COVER PAGE

NAME OF CANDIDATE: SUSAN WAIRIMU MAINA

BUSSINESS PLAN TITLE: CARESSER RESORT AND SPA
CANDIDATE INDEX : 2291010375
NAME OF THE : THE MICHUKI NATIONAL POLYTECHNIC
INSTITUTION
CENTER NO : 229101
COURSE NAME : CRAFT CERTIFICATE IN FOOD AND BEVERAGE IN
PRODUCTION SALES AND SERVICE
PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL
PAPER CODE : 1802/205
SERIES : MARCH/APRIL 2025
SUPERVISORS NAME: S MR JAMES WAWERU
 DECLARATION
I Susan Wairimu Maina do declare that this business plan is my original work and is a product
of my certificate knowledge and assistance from the supervisor.

I believe that it has never been submitted to the Kenya National Examination Council for any
award whatsoever.

NAME
INDEX NUMBER 2291010375
DATE
SIGNATURE

This work and research for business plan has been submitted with the approval of my
supervisor.

NAME OF THE SUPERVISOR

DATE
SIGNATURE
 DEDICATION
My special dedication of this business plan goes to my immediate family of Mr. and Ms. Simon
and Joan Maina, not forgetting the relatives, college colleagues and friends for their love,
support and care encouragement and understanding during the entire period.
 ACKNOWLEDMENT
I wish to acknowledge God for giving me the chance for my education and perfect knowledge in
my studies, also acknowledge the assistance of Mr. James who has made it possible for me to
complete the business plan. Appreciation also goes to my brother, sisters and friends for their
good encouragement not forgetting to thank my parents for making sure I remain in school for
this course.
 EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

Chapter one entails a summary of how the whole business is intended to be carried out which include;
Name and address of the owner ; Name of the business, Business location and address, Type of business
ownership, services provided and products sold, justification of the business, opportunities, goals and
the strategy of the business.

2.0 MARKETING PLAN

This chapter entail the marketing strategy that include; The customers targeted, customers market
share, competition to be encountered, pricing strategy, way of advertising the business, sale tactics and
the distribution strategy.

3.0 MANAGEMENT AND ORGANIZATIONAL PLAN

Its entails the overview of the business organization, job qualification of the employees, business
licenses and permits staff salaries and wages their duties and responsibilities.

4.0 OPERATIONAL PLAN

This chapter entails the production process strategies, equipment’s needed for production and
regulations affecting the production.

5.0 FINANCIAL PLAN

This chapter involves the overall overview of costs, business startup, capital and its running cost. The
variable cost and the sales which the establishment is expected to make will be included along with
gross and net profit expected for the business.
 CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.1 BACKGROUND OF THE OWNER
The business shall be owned by Susan Wairimu Maina, 25 years of age from Nyeri county,
Karatina town which is in Mathira east district.
The owner is currently undertaking a craft certificate in food and beverage service and
production at The Michuki National Polytechnic. She has earned the necessary skills and
knowledge in the exposure to the field as a trainee at Fk Resort and Spa located in Nyeri
County. She acquired necessary skills in the industry in all sections namely Pastry, hot kitchen
and service.
She planned on acquiring more skills through attending marketing through online research and
also follow chefs that have an exposure in the field. She has an email account
susanwmaina705@[Link] and P.o .box 705 Karatina.

1.2 BUSINESS NAME

As the business name suggests Caresser resort and spa is inspired by her interest in nurturing a
dream of becoming an entrepreneur and owning a hotel.
1.3 BUSINESS LOCATION AND ADRESS
The business will be located at Karatina, Nyeri County, near Karatina stadium opposite Karatina

University. The advantages of the location is that there is security lights increasing population

mean availability of customers Address Caresser resort and Spa P.O. box 705 Karatina email

susanwmaina705@[Link]

KANGEMA NYERI

MINAP KARATINA

1.4 FORM OF OWNERSHIP

The business will be a sole proprietorship. I as the business owner I choose this ownership
because of the following reasons/ advantages

I. Quick decision making

II. Flexibility of the business
III. Little capital to run the business
IV. Easy to start and operate
The disadvantages for this ownership will be
. Suffers losses alone
. It may be harder to sell the business.
. The owner is responsible for raising capital for startup cost
. Competition with other entrepreneurs
1.5 TYPE OF BUSINESS
The business will be a startup kind of business dealing with delicious foods, drinks,
accommodation recreation facilities at an affordable price.

1.6 PRODUCTS AND SERVICE

The main service the business will be offering is providing food and beverages at an affordable
price. There will be a bakery where baking products that are nutritional will be produced and
packaging will be unique with a design with graphic art on them.

1.7 JUSTIFICATION OF A BUSINESS OPPORTUNITY

According to me, the business will be viable due to the following reasons
 There will be exploitation of resources where I will be buying resources from the people
around the area.
 It will employ qualified personnel for quick service delivery.
 It will have an updated technology for quick service and production delivery.
 It will offer a proper infrastructure that fits the services provided.
 It will have security due to the police station nearby and also security light for late night
[Link] will also offer transport for personnel’s who work late shifts.

1.8 INDUSTRY
The business will belong to the Food and beverage production and service. There will be
production and service. There will be production of food also all kinds of beverages. It will also
offer additional services such as accommodation, recreational services, like swimming pool, and
gym. The beverages provided will be hot, cold beverages both alcoholic and non-alcoholic
beverages.

1.9 GOAL OF BUSINESS \OBJECTIVES

1.9.1 GOAL
The owner intend to have a successful and a profit making facility so as to open branches in
other towns to make the business big. The intention of opening more branches will help in
creation of more employment opportunities to the people within. The owner aims to make a
difference in the hospitality industry, throw the services offered at her resort.
 1.9.2 OBJECTIVES
The owner aims on to satisfy the guest desire, producing enough food to sustain and grow the
operation, to make reasonable amount of profits out of the service being provided.

1.10 ENTRY PLAN AND GROWTH STRATEGY

1.10.1 ENTRY PLAN
The business is intended to start after completion of her studies, after gathering enough capital
to start. To introduce the business to the market the sponsor will use the following methods.
 Social media advertisements
 Putting up of posters
 Advertisement of newspapers

She will make sure to offer discounts as a way of attracting guests. The prices for the services
will be fair and affordable for every kind of guest. She will make sure to offer packaging services
for all take away food and beverages.

1.10.2 GROWTH STRATEGY

The owner plans to introduce international cuisines that will attract international guests from
every part of the world. Employment of personnel’s with skills that are related to other country
will help the business have an advantage. This will also help the business grow in terms of
technology and new trends of service and production.
The owner will use the swot method of analysis

Weakness Strength Opportunities Trends

Neema hotel Have poor Have more Have job Machine used are modern
management employees opportunities trend.
every end of
year
Marafiki hotel Poorly located Qualified Have on job Have trending dishes
employee training for introduced every week.
people in
training
 2.0 MARKETING PLAN
2.1 CUSTOMERS
Caresser Resort and Spa potential customers will include:
 Domestic customers 500
 Retail customers 200
 Institutional customers 1000
Karatina University
DEB Primary school.
The products will be sold on specific days to the customers.
The customers will receive the services that consist of food and beverage and also take away
packages.

2.2 MARKET SELL /PRODUCT

Sales

0.25, FOOD
BEVERAGE
SPA

0.5,

0.25,

50X100/100 = 50% = FOOD

25X100/100 = 25% = BEVERAGE25X100/100 = 25% = SPA2.3 COMPETITION
Caresser Resort and Spa will consider the competitors hence upgrade the services like cuisines
offered will not only be local but also international to attract foreign guests who might even
invest in the business and bring in sponsors who will support the business. She will also take
challenges from the competitors since she admires some ideas from them.

NAME STRENGTH WEAKNESS

%
NEEMA HOTEL Has more employees Poor management
15% Staff motivation tips Illiterate employees
MARAFIKI 25% Bigger in size Poor location
HOTEL Qualified employees Low salaries
Good management No profits
CARESSER 50% Good management Few employees
RESORT AND High profits Small in size
SPA Qualified employees

Advantages that she has will help fill the gap

a. Due to availability of qualified employees the business will attract more customers
hence more profits leading to growth and expansion of the business.
b. Due to specialized staff members the business will attract guests from everywhere.

2.4 METHOD OF PROMOTION AND ADVERTISEMENT

2.4.1 PROMOTION
Several methods will be used to create awareness since the business is new to the customers.
The methods will include
 Offering promotional beverages to guests
 Offering discounts in pastry products
Offering promotional meals at lower prices in a span of time to increase the flow of guest.

2.4.2 ADVERTICEMENT
Methods of advertisement methods will be used. Printed posters that will be hanged
everywhere in the town for customers to see. Use of local radio station for the advertisement
of Caresser Resort and Spa. Creation of social media channels to make sure that it reaches a
wider range of people, through billboards that will be at the entrance of the hotel. This will cost
7000 for the billboard.

2.5 PRICING STRATEGY

The business price will depend on the buying price of the products or service.
The factors that will influence the prices will be:
The cost of raw material bought
Nature of competition on a certain product
Credit offers will be given to loyal customer: example
When a loyal customer buys a meal they can use credit cards, a loyal customer can take meals
for a month and pay at the end of the month. There will be transport for home deliveries.

2.6 SALES TACTICS

The business will sell directly to customers and some other sales tactics will include promotion
through posters. Free samples for the food offered will be produced, the geographical area
covered will be Karatina town and few kilometer away it.

2.7 DISTRIBUTION STRATEGY

The business will have the following channel of distribution.

PRODUCER RETAILER CONSUMER

This means of transport will be road transport, a vehicle will be used to various destinations.
The cost of transport will be 50,000 per month. The owner of the business will anticipate
problems like poor road transport.
Food spoilage
Weather changes
To solve the problems, several measures will be taken to prepare the food on time to avoid
lateness.
To use modern equipment for preparation and storage of food.
 CHAPTER THREE
3.0 ORGANISATION AND MANAGEMENT PLAN
3.1 MANAGEMENT TEAM
Management is the process of administering and coordinating resources effectively to achieve
the desired goals.
Organization resources effectively to achieve the desired goals. Organization management plan
will contribute to the quality of service output in my business.
The management will compromise of the following
i) General manager
ii) Human Resource Manager
iii) Food & Beverage Manger
iv) Restaurant Manager
v) Head Chef
vi) Head Waiter
vii) Chefs
viii) Drivers
3.1.1 DUTIES AND RESPONSIBILITIES OF MEMBER

TITLE NUMBER QUALIFICATIONS DUTIES

GENERAL MANAGER 1 DIPLOMA IN FOOD & ALLOCATION OF DUTIES
BEVERAGE MAKING DECISIONS IN THE
2 YEARS OF EXPERIENCE BUSINESS
30 YEARS AND ABOVE TRACKING AND ASSESSING
COMMUNICATES ATLEAST 2 THE PERFOMANCE OF
NATIONAL LANGUAGE TEAMS
COMPUTER LITERATE MANAGING DAY TO DAY
OPERATIONS
HUMAN RESOURCE 1 DIPLOMA IN HUMAN RECRUITMENT AND
MANAGER RESOURCE HIRING
1 YEAR EXPERIENCE TRAINING AND
25 YEARS AND ABOVE DEVELOPMENT
COMMUNICATES ATLEAST 2 MAINTAIN COMPANY
NATIONAL LANGUAGES CULTURE
MANAGE EMPLOYEE
BENEFITS
CREATE A SAFEWORK
 ENVIRONMENT
FOOD&BEVERAGE 1 DIPLOMA IN FOOD AND SHIFT SCHEDULING
MANAGER BEVERAGE CONTROL ORGANIZE DIRECT AND
1 YEAR EXPERIENCE EVALUATE FOOD AND
25 YEARS AND ABOVE BEVERAGE SERVICE
COMPUTER LITERATE PURCHASE AND CONTROL
OF INVENTORY
WAITERS 15 CRAFT CERTIFICATE IN FOOD LEAD GUEST TO THEIR
& BEVERAGE SERVICE TABLES
20-35 YEARS TAKE FOOD AND DRINK
COMPUTER LITERATE ORDERS
COMMUNICATE EFFICTIVELY COLLECT PAYMENT
HEAD CHEF 1 DIPLOMA IN FOOD CONTROLLING&DIRECTING
PRODUCTION THE FOOD PREPARATION
1 YEAR EXPERIENCE PROCESS AND OTHER
22 YEARS AND ABOVE RELATED
COMMUNICATES MULTIPLE RESPONSIBILITIES.
LANGUAGES
KNOWLEDGE IN DIFFERENT
RESTAURANT 1 DIPLOMA IN AGREEING&MANAGING
MANAGER FOOD&BEVERAGE SERVICE BUDGET
1 YEAR EXPERIENCE CREATING STAFFING
22 YEARS AND ABOVE ROUTINES
COMPUTER LITERATE PLANNING MERITS
PROMOTING AND
MARKETING THE
BUSINESS.
CHEFS 8 CRAFT CERTIFICATE IN FOOD DELEGATE TASK TO
AND BEVERAGE KITCHEN STAFF
PRODUCTION COOK FOOD IN A TIMELY
22 YEARS AND ABOVE MANNER
KNOWLEDGE ATLEAST TWO STUDY EACH RECIPE AND
NATIONAL LANGUAGES GATHER ALL NECSSARY
KNOWLEDGE OF DIFFERENT INGREDIENTS.

3.2 OTHER PERSONNEL

TITLE NUMBER QUALIFICATIONS DUTIES&

REQUIRED RESPONSIBILITIES
DRIVERS 1 DRIVING LICENCE FROM A RUNNING FOR
 REGISTERED DRIVING SCHOOL THE BUSINESS
TRANSPORTING
EMPLOYEES AFTER
SHIFTS
BUZZ BOYS 2 C- IN KCSE CLEARANCE OF TABLES
NATIONAL IDENTIFICATION WIPES TABLE AFTER
CARD CLEARANCE
SECURITY GUARD 5 NATIONAL IDENTIFICATION KEEP GUARD OF
CARD ENTRANCE
RECOMMENDATION FROM MAKE SURE THE
SECURITY COMPANY ICOMING VEHICLES ARE
C- IN KCSE CERTIFICATE REGISTERED
MAINTAINANCE 4 NATIONAL IDENTIFICATION MAKE SURE THE
TEAMS AND C- IN KCSE CERTIFICATE COMPOUND IS CLEAN
AND THE GRASS IS CUT
AND LITTER CLEARED
STEWARD 4 NATIONAL IDENTIFICATION CLEANING UTENSILS
CARD PREPARATION OF STAFF
D- IN KCSE MEALS
CLEANING THE KITCHEN
AND SURFACES IN THE
KITCHEN

3.3 RECRUITMENT / TRAINING / PROMOTION

3.3.1 RECRUITMENT
Recruitment will be through advertisement on the social media platform which will cost 5000
monthly interviews will be face to face.
3.3.2 TRAINING
Training will be on job training this method will in studying the character and productivity of the
particular person. They will be receiving a small amount of pay while training for personal use.
3.3.3 PROMOTION
The business will put in the following to ensure its employees are trained.
i) Vocational training will be organized for each employee
ii) All employees will be promoted from one level to another after one year.
3.4 RENUMERATIONS AND INCENTIVES

3.4.1 RENUMENATIONS.

TITLE NO MONTHLY PAY ALLOWANCES TOTAL

GENERAL 1 150,000 15,000 165000
MANAGER
HUMAN 1 120,000 12000 13200
RESOURCE
MANAGER
FOOD&BEVERAGE 1 100,000 10,000 110000
MANAGER
HEAD CHEF 1 90,000 9,000 99000
RESTAURANT 3 70,000 X3 7000X3=21,000 231000
MANAGER =210,000
WAITERS 15 30,000 X 15 3000X15=45,000 495000
=450,000
CHEFS 8 50,000X8 5000X8=40,000 440000
=400,000
DRIVERS 1 20,000 2000 22000
BUS BOY 2 10,000X2 1000X2=2000 22000
=20,000
SECURITY GUARD 2 12,000X2 1000X2=2000 26000
=24,000
STEWARDS 4 15,000X4 1500X2=3000 63000
=60,000
MAINAITANCE 4 12,000X4 1000X2= 2000 50000
TEAM =48000

3.4.2 INCENTIVES

BONUSES COMMISSIONS LUNCH TEA ITEM OVERTIME ALLOWANCES PER HOUR

Ksh 100 Ksh 50 Ksh 50 Ksh 30 Ksh 100
 3.5 LICENCE, PERMIT AND LAW
3.5.1 LICENCE
The business will need to have license from the county government of Nyeri. It will cost at least
10000 to acquire it. The license is a certificate to show that the business exists on legal grounds.
3.5.2 PERMIT
The business will require a permit to ensure that the business will adhere to the services that
the business control assets.
a. FINANCIAL MANAGEMENT: it will ensure that the account clerk will be responsible for
all financial statements or all deposits.
b. SUPPORT SERVICE:
I. BANKING SERVICES: The accounts clerk will ensure that all the business funds are
kept at the bank.
II. MANAGEMENT ADVICES: The management team will be responsible to ensure
that all the enterprise activities run smoothly and will cooperate to seek solution
to any problem.
3.5.3 BY LAW
The business will need to compile with by law issued by county council.
3.6 SUPPORT SERVICE
3.6.1 BANKING SERVICE
The business has an Equity bank account. This is to ensure that the funds are kept at the bank
and accounted for. To avoid mismanagement of the business funds, to help in accountability of
the business funds.
3.6.2 INSURANCE SERVICES
The business will have insurance services in the Britam insurance company of 10,000 per
month. The business will insure against theft, fire breakout it will also insure its employees in
case of any injuries while on duty.
3.6.3 CONSULTING SERVICES
The business will need law consulting services. The business will have MMS advocates which is
a law firm that is located at Nairobi, this will help in law issues that may arise.
3.6.4 LEGAL SERVICES
The business will have legal services in written contract, drafting legal products and
interpretation of labor law and employment.
 CHAPTER FOUR
4.0 PRODUCTION / OPERATION PLAN
4.1 PRODUCTION FACILITIES AND CAPACITY
Below are the tools and equipment that she will use in the effective running of the business and
the cost incurred and the data that will be required

NO. FACILITY NUMBER DATE SOURCE COST

REQUIRED
1 Utensils 200 20/10/2024 Hallad LTD 5,500
2 Fridge 1 21/10/2024 DANA shop 15,000
3 Chairs 30 21/10/2024 MILIMANI 20,000
shop
4 Aprons 10 22/10/2024 Concluche ltd 1,000
5 Computers 5 22/10/2024 Haluej 60,000
electronics
6 Oven 2 22/10/2024 Dana shop 50,000
7 Microwaves 2 23/10/2024 Dana shop 30,000
8 Trollies 4 23/10/2024 Milimani 10,000
shop
9 Blenders 2 23/10/2024 Dana shop 15,000
10 Gas cookers 5 24/10/2024 Dana shop 20,000
11 Fans 3 24/10/2024 Dana shop 10,000
12 TOTALS Dana shop 250,000

There will be a maintenance team that will make sure that the equipment’s are in shape. The
repairs will be carried out each month to make sure they are functional and to avoid any
inconveniences while working. The cost of maintenance will be around 7,000 shillings per
month
4.1.1 FIRM LAYAOUT

MAIN ENTRANCE

RESTAURANT GENERAL MANAGER

OFFICE

SWIMMING POOL WATER TAPS TOILETS

STORE
4.2 PRODUCTION STRATEGY (PROCUDURE OF PRODUCTION)
The business will be producing its own pastry products hence having owned bakery within the
institution. The amount incurred will be maximum 300,000 to acquire the required machine in
the bakery. The charge in technology might be developed through being updated on what is
new in the pastry industry .This will help to develop new styles and technique in baking and
new machines also. The workers will be required to have a craft certificate in pastry and bakery,
mathematics literate and have knowledge of computer operations to help in feeding guest and
order information in a computer. The monthly production cost for the pastry products will be
around 200,000.
4.3 PRODUCTION PROCESS
The pastry products are produced in stages to make sure the final product is great. There will
be the mixing of ingredients into dough, fermentation and baking of the products finally the
declaration. Production might be affected by some external factors some are government
policies for example increase in taxation hence affecting the previous cost of products and
making them to increase. To minimize the external factors from affecting the production we will
produce more products than increasing the cost. Factors that affect production process are
land, labor, capital and also entrepreneurship
4.4 PRODUCTION AFFECTING OPERATION
4.1 HEALTHY REGULATIONS
The requirement for the public health will be necessary to handle the entire company product.
This Is is to make sure that the floors will always be clean, walls will be painted, employees put
on clean uniforms when in the industry, cleanliness is observed in the sanitary areas
4.4.2 SAFETY
All employees will be wearing aprons during working hours. Every employee will be provided
with the company’s safety boots, enough gloves will be provided for use while in the firm
4.4.3 ENVIROMENTAL REGULATIONS
There will be provision of dustbins for proper waste disposal planting of trees will be done
regularly for a clean atmosphere
.
 CHAPTER FIVE
5.0 FINANCIAL PLAN
Some of the objectives made in the financial plan will be
 Setting financial goal by having a long term saving for retirement
 Tax planning that will maximize tax deduction and credits
 Budgeting that will monitor cash flow and create a budget to help make most money
 Risk management by identifying potential risks
 Growth assumptions
 Change in marketing expenditures
 Benefits realization
 Revenue assumptions
Assumption of financial plan

I. Economic and market factor

II. Financing and interest rates
III. Capital expenditure
IV. Cost it includes cost of material labour, overhead, equipment or technology.
V. Revenue cost

5.1 PRE OPERATIONAL COST

ITEMS
Trade license 5,000
Insurance 10,000
Permit 2,500
Water bill 20,000
Raw 50,000
Equipment 25,000
Machinery 50,000
Advertising 5,000
Electricity 20,000
Rent 50,000
Telephone 1,000
Maintenance 7,000
TOTAL 245,500
5.2 PROFORMA BALANCE SHEET
FIXED ASSETS

Item Cost

Land 150000

Building 10000

Motorcycle 30000

Furniture 55000
Fittings 40000
Total 285000

CURRENT ASSETS AMOUNT(KSH)

Stock 100000
Debtors 30000
Cash at bank 150000
Cash at hand 80000
TOTAL 360000
LIABILITIES

LONG TERM LIABILITY AMOUNT(KSH)

Loan 20000
SHORT TERM LIABILITY AMOUNT(KSH)
Bank overdraft 70000
Creditors 150000
Insurance 7000
Expense 10000
Total 327000
 5.3 WORKING CAPITAL

ITEMS YEAR ONE (Ksh) YEAR TWO (Ksh) YEAR THREE (Ksh)
Stock of raw material 93,720 93,950 95,600
Stock of finished 715,800 750,600 760,000
goods
Cash in hand 17,000 190,000 200,000
Cash at bank 175,000 175,900 180,950
Debtors 20,000 15,000 13,000

Total assets 1,174,520 1,225,450 1,250,350

CURRENT CREDITORS 195,000 195,000 108,000

Estimated working 979,500 1,030,450 1,142,350

capital

Working CAPITAL = Current assets – Current Liability

5.4 CASH FLOW PROJECTION

JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DEC

Opening 1,154, 1,115, 1,115, 1,154, 1,154, 1,154, 1,154, 1,154, 1,154, 1,130, 1,200, 1,15 13,
cash 520 450 520 520 520 520 520 520 520 200 500 4,00 85
 0 4,2
40
Receipt 595, 595, 595, 595, 595, 595, 595, 595, 595, 595, 595, 595, 7,1
debtors 500 500 500 500 500 500 500 500 500 500 500 500 58,
00
0
Loan 1000 1000 2000 3000 500 1000 1000 1000 1000 1000 10,
received 50
0
Total 10,00 10,00 5,100 15,00 8,000 15,00 8000 10,00 80,0 24,
cash flow 0 0 0 0 0 00 65
2,8
70
License 1,224. 1,224, 1,219, 1,224, 1,222, 1,229, 1,219, 1,214, 1,222, 1,214, 1,214, 1,22 24,
170 170 270 370 300 600 220 400 350 400 400 4,70 00
0 0
Permit 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 18,
00
0
Water 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 9,6
00
Raw 800 800 800 800 800 800 800 800 800 800 800 800 93,
material 72
0
Equipme 7,810 7,810 7,810 7,810 7,810 7,810 7,810 7,810 7,810 7,810 7,810 7,81 21,
nt 0 97
0
Machine 14,45 4000 610 540 840 640 800 17
0 2,8
00
Insuranc 93.50 2000 800 900 5000 1000 1200 700 2500 30,0 9,6
e 0 00 00
Advertis 800 800 800 800 800 800 800 800 800 800 800 800 9,6
ement 00
Electricit 300 700 300 1800 900 200 60
y 00
Telephon 500 500 500 500 500 500 500 500 500 500 500 500 35
e 00
Salary 450 620 300 200 140 200 180 180 620 600 300 600 50
wage 00
Loan 95,00 95,00 95,00 95,00 95,00 95,00 95,00 95,00 95,00 95,00 95,00 95,0 81,
payment 0 0 0 0 0 0 0 0 0 0 0 00 00
0
Total
cash out

5.5 TRADING PROFIT AND LOSS ACCOUNT

ITEM YEAR 1 YEAR 2 YEAR 3

Sales 11991000 21000100 112000200

Purchases 1496000 5000000 6020000

Gross profit expense 134330100 16000100 105980000

Expenses 10295000

Distribution 2000 3000 5000

Salaries/ wages 1432600 15000000 150000

Telephone 15000 16000 17000

Water 15000 16000 17000

Electricity 20000 21000 22000

Stationary 20000 20000 20000

TOTAL 1504800

Net profit = Gross profit – Total expenses

10295000 – 1504800 = 8790200

5.6 BREAK-EVEN ANALYSIS

I. Linear relationship between cost and product
II. Fixed and variable cost are constant
III. Selling price is constant
IV. Variable cost per unit is constant
V. Budgeted fixed cost are equal to actual cost
a) USEFULNESS OF BREAK-EVEN POINTS ANALYSIS
I. By assessing financial viability
II. Managing risk
III. Making decision about pricing
IV. Determining remaining capacity
V. Setting sales revenue targets
b) LIMITATION OF BREAK-EVEN POINTS
I. Assumption of constant price and cost.
II. Simplification of complex
III. No consideration for complex business model
IV. No consideration for strategic decision making
V. Ignores the impact of volume and sales

CALCULATING BREAK EVEN POINT/ ANALYSIS (BEPA)

1. Total contribution margin;
Breakeven point in units= fixed cost*100/unit
Contribution =sales -total valuable cost
11,791,000-9,500,000=2,291,000
2. Calculate the contribution margin
Cm = contribution margin=contribution margin*100/sales
2,291,000*100/1,179,100=74%
3. Determine the total proceed cost=proceed cost
=6,765
4. Calculate the breakeven level of sales in shilling
Breakeven level=fixed cost/contribution margin %
6,765/74=91.4%
5. Breakeven unit [level of production of beep]
Contribution margin/fixed costs
2,291,000/6,765=338.7

5.7 DESIRED FINANCING

ITEM AMOUNT
Preoperational cost 105900
Working capital 650000

Fixed asset 375000

TOTAL 1130000
 5.8 CAPITALIZATION
Item Amount

Personal saving 250000

Friend/relatives contribution 300000

Bank loan 500000

Total investment 10500000

5.9 PROFITABILITY RATIO

gp
I. Gross profit ratio = ∗100
sales

57307300
= ∗100
44791300

= 127.94

net profit
II. Net profit ratio = ∗100
sales

8790200
= ∗100
44771300

current assets−stock
III. Quick ration =
current liabilities

360000−100000 260000
327000 327000

= 0.795

current asset
IV. Liquidity ratio =
current liabilities
360000
= 1.101
327000
V. Asset turn over = total sell – asset turn over
45000-1882000=1837000

Gross profit ratio 10,295,000

x 100 x100=87.3
sales 11,791,000
Net profit ratio
Net profit before tax 8,790,200
x 100 =74%
sales 11,791,000
VI. Return on equity
Net after tax 10,294,500
X100 =20,589
owner equity 500,000
Return on investment
Net Profit after Tax 10,294,500
X 100 x100 = 87%
Total investment 11,791,000
APPENDIX