BUSINESS PLAN

: BIDII MOTORCYCLE SPARES

P.O BOX 45,

NAVAKHOLO

TEL:0792536383

Email address: [email protected]

PRESENTED BY : KUOVA KELVIN MUCHANA

ADM. NO. : 13351

INDEX. NUMBER : 6161030411

CENTER CODE. :616103

DEPARTMENT : BUSINESS.
CENTER NAME. :THE SIGALAGALA NATIONAL POLYTECHNIC.

PRESENTED TO : KENYA NATIONAL EXAMINATION

COUNCIL AS PARTIAL FULFILMENT
FOR THE AWARD OF DIPLOMA IN
ACCOUNTANCY.
DATE OF SUBMISSION: NOVEMBER,2021 SERIES

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DECLARATION

I hereby declare that this business plan is my original work and has never been
presented anywhere for the award of Diploma or Certificate course.
It is therefore submitted to the Kenya National Examination Council.

Name. : Kuova Kelvin Muchana

SIGNATURE:…………………………………..
DATE :……………………………………
This work has been submitted to the Kenya National Examination Council with the
approval of my supervisor.

SUPERVISOR: Mr. Shipaaka Protus

SIGNATURE :………………………………..
DATE :………………………………….
DEDICATION

This business plan is dedicated to all friends and classmates. Above all the successful
completion of this project is realized through the extra ordinary inspiration from my parents
and the ultimate Guidance of the Almighty.
GODBLESSYOUALL.

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ACKNOWLEDGEMENT
I give much thanks to almighty God for everything he has done to me. I also wish to
express my sincere thanks to everybody who assisted me directly or indirectly towards the
completion of this business plan .Much thanks goes to my lecturer for guidance. May God
bless you all.

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 TABLE OF CONTENTS
DECLARATION...................................................................................................2
DEDICATION......................................................................................................3
ACKNOWLEDGEMENT......................................................................................1
1.0 EXECUTIVE SUMMARY.................................................................................5
1.1 BUSINESS DESCRIPTION................................................................................5
1.2. MARKETING PLAN.........................................................................................5
1.3. ORGANIZATION PLAN...................................................................................5
1.4 OPERATION PLAN..........................................................................................5
1.5. FINANCIAL PLANS.........................................................................................5
CHAPTER ONE.....................................................................................................6
1.0 BUSINESS DESCRIPTION................................................................................6
1.1. BUSINESS NAME...........................................................................................6
1.2 BUSINESS LOCATION AND ADDRESS.............................................................6
1.3.0 BUSINESS OWNERSHIP..............................................................................6
1.4 TYPE OF THE BUSINESS.................................................................................7
1.5 PRODUCTS/SERVICES....................................................................................7
1.6 JUSTIFICATION OF THE OPPORTUNITY...........................................................7
1.7 INDUSTRY......................................................................................................7
1.8 GOALSAND OBJECTIVES OF THE BUSINESS...................................................8
1.9.0 ENTRY AND GROWTH STRATEGY...............................................................8
CHAPTER TWO.................................................................................................... 9
MARKETING PLAN................................................................................................9
2.1.0 POTENTIAL CUSTOMERS.............................................................................9
2.2 MARKER SHARE.............................................................................................9
2.3. COMPETITORS............................................................................................10
2.4 METHODS OF PROMOTING AND ADVERTISING............................................10
2.5 PRICING STRATEGIES..................................................................................11

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2.6 SALES TACTICS...........................................................................................11
2.7 DISTRIBUTION STRATEGIES.........................................................................11
CHAPTER THREE..............................................................................................13
ORGANISATION PLAN.......................................................................................13
3.2 .0 KEYMANAGEMENT PERSONELL................................................................14
3.2.1 GENERAL MANAGER.................................................................................14
3.2.2 SALES PERSON.........................................................................................14
3.2.3 CASHIER...................................................................................................15
3.3.0 OTHERBUSINESS PERSONNEL..................................................................16
3.4.0 RECRUITMENT, TRAINING AND PROMOTION OF PERSONNEL...................17
3.5 REMUNERATION AND INCENTIVES FOR PERSONNEL...................................17
3.6 PERMIT, LICENCE AND BY-LAWS..................................................................18
3.7.0 SUPPORTIVE SERVICES.............................................................................18
3.7.1 BANKING SERVICES..................................................................................18
3.7.2 POSTAL SERVICES....................................................................................18
3.7.3 LEGAL SERVICES......................................................................................19
3.7.5 INSURANCESERVICES...............................................................................19
CHAPTER FOUR.................................................................................................21
OPERATION PLAN..............................................................................................21
4.2.0 PRODUCTION STRATEGY..........................................................................21
4.3 PRODUCTION PROCESSES...........................................................................23
4.4.0 GOVERNMENT REGULATIONS...................................................................24
CHAPTER FIVE...................................................................................................25
5.0 FINANCIAL PLANNING..................................................................................25
5.1 PRE-OPERATIONAL COSTS..........................................................................25
5.2 WORKING CAPITAL......................................................................................25
5.3.1 CASH FLOW STATEMENT 2023.................................................................28
5.4 PROJECTED INCOME STATEMENT TRADING PROFIT AND LOSS
ACCOUNT..........................................................................................................29
6.5. CONSUMER BALANCE SHEET.....................................................................30
5.6 BREAKING EVEN ANALYSIS..........................................................................31

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6.7. EXPECTED PROFITABILITY RATIOS..............................................................31
5.8 DESIRED FINANCING...................................................................................32
5.9 PROPOSED CAPITALIZATION......................................................................32
APPENDIX 1.......................................................................................................33

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 1.0 EXECUTIVE SUMMARY
1.1 BUSINESS DESCRIPTION
The chapter briefly describes the name of the business, services, offered location and the type
of business. It also describe the size, trends and industry entry and growth

1.2. MARKETING PLAN

The chapter describes important information regarding the market.

1.3. ORGANIZATION PLAN

The chapter describes organization structure and the management of the business. It also
included the recruitment, training, promotion and remuneration of the employees

1.4 OPERATION PLAN

This chapter describes the business operation strategies. It involve preoperational cost,
financing of the business and the operational of planned sketch

1.5. FINANCIAL PLANS

The chapter entails the financial view of the business. It contain the project cash flow
statement, projected balance sheet, and projected income statement, financial ratios and the
desired financing outlining from the respective sources of income

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 CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.1. BUSINESS NAME

The name of the business will be Bidii Motorcycle Spares.The name will be easy to be be
remembered since it is easy to be pronounced.It will be unique since none of the business
man had used the name earlier before.The logo of the business will indicate samples of the
products that the business will be dealing with.Below is the business logo.
Business logos

1.2 BUSINESS LOCATION AND ADDRESS

The business will be located in Navakholo town, Kakamega countyopposite police camp
along Navakholo_Kakamega road near Tuinuwane Bodaboda stage. The location was
selected due to good accessible road to the place, the availability of customers, high security
and large population.The business address will be:
Bidii Motorcycle Spares,
P.O Box 45,
Navakholo.
1.3.0 BUSINESS OWNERSHIP.
It will be sole proprietorship. Its advantages are; easy to start due to little capital needed, easy
to manage, quick decision making and enjoyment of all the profit
1.3.1 PROPRIETOR'S PROFILE

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The owner of the business will be Mr.Muchana Kevin of age 35years.The owner went to
Chebuyusi Secondary School after which he joined tertiary institution for further
studies.Currently he is a holder of Degree in accounting field and has done work with
different schools as an accountant.The business will require a starting capital of 850000. The
amount will be provided by the following sources
Details Amount
Owner's contribution 500000
Bank loan 250000
Family and friends contribution 100000
TOTAL AMOUNT 850000

1.4 TYPE OF THE BUSINESS

The business will be a trade business based on motorcycle spare parts. The major role of the
business will be buying and sell spare part at a profitThe business will be a trade business
because of it will be saling to whole sellers , retailers and directly to it's customers.
1.5 PRODUCTS/SERVICES
The goods to be sold includes; tyres, brakes pads, engine oil, break lining, grease, coolant,
lifesavers, fast aid kit, fire extinguisher, plugs, air cleaner elements, wheel nuts, chain and
fuel filters. The product will be of high quality. The operating time of the business will be as
Fromm 7am to8pm.
1.6 JUSTIFICATION OF THE OPPORTUNITY
The business will be started after a researchhas been conducted and identified that there will
be no other spare part shop but fur from the area ,the owner will make more profit, existence
of good security and transport system.
1.7 INDUSTRY
The business will fall under manufacturing industry and will operate under the repair and
maintenance. The people that will affect positively to the business are customers. The main
competitors of the owner's business will be Tumain Motorcycle Spares that has stabilize in
the market. The business will use modern technology in its production due to its large size
and large number of customers.

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 1.8 GOALSAND OBJECTIVES OF THE BUSINESS.
The business will haveseveral goals to achieve; these will be long term goals and short term
goals as stated below;
 Providing high quality product by purchasing original ones
 Expanding in another area after a period of 5 years
 Selling the product at avery fair price
 Creating job opportunity to people.
 Improving communication system in the area located
1.9.0 ENTRY AND GROWTH STRATEGY
1.9.1 ENTRY STRATEGY
The owner will make business popular through advertisement,use of posters, signpost, radios,
television and journals.He use public functions too such as Harambee and public holidays
such as Labour days.
1.9.2 GROWTH STRATEGY.
Increase in sales volume will lead to expansion of the business through use of retained profit
to purchase more raw materials .The owner will also make more sales by offering free
samples to customers who but in large quantities.
1.9.3 SWOT ANALYSIS.
Strength Weakness Opportunity Threats
Large in size Poor location Modern Water problem
technology
Fair price Inadequate Enough raw Inadequate labour
capital material
Qualified staffs Low payment Inadequate Mismanagement
space for
expansion

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 CHAPTER TWO.

MARKETING PLAN
The business expects one hundred number of customers since it is new in the market.
Thereafter as it grows the number of customers will increase

2.1.0 POTENTIAL CUSTOMERS

The business is open to public and to schools, colleges and institutions. Some of the
institution includes Masinde muliro University of science and Technology, Kakamega high
school, Kakamega hill schoo, Friends Navakholo Secondaryl and others. Even county
government of Kakamega will benefit from the business.

Since the business is new to the market, it will take time for it to be recognized. This
challenge will be overcome by making sure each customers is served with respect and
courtesy The customers will include wholesalers, retailers and the end users.

2.1.1 WHOLESALERS.

They buy goods in large quantities and sell them to the customers. Their features Include,they
buy in bulk,they have more capital,most of them are employed among others.

2.1.2 RETAILERS.

They buy goods relatively in low quantities and sell them to the customers. Their features
Include, aquire products relatively in low quantities,have low amount of money,

2.1.3 END USERS

They buy goods mainly for their own use. Their features Include,buy goods relatively in low
quantities, they have low amount of money,

2.2 MARKER SHARE

The percentage of people using motorcycles in the area is 1000. The business will have to
capture those customers with motorcycle and the institutions. The business will capture
45%of the owner's market share.The customers that will be buying will be the wholesalers,
retailers and the end users as shown in the pie chart below.

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 2.3. COMPETITORS
The business key are, Huruma Motorcycle Spares, Uwezo Motorcycle Spares, and Bidii
Motorcycle Spares. Those competitors some are located few meters next to the business.
While others three kilometers from the business.

The business sells goods and in high quality compared to the competitors whom others sell
one variety of goods..The major competitor of the owner's Business will be Huruma
motorcycle spare due to its large size and enough room for expansion. Below is a table of the
owner's competitors

NAME OF THE STRENGTH WEAKNESS

BUSINESS
Huruma Motorcycle -Most famous business in the -Only one has variety of goods
Spares town sold.
-Has a lot of experience. -has no space for customers
parking there vehicle.
Uwezo Motorcycle -Has more varieties of goods -Still new in the market.
Spares and has enough space for -Not having more experience.
customers parking their
vehicles.
Bidii Motorcycle -Has other branches in -has to be closed sometimes for
Spares different towns. the other branches to operate.

2.4 METHODS OF PROMOTING AND ADVERTISING.

In promoting and advertising, the business will have use the following

Methods;

I) Radio- This will be the most mean of advertisement because it will reach many
customers since radio is cheap and everybody can access to it

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 II) sign posts-the business will ensure that the advertisement is done thrice a week

III) Internet- This includes face book, twitter and instagram. this is another
faster and cheapest means of reaching customers within Kakamega town and the
whole country in general.

IV) word of mouth-meeting customers and telling them where the business is located
and the goods sold

V) The other means of promoting the business is by sales promotion whereby

customer will buy engine oil, plugs, oil filter, and air filter and have his or her
vehicles be services free of charge.

2.5 PRICING STRATEGIES

The business pricing strategies will depend on the following;comparing the competitors
prices hence coming up with a suitable and affordable price for the goods .it will(business)
consider the position of the market, that is how the demand of the consumers. Are their
demands high or low?

2.6 SALES TACTICS

The business will creates awareness of its products to services throughadvertisement. The
most means being radio since it is the most accessed by everycustomer all over the country.
Some other means is the use of business cards. Those cards will be given to each customers
who is served for him or her to take it to another customers who will know where the
business is located

2.7 DISTRIBUTION STRATEGIES

The business will set aside a day every week to have door-to-door selling its products. Other
means of distributing is by brokers whom they will have to sell the products and get there
commission of the products sold.

2.8 SERVING.

The owner's business will ensure that the products are well packed for the customers. Some
products will be wrapped in papers as they wait to be bought by the customers. Such goods

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will include motorcycle tubes, chains, sproket among others.Heavy motorcycle spare such as
engines will be wrapped up in cartons as they wait to be purchased by the customers.

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 CHAPTER THREE

ORGANISATION PLAN
3.1 ORGANIZATION STRUCTURE

Generalmanager

Salesman Salesman Cashier

1 2

The general manager will be the overall director of the business.He will be deticated with
dutiesand responsibilities to assign work to other junior staff members.The salesperson will
be reporting directly to the general manager.The cashier will be reporting directly to the
general manager too on daily performance of the owner's business.The table shows the name,
professional,duties andsalary if the workers of the owner's business.

Name Professional Duties Salary

K.K.Muchana General manager Allocation of duties, 27000
implement business
laws, making
business decision
J.A Wafula Salesperson 1 Selling products, 21600
adjustment of prices,
seeking information
from customers
S.M Kwoba Cashier Receipt of cash, 16000
deposit and
withdrawal of
business money

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 F.W Wangare Salesperson 2 Selling products, 21600
seeking
information from
customers

3.2 .0 KEYMANAGEMENT PERSONELL

3.2.1 GENERAL MANAGER
The business will have the owner as the managing director of the business.He is a Diploma
holder in accountancy with adequate experience from entrepreneurship education.He also
have a three year experience from Huruma Motorcycle Spares.The manager will have the laid
down qualifications and duties:

QUALIFICATIONS
 Have a diploma in community development and social work
 Have a certificate in sales and marketing
 Business management skills
 Must have Entrepreneurial skills

DUTIES AND RESPONSIBILITY

 Motivation to inspire, encourage and make people action oriented.
 Pay salary to the minor.
 The plans and implements for the business.
 Recruit trainees for various positions in the organization.

The manager will plan for the business opportunity this will involve formulating
decisions that will enable the business to opportunities and challenges of the future. Also he
will be in a position to set goals and objectives that the business aims to achieve in the near
future. The manger also will formulate budget to allocate resources necessary to accomplish
objectives.
3.2.2 SALES PERSON
He will have the following qualifications and duties as a salesperson:

QUALIFICATIONS

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  Certificate in sales and marketing.
 Arranging the Fruits and display them.
 Packaging the already bought by the customers.
 Distribution of Fruits to customers who buy in order
 Certificate in sales and marketing.
 good communication skills
 Two years of experience in similar position.
 above 25 years of age

DUTIES AND RESPONSIBILITIES

-There duties are to be giving out the spare parts to the clients in exchange of money

-Inform the general manager about the spare parts that are out of stock.

3.2.3 CASHIER.
The cashier will have the following qualifications and duties:

DUTIES AND RESPONSIBILITIES

 Receive payment from customers

 Sits in budget preparation
 Prepare payroll for business workers
 Minimum CPA III from recognized institution
 Above 25 yrs.Compute literature
 3yrs working experience
QUALIFICATION.

 -Be a holder of diploma in information technology

 -Computer literate

The business will offer incentives such as tea, one day off per week for each employee.
Shopping for each employee once in a month as a sign of appreciation.The business will pay
its general manager 25,000, each sales man 10,000 and the cashier 15,000 owing to the
products of the business.

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 3.3.0 OTHERBUSINESS PERSONNEL
Other personnel who will be involved in various operations are;

3.3.1 SECURITY OFFICERS.

They will have the following qualifications and duties:

DUTIES AND RESPONSIBILITIES.

 To produce security to the business

 To ensure there is harmony and peace
 To give directions to customers and visitors.
 Keep records on what is coming in and going out of the business.
 Keeping the register on timbers and saw dust produced and take report to the
concerned manager.

QUALIFICATIONS

 Must be physically and mentally fit

 Must be well versed with communication skills
 Must have worked well in security firm for more than 5 years.
 Must be strong and energetic.

3.3.2 STOREKEEPER

They will have the following qualifications and duties:

DUTIES AND RESPONSIBILITIES.

 Will be in charge of making orders of timbers.

 Keeps records pertaining the store items
 Control stock in the business.
 Keeps records on of registers of assets and the business.
 Concerns with issuing of items to other workers.
QUALIFICATIONS.

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 Must have a certificate in store management and keeping of records.
 Must have skills in supply management.
 Must have working experience of three years.
 Must be a computer literate since the business has to use it for record keeping.

3.4.0 RECRUITMENT, TRAINING AND PROMOTION OF PERSONNEL

3.4.1 TRAINING.

The business will allow the employee to attend to various seminars on sales
production and management so as to improve on the owner's Business
performance.This will equip the business workers with relevant skills thus much
production in the business.

3.4.2 RECRUITMENT

The methods used will be through, advertisement through posters to potential

applicants, Interviews will be conducted and the qualified applicants will be
considered.

The business will consider advertisement for the following;

a. Duties and responsibility for each position.

b. Qualifications needed for each position.
c. Dateline
3.4.3 EMPLOYEE PERFORMANCE AND PROMOTIONAL
METHODS
This will be done according to how one performs his duties .If one shows
potential skills and experience on working in a certain area,he will be
automatically be promoted effectively.

3.5 REMUNERATION AND INCENTIVES FOR PERSONNEL

The business will have to provide an allowance salary to each employee and other
personnel

person No. Basic salary allowance Gross salary

Manager 1 25000 2000 27000
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 Sales men 2 20000 1600 21600
cashier 1 15000 1000 16000
Store keeper 1 8000 700 8700
Security man 1 5000 300 5300
mechanic 1 6000 500 6500
Total 7 79000 6100 85100

3.6 PERMIT, LICENCE AND BY-LAWS

The business will require permit and license from the county government of Kakamega for it
to operate legally. This will cost the business Ksh 25000 to serve the whole year. This will
also be registered under the laws of Kenya

3.7.0 SUPPORTIVE SERVICES.

3.7.1 BANKING SERVICES
The business will require banking services since it is safe ways of keeping money and its
activities to all business. The entrepreneur requires its cash to be deposited in Kenya
commercial bank. It charges interest as a lower rate which favor the growth of small business.
The interest earned in this bank after depositing money is at a fair rate of 15% of the cash
deposited each year.

It's address will be:

Kenya Commercial Bank,

P.O BOX 123,,

Kakamega

3.7.2 POSTAL SERVICES

It is very important service to many organization since without post office, the
communication might not be effective and for success of any business enterprise there must
be communication.

The post office services of the business will be obtained from Navakholo Post Office. The
business letters mailing services will be sending and receiving through this office. The

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management preferred post office because of the reliability and nearness to the area of
operation.The address of the owner's business will be:

Bidii Motorcycle Spares,

P.O. BOX 45,

Navakholo.

3.7.3 LEGAL SERVICES

The business will require services of a lawyer in any activity that the owner might encounter.
The business shall get services from Musiege and Company Advocates in Kakamega.The
address will be:

Musiege and Company Advocates,

P.O BOX 345,

Kakamega.

3.7.4 SECURITY SERVICES.

The business shall require security officers for protection.The services shall be provided by
The Pride Kings Security Services.The address will be:

The Pride Kings Security,

P.O BOX 567,

Kakamega.

3.7.5 INSURANCESERVICES
ThebusinesswillbeinsuredagainsttheftandfireinanInsuranceCompanyKakamega.Theentrepren
eurwillbecompensatedincaseofsuchcircumstanceshappen.Itwillprovideservicestoitscustomers
verywell.Thelifeofemployeesisinsuredinthiscompanybyobtaininglifeinsurancepolicywhichals
obooststhemoraleasworkers.The address will be,

Madison Insurance company,

P.O BOX 789,

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Kakamega.

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 CHAPTER FOUR
OPERATION PLAN.
4.1 PLAN PRODUCTION FACILITIES AND EQUIPMENTS

The business will need two bicycles and one motor bike, one computer for the
production activities. The business will also need five chairs.

Machinery/equipment quantity
Bicycle 2
Motor bike 1
Chairs 5
Computer/laptop 1
The above machinery /equipment will be bought at a totalcost of Ksh 109000 and will be
supplied respectively by the company that manufactured them. The business will set aside
Ksh 5000 for bicycle and motor bike service and maintenance. The spare part will be
available locally the business have a future plan for purchasing a pressing machine once the
business has been widely known and the production id very high.

Item quantity Cost (Ksh) supplier Total cost

Laptop 1 20000 Toshiba 20000
Chairs 5 600 Kenpoly 3000
Motorbike 1 50000 TVS 50000
Bicycle 2 18000 Buffalo 36000
Total 109000
4.2.0 PRODUCTION STRATEGY
The business will lay down several strategies to be followed and this will ensure that efficient
and effective running of the business i.e. buying of materials needed monthly. These include;

 engine oil
 oil filter
 air filter
 spark plugs
 break lining
 brakefluid

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The business will also purchase two bicycles and one motor bike for easy transportation
goods to other sellers. The business will also purchase five chairs. The business will also
apply for electricity from the Kenya power and lightening company limited, get permit from
county government of Kakamega.

4.2.1 MONTHLY MATERIAL REQUIRED.

Name of goods quantity supplier Cost

Engine oil 500 liters Total Kenya limited 150000
Oil filter 100 pieces Total Kenya limited 40000
Air filter 100pieces Total Kenya limited 25000
Spark plugs 400 pieces NGK 60000
Brake pads 200 pairs ASIMCO 30000
Brake lining 200pairs ASIMCO 240000
Brake fluid 100litre Total Kenya limited 20000
Bicycle 2 buffalo company limited 36000
Motor bike 1 TVS 50000
Chairs 5 KENPOLLY 3000
Total 654000

4.2.2 MONTHLY LABOUR COST REQUIRED

personnel no. roles monthly cost Ksh

Manager 1 Managing business 27000
Sales men 2 Selling the goods 21000
Cashier 1 Financing 16000
Store keeper 1 In charge of stores 8700
Security man 1 Offer security 5300
Mechanic 1 Assisting client 6300
Total 84300

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4.2.3 PRELIMINARY PRODUCTION

Expenditure Cost Ksh

Electricity 5000
Permit/licensce 25000
Transport 20000
Total 50000

4.2.4 TOTAL PRODUCTION COST

General expenditure Cost Ksh

Material and goods 654000
Labour cost 84300
Preliminary production 50000
Total 788300
4.3 PRODUCTION PROCESSES
For the business to succeed in production, it must have to do the following;

 Delivery of goods to customer’s right on time.

 The goods to be of high quality

There are some other factors that may be likely affect the production process i.e. external
factors and internal factors;

Internal factors may be caused by customers who come to buy goods on debt hence upon
paying, they delay to pay on time hence there is no enough money to purchase the goods that
have run out of stock

External factors may be caused by poor road infrastructure leading also to goods being
delayed. Worn out bicycles and motorbike will also hinder the delivery of goods on time.

To overcome these factors, the business has set aside Ksh 5000 monthly for bicycles and
motorbike repair and services

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 4.4.0 GOVERNMENT REGULATIONS
The business will be affected by government regulations since the business will not be able to
run without getting a permit and license

The permit and the license will be found from the Kakamega county government at the
beginning of the month and they will be renewed automatically once they are expired

4.4.1 HEALTH REGULATIONS

The employees will have a regular medical check-up from qualified doctors so as to prevent
the spread of diseases.

4.4.2 SAFETY REGULATIONS.

The business will be installed with the fire extinguisher as one of the measures to keep the
employees safe. Each section of the owner's business will be installed with a fire extinguisher
too. The employees will be educated on how to use this fire extinguisher.

4.4.3 ENVIRONMENTAL REGULATIONS

The business owner will locate place to dispose off wastes from the business. Compost pits
will be dug to facilitate this act of waste disposal as this will call for maximum operation of
the owner's business.

4.4.4 TRADE MARKS, COPYRIGHT

Bidii Motorcycle Spares will have a computer code and a painting that will distinguish it
from other businesses in the area.The business will require a permit from the municipal
council of Kakamega. The business will also acquire a local government licence from the
registrar of business in the area.

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 CHAPTER FIVE.

5.0 FINANCIAL PLANNING

The business will have to spend some amount of money on certain items before
operating officially.

item Amount
License 25000
Insurance 50000
Advertisement 2500
Premises 15000
Electricity 3000
total 95500

5.1 PRE-OPERATIONAL COSTS

item amount
Premise 15000
Insurance 50000
Transport 30000
License 25000
total 120000

5.2 WORKING CAPITAL

Below is the analysis of the working capital.

Current asset Year one(Ksh) Year two (ksh0

Stock 100000 90000
Debtors 50000 52000
Cash in hand 20000 15000
Cash in bank 80000 60000
Total 250000 217000
Current liability

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Creditors 40000 57000
Tax 10000 10000
Overdraft 10000 -
Total 60000 67000
Working capital 140000 200000

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 5.3.0 CASH-FLOW1911 STATEMENTS 2022

Jan Feb. Mar April May June Jul Aug Sep Oct Nov Dec TOTAL

Cash inflow receipt

Opening cash 80000 79000 72000 75000 80000 68000 72000 65000 70000 73000 75000 81000 890000
Cash sales 230100 230100 230100 230100 230100 230100 230100 230100 230100 230100 230100 230100 2761200
Receipt on debtors 58000 55000 48000 50000 60000 57000 55000 49000 60000 56000 60000 6000 668000
Loan received 250000 250000
Total cash inflow 618100 364100 350100 355100 370100 355100 357100 344100 360100 359100 365100 371100 4569200
Cash
outflow/payment
Purchase in cash 9700 9700 9700 9700 9700 9700 9700 9700 9700 9700 9700 9700 116400
Salaries 85100 85100 85100 85100 85100 85100 85100 85100 85100 85100 85100 85100 170200
Transport 20000 10000 15000 10000 10000 12000 10000 10000 10000 12000 11000 10000 141000
Electricity 1000 1000 1000 1000 1000 800 700 500 700 500 500 500 9200
Insurance 50000 50000
Loan repayment 200000 200000 200000 200000 200000 200000 200000 200000 200000 200000 200000 200000 2400000
Taxes and 7000 7500 8000 6000 8000 7500 7800 6500 7000 8500 8000 7000 88800
advertisement
Telephone c 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Total cash outflow 375800 134300 319800 312800 314800 316100 134300 132800 313500 316800 315800 3o13800 3297600
Net cash balance 244300 229800 30300 42300 55300 39000 222800 211300 46600 42300 49800 57800 1271600

27
 5.3.1 CASH FLOW STATEMENT 2023
Jan Feb. Mar April May June Jul Aug Sep Oct Nov Dec TOTAL

Cashinflowreceipt
Openingcash 50000 29000 62000 75000 60000 68000 72000 65000 70000 73000 75000 81000 290000
Cashsales 63010 23010 23010 23010 23010 23010 23010 23010 23010 23010 23010 230100 276120
0 0 0 0 0 0 0 0 0 0 0
Receiptondebtors 58000 55000 48000 50000 60000 57000 55000 39000 60000 56000 60000 6000 668000
Loanreceived 25000 250000
0
Totalcashinflow 61810 36410 35010 35510 37010 35510 35710 34410 36010 35910 36510 371100 456920
0 0 0 0 0 0 0 0 0 0 0 0
Cashoutflow/payment
Purchaseincash 9700 9700 9700 9700 9700 9700 9700 9700 9700 9700 9700 9700 116400
Salaries 55100 85100 85100 85100 85100 85100 85100 85100 85100 85100 85100 85100 170200
Transport 20000 10000 15000 10000 10000 12000 10000 10000 10000 12000 11000 10000 141000
Electricity 1000 1000 1000 1000 1000 800 700 500 700 500 500 500 9200
Insurance 50000 50000
Loanrepayment 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 200000 240000
0 0 0 0 0 0 0 0 0 0 0 0
Taxesandadvertiseme 7000 7500 8000 6000 8000 7500 7800 6500 7000 8500 8000 7000 88800
nt
Telephonec 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Totalcashoutflow 37580 13430 31980 31240 31480 31610 13430 13280 31350 31680 31580 3o1380 329760
0 0 0 0 0 0 0 0 0 0 0 0 0
Netcashbalance 54830 22980 30300 42300 55300 39000 22280 21130 46600 42300 49800 57800 627160
0 0 0 0 0

28
5.4 PROJECTED INCOME STATEMENT TRADING PROFIT AND LOSS
ACCOUNT
The table bellows show-trading project and loss account for the good point auto spare
shop for the year ending 31st December 2022

Ending 31st December 2022

Ksh
Sales 2761200
Less cost of sells 116400
Gross profit 2644800
Less expenses -
Salaries 170200
Electricity 9200
Insurance 50000
Telephone 12000
Loan repayment 200000
Net profit before tax 2203400
Net profit after tax 16% 1850856
Ending 31st December 2023

Sales 2954400
Less cost of sells 120000
Gross profit 2834400
Less expenses
Salaries 170200
Electricity 16600
Insurance 50000
Telephone 12000
Net profit before tax 2585600
Net profit after tax 16 % 2171904

29
 6.5. CONSUMER BALANCE SHEET
The following table shows Bidii Motorcycle Spares 2022

Balancesheet at 31st Dec 2022

Fixed asset Long term liability

Machine and equipment 100000 Capital 140000
Installation 50000 Bank loan 200000
Current asset Short term liability
Debtors 50000 Creditors 57000
Stock 100000 Tax 10000
Cash in hand 20000 Overdraft 10000
Cash in bank 80000

400000 400000
Balance sheet as at 31st Dec 2023

Fixed asset Long term liability

Machine and equipment 500000 Capital 200000

Current asset Short term liability

Debtors 52000 Creditors 57000

Stock 90000 Tax 10000

Cash in hand 15000

Cash in bank 60000

267000 267000

30
 5.6 BREAKING EVEN ANALYSIS

This is an attempt to determine the level of sales at which business does not get profit
or loss. It is the point where the sales only cover fixed expenses and once the breaking
point is reached any extra sale made gives a profit

Contribution margin =sales – total variable cost

Year 2022

2761200 – 239000 = 2522200

(Contribution margin/sales) x 100

(2522200/2761200) x 100 = 91.0%

6.7. EXPECTED PROFITABILITY RATIOS

This help the businessperson in interpreting the information contained in the financial
statements for making important decisions

Gross profit margin

Year 2022

(Gross profit/ sales) x 100

(1271600/2761200) x 100 = 41.1%

Gross profit margin

Year profit margin

Year 2023

(Gross profit / sales) x 100

(2824570 / 2954400) x 100 = 95.6%

31
 5.8 DESIRED FINANCING

Amount of money required at the start of the venture

Amount (Ksh)
Owner contribution 500000
Banking loans 250000
Family and friends 100000
total 850000

5.9 PROPOSED CAPITALIZATION

The table below shows how the business will financed

Amount (Ksh)
Owner contribution 500000
Bank loan 250000
Family friends 100000
Total 850000
,

32
 APPENDIX 1
BUSINESS LOCATION

MARKET STAGE

NAVAKWOLO

33