BUSINESS PLAN

BUSINESS LOGO:

BUSINESS NAME: POLAR CONCRETE PRECAST PRODUCTS.

EMAIL ADDRESS: onyangobruce7@gmail.com.

TELEPHONE NO: 0745666248.

NAME: BRUCE ONYANGO

REGISTRATION NO: EICF/02015 /2019

THIS BUSINESS PLAN IS SUBMITTED TO THE TECHNICAL UNIVERSITY OF KENYA

IN PARTIAL FULFILMENT FOR AWARD OF:

DIPLOMA IN CIVIL ENGINEERING.

DECEMBER 2022.

1
DECLARATION STATEMENT

I hereby declare that this business plan is represents my own work and that it has not been
previously included in any dissertation submitted to this or any other institution for a diploma or
any other qualifications.

Signature:

NAME: BRUCE ONYANGO.

DATE: 26TH December 2022.

This business plan was submitted for grading with my approval as the university supervisor

Signature ……………………

SUPERVISOR NAME: DR MPUTHIA

DATE:26th December 2022.

2
ACKNOWLEDGEMENT

I would like to extend my special gratitude towards;

My friends – For the constant encouragement and uplifting messages.

My Parents – For helping me realize my full potential.

My Business lecturer – Mr. Charles Bukowski for offering proper professional guidance and
lending me an ear when I had queries and doubts.

3
DEDICATION

I dedicate this business plan to my Parents, Mr. and Mrs. Onyango.

My friends

My potential business associates, and

To myself.

4
TABLE OF CONTENTS

DECLARATION………………………………………………. 2

ACKNOWLEDGEMENT…………………………………………3

DEDICATION……………………………………………………...4

TABLE OF CONTENTS…………………………………………...5

EXECUTIVE SUMMARY………………………………………...6

CHAPTER 1; BUSINESS DESCRIPTION………………………… 8

CHAPTER 2; MARKETING PLAN………………………………... 12

CHAPTER 3; ORGANIZATION AND MANAGEMENT PLAN …... 16

CHAPTER 4; OPERATIONAL PLAN……………………………… 20

CHAPTER 5; FINANCIAL PLAN…………………………………. 26

5
EXECUTIVE SUMMARY

BUSINESS DESCRIPTION.

POLAR PRECAST CONCRETE PRECAST PRODUCTS is a precast concrete company based in

Nairobi industrial area, along Bunyala road. This company is an initiative in order to develop and
strengthen a new market for precast concrete products. Our target customers are construction
companies and individual clients e.g. Road construction Companies, Real estate investors and
individual clients. This location was chosen because of the increase in demand for precast products
around South B and South C which are in the near vicinity of our company’s location. This brings
products and services closer to the customers.

The form of business will be sole proprietorship. The owner settled for this form because of the
few formalities required to start the business. Start up capital required for this business is 3,000,000
to set up the business structure at the proposed location and purchase machines needed for the
company’s operations.

MARKETING PLAN

The business will cater for all customers interested in construction. Main mode of marketing shall
be via social media and general media outlets. This is because through social media we reach a
larger market with regards to location and we also reach all kinds of people from the younger
generation to the older ones. We shall use various social media platforms like Facebook and
Instagram to advertise our products and create a communication channel with our clients.

All major company breakthroughs will be aired publicly via television channels and chosen radio
stations so as to further make the company’s name be heard.

ORGANIZATION AND MANAGEMENT PLAN

This will enable smooth running of the business operations. The following work personnel will be
employed in the business; the Board of Directors consisting of 5 members with each having a
minimum of a master’s degree in civil engineering and any other construction related course,
Human resource, technical officer, lead finance officer, lead sales officer, sales engineer, site
managers foremen and customer care team. They will all be subjected to the Board of Directors.

6
The human resource and board of directors will ensure all other employees meet the required
threshold for employment. The chief executive officer or the owner, will carefully choose members
of the board of directors, by assessing their qualifications. interviews will be conducted during
recruitment process and vacant positions shall be advertised through newspapers and most of all
social media platforms. Qualified personnel will be conducted by the human resource officer for a
reporting date. They will undergo training sessions internally especially on how to relate with
customers. Promotion of employees will entirely depend on their hard work and performance
which will include a pay rise. There shall also be employee of the month awards in terms of cash
tokens in order to encourage more work rate and productivity among the staff.

Employees will receive their salary at the end of every month. Support services that the business
will depend on are the bank and insurance services.

PRODUCTION PLAN

The business will require enough space for the setting up of machines, offices and sales areas.
there will be regular servicing of the machines in order to keep them in good working condition.
Personal protective equipment will be provided for the site workers and they shall be under strict
supervision by the site managers. Health and safety regulations shall be adhered to. packaging and
delivery of products will be upon client’s request.

FINANCIAL PLAN

Initial capital for the business will be 3,000,000. The money shall be acquired from the following
sources, personal savings and owners’ equity will be 1500000 and a bank loan of 1500000.

Gross profit margin = 90.25% in one year.

Return on equity = 85%.

Return on investments = 65.20%.

CHAPTER 1: BUSINESSES DESCRIPTION.

BUSINESSES NAME

7
POLAR CONCRETE PRECAST PRODUCTS. Ltd

Our Vision

To emerge as a fast growing and influential precast concrete company in the construction industry
of Kenya.

Our Mission

To delight our customers by providing high quality, safe, economical and quick construction
schemes an md products.

Location and Address

Located in Nairobi industrial area, along Bunyala road.

Building: Cabby Centre 4th floor.

Contact Information: 0745666248

Website: info@pcpp.com

Email address: polarconcreteworks@gmail.com

Form of business ownership

Polar Concrete Precast Products is a Solely owned concrete industry. (Sole proprietorship). This
means that it will be owned and controlled by the owner, Erick Amerix, with the help of other
qualified employed workforces and family support. I will be in charge of the smooth running of
business activities.

Type of business

Polar Concrete Precast Products offers is a construction company that offers complete precast
concrete products on buyers request and manufactured according to international codes and
specifications.

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Products and services

We manufacture and deliver precast concrete product inform of beams, cabbros, culverts, tiles and
finishes. Precast concrete products provide the following benefits:

• Saves time - specifically mixing and batching time as they are already manufactured
products.
• Saving money - By reducing time spent on projects and afterwards repairs for we provide
high quality products at affordable rates.
• High quality – Our products possess very good engineering properties hence they are quite
reliable.
• Readiness - Precast Products can also be easily assembled hence projects take less time.
• Durability - Precast Products are built to last as they can resist adverse weather conditions,
fires and damage for up to 100 years.

Justification for the business

In the recent years, population growth in Nairobi has increased therefore increasing demand for
construction products and services. There has also been an increase in government projects that
need construction companies. This presented a huge opportunity for the start of the company so as
to solve the construction department problems and meet the required demands.

Reasons why I chose this business:

• Ease of acquiring raw materials

• Uniqueness of the product hence less competition.
• Highly durable hence reduces repair overhead costs.
• Precast Products have high adaptability and can be created with any specifications in terms
of size and shapes no matter what the type of project being worked on.
• There is also high demand for more flexible and durable construction materials, hence
precast concrete products were the solution to a problem in the market as they are ready to
go when you are.

Industrial Analysis

9
Precast concrete products according to research reduce construction time by 50% and saves 30%
of construction costs. The global precast concrete market size was estimated at USD 96.3 billion
in 2021 and is expected to register a compound annual growth rate (CAGR) of 5.5% over the
forecast period. The market is expected to be driven by the expanding construction industry across
major regions owing to the increasing investments in infrastructure development. The increasing
disposable income levels in developing as well as developed countries are expected to boost the
residential construction segment. In addition, increasing initiatives by various governments for the
development of their respective economies are also expected to boost the construction industry,
augmenting the product demand in the years to come.

The structural building components segment Is expected to be the fastest-growing product type
growing at a CAGR of 5.9% over the forecast period. This growth can be attributed to their high
demand from the construction industry. The increasing number of hotels, malls, and hospitals
coupled with growing industrialization globally will likely propel the product segment growth over
the forecast period. The rising use of structural building components in affordable housing is
anticipated to be a major driver for this segment. The rising demand for affordable housing on
account of the rapidly growing middle-income population is expected to drive the product demand
over the forecast period. Precast concrete walls offer design flexibility and improve profitability,
which is projected to propel the demand for precast architectural building components over the
forecast period.

Sources: https://www.grandviewresearch.com/industry-analysis/precast-concrete-market.

https://www.hpdconsult.com/precast-concrete/

Business goals and objectives

• To create awareness about precast concrete products.

• To be a leading construction industry in the country.
• To create new and more innovative methods of construction.

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 • To support community development by supporting charity events.
• To provide our customers with utmost satisfaction by producing and delivering high-
quality services and products.

Entry and growth strategy

Currently there us no proper knowledge of precast concrete products in the minds of our targeted
customers. Our primary objective is to create awareness about precast concrete products among
our target market by the use of effective marketing strategies like word of mouth through family
and friends. We will employ a number of least expensive techniques to help in spreading our
brands name, which are: creating a website, public relations and local affairs.

Phase 1 of the business which will take place in about 2 to 3 months, involve finding a steady
supply of materials needed, purchase of machines, employing relevant personnel and setting up
the mixing system. Phase 2 taking about 8 to 15 months will involve proper marketing of the
products in a more aggressive manner, identifying our competitors and coming up with ways to
cope with them. By the end of this phase the business would have generated about 4 million by
selling up to 200 tons of precast concrete products.

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CHAPTER 2: MARKETING PLAN

Marketing plan

Our targeted customers are construction companies and real estate investors. Most of our clients
are located locally in Nairobi industrial area with real estate investors coming from all over the
country. According to our market research, we have discovered that most construction company
clients choose one company for construction services and are mostly loyal to that particular
company. We look forward to having a good number of loyal clients by providing compelling
treatment and services to our customers.

Marketing share

Our market share can be estimated at 30% owing to the fact that we are new to the market. Our
competitors occupy at least 50% of the market shares hence have a significant edge on our
company. According to my research our competitors do not deliver their products, which gives my
business a boost. We shall attract more clients since we are willing to deliver our products to our
esteemed customers. We also have better payment plans compared to our competitors.

Our market share in the first year will be 30% as estimated below;

Sales

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

The yellow part represents 30% of the market which polar concrete precast products occupies. The
rest is occupied by our competitors.

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Competition analysis

Initially Polar Concrete Precast Products won’t have any competition edge over our competitors
except in time saving, cost efficiency and high-quality products. In a couple of years, we will
develop a competitive edge in our products in unique value offering by incorporating latest
technology in our product. We shall also extend our product line over the years by continuously
researching about related products and likable services to our loyal customers. Our competitors
according to our market survey are; Kenya Builders and Construction company and Kitengela
Concrete works. They both have a larger market share and more sophisticated machinery
compared to us. We look to level the playing field through our quick manufacturing and delivery
of products so as to get to a percentage of their huge pool of demanding clients.

Name of business Strength Weaknesses Threats

Kenya builders Located along main road. Do not offer Popularity is higher due to
and construction delivery of their their longevity in the
Possess sophisticated
company products. construction industry.
machinery.
Poor
Have better experience
advertisement
in the sales of
construction products.

Kitengela Possess a larger space for Poor Process high quality

concrete works setting up and operations transportation and products using very good
of sophisticated delivery services. technology hence
machinery. technological threat.
Situated far away
Offer free delivery of from the CBD.
goods.

Advertising and Sales promotion.

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Polar Concrete Precast Products will use the following methods to position and market itself and
its products to its potential buyers so as to achieve more sales;

• Public relations – We shall capitalize on public relation opportunities by partnering with

local contractors, green building associations and different construction companies locally.
We will strive to connect with the community and be their voice for precast concrete
products. All company milestones will be celebrated via press release so as to create more
awareness.
• We shall advertise through Social media so as to reach the younger generation who in turn
may inform their guardians about our products, hence potentially finding more clients.
• Use of brochures will be employed and distributed to the clients and local community.
• A company website shall be created for the purpose of channeling information and
communication.
• We shall also put up several billboards with our company details on them across the city.

A virtual tour of our industry will be held, for the purpose of showing exactly what we
manufacture and offer and that we actually mean business.

Pricing strategy

Some of the factors that will influence my pricing are as follows

• Demand for the product

• Target share of the market
• Cost of production

With higher demand and increase in target share of the market, we shall value our products at a
reasonable price so as to attract all types of buyers. We shall launch comfortable and affordable
payment plans for our expensive products so that we can split the total price into small manageable
segments. Our payment plans may include higher purchase with a payment period of up to 15
months after a 15% deposit of the total priced amount. Different products will have different
payment plans with the cost of production being put into consideration. Our Sales department will
be responsible for negotiations of payments plans with potential clients.

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Sales Tactics

Polar Concrete Precast Products will use modern sales tactics for promoting our products e.g.

• Active listening – we shall lend our ears to our clients so as to create a deeper
connection with them and understand their needs so as to try our best to adhere to
them. Being too pushy can be detrimental to our business.
• Social media – Through social media we shall continuously advertise our products
and update our payment plans according to latest marketing trends.
• Features and Benefits – We shall effectively show our clients the features and
benefits of our products that fit their expenditure and formulate the best payment
plans for purchase.
• Warm calls – Through recent research we have discovered that warm random calls
to our clients with an objective of keeping them updated on our latest innovations
and products is actually very effective in creating good customer relations.

Distribution strategy

Our products will be transported via transit tracks and lorries. In this operation we might face
challenges like: High fuel prices, which in turn increases transportation costs. We will counter this
by avoiding night time travels towards far destinations for delivery purposes so as to cut on the
fuel consumption. Another challenge we might face is Security Concern and worker safety because
there are significant hazards associated with storage, handling and transportation of concrete
products. We will counter this issue by implementing tight safety standards to avoid unfortunate
occurrences, system failures and maintain preparedness for potential security issues that can arise.

15
CHAPTER 3: ORGANIZATION AND MANAGEMENT PLAN

This will be the hierarchy for the company:

Key personnel.

a) Chief executive officer (CEO)

The CEO will be the head of the business. He will have overall responsibilities for the
finance issues of the company. He shall also carry out meetings with board of directors to
keep them motivated by showing them monthly and annual financial reports. Lastly, he
will carry out overview of the company’s balance sheets, marketing strategies and other
issues of concern.
b) Board of Directors
They will be responsible for attracting and contributing in financial and business
investments, expanding and developing the business, making key decisions for the
company and meeting with top company management to build and implement company
policies.
c) Human resource and procurement
The HR shall be responsible for overall contract management, attracting and maintaining
relationships with potential clients, facilitating product orders and delivery to customers
and overall management of employees including carrying out training of staff members.
Skill and qualities required are: Bachelor in Civil engineering or Construction
management.
Relevant experience in procurements and management of people.
d) Technical officer
Responsible for approving final designs before they are sent to manufacturers, facilitate
and monitor manufacturing process and to continuously innovate and add value to our
products to make our offers more competent.
Skills and qualifications required are: Bachelor in Civil engineering or Architecture, must
be proficient in different software designs and should have relevant experience in structural
and architectural design.

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 e) Lead finance officer
Responsible for handing all finance management issues of the company, to keep check and
balance of all business accounts, approval of budget for marketing strategies and invite and
attract new business investments, opportunities and partnerships. The lead finance officer
will be required to have the following qualifications: MBA finance and minimum of 2 years
finance related experience.
f) Lead Sales officer
Will be the head of sales and marketing, responsible for identifying and attracting potential
clients and creating new marketing strategies for company and product promotion.
Required skills qualifications are a degree holder of Bachelor in Civil engineering and
preferably with MBA marketing, to have good social skills and a minimum of 2 years
relevant sales experience in a construction company.
g) Sales engineer
Responsible for preparing reports for head of sales and marketing, persuading clients that
a product satisfies their needs in terms of quality, price and delivery, coordinate sales
projects and supporting marketing campaigns by attending trade shows, conferences and
marketing events. Qualifications required are: Bachelor in Civil engineering and 2 years
relevant experience.
h) Site managers
They will handle all the sites and oversee all site operations and engage with different
suppliers for materials. Qualifications needed are a Diploma in Civil and Construction
Engineering and 2 years of relevant experience.

Other personnel

I. Customer Care
Will be responsible for solving quarries of customers and creating a friendly environment
for customers. Skills and qualifications needed are: excellent communication skills,
pleasant personality and experience in handling people.

Foremen

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 Will be responsible for site preparation, coordinating construction workers and acquiring
necessary labor for a particular project. Skills and qualifications required are Certificate in
Civil engineering or any construction related course, good problem-solving skills and
relevant experience in construction works.

Remunerations and incentives

Each member of the Board of Directors will get an equal share of 20% of the total monthly profits.

The rest of the staff members will earn the following salaries in Kenyan shillings per month:

NO OF SALARIES ALLOWANCES TOTAL

TITLE
EMPLOYEES
1 75000 10000 85000
Human resource
1 68000 10000 78000
Technical officer
1 60000 10000 70000
Lead finance
officer
1 55000 10000 65000
Lead sales officer
1 50000 10000 60000
Sales engineer
3 50000 10000 180000
Site managers
2 25000 8000 66000
Customer care
5 12000 8000 100000
Drivers

3 10000 5000 45000

foremen
2 8000 4500 25000
Security personnel
20 413000 85500 774000
TOTAL

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 Licenses, permits and by laws
License needed will be an operational license. It shall be obtained from local member of
parliament office. It requires an annual renewal.
The company will also be in need of a business permit that shall be obtained from the
ministry of public works. It will be renewed after every six months.
We will also obtain worker law permits from the workers association. It will be renewed
once ever 4 years. All these permits and by laws will incur a cost of approximately
60000ksh.

Support Services
Support services that will be needed for smooth running will be:
• Insurance – We will be under Jubilee insurance cover located in Nairobi, Ngara area.
• Legal sources – We shall seek the services of Wanjohi and Associates law firm located in
Addams arcade along Ngong road.
• Banks – the business will open an account at Kenya commercial Bank which has branches
nationwide. This account will help in acquiring the loan required to start the business and
also pa salaries to the employees at the end of every month.

19
CHAPTER 4: OPERATIONAL PLAN

Operation / production facilities.

Machines Output No Cost Total Supplier

cost

Mixers 80000 2 40000 80000 Peak

Engineering
plants. Inc

Auger 100000 2 50000 100000 Peak

boring Engineering
machines plants. Inc

Vibrators 350000 5 60000 300000 Peak

Engineering
plants. Inc

Cranes 1500000 1 1500000 1500000 Peak

Engineering
plants. Inc

Trucks 3000000 2 1500000 3000000 Isuzu

Manual 30000 10 2000 20000 Peak

Auger Engineering
machine plants. Inc.

20
Tools and equipment

Tools Output No Cost/unit Total cost Supplier

Horse pipes 50000 5 10000 50000 Rashid

hardware

Samplers 10000 10 1000 10000 Rashid

hardware

Shovels 60000 30 2000 60000 Rashid

hardware

Timber 50000 50 1000 50000 Kawangware

Timber works

Wheelbarrows 30000 10 3000 30000 Rashid

hardware

PPEs 90000 30 3000 90000 Rashid

hardware

Nails 20000 400 50 20000 Rashid

hardware

Furniture and fittings

Office desks 50000 5 10000 50000 Shelby

furniture
house

21
 Office chairs 60000 15 4000 60000 Shelby
furniture
house

Benches 6000 2 3000 6000 Shelby

furniture
house

Shelves 10000 5 2000 10000 Shelby

furniture
house

Businesses premises layout

The company will be comprised of five offices, namely CEO’s office, lead finance officer’s office,
technical officer’s office, human resource office and the Sales engineers office. There shall be a
meeting room for the board of directors, a lobby for the customer care and waiting clients and a
staff room where staff meetings will be held.

Operational /production strategy

In order to ensure efficient supervision, minimum costs and maximum output performance and
profitability, I will

• Formulate a company target that we shall all work to achieve.

• Ensure high quality production so as to reduce repair costs.
• Motivate staff members and all employees by appreciation for their efforts and giving
promotions where they are deserved.
• I will maintain frequent contact with my employees.
• I will be an active listener and be open to new ideas.
• I shall take corrective measures, when dealing with negative aspects of workers
performances, privately with the particular workers.
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 • Work to extensively expand our market by attending trade fairs.
• Delegate authoritative and authoritative leaders.

Items of monthly production cost my business will incur;

Monthly cost of raw materials

Item Cost

Cement 200000

Sand 100000

Fine and course aggregate 200000

Water 150000

Total cost 650000

Monthly cost of labor

Technical staff salaries = 604000

Non-technical staff salaries = 170000

Total=774000

Overheard costs

Damage repairs = 20000

Transportation and fuel = 90000

Machine servicing = 50000

Total=160000.

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Total cost of production per month

Cost of raw materials = 650000

Cost of labor = 774000

Overhead costs =160000

Total = 1584000.

Production process

• All raw materials will first of all be acquired from the appointed suppliers.
• Raw materials will then be placed in the mixers in the best ratios with the Technical
officer’s supervision.
• Afterwards the precast concrete products shall be left to cure for 14 days.
• The technical officer will then carry out a routine inspection on the products for any defects.
• Upon request from clients, the products will be placed on huge tracks using cranes, to be
delivered to the clients’ desired destinations.
• Payment will be done upon delivery and aesthetic satisfaction.

Government regulations
The government laws and regulations that will be enforced to my company are
Construction (Design and Management) Regulations 2015. Control of Substances
Hazardous to Health Regulations (COSHH) 2002. Health and Safety (Consultation with
Employees) Regulations 1996. It is also required by the law to employ the following safety
measures on site:
• Personal Protective Equipment (PPE)
• Follow Environmental Guidelines
• Keep the Work Area Clean
• Ladder Safety
• No Crowding inside the Site Perimeter
• Lifting Precautions

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 • Proper Site Training
• Safety Programs and Culture

25
CHAPTER 5: FINACIAL PLAN
Pre- operational costs
Item Amount
Operational licenses 50000
Rent 90000
Business permits 20000
Furniture 80000
Personal Protective 50000
Equipment
Insurance 150000
Total 440000

Working Capital estimation

Current assets

Cash in hand = 500000

Cash at bank = 2500000

Total current assets = 3000000.

Current liabilities.

Creditors = 200000

Rent = 90000

Total current liabilities = 290000

Working capital = 2710000.

PROJECTED CASH FLOW STATEMENT

particu Jan Feb mar Apr Ma Jun July aug Sept Oct Nov Dec Tota
lars uar ruar ch il y e ust emb obe emb emb l
y y er r er er

26
 Cash
in flow

Openi
ng
balanc
e

Owner 150 160 160 160 160 160 160 160 1600 160 1600 1600 191
s’ 000 000 000 000 000 000 000 000 000 000 000 000 000
equity 0 0 0 0 0 0 0 0 0 00

Bank 150 500 500 500 500 500 500 500 5000 500 5000 5000 205
loan 000 00 00 00 00 00 00 00 0 00 0 0 000
0 0

Cash 800 100 120 140 160 165 171 180 2000 210 2200 2500 199
sales 00 000 000 000 000 000 000 000 00 000 00 00 600
0

Debtor 500 650 100 250 220 200 150 140 1800 195 1000 1850 183
s 0 0 00 00 00 00 00 00 0 00 0 0 500

Anoth
er
source

Total 308 175 178 181 183 183 183 184 1868 187 1880 1918 233
Cash 500 650 000 500 200 500 600 400 000 950 000 500 295
in flow 0 0 0 0 0 0 0 0 0 00

27
 Cash
out
flow

Purcha 120 120

ses 000 000
0 0

Pre-
operati
onal
costs

Payme
nt to
credito
rs

Salarie 774 774 774 774 774 774 774 774 7740 774 7740 7740 928
s 000 000 000 000 000 000 000 000 00 000 00 00 800
0

Rent 900 900 900 900 900 900 900 900 9000 900 9000 9000 108
00 00 00 00 00 00 00 00 0 00 0 0 000
0

Electri 250 250 250 250 250 250 250 250 2500 250 2500 2500 300
city 00 00 00 00 00 00 00 00 0 00 0 0 000

Water 150 150 150 150 150 150 150 150 1500 150 1500 1500 180
000 000 000 000 000 000 000 000 00 000 00 00 000
0

28
 Transp 900 900 900 900 900 900 900 900 9000 900 9000 9000 108
ort 00 00 00 00 00 00 00 00 0 00 0 0 000
0

Advert 200 200 200 200 200 200 200 200 2000 200 2000 2000 240
isemen 00 00 00 00 00 00 00 00 0 00 0 0 000
t

Insura 500 500 500 500 500 500 500 500 5000 500 5000 5000 600
nce 0 0 0 0 0 0 0 0 0 00

Loan 300 300 300 300 300 300 300 300 3000 300 3000 3000 360
repay 00 00 00 00 00 00 00 00 0 00 0 0 000
ment

Interes 200 200 200 200 200 200 200 200 2000 200 2000 2000 240
t on 0 0 0 0 0 0 0 0 0 00
loan

Taxes 350 350 350 350 350 350 350 350 3500 350 3500 3500 420
0 0 0 0 0 0 0 0 0 00

Any
other
expens
e

Repair 500 500 500 500 500 500 500 500 5000 500 5000 5000 600
and 00 00 00 00 00 00 00 00 0 00 0 0 000
mainte 0
nance

29
 Licens 200 200 200 200 200 200 200 200 2000 200 2000 2000 240
e and 0 0 0 0 0 0 0 0 0 00
permit
s

Total 244 121 121 121 121 121 121 121 1214 121 1214 1214 158
cash 150 450 450 450 450 450 450 450 500 450 500 500 010
outflo 0 0 0 0 0 0 0 0 0 00
w

Month 643 542 565 600 617 620 621 629 6535 665 6655 7040
ly Net 500 000 500 500 500 500 500 500 00 000 00 00
cash

PRO-FORMA INCOME STATEMENT

Particulars Year 1 Year 2 Year 3

Sales 1996000 2000000 2200000

Less cost of 120000 150000 155000

sales

Gross profit 1876000 1850000 2045000

Expenses

Purchases 1200000 1500000 1600000

Payment to
creditors

30
 Salaries and 774000 780000 800000
wages

Rent 1080000 1080000 1080000

Electricity 300000 320000 380000

water 1800000 2000000 2500000

Transport 1080000 1200000 1300000

Advertising 240000 245000 250000

Insurance 60000 60000 60000

Loan 360000 360000 360000

repayment

Interest on 24000 24000 24000

loan

Taxes 42000 42000 42000

Repair and 6000000 6200000 6250000

maintenance

Licenses 24000 24000 24000

and permits

Total 12984000 13835000 14670000

expenses

Net profit
before tax

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 Tax [ 30%
income]

Net profit
after tax

Pro-forma balance sheet

Fixed assets

Delivery trucks = 1600000

Furniture = 80000

Machinery = 1200000

Total fixed assets = 2880000

Current assets

Cash in hand = 1500000

Cash in bank = 2000000

Total current assets = 3500000

Total assets = 6380000

Equity and liabilities

Current liabilities

Creditors = 200000

Rent = 90000

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Bank loan = 1500000

Owner’s equity = 1500000

Total equity and liabilities = 3290000.

Break-even point calculation

Break-even point analysis.

description Kshs

sales 1996000

VARIABLE COSTS

Electricity 300000

Repair and maintenance 6000000

Transport 1080000

Advertisement 240000

Water 1800000

Total variable costs 9204000

Contribution = sales – variable costs

1996000-9204000 = - 7208000

Contribution margin

=contribution [100%]/sales

Profitability ratio analysis.

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Gross profit margin = gross profit ×100% /sales

Year 1 = 1876000× 100% / 1996000 = 0.94%

Year 2 = 1850000×100% / 1996000 = 0.93%

Year 3 = 2045000 ×100% / 1996000 = 1.03%

Desired financing

ITEM AMOUNT

Pre-operational costs 440000

Working capital 2710000

Contingency funds 250000

Total desired financing 3400000

Proposed capitalization

source Amount[kshs]

Owners’ equity 1500000

Bank loan 1500000

Total investment 3000000

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