BUSINESS TITLE: BUSINESS PLAN

Business Name: Mawa Cloth and Designing

Presented by: Ngugi Mary Wanjiku

Index Number: 2011010013
Course Name: Certificate in Fashion Design and
Garment Making Technology
Course Code: 1801
Institution: Ndaragwa Technical and Vocational
College
Presented to: Kenya National Examination Council
in partial fulfillment of the award of Certificate in
Fashion Design
Exam Series: March
DECLARATION

I declare that this is my original work and that it has never been presented by any person or
institution to any examination body for the award of any certificate or diploma.

Candidate Name: ___________________________________________________________

Signature: ______________________________________________________________
Date: ______________________________________________________________________

The business plan has been submitted to the Kenya National Examination Council with the
approval of my supervisor.

Supervisor Name: _____________________________________________________________

Signature: __________________________________________________________________
Date: ______________________________________________________________________
DEDICATION

I dedicate this work to my beloved family members for their contribution in making this business
plan. I also thank my supervisor, Mr. Edel Ndege, for guiding and correcting my mistakes in the
business plan.
ACKNOWLEDGEMENT

Special thanks to my parents for their financial assistance towards this project. My appreciation
also goes to the entire Ndaragwa Technical and Vocational College (NTVC) for providing a
conducive learning environment. Thanks to my supervisor, Mr. Edel, for assisting in ensuring
that this work meets the required standards.
CONTENTS

 Declaration

 Dedication

 Acknowledgment

 Executive Summary

Chapter One: Business Description

1.1 Sponsor
1.2 Business Name
1.3 Business Location and Address

 1.3.1 Business Location

 1.3.2 Business Address

1.4 Type of Business
1.5 Business Ownership
1.6 Products and Services
1.7 Justification and Opportunity
1.8 Industry
1.9 Business Goals

 1.9.1 Short-Term Goals

 1.9.2 Long-Term Goals

1.10 Entry and Growth

 1.10.1 Entry

 1.10.2 Growth

Chapter Two: Marketing Plan

2.0 Marketing Plan

2.1 Customers
2.2 Market Share
2.3 Competitors
2.4 Methods of Promotion and Advertisement

 2.4.1 Promotion Strategies

 2.4.2 Advertising Strategies

2.5 Pricing Strategy
2.6 Sales Tactics
2.7 Distribution Channels

Chapter Three: Organization and Management Plan

3.0 Organization and Management Plan

3.1 Business Managers and Qualifications
3.2 Personnel, Numbers, and Duties
3.3 Recruitment, Training, and Promotion

 3.3.1 Recruitment

 3.3.2 Training

 3.3.3 Promotions
3.4 Remuneration and Incentives

 3.4.1 Incentives
3.5 License, Permits, and Bylaws

 3.5.1 License Permit

 3.5.2 Bylaws
3.6 Support Services

Chapter Four: Operation Plan

4.0 Operation Plan

4.1 Production Facilities and Capacity
  4.2.1 Production Strategies

4.2.2 Monthly Expenses

4.3 Production Process

4.4 Government and Other Regulations

CHAPTER FIVE
5.0

5.1 Pre-Operational

5.2 Estimation of Working Capital

5.3 Projected Cash Flow

5.4 Proforma Income Statement

5.5 Balance Sheet as at Start up to End of the Two Years in Operation

5.6 Break-Even Point

 5.6.1 Total Contribution

 5.6.2 Contribution Margin Percentage
 5.6.3 Total Fixed Cost
 5.6.4 B.E.P (Break-Even Point)

5.7

 5.7.1 Gross Profit Percentage

 5.7.2 Return on Equity
 5.7.3 Return on Investment

5.8 Desired Financing

5.9 Proposed Capitalization

EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

The owner of the proposed business will be Mary Wanjiku, who will also be the manager. The
business will be a sole proprietorship.

The name of the proposed business is Mama Cloth and Designing, which will be dealing with
all types of designs for occasions, women's dresses, and children's clothing.

The proposed business will be located in Mairo-Inya town, next to Hass Petrol Station.

The address of the proposed business will be:

Mama Cloth and Designing
P.O. Box 1375-121
Nyahururu, NYAHURURU
Email Address: www.mamaclothanddesign
Telephone: 0721 578182

2.0 MARKETING PLAN

The customers in the business will be new customers, impulse customers, intent customers,
and loyal customers.

The business will have 50% of the market share at the start of operations and shall be
competing with Mama Mbugu Tailors and Steve Tailoring.

The main way of product promotion will be through:

 Posters

 Giving out booklets

 After-sales services

 Online marketing
3.0 ORGANIZATIONAL AND MANAGEMENT TEAM

The business will be a sole proprietorship, where the owner of the business will be the
manager.

Promotion to the staff will be due to hard work and professionalism.

4.0 OPERATIONAL PLAN

During the production process, tools and equipment will be used to produce quality garments
that will be attractive to customers.

The clothing in our business will be sold at affordable prices. The business will also ensure it
obeys government regulations by paying for licenses at the right time.

5.0 FINANCIAL PLAN

The business will have the following sources of finance:

 Owner's savings – Ksh. 50,000

 Family and friends – Ksh. 100,000

 Bank loan – Ksh. 100,000

CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 Sponsor

The owner of the proposed business is Mary Wanjiku. She is a Kenyan by birth and is currently
pursuing a Certificate in Fashion Design. Self-motivation is an important aspect of success.
Being interested in fashion and clothing design, she aims to establish a business in this field.

1.2 Business Name

The suggested business name is Mawa Clothing and Designing.

Reason for Choosing the Name:

 The name is derived from "Mary" (Ma) and "Wanjiku" (Wa), forming "Mawa."
 "Clothing and Designing" represents the core activities of the business.
 The name is attractive and easy to pronounce, making it memorable for customers.

1.3 Business Location and Address

1.3.1 Business Location

The proposed business will be located in Mairo-Inya Town, next to Hass Petrol Station.

1.3.2 Business Address

 P.O. Box: 1375-121

 Mobile: 0721577182
 Email Address: www.mawaclothanddesign
 City: Nyahururu
 Landmark: Hass Petrol Station
Type of Business

The business will officially launch in March 2025.

Proposed Capital Contribution:

 Own Savings: Ksh. 50,000

 Bank Loan: Ksh. 50,000
 Family and Friends Contributions: Ksh. 100,000
 Total Capital: Ksh. 200,000

The business will specialize in designing various types of clothing for different occasions,
including women’s dresses, children’s clothing, and men’s outfits.

1.5 Business Ownership

The proposed business will be a sole proprietorship, owned and managed by Mary Wanjiku.

Reasons for Choosing Sole Proprietorship:

1. Name Protection: The business name is personal and can be changed as needed.
2. Hiring Flexibility: There is no limit to the number of employees.
3. Full Control: The owner maintains total control over management and operations.
4. Ease of Operation: Sole proprietorship is simple to start and manage.

1.6 Products and Services

The business will focus on the following aspects:

1. Different Sizes: Clothing will be available in various sizes to cater to all customers.
2. Unique Designs: Custom designs will be created to meet market demand.
3. High-Quality Products: The clothing will be durable and made from premium materials.
4. Variety of Colors: The business will offer a wide range of colors to attract and satisfy
customers.
1.7 Justification of Opportunity

i) High population: The business is surrounded by all kinds of people. The increase in
population has also led to the demand for occasional garments.

ii) Good infrastructure: These are good houses which enable the clothes and garments to be on
display in large numbers.

iii) Availability of market: High demand for occasional garments. This is due to the high
population and availability of people capable and willing to buy the garments, especially people
from K.M.T.C within.

iv) Availability of electric power: The business will have enough supply of electric power,
which will enable it to provide goods and services to customers.

v) Competitors in the market do not design many styles: This gives room for business growth
since it will design many styles in the market to meet the demand.

1.8 Industry

The proposed business falls under the textile industry. The global workforce is estimated to be
3.4 million through work in fashion and textile production.

a) There are trends in the textile market like technology, where the textile industry is a large
growth market.

b) The textile industry has experienced some challenges like crop damage and lack of enough
products.

Challenges faced by the textile industry

i) Poor working conditions:

Some small-scale issues include working environments with poor lighting and ventilation. Some
factories are uncomfortable and extremely unsafe, exposing workers to toxic chemicals in the
textile industry.

ii) Exposure to dangerous chemicals:

This occurs in parts of the dyeing, printing, or finishing sector of textiles.
iii) Waste in the industry:
The waste of resources, especially water. The ecosystem may have been polluted in the past by
companies.

iv) High noise level:

This is caused by noise produced by working machines. This has led to loss of hearing for many
textile workers and can also cause sleep disorders, changes in blood pressure, and anxiety.

Improvement of the Textile Industry

i) Technology advancement in the textile industry:

This includes the use of new machines, for example, knitting machines. We also have the use of
computerized machines to produce textile fibers.

ii) Improved living conditions:

Poverty and lack of sanitation have greatly decreased. This is in areas where textile industries are
established and people are employed.

iii) Working practices:

The nature of work changed from a craft model to a factory-centric model. Textile factories
organize workers’ lives differently than did craft production.

1.9 Business Goals

1.9.1 Short-term goals

i) Create a profile picture on the social media channel.

ii) Give a one percent discount to the first fifty customers in the business.
iii) Employ two workers in the business for two months.
iv) Increase social media posting for two months to advertise our products and grow the business
as well.
v) Market our product locally through hiring new marketing for two months.

1.9.2 Long-term goals

i) Reduce production expenses in the next two years.

ii) The proposed business will increase its shares in the market.
iii) The business will hire more workers after two years to enhance growth and productivity.
iv) Increase the total production of the business by three percent in the next two years.
v) The business will relocate to another large building for more space.

1.10 Entry and Growth

1.10.1 Entry

i) Capturing production by making many garments.

ii) Designing attractive styles for customers.
iii) Using machines to produce high-quality products.
iv) Enhancing high-quality product production.
v) Offering slightly lower prices to attract more customers.

1.0.2 Growth

1. Advertisement: Advertise products through radio, posters, and online platforms to make
them known to potential customers.

2. Selling Products Online: Selling products on various online platforms will increase
competitiveness by allowing the business to operate 24/7.

3. Distribution of Products: Establishing a trade name and business system will aid in
marketing and distribution.

4. Expansion: The business will aim for rapid growth, higher profits, and a larger market
share.

5. Investing in Customer Acquisition: Attracting new customers will help grow the
business.

Chapter Two:
2.0Marketing Plan

2.1 Customers

The proposed business will be located in Mairo-Inya town, near the Hass petrol station.
Expected customer categories:

1. New Customers: First-time buyers who should receive excellent service to encourage
repeat business.

2. Impulse Customers: Buyers who make spontaneous purchases when something catches
their eye.

3. Intent Customers: Customers who conduct research before purchasing; they require
proof of quality and effectiveness.

4. Loyal Customers: Returning buyers who promote the business through word of mouth.

5. Retained Customers: Customers who trust the business and consistently purchase from
it.

Products will be marketed as:

 Attractive: Selling stylish clothing to attract customers.

 High Quality: Ensuring high product standards.

 Affordable: Offering discounts to attract and retain customers.

 Reliable and Sustainable: Providing durable products with good service.

2.2 Market Share

The market share of the business compared to competitors is illustrated in a pie chart.
Competitors include:
Objectives of Market Share Growth

1. Provide High-Quality Products: Ensure quality clothing to attract customers.

2. Increase Sales: Expand the variety of designs to boost production and sales.

3. Launch New Products: Introduce new clothing designs to attract a broader customer
base.

4. Enhance Customer Relationships: Foster strong customer connections.

2.3 Competitors

The proposed business will compete with Mama Mbugu’s Tailors and Steve Tailoring.
Competitor analysis helps identify key strengths and unique features that attract customers.

SWOT Analysis Table

Factor Strengths Weaknesses Opportunities Threats

Mawa - Unique products - - Lack of product - Consulting & - High cost

Clothing & Good customer differentiation - management training of raw
Designing relationships - Leadership - Public relations materials
High-quality limitations consulting
products

Mama Mbugus Tailoring Services

1. Strengths:
o Quality products
o Affordable prices
o Good relationship with customers
2. Weaknesses:
o Limited product availability
o Poor security
o Expensive clothing
3. Opportunities:
o Public relations and consultant services
o Management enquiring
4. Threats:
o No media presence
o No messaging service
Competitor Analysis Table

Competitor Name S W O T
Mawa Cloths & 1 3 1 3
Designing
Mama Mbugus 2 2 3 2
Steve Tailoring 3 1 2 1

2.4 Methods of Promotion and Advertisement

2.4.1 Promotion Strategies

Promotion strategies will include the following:

(i) Media Houses: The business will use advertisements on media such as Kameme Television
and Citizen.

(ii) Create a YouTube Channel: The business will create a YouTube channel to help promote
products, monitor feedback, and provide customer services to spread all over the business.

(iii) Incorporate Social Media into Promotions: This is by advertising our products using
Facebook, WhatsApp, and Instagram.

2.4.2 Advertising Strategy

The advertising strategies include the following:

(i) Media Houses: The business will advertise itself and its products using Kameme Television
and Citizen once a week for the next two months.
(ii) Posters: The business will use posters to spread the message widely, making it easy for
customers to recognize the business.

(iii) Online Market: The business will advertise itself on Facebook, WhatsApp, Instagram, and
YouTube.

2.5 Pricing Strategies

(i) Production Cost: The proposed business will sell its product at a higher cost than the
production cost to make a profit and cater to expenses.

(ii) Price of Competitors: The business will be selling its products slightly lower than
competitors to have greater shares in the market.

(iii) Value-Based Pricing: The business will set prices worth the value to customers.

(iv) Demand Cost: The business will sell clothing according to demand cost—if demand is high,
prices increase; if demand is low, prices decrease.

2.6 Sales Tactics

The proposed business will have the following methods of sale:

(i) Personal Selling: The business will sell its products directly to customers to get direct
feedback.

(ii) Discounts: The business will offer at least a 1% discount to cash buyers to encourage cash
purchases.
(iii) Credit Items: The business will sell clothing on credit, requiring customers to give a deposit
and pay within the agreed time.

2.7 Distribution Channel

The distribution strategy includes Producer → Distributor → Customer

The projected problem from this distribution strategy is managing large-scale production. The
solution will be expanding the business in the future.
Chapter Three

3.0 Organization and Management Plan

3.1 Business Managers and Qualifications

The business will be a sole proprietorship. The owner of the business will be Mary Waniki, who
is currently pursuing a certificate in clothing technology. This experience will help run the
business efficiently. The manager will be assisted by two other

The organization of Mawa Cloth and Designing

Manager

-↓-----------------↓---

Designer Cleaner

3.2 Personal Numbers and Duties

Job Title Number Qualification Duties Salary

Business 1 - Certificate in Fashion - Motivating staff 25,000
Manager Design - Providing exceptional
- Ability to plan and services
organize - Managing operations
Designer 1 - Certificate in Fashion & - Attending to customers 18,000
Design - Making new design clothes
- Hardworking
- Ability to make
different designs
Cleaner 1 - KCSE Certificate - Ensuring the business 12,000
facilities are clean
3.3 Recruitment, Training, and Promotions

3.3.1 Recruitment

Recruiting is the process of actively seeking out, finding, and hiring candidates for a specific
position or job. The recruitment will be done through radio, seminars, and televisions.

Requirements for employees will be:

1. Form four certificate for the cleaner.

2. Certificate in fashion and design for the designer.

3. Certificate in business management for the supervisor.

3.3.2 Training

Training is the act of teaching a person a particular skill or a certain type of behavior. The
business will train the employees on the way to handle the machines and the materials. This will
help to reduce damage and also reduce the maintenance cost.

3.3.3 Promotions

Promotions are the activity that supports or encourages a cause, venture, or aim. Promotions will
be offered to employees in order to motivate workers based on:

(a) High performance level – The hardworking employee will be given a promotion according
to the level of performance.

(b) Experience – Promotion will also be done according to work experience, thus increasing
salary.
(c) Discipline – The proposed business will admit the levels of discipline among its workers
during promotion, whereby disciplined workers will be given higher ranking and salaries than
indisciplined workers.

3.4 Remuneration and Incentives

Salaries will be paid on a monthly basis:

Employe Number of Staff Salary/Month (Ksh)

e

Manager 1 25,000

Designer 1 18,000

Cleaner 1 12,600

3.4.2 Incentives

The proposed business will be offering the following to employees:

1. Sponsorship – The business will be offering the employee overtime allowance and lunch
allowance.

2. Recognition – The business will recognize the workers and give rewards to employees
according to work done.

3. Health and wellness – The business will offer a medical allowance to the employees to
promote their physical and mental health when they are working and when out of work.

3.5 License Permit and By-Laws

The business will obtain a trading license from the registers of companies in Nyahururu Town. It
will also get a business permit from the office of the city council of Nyahururu.
3.5.2 By-Laws

The business will follow the rules and regulations governing the corporation's day-to-day
operations as required by the government:

1. Tax – The business will pay tax to the government through the Kenya Revenue
Authority.

2. Value Added Tax certificate – The business will obtain a certificate from the Kenya
Revenue Authority.

3. Quality of goods and services – The business will acquire a quality stamp from the
Kenya Bureau of Standards (KEBS).

3.6 Support Services

The support services include the following:

1. Business services – They will also ensure good communication services to customers.

2. Insurance cover – The business will be insured by real insurance, which will ensure that
the business assets and employees are insured in case of an accident.

3. Postal services – The business will be able to access postal offices in Nyahururu Town
for communication services.

4. Marketing services – Marketing services will ensure that the new designs made are
advertised.
 CHAPTER FOUR
4.0 OPERATION PLAN

4.1 Production facilities and capacity

In order for the business to operate smoothly, production facilities will be required. They are as
shown in the table below:

Machinery, tools, and equipment table

Item Number Uses Supplier Cost per Total cost
unit
Straight sewing 2 For making garments Sew Tech 25,000 50,000
Kenya
Overlock sewing 1 in 7 For finishing the raw Sew Tech 50,000 50,000
edges of garments Kenya Limited
Fabric 3 rolls For making garments Fancy Textile 4,800 14,400
Cutting shears 2 For cutting fabrics Fancy Textile 800 1,600
Sewing threads dozen Used for stitching Fancy Textile 500 500
Tape measure 5 For taking measurements Fancy Textile 30 150
Iron equipment 2 For ironing clothes Fancy Textile 1,200 2,400
Dummy 2 For putting garments Kenya made 3,500 7,000
dummy
Cutting table 1 For placing materials 4,000 4,000
when cutting

Total: 130,050
4.2 Production strategies

The major production strategies that the suggested business will follow include the following:

1. Product quality – In order for the business to provide quality garments.

2. The market – It must purchase fabric from a known textile industry that produces quality
fabrics.
3. Customer relations – The business will create a good relationship with customers so as
to make more garments that are attractive and appealing to customers.

The business will employ both permanent and casual workers. The permanent workers will be
paid on a weekly basis via M-Pesa. Casual workers will be employed when there is a lot of work
for making occasional clothing and in case of order surges. The number of employees in the
business will depend on the demand and profit made in the business.

Particulars
Particulars Expenses per month (Ksh.)
Salaries 55,000
Wages 5,000
Total 60,000

4.2.2 Monthly expenses

The business will incur the following production costs:

Expenses Cost per month (Ksh.)

Rent 6,000
Advertisement 2,000
Electricity 1,200
Insurance 10,000
Telephone bill 150
Transport 550
Salaries & wages 60,000
 Total 79,900

4.3 Production process

The production process of the suggested business will be as follows after importing different
fabrics from different textile industries:

1. Major factors affecting the clothing industry

o Shortage of raw materials, demand, and production such as scarcity of certain raw
materials like leather and increase in the price of cotton clothing. If they
encounter shortages of these raw materials, manufacturers shift demand away
from older fashions.

2. Solution to the increase of raw material costs

o Change suppliers and check for fabric with affordable prices.

The production process will involve the following:

 Receiving orders from customers – Customers will come to the workplace where
measurements will be taken, or they can make phone calls and provide measurements.

(i) Fabric Selection - The customer will select the type of material he or she wants and also
gives the color of the material. Also, a customer can come with his/her own material.

(ii) Pattern Making - After the customer chooses the type of material, then a pattern will be
made using the taken measurements from the customers.

(iii) Making of the Garment - After the pattern is made and cut, then the fabric will be made
into a garment.

(iv) Ironing and Pressing - After the garment is made, it will be pressed and packed well,
giving the garment to the customer.

4.4 Government and Other Regulations

(i) Taxation - The suggested business will pay the amount of tax required by the government in
time.

(ii) Work - The proposed business will give its workers off during public holidays, and there
will also be payment for overtime work. Employment in the business will be for people with
eighteen years and above, following the government rules and regulations.

CHAPTER FIVE
5.0 FINANCIAL PLAN
5.1 Pre-Operational Costs
The business will have the following pre-operation costs:

Pre-Operation Costs

Item Cost (Ksh.)

Rent 6,000
Tools and Equipment 149,750
Insurance 10,000
Telephone Bill 150
Transport 500
License 5,000
Electricity Bill 1,100
Total 171,700

Cash Balance Calculation:

 Capital - Pre-operation Cost

250,000 - 171,700 = 78,300

5.2Estimation of Working Capital

Current Assets
Item 1st Year (Ksh.) 2nd Year (Ksh.)
Stock 50,000 70,000
Cash in Hand 65,000 75,000
Cash at Bank 100,000 150,000
Pre-paid Expenses 15,000 20,000
Total Current Assets 230,000 315,000
 Current Liabilities
Item 1st Year (Ksh.) 2nd Year (Ksh.)
Creditors 50,000 70,000
Bank Overdraft 150,000 200,000
Bank Loan 100,000 50,000
Total Current 300,000 320,000
Liabilities

5.2 Working Capital Calculation

Working Capital = Current Assets - Current Liabilities

 Year One:
o Current Assets = 300,000
o Current Liabilities = 230,000
o Working Capital = 70,000
 Year Two:
o Current Assets = 320,000
o Current Liabilities = 315,000
o Working Capital = 5,000

5.3 Projected Cash Flow (First Year)

Item JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Total
Sales 125000 129000 141000 147000 155000 165000 165000 127000 182000 195000 210000 220000 1987000
Debtor - - 4500 - - - - - 5000 - - - 9500
Total Cash 125000 129000 141000 147000 155000 165000 165000 127000 182000 195000 210000 220000 1987000
Flow
Cash Outflow - - - - - - - - - - - - -
Purchases 20000 24000 29000 35000 39000 46000 53000 62000 67000 75000 81000 86000 617000
Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
Salary & Wages 52000 52000 52000 52000 52000 52000 52000 52000 52000 52000 52000 52000 572000
Advertising & 3,000 2000 2,000 3,000 1,000 - - 11500
Promotion
Electricity 1,000 11000 1200 1300 1350 1400 1450 1500 1600 1700 1800 1,800 17350
Insurance 10,000 - - - - - - - - - - - 10,000
Telephone 100 120 135 160 170 210 150 220 230 190 170 280 2115
Port 450 500 500 500 550 550 550 550 600 600 600 650 6600
Total Cash 92 85 90 42 99 10 17 12 12 135 141 146 528
Out
Flow 550 720 835 960 680 6160 6150 2320 8436 490 570 807 2565
Net Cash Flow 32 43 44 98 51 48 48 81 59 68 73 659
Cash Account 450 280 165 040 920 840 850 680 580 510 430 200 063
Accumulated 32 75 119 217 269 313 367 419 477 537 605 678
Cash
Final Cash 450 730 895 935 855 695 545 225 795 305 735 935 -

Projected Cash Flow (Second Year)

Item JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Total
Sales 23000 23500 24500 26000 26300 26500 27300 27500 27900 28500 29400 22900 317390
 0 0 0 0 0 0 0 0 0 0 0 0 0
Debtor - - 7000 4 - - 4000 -6000
Total Cash 23000 23500 25200 26000 24300 26500 27300 27500 27900 28500 29400 27900 317390
Flow 0 0 0 0 0 0 0 0 0 0 0 0 0
Purchases 90000 93000 95000 98000 10300 96000 10600 10800 10900 10800 11100 11400 123100
0 0 0 0 0 0 0 0
Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
Salary & 52000 52000 52000 52000 52000 52000 52000 52000 52000 52000 52000 52000 624000
Wages
Advertisemen 2,000 1,000 3,000
t
Electricity 1,970 2,050 150 200 250 2,300 2,400 450 70 26 2,700 3,000 28,300
Insurance 10,000 10,000
Transport 600 600 680 680 680 680 700 700 700 750 750 800 8,140
Telephone 120 200 150 300 210 260 230 270 310 270 300 330 2,850
Total Cash 966 153 155 161 164 157 167 169 170 172 175 171 1,979
Flow
Net Cash 69 81 96 98 78 167 105 105 108 108 112 118 1,193
Flow
Accumulated 69 180 246 345 424 531 637 748 852 960 1,072 1,196 2,338
Cash
Final Cash 310 460 510 360 270 980 670 650 670 670 140 960 4,920

5.4 Proforma Income Statement (Mawa Cloth and Designing)

For the year 2024 - 2025

Item 2024 2025

Sales 1,985,000 3,156,900
Less: Cost of Sales 1,804,610 2,500,000
Gross Profit 880,390 956,380
Expenses - -
Salaries & Wages 624,000 624,000
Electricity 17,350 28,350

Rent 72,000 72,000

Advertisement 11,000 3,000
Insurance 10,000 10,000
Transport 6,600 8,140
Telephone 2,115 2,850
Total Expenses 743,065 748,340
Net Profit Before 137,325 208,040
Tax
Tax Provision (10%) 13,732.5 20,804
Net Profit After Tax 123,592.5 187,236

5.5 Balance Sheet (Start-up vs. End of First Two Years)

Fixed Assets
Item Start-up (Ksh) End of Two Years (Ksh)
Machinery 110,000 110,000
Tools & 39,000 39,000
Equipment
Total Fixed Assets 149,000 149,000
Current Assets
Item Start-up (Ksh) End of Two Years (Ksh)
Cash at Hand 50,000 40,000
Cash at Bank 100,000 80,000
Debtors 19,000 17,000
Total Current 169,000 137,000
Assets
Total Assets
Description Start-up (Ksh) End of Two Years (Ksh)
Total Assets 318,000 286,000

Liabilities and Equity

Liabilities
Item Start-up (Ksh) End of Two Years (Ksh)
Long-Term Bank Loan (1.5 years) 100,000 120,000
Current Liabilities 2,000 3,000
Bank Draft 160,000 200,000
Total Liabilities 262,000 323,000
Equity
Item Start-up (Ksh) End of Two Years (Ksh)
Capital 250,000 300,000
Add: Net Profit 12,000 23,000
Total Liabilities & Equity 262,000 323,000

5.6Break-Even Analysis

Fixed Costs
Particulars Amount (Ksh)
Rent 72,000
Salary & Wages 624,000
Total Fixed Costs 696,000
Variable Costs
Particulars Amount (Ksh)
Advertisement 11,000
Telephone 2,115
 Electricity 17,350
Transport 6,600
Total Variable Costs 37,065
5.6.1 Total Contribution
Calculation Value (Ksh)
Sales - Variable Cost 1,978,000 - 37,065
Total Contribution 1,940,935
5.6.2 Contribution Margin Percentage
Formula Calculation Result
(Total Contribution / Sales) × (1,940,935 / 1,985,000) × 100 97.8%
100
5.6.4 Break-Even Point (BEP)
Formula Calculation Result
Fixed Cost / Contribution 696,000 / 97.8 7,116.56
Margin

5.7Profitability Ratios

5.7.1 Gross Profit Percentage

Formula Calculation Result
(Gross Profit / Sales) × (880,000 / 1,940,935) × 100 45.34%
100
5.7.2 Return on Equity
Formula Calculation Result
(Net Profit After Tax / Owner’s Equity) × (123,592.5 / 250,000) × 100 49.44%
100
5.7.3Return on Investment
Formula Calculation Result
(Net Profit After Tax / Total Investment) × 100 (123,592.5 / 200,000) × 100 61.80%

5.8 Desired Financing

Item Amount (Ksh)

Pre-operation 250,000

Working Capital 70,000

Fixed Assets 696,000

Total Desired Financing 1,016,000

5.9 Proposed Capitalization

Item Amount (Ksh)

Owner's equity 50,000

Bank loan 100,000

Family and friends 100,000

Total 250,000