BUSINESS PLAN FOR UPENDO POULTRY FARM

LILIAN NZEMBI
INDEX No: 1151010463

A BUSINESS PLAN PROJECT PROPOSAL SUBMITTED TO

THE KENYA NATIONAL EXAMINATION COUNCIL IN
PARTIAL FULFILLMENT OF THE REQUIREMENT FOR
THE AWARD OF CERTIFICATE IN SOCIAL WORK

NOVEMBER, 2020

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 DECLARATION
Declaration by student
I declare that this business plan is my original work and has not been presented for a
certificate in any college.

Student Name: Lilian Nzembi Masinga

Sign: …………………….
Date: …………………….

Declaration by Supervisor
This research project has been submitted with my approval as college supervisor
Name: John Luseta
Sign: …………………….
Date: …………………….

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 DEDICATION
This work is dedicated to my family members and my fellow trainees who overwhelmingly
supported me during the study duration of the business plan writing.

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 ACKNOWLEDGEMENT
My foremost gratitude is to the Almighty God that through His amazing grace I was able to
undertake and complete this study. To Him I give honor and glory.
I would like to thank my supervisor Mr. John Luseta for the inspiration and assistance in
completing this research project. I feel greatly indebted to my colleagues for their valuable
comments and suggestions that encouraged me during the times in the course of my study.
I also acknowledge the authors of various books, journals, magazines, newspapers and
internet sites that have contributed to come up with reports of different kinds.

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 TABLE OF CONTENTS
DECLARATION......................................................................................................................ii
DEDICATION.........................................................................................................................iii
ACKNOWLEDGEMENT.......................................................................................................iv
TABLE OF CONTENTS..........................................................................................................v
CHAPTER ONE......................................................................................................................1
1.0 EXECUTIVE SUMMARY.................................................................................................1
1.1 Business Description...........................................................................................................1
1.2 Opportunity and Entry Strategy..........................................................................................1
1.3 Target Market......................................................................................................................1
1.4 Competitive Advantage.......................................................................................................1
1.5 Management Team..............................................................................................................1
1.6 Financial Plan.....................................................................................................................2
1.7 Overall Schedule.................................................................................................................2
CHAPTER TWO....................................................................................................................3
2.0 BUSINESS DESCRIPTION...............................................................................................3
2.1 Business Name....................................................................................................................3
2.2 Business Location and Address...........................................................................................3
2.2.1 Map of business location..................................................................................................4
2.3 Form of business.................................................................................................................4
2.4 Type of business..................................................................................................................4
2.5 Products and services..........................................................................................................5
2.5.1 Product.............................................................................................................................5
2.5.2 Services............................................................................................................................5
2.6 Justification of Business opportunity..................................................................................5
2.7 Industry...............................................................................................................................5
2.7.1 Characteristics of Industry...............................................................................................5
2.7.2 Industrial Trend................................................................................................................6
2.8 Business Goals....................................................................................................................6
2.8.1 Short term goals...............................................................................................................6
2.8.2 Long Term Goals.............................................................................................................6
CHAPTER THREE................................................................................................................7
3.0 MARKETING PLAN.........................................................................................................7
3.1 Customer............................................................................................................................7
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3.1.1 Customers Characteristics................................................................................................7
3.2 Market Share.......................................................................................................................7
3.3 Competition.........................................................................................................................8
3.3.1 Comparison of Competitors............................................................................................8
3.3.2 Swot Analysis..................................................................................................................8
3.4 Advertising and promotion................................................................................................9
3.4.1 Advertising......................................................................................................................9
3.4.2 Promotion........................................................................................................................9
3.5 Pricing Strategy..................................................................................................................9
3.5.1 Factors to Consider Pricing..............................................................................................9
3.5.2 Pricing Techniques........................................................................................................10
3.6 Sales Tactics.....................................................................................................................10
3.7 Distribution Strategy.........................................................................................................10
CHAPTER FOUR.................................................................................................................11
4.0 MANAGEMENT PLAN..................................................................................................11
4.1 Organization Structure.....................................................................................................11
4.2 Key Personnel...................................................................................................................11
4.3 Other Personnel.................................................................................................................12
4.4 Recruitment, Training and Promotion..............................................................................13
4.4.1 Recruitment...................................................................................................................13
4.4.2 Training.........................................................................................................................13
4.4.3 Promotion.......................................................................................................................13
4.5 Remuneration and Incentives...........................................................................................14
4.6 License and Permit .................................................................................................14
4.7 Supporting Services..........................................................................................................14
CHAPTER FIVE...................................................................................................................15
5.0 PRODUCTION PLAN.....................................................................................................15
5.1 Production Facilities and Capacity...................................................................................15
5.1.1 Machine and Equipment.................................................................................................15
5.1.2 Repair and Maintenance.................................................................................................15
5.1.3 Workshop Layout..........................................................................................................16
5.2 Production Strategy..........................................................................................................16
5.2.1 Monthly Material Requirements....................................................................................16
5.2.2 Monthly Labour Requirements.....................................................................................17
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5.2.3 Monthly Overhead Expense...........................................................................................17
5.3 Production Design............................................................................................................17
5.3.1 Production Process........................................................................................................17
5.3.2 Factors Affecting Production.........................................................................................17
5.3.3 How to Minimize Factors Affecting Production...........................................................18
5.4 Regulation Affecting Operation........................................................................................18
CHAPTER SIX......................................................................................................................19
6.0 FINANCIAL PLAN.........................................................................................................19
6.1 Pre Operational Cost.........................................................................................................19
Table6:1 pre-operational cost..................................................................................................19
6.2 Working Capital................................................................................................................19
6.3 Projected cash flow statement year one............................................................................20

6.3.1 Projected Cash Flow Year 2022.....................................................................................20

6.3.2 Projected Cash Flow For Year 2023..............................................................................21

6.3.3 Projected Cash flow For Year 2024...............................................................................22

6.4 Pro-Forma Income Statements..........................................................................................23

6.4.1 Pro-Forma Balance Sheet...............................................................................................24

6.5 Break Even Point...............................................................................................................24

6.6 Expected Profitability Ratio..............................................................................................26
6.6.1 Gross Profit Margin Ratio..............................................................................................26
6.7 Desired Financial Plan......................................................................................................28
6.8 Proposed Capitalization.....................................................................................................28

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 CHAPTER ONE
1.0 EXECUTIVE SUMMARY
1.1 Business Description
The business name will be Upendo poultry farm. It will be a sole proprietorship business
owned by Lilian Nzembi from Kilifi County. The owner is pursuing certificate in information
communication technology. The products offered will be eggs and chicken meat.

1.2 Opportunity and Entry Strategy

Upendo poultry being a high demand poultry farm will attract most people who are
travelling, teachers, doctors and local people around the community.
The farm will offer best quality of products and standard services so as to meet the needs and
demands of all customers.
To penetrate and gain more customers there shall be pre advertisement through a word of
mouth, posters, and personal selling’s on the area and schools. The strategy of poultry farm
will be increasing more variety of hens and working hours will be increased depending on the
demand.

1.3 Target Market

Upendo poultry farm will be offering products and services to local people around the
community. Majority of the people are self-employed and they will purchase the products in
small quantities.
All the people in the area need the products despite of their age the business target market
population share expected to be served in 50% of the whole market.

1.4 Competitive Advantage

The area in which Upendo poultry farm is located shall capture all local people around Kilifi
town.

1.5 Management Team

The poultry farm shall be led by the manager and his/ her employees the employees will
include accountant, 2 casual workers and storekeeper. The manager is the overall boss and
will bear the business risks and liabilities. The clerk should collect count and disburse money,
do basic book keeping and complete banking transactions. The driver will be in charge of the
car in Upendo poultry farm.
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1.6 Financial Plan
The business will have a startup capital of Kshs 300,000 be obtained from personal savings
relatives and also a bank loan. The capital is sufficient to start up to operate the business. A
project cash flow shall be prepared on monthly basis for the year and the profits will be used
for the expansion of the business.

1.7 Overall Schedule

Event Expected start date Expected date of Competition

Business registration 20th Jan 2017 20th may 2017

Machinery 20th July 2017 30th July 2017
Equipment’s
Installation

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 CHAPTER TWO
2.0 BUSINESS DESCRIPTION
2.1 Business Name
The business name will be Upendo Poultry farm. The name was chosen because of the
Upendo modern nursery and primary school thus makes it easy to remember and attract most
people who are travelling using the highway, teachers and people around the community. The
business will require a startup capital of 300,000 Kshs.
Source Amount Percentage %
Kenya Women Finance 50,000 25%
Parents 50,000 25%
Chonga Darius 50,000 25%
Friends 50,000 25%
Mr. Omondi 50,000 25%
Personal Savings 50,000 25%
TOTAL 300,000 100%

2.2 Business Location and Address

The business will be located at Kilifi highway near Upendo modern Nursery and primary
school next to Methodist church. The business will experience good road network good road
networks and electricity

The business will be as follows;

Upendo Poultry
Farm
P.O. Box 105
Kilifi
Tel: 0702342056
Emali: nzembililian@gmail.com

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2.2.1 Map of business location

2.3 Form of business

The poultry farm shall be a sole trader business owned by Nzembi Lilian from Kilifi. The
profits will belong to Nzembi who will be able to make decisions with no objections from.
Nzembi will have direct contact with the customers to know their likes and dislikes.

2.4 Type of business

The type of business shall be a product based. It will mostly deal with eggs and chicken meat.
The business will run out its activities on September 2021 where all the funds will have been
collected and a good budget made to avoid extra expenses.

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2.5 Products and services
2.5.1 Product
The products offered will be eggs and chicken meat. The equipment used in production will
be of highly standards quality. The eggs will be sorted and graded before they are marked.
This is to ensure they are big enough and free from patches or colours. The prices shall be
affordable for all products. Quality hens will be on the market and hygiene will be highly
observed to prevent disease and parasites.

2.5.2 Services
The services shall be slaughtering, plucking feathers and packaging in Khaki bags.. for the
customers who will require live chicken shall be put in boxes which have ventilation to
prevent them from suffocation. The eggs will be packed in trays consisting of 30 eggs and
handled with care to avoid breaking down. Services shall be rendered by trained employees
and also transport services shall be offered at a bonus price for those who shall purchase in
large quantities.

2.6 Justification of Business opportunity

The poultry farm shall attract most people who are teacher, drivers, believers of Methodist
church and local people around the community. The farm shall offer products and services of
high quality so as to meet the needs of customers. The business shall create job opportunities
for the community to improve their life standard.

2.7 Industry
Poultry farm belongs to live has a lot of firms operating in different outlets. The livestock and
veterinary industry helps poultry farmers by offering seminars and training on how to rear
various animals such as poultry.

2.7.1 Characteristics of Industry

Simple technology shall be used compared to large poultry farms. The startup capital shall
depend on the size of the poultry farm and its location. The number of employees shall
depend on the number of customers to be served at a time, seasonal factors when schools
open there is a high demand of the products since the school usually purchase those products
for students to supplement their diet.

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2.7.2 Industrial Trend
Due to the nearest school, church and the poultry being in a highway, most people can see the
poultry farm where it is located thus it will raise the demand through people who will
purchase the products offered. This will increase the sales volume. The quality of eggs will
change the people living standards since they are perfectly safe for their health and one can
purchase even 3 eggs per day.

2.8 Business Goals

2.8.1 Short term goals
i. Promotion to employees for them to have a morale in the business enterprise by
January 2022
ii. Get a double profit from the startup capital by December 2021
iii. Recruit 10 more workers who will do self delivery services to the homes of the
frequent customers
iv. Produce high quality products and meet client demands.
2.8.2 Long Term Goals
i. Open 10 branches within Kilifi region in the year 2030
ii. Be the premier commercial supplier of indigenous day old chicks in Kilifi County
iii. Be a guiding and counseling mistress offering consultancy in poultry breeding and
management

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 CHAPTER THREE
3.0 MARKETING PLAN
3.1 Customer
Upendo poultry farm will be offering products to the local people around, teachers of Upendo
nursery and primary school, believers of the Methodist church and drivers. Majority of the
people around Upendo poultry farm are self-employed and they will purchase the products in
small quantities.
3.1.1 Customers Characteristics
Local people
They like cheap things that satisfy their needs like chicken legs, neck, head and intestines.
Teachers
They like egg, chicken meat and are frequently buyers who are willing to pay any price.
Believers
They mostly buy eggs and chicken meat on Sundays after their church services. They usually
purchase eggs in large quantities since they buy once in a week.
Drivers
They are within Upendo nursery and primary school. Others pass-by using the Upendo
highway. They mostly like eggs and live chickens.

3.2 Market Share

All the people around the area need the products despite of their age, the business will target
on the sales made per day. Upendo poultry farm has three competitors namely Kibarani
poultry farm, Charowamwae poultry and Mephi poultry farm.

No Competitor Sales per day Percentage

1 Chaorowamae poultry farm 20000 34.46%
2 Kibarani poultry farm 15000 28.85%
3 Mephi poultry farm 10000 19.23%
4 Upendo poultry farm 7000 13.46%
Total 52000 100%

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 Chart Title
Upendo poultry farm
14%

Chaoro wa mae poultry farm

36%
Mephi poultry farm
20%

Kibarani poultry farm

30%

Upendo poultry market share

3.3 Competition
The key competitors faced by Upendo poultry farm are Charowamae poultry, Kibarani
poultry and Mephi poultry farm.
Charowamae poultry farm
It is owned by a man who is famous to the area thus the sales around his poultry are high.
Mephi poultry farm
It is owned by the director of the Mephi hospital and most patients purchase eggs for their
breakfast and during every meal in the poultry.
Kibarani poultry farm
It is sponsored by the Kibarani childrens home hence most eggs are bought and distributed to
various children’s home.
3.3.1 Comparison of Competitors
Due to high rate of competition Upendo poultry farm will make sure it provide a wide variety
of products and offer fair services to the customers with no selective basis. There will be
affordable prices and good proper hygiene.
3.3.2 SWOT Analysis
Strength
- Affordable prices
- Good quality eggs
- Good source of advertising the business
- Good road networks to transport products

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Weakness
- Poor services
- Poor hygiene
- Poor handling of eggs
Opportunities
- Improved technology for good production
- Increased production
Threats
- Competition
- Difficult in obtaining labour
3.4 Advertising and promotion
3.4.1 Advertising
Advertising is a process of creating awareness of the product through the media.
Advertisement will be done through posters, word of mouth, social media and local station.
The advertisement will be done for four months and estimated cost is Ksh 5500. People will
be hired to advertise and paid a commission while the employees will be busy running the
business.
3.4.2 Promotion
Promotion means spreading information about a product, service or issue. Promotion will be
done through price cuts where by Upendo poultry will lower price, premium, and competition
though beating other competitors hence increasing more sales leading to higher profits.
The promotion of the business will also be done during launching of various projects and
trade shows.

3.5 Pricing Strategy

Pricing is the process whereby a business sets the price at which it will sell it products and
services.
3.5.1 Factors to Consider Pricing
- Cost of feeding and housing chickens are high
- Competitors
- Government and legal regulations
- Utility and demand
- Type of customers

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3.5.2 Pricing Techniques
- Promotional pricing
- Use of odd pricing
- Variable pricing
3.6 Sales Tactics
The Upendo Poultry will sale its products through personal selling methods this is by selling
its products direct to customers. This is enhanced by coming into direct contact with the
customers and also persuasions, offering quality services and products and at reasonable
prices.
The customers can easily persuade the manager in order to lower the prices of goods and
services if they are purchasing bulk.
3.7 Distribution Strategy
Upendo poultry farm will distribute its products and services through salesmen and women
who will aid in the distribution of the products to retailers and customers who will purchase
in large quantities. Upendo poultry farm will use road transport as means of transport with its
cost estimated to be Ksh. 6,000. The roads in this area are not much good hence great care
should be taken during transportation to minimize loses

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 CHAPTER FOUR
4.0 MANAGEMENT PLAN
4.1 Organization Structure
The poultry farm shall be run by the manager, clerk, driver and cleaner. The following is the
organizational hierarchy of upendo poultry farm.

Manager

Accountant Store Keeper

2 Casual
workers
4.2 Key Personnel
Manager
The manager is the overall boss who will take the risk of the business and liabilities. She will
enjoy the profits and bear losses.
Duties and responsibilities
Manager should;
- Be responsible for checking the records and making banking transactions
- Ensure timed salary for the staff
- Supervise lead guide and support employees
- Facilitate collaboration
- Monitor cash movement on daily basis
- Control purchase and spending
Qualifications and qualities
For one to be considered for the position as a manager must have a certificate in social work.
She should also have experience concerning the field of poultry for at least 6 months. The
manager should be able to communicate well in both language Kiswahili and English.

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Accountant
Duties and responsibilities
- Collect, count and disburse money
- Do basic book keeping and complete banking transactions
- Answer telephones, direct calls and messages concerning Upendo poultry farm
- Disseminate or explain information, take orders and take complaints
- Compile, copy, sort and file records of office activities and business transactions
Qualifications and qualities
- Must have certificate in business administration, computer literate and excellent
communication skills
Casual Worker
The collect eggs, feed the chicken, and clean Upendo poultry farm
Duties and responsibilities
- Should be a holder of valid driving license
- Should have good communication skills and at least one year road experience
Store Keeper
Duties and responsibilities
The store keeper will be responsible storing the eggs and book keeping on the farm
equipments

Qualifications and qualities

Should have general knowledge in store keeping

4.3 Other Personnel

Slaughter man
Duties and responsibilities
Involved in initial cutting, opening the major body cavities to remove the entrails
Qualifications
Be sound minded
Aged 25-40
At least one year experience on the field of slaughtering

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4.4 Recruitment, Training and Promotion
4.4.1 Recruitment
Recruitment is the action of enlisting new people in an organization. Announces will be made
during church services chief barazas and at market places, concerning the positions ie
cleaner, clerk and a driver through posters and the interested persons shall apply and send
their applications to the manager. The manager will sort the applications and successful
candidates will be shortlisted. An interview will be done and employment will be given to the
most suitable candidate.
4.4.2 Training
Action of teaching a person about a particular skill through practice and instruction over a
period of time. The training program will be on job basis and will be aimed at improving
employees knowledge, skills and business operation in every one year. Upendo poultry farm
will be attending seminars and be taught on how to run the business effectively. The will be
further studies for the employees who will be given an off in order to attend classes
concerning their field of work.
4.4.3 Promotion
It is the ascension of an employee given higher ranks and it involves increase in salaries,
rank, responsibilities and benefits, employees will be promoted on basis of performance
output, competition, willingness towards work to achieve the set goals and objectives.
Factors to consider
i. Motivation
Promotion will aim to motivate employees thus increasing sales
ii. Performance
Good performance of work by the employees thus rewarded
iii. Qualifications
Employees who will go for further studies will be given promotions due to their
qualifications on the job.
iv. Years at position
Employee’s salary will be increased after one year of job in Upendo poultry farm.
v. Death
In case of death an interview will be conducted in order to fill the gap missing
member.
vi. Resignation and dismissal

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 The case of resignation I will always lead to an interview of obtaining new
employees and dismissal with letter explain the reasons of termination.
vii. Retire
Employees will be free to leave whenever they feel like and go for retirement.

4.5 Remuneration and Incentives

Remuneration is the process of identifying the salary of employees
No Position Monthly salary
1 Manager 12000
2 Accountant 7000
3 Store Keeper 5000
4 Casual workers 3500
Total 27500

Incentives
The items that are given to employees to work hard. Staff will renew their uniform free and
lunch shall be provided
There will be an off on specific days

4.6 License and Permit

Upendo poultry shall obtain its license from municipal council at usual rates of Ksh 3500 per
year. The license shall be obtained from Kilifi this is under trading license act cap 497. There
will be weight and measures act cap 513 which annual checks weighing and standardize
them. Public health act cap 422 health certificate license will be obtained from Kilifi health
organization offices at rate of Ksh.3, 000

4.7 Supporting Services

The business will acquire services from the following institutions, banking services from
Kenya commercial bank KCB in Kilifi
Insurance services will be offered against fire and theft. The business will be receiving and
posting mails through postal office in Kilifi.

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 CHAPTER FIVE
5.0 PRODUCTION PLAN
5.1 Production Facilities and Capacity
5.1.1 Machine and Equipment
No Item Cost Quantity Total
1 Incubator 11500 1 pcs 11500
2 Poultry feeders 450 15 pcs 6750
3 Poultry waters 450 10pcs 4500
4 Knife sterilizer 500 1pcs 500
5 Lung remover 650 2pcs 1300
6 Poultry netting 300 5pcs 1500
7 Nest boxes 300 20pcs 6000
8 Shrink bags 200 20pcs 4000
9 Khaki bags 200 20pcs 4000
10 Vacuum bags 200 3 pcs 600
11 Nest pads 250 1 dozen 250
12 Fowl catcher 380 1pcs 380
13 Bag sealer 400 1 dozen 400
14 Egg brush 200 1pcs 200
15 Pinning knives 250 3pcs 750
16 Egg washer 250 1pcs 250
17 Air compressor 200 1pcs 200
18 3 butcher knives 250 3pcs 750
19 Egg basket 280 2pcs 560
20 Generator 35000 1pcs 35000
Total 79390

The total cost of Upendo poultry farm is ksh.79360

5.1.2 Repair and Maintenance
Maintenance and repair of farm equipment will be done after three months by local juakali
traders at kilifi. The spare parts will be supplied by charowamae auto spares and the cost is
estimated to be ksh.6000 per year.
5.1.3 Workshop Layout
The manager at Upendo poultry farm will own the ground on which the farm shall be
constructed. The following is the proposed ground plan of the farm.
Poultry structure

Store Manager Clerk office Gents

office
Ladies

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 Exit
Entry

5.2 Production Strategy

5.2.1 Monthly Material Requirements
No Item Qty Cost Total
1 Poultry beddings 2 sacks 50 100
2 Poultry beakers 5 pcs 200 1000
3 Poultry waters 20 pcs 450 9000
4 Shrink bags 1 dozen 200 200
5 Khaki bags 1 dozen 200 200
6 Vacuum bags 1 dozen 200 200
7 Chicken feed 33 sacks 2000 6000
8 Poultry feeders 20pcs 450 9000
9 Egg washers powder 5kg 200 1000
Total 27500

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5.2.2 Monthly Labour Requirements
No Position Salary
1 Manager 12000
2 Clerk 7000
3 Driver 5000
4 Cleaner 3500
Total 27500

5.2.3 Monthly Overhead Expense

Item Cost
Telephone 1500
Electricity 2000
Water bill 500
Transport 2000
Postage 200
Stationary 2000
Total 8200

5.3 Production Design

5.3.1 Production Process
The chicken will be fed for 6 months using both artificial feeds and green fodder to increase
the yield and productivity of the chicken after the 6 months. The brooder will be well
designed to prevent the chicken from not laying the eggs, the house will be warmly covered
to prevent the chicken not to die from cold harsh weather. After 8 months the chicken will be
ready for egg production and for broilers (meat) after six weeks of rearing the broilers meat
will be ready for production.
5.3.2 Factors Affecting Production
Cost of feeds: At time the cost of feed fluctuates delaying farmers from buying the feeds
Harsh weather: Broilers and layers chicken are always affects by harsh weather whereby
when it is very cold layers wont lay eggs and broiler cease to gain weight.
Water shortage: water will be relied as the major component of production will not continue
effectively as water is the most important in food production

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5.3.3 How to Minimize Factors Affecting Production
Budget for your chicken feed early enough to avoid food shortage for your poultry
Build well covered houses for poultry
Water shortage: design water efficient house to store water and use closed nipple drinkers
systems that determine the water flow rate. This will help to ensure enough water for the
birds.
5.4 Regulation Affecting Operation
The business shall have trade license act cap 407 giving permit of running upendo poultry
farm. Income tax act cap 407 will be paid to the government every month to obey law of the
government.

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 CHAPTER SIX
6.0 FINANCIAL PLAN
6.1 Pre Operational Cost
The table below shows the preoperational cost of business;
Table6:1 pre-operational cost
Electricity deposit 2000
Telephone deposit 1500
License 5400
Water bill 500
Stationary 2000
Postage 600
Equipment 72920
Installation cost 6000
Total 92920

6.2 Working Capital

The table below shows the working capital for the first three years.
ITEM YEAR1 YEAR2 YEAR3
Stock of raw material 77920 80000 85000
Stock in progress 100000 115000 120000
Stock of finished goods 50000 60000 70000
Debtors 50000 65000 70000
Total 277920 320000 345000

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6.3 Projected cash flow statement year one

6.3.1 Projected Cash Flow Year 2017

R EC IP TS JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPT OCT NOV DEC TOTAL
C A S H S A LE 100000 180000 190000 195000 198000 200000 200000 205000 220000 230000 240000 245000 2403000
C R ED IT S A LE _ _ _ _ _ _ _ _ _ _ _ _
C A P IT A L IN TR O D U C ED 180000 _ _ _ _ _ _ _ _ _ _ _ 180000
TO TA L R EC IP TS ( A ) 280000 180000 190000 195000 198000 200000 200000 205000 220000 230000 240000 245000 2583000
P A Y M EN TS _ _ _ _ _ _ _ _ _ _ _ _
C A S H P U R C HA S E 77920 77920 80000 90000 85000 10000 108000 115000 110000 110000 115000 128000 1106840
C R ED IT P U R C HA S E _ _ _ _ 10000 _ _ _ 15000 _ _ _ 25000
S A LA R Y 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 330000
W A TE R 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
ELEC T R IC ITY 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
IN S U A R A N C E 5400 _ _ _ _ _ _ _ _ _ _ _ 5400
A D V ER TIS EM EN T 3000 _ _ 3000 _ _ _ 3000 _ _ _ 3000 12000
TELEP HO N E 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000
S TA TION A R Y 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
V EHIC LE R U N N IN G C OS T 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
D R A W IN G S _ _ _ 3000 _ _ _ _ _ 3000 _ _ 6000
P O S TA G E 600 600 600 600 600 600 600 600 600 600 600 600 7200
C A P IT A L EX P EN D ITOR S _ _ _ 2000 _ _ _ 3000 _ _ _ _ 5000
V A T P A Y EA B LE 80000 10000 12000 13000 12000 13000 12000 13500 12000 16000 14000 13000 220500
TO TA L P A Y M EN T( B ) 130920 124520 128600 147600 143600 149600 156600 171100 173000 165600 165600 180600 1837340
N ET C A S H F LO W ( A - B ) 149080 55480 61400 47400 54400 50400 43400 33900 47000 64400 74400 64400 745660
B/F _ 149080 204560 256960 313360 367760 418160 461560 495460 542460 606860 681260 4497480
N ET B A LA N C E 14980 204500 256960 313360 367760 418160 461560 495460 542460 606860 681260 745660 5108980

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6.3.2 Projected Cash Flow For Year 2023

RECIP TS JAN F EB M A R C H A P R IL MAY J UN E J ULY A UGUS T S EP T OC T N OV D EC TOTA L

CASH SALE 19000 195000 200000 205000 220000 230000 235000 240000 245000 248000 250000 255000 2542000
CREDIT SALE _ _ _ _ _ _ _ _ _ _ _ _
CAP ITAL INTRODUCED _ _ _ _ _ _ _ _ _ _ _ _
TOTAL RECIP TS (A) 190000 215000 200000 205000 220000 230000 235000 240000 245000 248000 250000 255000 2733000
P AYMENTS _ _ _ _ _ _ _ _ _ _ _ _
CASH P URCHASE 78000 80000 85000 90000 105000 109000 112000 180000 120000 125000 126000 128000 1338000
CREDIT P URCHASE _ _ _ _ _ _ _ _ _ _ _ _
SALARY 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 330000
WATER 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
ELECTRICITY 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
INSUARANCE 5400 _ _ _ _ _ _ _ _ _ _ _ 5400
ADVERTISEMENT 3000 _ _ 3000 _ _ _ 3000 _ _ _ 3000 12000
TELEP HONE 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000
STATIONARY 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
VEHICLE RUNNING COST 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
DRAWINGS 2000 _ _ 2000 _ _ _ _ _ 1500 _ _ 5500
P OSTAGE 600 600 600 600 600 600 600 600 600 600 600 600 7200
CAP ITAL EXP ENDITORS _ _ _ _ _ _ _ _ _ _ _ _
VAT P AYEABLE 7500 8500 9000 9500 10000 13000 12000 12500 13000 13500 16000 14000 138500
TOTAL P AYMENT(B) 132500 133600 130600 139100 151600 160600 160600 232100 169600 176600 178600 181600 1947100
NET CASH FLOW(A-B) 57500 81400 69400 65900 68400 69400 74400 7900 75400 71400 71400 73400 785900
B/F 745660 803160 884560 953960 1019860 1088260 1157660 1235060 1242960 1318360 1389760 1461160 13300420
NET BALANCE 803160 884560 9539601 1019860 1088260 1157660 123060 1242960 1318360 1389760 1461160 154560

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 6.3.3 Projected Cash flow For Year 2024

R EC IP TS JAN F EB M A R C H A P R IL MAY J UN E J ULY A UGUS T S EP T OC T N OV D EC TOTA L

C A S H S A LE 230000 235000 238000 250000 255000 258000 260000 270000 280000 285000 290000 295000 3146000
C R ED IT S A LE _ _ _ _ _ _ _ _ _ _ _ _
C A P ITA L IN TR OD UC ED
_ _ _ _ _ _ _ _ _ _ _ _
TOTA L R EC IP TS (A )
P A YM EN TS _ _ _ _ _ _ _ _ _ _ _ _
C A S H P UR C HA S E 80000 90000 100000 105000 110000 115000 120000 130000 140000 145000 148000 149000 1432000
C R ED IT P UR C HA S E _ _ _ _ _ _ _ _ _ _ _ _
S A LA R Y 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 27500 330000
WA TER 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
ELEC TR IC ITY 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
IN S UA R A N C E 5400 _ _ _ _ _ _ _ _ _ _ _ 5400
A D VER TIS EM EN T 3000 _ _ 3000 _ _ _ 3000 _ _ _ 3000 12000
TELEP HON E 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000
S TA TION A R Y 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
VEHIC LE R UN N IN G C OS T 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
D R A WIN GS 2500 _ _ 2500 _ _ _ _ _ _ _ _ 5000
P OS TA GE 600 600 600 600 600 600 600 600 600 600 600 600 7200
C A P ITA L EXP EN D ITOR_ S _ _ _ _ _ _ _ _ _ _ _
VA T P A YEA B LE 8000 10000 12000 12000 13000 12500 12000 13000 14000 145000 16000 13000 280500
TOTA L P A YM EN T(B ) 133000 136600 151100 156000 159600 164100 171100 182600 190600 196100 200600 201600 2043000
N ET C A S H F LOW(A -B ) 97000 984000 86900 93400 95400 93900 88900 87400 89400 88900 89400 93400 1988000
B/F 1534560 1631560 172960 1816860 1910260 2005660 2099560 2188460 2275860 2365260 2454160 2543560 22998720
N ET B A LA N C E 1631560 1729960 181860 1910260 20055660 2099560 2188460 2275860 2365260 2454160 2543560 2636960 42073120

6.4 Pro-Forma Income Statements

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 Profit loss account

Year1 Year 2 Year3

Year 2014 Year 2015 Year 2016
sales 2403000 2458000 314600
Direct cost( cost of goods)
Direct labor cost 102000 102000 102000
Fuel 7200 7200 7200
Raw materials 77920 77920 77920
Gross profit (a) 2215880 226800 2951800
overheads /expenses
Electricity 24000 24000 24000
Insuarance 5400 5400 5400
Telephone 18000 18000 18000
stationary 24000 24000 24000
Water 12000 12000 12000
Transport 24000 24000 24000
Advertising 3000 3000 3000
License 3000 3000 3000
Maintanance 6000 6000 6000
Salaries 59000 59000 59000
Drawings 5500 5500 5500
Postage 7200 7200 7200
Depriciation 6000 6000 6000
Total overheads(b) 197100 197100 196600
Trading profit (a-b) 2018780 2071700 2755200
Tax provisional 16% of sales 384480 393280 503360
Net profit( after tax) 1634300 1678420 251840

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6.4.1 Pro-Forma Balance Sheet

Fixed Assets Year One Year Two Year Three

Equipment 77920 77920 77920
vehicle 98000 80000 80000
Total Fixed Assests 175920 157920 157920

CURRENT ASSETS YEAR ONE YEAR TWO YEAR THREE

Stock of raw material 77920 80000 85000
Stock of finished goods 50000 60000 70000
Bank and cash 500000 500000 600000
Total current assets (A) 627920 640000 755000

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 CURRENT LIABILITIES YEAR ONE YEAR TWO YEAR THREE
Tax and insuarance 389880 389680 508760
Trade creditors 9000 10000 10000
Long term Bank loan 150000 200000 200000
Total curent Liability 548880 599680 718760

Net current assets 79040 31320 36240

Total assets (A+(B- 96880 189240 194160
C)
Introduced capital 30000 - -
Net profit 1634300 1678420 2251840
Long-term loan 150000 200000 200000
Loan payment 53120 10760 5480
Outstanding loan 96880 189240 194160

6.5 Break Even Point

Year 2022
Gross profit=sales-Total direct cost
=2403000-187120
=ksh 2215880

Year 2023
Gross profit=sales-Total direct cost

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2458000-189200
=ksh268800

Year 2024
Gross profit=sales-Total direct cost
3146000-194200
=ksh2951800

Year 2022
Gross profit margin= Gross profit × 100%
Sales
=2215880×100%
2403000
=92.2%
Year 2023
Gross profit margin= Gross profit × 100%
Sales
=2268800×100%
2458000
=92.30%

Year 2024

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 Gross profit margin= Gross profit × 100%
Sales
=2951800×100%
3146000
=93.83%
The cost overheads for the first year are ksh 197,100
Year 2022
Breakeven level = Overhead × 100%
Gross profit margin
=197100×100%
92.21
=ksh23,751.22 per year

Year 2023
Breakeven level = Overhead × 100%
Gross profit margin
=197100×100%
92.30
=ksh213542.2 per year

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Year 2024
Breakeven level = Overhead × 100%
Gross profit margin
=196600×100%
93.83
=ksh209527.87 per year

6.6 Expected Profitability Ratio

6.6.1 Gross Profit Margin Ratio
Year 2022
Return equity =Net profit after tax×100%
Owners’ equity
=164300 × 100%
150000
=1089.53%

Year 2023
Return equity =Net profit after tax×100%
Owners’ equity
=1678420 × 100%
150000

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 =1118.95%

Year 2024
Return equity =Net profit after tax×100%
Owners’ equity
=2251840 × 100%
150000
=1501.22%

Year 2022
Return on investment = net profit after tax +interest × 100%
Total investment
=1634300+53120 × 100
300000
=ksh 562.47%

Year 2023
Return on investment = net profit after tax +interest × 100%
Total investment

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 =1678420+10760 × 100
300000
=ksh 563.06%

Year 2024
Return on investment = net profit after tax +interest × 100%
Total investment
=2251840+5840 × 100
300000
=ksh 742.56%

6.7 Desired Financial Plan

ITEM AMOUNT
Pre-operational cost 92920
Working capital 277920
Fixed assets 175920
Total financial requirement 546760

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6.8 Proposed Capitalization
The total capitalization of Upendo poultry farm is Kshs 3000:
Source Amount
Owners contribution 150000
Borrowed cash 150000
Long term loan 200000

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