ESTIMATION OF WORKING CAPITAL

ITEMS YEAR ONE YEAR 2 YEAR 3
Currents assets Kshs Kshs Kshs
Opening stock 80,000 100,000 120,000

Cash at bank 150,000 2,200,000 2,600,000

Cash at hand 300,000 450,000 600,000

Debtors 20,000 25,000 30,000

Closing stock 40,000 60,000 80,000

Totals 590,000 2,835,000 3,430,000
CURRENT LIABILITIES KSHS KSHS KSHS
Creditors 50,000 20,000 40,000

Rent 18,000 18,000 18,000

Insurance 10,000 8,000 12,000

Totals 78,000 46,000 70,000

Working capital = Current Assets – Current liabilities

Working capital for year 1 = 590,000 – 78,000

= 512,000 /=

Working capital for year 2= 2,835,000 – 46,000

= 2,789,000 /=

Working capital for year 3 = 3,430,000 – 70,000

= 3,360,000 /=
5.3.1 First Cash Flow
Ja Feb Ma Ap m J J Ag Sep Oct Nv D total
n r a
Start 44 561, 167, 1,4 64 97, 752,800 187,300 13,8 113,80 679 375, 4,872,
ing 3,4 600 300 15, ,8 20 00 0 ,80 200 300
capit 00 300 00 0 0
al
Cash
inflo
ws
Sale 50 500 5000 400 500 400 5000 500 400 3000 3000 3000 50
s 00 0 0 0 0 0 0 ,0
00
Debt 60 500 400 300 400 300 3000 400 300 4000 3000 3000 60
ors 00 0 0 0 ,0
00
Com 40 400 300 300 200 200 200 300 200 200 300 200 3,
miss 0 20
ion 0

Tota 11 100, 900, 700 700, 800, 700,200 900 700, 600,20 900, 600, 68
l 0,4 400 300 ,30 200 200 ,30 200 0 300 200 0,
cash 00 0 0 00
Inflo 0
ws
Cash
outfl
ows
4000 400 30 200 40 3000 3000 20 5000 5000 500 10,00 50,0
Stoc 0 00 0 00 00 0 0 00
k
Tran 12,5 12, 12, 12, 12 12,60 12,600 12, 12,50 12,50 12, 12,50 150,
sport 00 000 60 600 ,6 0 50 0 0 500 0 000
0 00 0
Tele 66 66 66 66 66 66 66 66 66 66 66 66 800
phon 0
e
 166 166 16 166 16 166 166 16 166 166 166 166 200
Elect 6 6 6 0
ricit
y
Wat 250 250 25 250 25 250 250 25 250 250 250 250 300
er 0 0 0 0
Rent 4160 416 41 416 41 4160 4160 41 4160 4160 416 4160 50,0
0 60 0 60 60 0 00
Lice 1250 125 12 125 12 1250 1250 12 1250 1250 125 1250 15,0
nse 0 50 0 50 50 0 00
Repa 1160 116 11 116 11 1160 1160 11 1160 1160 116 1160 14,0
ir 0 60 0 60 60 0 00
and
main
tena
nce
Tota 65,7 660 73 715 76 70300 145300000 71 71400 22100 225 71500 209
l 000 00 10 000 50 0 000000000 30 0 00000 000 0 000
cash 00 00 00 00 000 0
outfl 00
ows
Net 44,3 561 16 141 64 97200 752800 18 13800 11380 679 37520 487
cash 400 600 73 530 80 73 0 800 0 380
flow 00 0 0 00 0
s

5.3.2 Second year Cash Flow

Particulars Jan Feb. Mar Apr May June July Aug Sept Oct Nov Dec Total
Starting 4873800 21815 21815 21815 2181 21815 21815 21815 21815 21815 21815 2181 5113765
capital 5 5
Cash
inflows
Sales 3330 3330 3330 3330 3330 3330 3330 3330 3330 3330 3330 3330 40,000
Debtors 4165 4165 4165 4165 4165 4165 4165 4165 4165 4165 4165 4165 50,000

Commissio 3330 3330 3330 3330 3330 3330 3330 3330 3330 3330 3330 3330 40,000
n
Total 10825 10825 10825 10825 1082 10825 10825 10825 10825 10825 10825 1082 129900
inflows 5 5
Cash
outflow
Stock 12500 12500 12500 12500 1250 12500 12500 12500 12500 12500 12500 1250 150,000
0 0
Transport 12500 12500 12500 12500 1250 12500 12500 12500 12500 12500 12500 1250 150,000
0 0
Telephone 660 660 660 660 660 660 660 660 660 660 660 660 8000
Electricity 410 410 410 410 410 410 410 410 410 410 410 410 5000
Water 250 250 250 250 250 250 250 250 250 250 250 250 3000
Rent
416

416

416

416

416

416

416

416

416

416

416

416

500
00
0

0
License

16000
1330

1330

1330

1330

1330

1330

1330

1330

1330

1330

1330

1330
Repair

1000
830

830

830

830

830

830

830

830

830

830

830

830

0
Total
outflow

391680
32640

32640

32640

32640

32640

32640

32640

32640

32640

32640

32640

32640
Net cash
flow

261780
21815

21815

21815

21815

21815

21815

21815

21815

21815

21815

21815

21815
 Cash
Total
Sales

Stock
capital

inflows
Starting

Debtors

outflows
Particular

Transport
Commission
Cash inflows
125 15 949 325 541 375

Jan
00 00 0 5 0
0
125 15 949 325 541 375 5.3.3 Third Cash Flow

Feb.
00 00 0 5 0
0
125 15 949 325 541 375 Mar
00 00 0 5 0
0
125 15 949 325 541 375
00 00 0 5 0
Apr.

0
1

125 15 949 325 541 375

Ma

15400 27331 27331 27331 2733

00 00 0 5 0
0
125 15 949 325 541 375
Jun

00 00 0 5 0
0
125 15 949 325 541 375
July

00 00 0 5 0
0
125 15 949 325 541 375
Aug

00 00 0 5 0
0
125 15 949 325 541 375
Sept

00 00 0 5 0
0
1

125 15 949 325 541 375

Oct

27331 27331 27331 27331 2733

00 00 0 5 0
0
125 15 949 325 541 375
Nov

00 00 0 5 0
0
125 15 949 325 541 375
Dec

00 00 0 5 0
0
150 18 113 390 65, 45,0
,00 00 880 0 000 00
Total

27331 27331 316041

0 00
 Net
flow
Rent

Total
Water

Repair
License

outflow
Electricity
Telephone

cash
2733 368 833 133 57 160 830 415
1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

2733 368 833 133 57 160 830 415

1 21 3 50

3279 441, 10,0 160 69 192 996 500

72 852 00 00 00 0 0 0
0
5.4 PROFORMA INCOME STATEMENT
DESCRIPTION YEAR 1 YEAR 2 YEAR 3
Cash sales 1,700,000 2,400,000 3,000,000

Discount received 175,000 180,000 220,000

Debtors 260,000 270,000 300,000

Totals 2,135,000 2,850,000 3,520,000
Less cost of sales 198,000 250,000 300,000
Gross profit 1,937,000 2,600,000 3,220,000
Less expenses

Electricity 27,200 30,000 40,000

License 8,000 8,500 10,000

Telephone 9,600 9,000 9,500

Insurance 8,000 9,000 12,000

Creditors 27,700 30,000 40,000

Travel 6,500 8,000 10,000

Rent 14,400 15,000 20,000

Advertisement 72,000 65,000 80,000

Water 3,600 4,500 6,000

Salaries 1,200,000 1,200,000 1,200,000

Total expenses 1,377,000 1,379,000 1,427,500

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Net profit before tax 560,000 1,221,000 1,792,500
Less provision of tax @ 16 % 89,600 195,360 286,800
Net profit after tax 470,400 1,025,640 1,505,700

5.5 PROFORMA BALANCE SHEET

DESCRIPTION YEAR 1 YEAR 2 YEAR 3
Fixed assets

Production facilities 40,000 50,000 70,000

Furniture 15,000 10,000 12,000

Vehicle - - 200,0000

Computer 30,000 60,000 100,000

Totals 85,000 120,000 382,000

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Less depreciation

5% production facilities 2,000 2,500 3,500

5 % furniture fittings 750 500 600

10 % vehicle - - 20,000

10 % computers 3,000 6,000 10,000

Totals 5,750 9,000 24,100
Total fixed assets 79,250 111,000 357,900
Current assets

Cash at hand 300,0000 400,000 500,000

Cash at bank 170,000 255,000 390,000

Stock 80,000 100,000 120,000

Debtors 260,000 270,000 300,000

Totals 810,000 1,025,000 1,310,000
Totals assets 889,250 1,136,000 1,667,900
Current liabilities

Creditors 300,000 400,000 480,000

Bank overdraft 200,000 350,000 550,000

Total 500,000 750,000 1,030,000
Long term liabilities

Bank loan 300,000 400,000

480,000
Owners equity 89,250 350,000

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 550,000
Totals 389,250 386,000 637,900
Total liabilities 889,250 1,136,000 1,667,900

5.6 BREAK EVEN ANALYSIS

DESCRIPTION KSHS
Sales 1,700,000
Variable cost

Purchases 230,000

Telephone 9,600

Advertisement 72,000

Repair and maintenance 24,800

Water 3,600
Total variable cost 340,000

Contribution = Total sales – variable costs

= 1,700,000 – 340,000

= 1,360,000

(i) Contribution margin = Contribution x 100

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Sales

= 1,360,000 x 100

1,700,000

= 80 %

(ii) Breakeven level of sales

Fixed costs Kshs

Salaries 1,200,000

Licenses 8,000

Insurance 8,000

Loan Payment 113,000

Rent 14,400

Interest On Loan 12,000

Total fixed cost 1,355,400

Breakeven level of sales = Fixed cost x 100

Contribution margin

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= 1,355,400 x 100

80

= 1,694,250

5.7 PROFITABILITY RATIO

(a) Gross profit margin = Gross profit x 100

sales

Year 1 – 1,937,000 x 100

1,700,000

= 113.94 %

Year 2= 2,600,000 x 100

1,700,000

= 152.94 %

Year 3 = 3,220,000 x 100

1,700,000

= 189.41 %

(b) Return on equity = Net profit after tax x 100

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Equity contribution

Year 1 = 470,400 x 100

89,250

= 527.06 %

Year 2= 1,025,640 x 100

150,000

= 683.76 %

Year 3 = 1,505,700 x 100

237,900

= 632.91 %

(c) Return on investment = Net profit after tax x 100

Year 1 = 470,400 x 100

889,250

889,250

= 52.9 %

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Years = 1,025,640 x 100

1,136,000

= 90.29 %

Year 3 = 1,505,700 x 100

1,667,900

= 90.28 %

5.8 DESIRED FINANCE

DESCRIPTION AMOUNT (KSHS)

Pre – operational cost 360,000

Working capital for year 1 512,000

Desired Financing 872,000

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5.9 PROPOSED CAPITALIZATION
DESCRIPTION KSHS
Bank loan 450,000

Owners equity 89,250

Total investment 539,250

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