BUSINESS PLAN

CATHRYN’S FASHION AND DESIGN HOUSE.

NAME: CATHERINE KANYIVA MALAI.

EMAIL: catherinekanyiva53@gmail.com
PHONE: 0768504616
INDEX NO: 1061200360
COURSE CODE: 1801/206B
SUPERVISOR: MADAM SUSAN ROSE
NAME OF INSTITUTION: KENYA COAST NATIONAL
POLYTECHNIC.
EXAM SERIES: NOVEMBER 2020

THIS PROJECT IS SUBMITED TO THE KENYA NATIONAL EXAMINATIONAL

FOR PARTIAL FULFILLMENT FOR THE AWARD OF CRAFT CERTIFICATE IN
FASHION AND DESIGN.
2
DECLARATION
I CATHERINE KANYIVA MALAI declare the work is my own work using the help of
my teacher.

Name…………………….
Signature …………………
Date ……………………….

Supervisor
Name ………………………
Signature …………………….
Date ……………………………

3
ACKNOWLEDGEMENT.
I wish to acknowledge my family members especially my loving mother for giving me
support ensuring the business project was successfully done. Also my acknowledgment
goes to my supervisor for the guidance and encouragement in writing business plan.

4
DEDICATION.
I dedicate my project to my family members who have made me who I am today and also
to all my friends Doris kerubo, Brenda mmoji and Grace kyalo whom we worked
together tirelessly, may you be blessed.

5
 1.0 EXECUTIVE SUMMARRY.
1.1 BUSINESS DESCRIPTION
Cathryn’s Fashion and design shop will be the name of the owner of the business. The owner
named it after her second name which is Catherine and means “pure”. The form of ownership of
the business will be sole proprietorship. The products that will be offered by the business will be
cotton, linen, etc. other key issues outlined in this chapter include chances and opportunities,
industry, entry growth strategy and startup capital.

1.2 MARKETING PLAN

In this part of the business plan the owner talks about customers market share, this is targeting
the population percentage. It also talks about competition, advertising and promotion,
distribution and pricing strategies the owner understands very well many customers will be
seeking low prices.

1.3 ORGANISATION AND MANAGEMENT.

It entails management plan of the business, the organization chart, staff qualification, other
personnel, support services, people system recruitment, training and promotion as well as
remuneration of staff

1.4 PRODUCTION AND PROCESS PLAN.

This section talks about product and development, operational facilities and their capacity,
production strategy, material requirement from supplies production structure and external factors
which are likely to affect the business. It also talks about regulations affecting operations e.g.
general regulations, health care licenses and cost or procuring them.

1.5 FINANCIAL PLAN

This section we give into details about pre- operational cost, working capital, the projected cash
flow for the year beginning from 1st January 2023 and ending 31st December 2025. It also talks
about profoma income statement, break- even point, desired financing, profitability and
capitalization. It also talks about sources of raising capital that is proforma cash flow of the three
years, income statement and proforma balance sheet.

6
 CHAPTER ONE
1.1 BUSINESS NAME.
The name of the business is CATHRYN’S FASHION DESIGN HOUSE. The business name
bears the sponsors middle name Catherine, which means PURE.
The business owner will operate based on the legal and commercial requirements.
The business owner will talk to an attorney about the correct business entities and start- up
requirements.

1.2 LOCATION AND ADDRESS.

Cathryn’s fashion design house will be located near Barclays bank, Digo road. P.O. BOX 50100-
10145, MOMBASA.
Phone No. 0768504616.
The location will take into account demographic, psycho graphic and other useful data, this will
help to maximize the owner chances to success in site selection.

1.3 FORM OF OWNERSHIP.

The Cathryn’s fashion design house from of ownership will be a sole proprietorship. It is a
highly advantageous the sponsor enjoys profit alone, there will be flexibility where the owner is
accountable for herself and she has personal contact with customers’

1.4 PRODUCT AND SERVICES.

Fashion is the art of applying design. It is influenced by cultural and social attitudes and has
vaned over time place. Designers must at times anticipated changes to customers tastes therefore
the designer should conduct research on fashion and trend interpret it to the audience. So
Cathryn’s business will produce a lot of product to give out .e.g. ready-made cloths and services
will be given to customers in terms of men and women wear.

1.5 JUSTIFICATION OF BUSINESS.

NAME OF STRENGTH WEAKNESS CHANCES OF
BUSINESS OPPORTUNITY
1. Cathryn’s Business will help the There will be a It will ensure the
Fashion fashion to reach its challenge in locals get interest in
Design House goals and objectives. approaching a foreign Africa fashion trends.
Cathryn’s fashion will market for first time The local buyer will

7
 ensure there is spend on quality
excellent financial fashion product.
performance.
It will provide top
quality products.
2.Dark smile house They have excellent Local quality to They have more
financial performance maintain affordable online purchase.
in their fashion pricing. Threats .There is
Too dependent on rising cost of
new fashion trends ingredients
Lee fashion house They help the They are too Their buyer personnel
organization reach dependent on third improve their
its set goals and party supplies. lifestyles with more
achievements They have harmful opportunities to
They don’t have elements that block spend.
control but they have the organization to Threats. Environment
to priotize them, reach its maximum constrains.
invest in them and Time delay increase
capture them. cost.
People hate change
limited funding scope
creep opposition.

1.6 INDUSTRY.

Cathryn’s fashion design house will get into textile industry which deals with fashion outfits.
The business will operate under industrial small scale business because they invest little capital.
Use of M-pesa to withdraw and use of pay bill number to pay goods. Installation of CCTV to
control the operations and stock.

1.7 GOODS OF BUSINESS.

Cathryn’s fashion design house will have to set goals to achieve after the startup of business in
fashion design. Owners goals include; short term, medium and long term goals. They will be
classified as follows:

8
 SHORT TERM GOALS
Reduce carbon emission
Create job opportunities.
MEDIUM TERM GOALS
Improve employee training
motivation scheme.
LONG TERM GOALS
Increase efficiency in fashion
designing.
Build good relationship with
customers.
Increase profit margin capture
a bigger market share.

1.8 ENTRY GROWTH STRATEGY.

Public relation and marketing Cathryn’s fashion design house will net fly the customer radar.
The sponsor will make public awareness of cathryn’s products, services and showcase its
successfulness in innovation.
The sponsor will offer her customers a special or unique fashion brand. Cathryn’s fashion design
house will have a vehicle for transportation of stock. The business will face many challenges
such as competitions changes in economy status etc. therefore it will maximize to its best of the
profit.

1.9 START-UP CAPITAL.

START-UP CAPITAL SHILLINGS
OWN SAVINGS 200,000
RELATIVE CONTRIBUTION 250,000
BANK LOAN 150,000
LEASING PROPERTY 100,000
TOTAL 700,000

1.10

9
CHAPTER TWO
2.0 MARKET PLAN.
2.1 CUSTOMERS
The targeted customers will be grouped according to their potentially of buying. The
grouping will depend on various factors like income, social class, economic activity in
the area and traditional belief and practices. These groups include:
2.1.1 DOMESTIC CUSTOMERS.
The uniforms will source potential customers from household members. Since customers
are who define a business and its activities, the family members of owner will help in
running of the business by requiring goods and services. Travelers using busy Mombasa
– Nairobi highway will have a uniform solution along their way.

2.1.2 INSTITUTIONAL CUSTOMERS.

This will be students from Mwairu High school which 10 meters from Lee Uniforms and
Luis medical training college. The business will also offer the transportation service of
exercise book to Nuru-school.

2.1.3 COMMERCIAL CUSTOMERS.

There will be Tinasha uniforms, Kesmac school were and Mteule uniform. They will be
supplied with the products in large quantities monthly, they will also be given percentage
discount and their goods will be transported on free charges. The payment shall be made
as the goods are delivered to them some customers from competitors will also be
expected.

2.2 MARKET SHARE.

Cathryn’s fashion design house will target population percentage in business because
marketing involves the act or promising the image of a service so as it appears appealing
to the customers.
The following shows the market share for the business within the first three years of
operation.

10
The market share for the year ended 31st December 2022
Cathryn’s fashion design house 15%
Dark smile fashion design house 40%
Lee fashion design house 45%

Sales

cathryn's fashion dark fashion lee fashion

11
Market share for the year ended 31st December 2023
Cathryn’s fashion design house 50%
Lee fashion design house 25%
Dark smile fashion design house 25%

Sales

cathryn's fashion dark fashion lee fashion

12
Market share for the period ended 31st December 2024
Cathryn’s fashion design house 70%
Dark smile fashion design house 15%
Lee fashion design house 15%

Sales

cathryn;s fashion dark fashion lee fashion

13
 2.3 COMPETITION
Design competition are certainly in play for design house especially in large area full of young
talent , therefore Cathryn’s will select the best.
The competition where Cathryn’s fashion will be located will be quite high in terms of market
but the sponsor will work hard to maintain a high rate of growth in fashion.
There will be three main competitors namely:
a) DARK SMILE FASHION DESIGN HOUSE, about 200 meters away from sponsors
business.
b) LEE FASHION DESIGN HOUSE, about 100 meters away from Cathryn’s fashion
house.
c) SERAI FASHION DESIGN HOUSE, about 400 meters away.

2.4 SWOT ANALYSIS.

COMPETITORS STRENGTH
DARK SMILE UNIFORM Popularity
Excellent customer services.
After sales services e.g. free
transport.
Good customer relations.
Quality goods and services.
LEE FASHION UNIFORM More service offered
Direct channel of distribution
Personal selling offered
SERAI FASHION High sales volume
UNIFORM Good reputation.
Technologically advanced.
WEAKNESS
Opening late hours.
Lack of package materials.
Untidy and disorganized
personnel.
Maximum stock level
High price
Unspecified working hours
Offers sub-standard services
Poor transport system
High loan burdens
No discount allowed
Limited dispensing area

2.5 METHODS OF ADVETISEMENT AND PROMOTION.

2.5.1 PROMOTION
The business will be promoted for attraction of more customer. The business will offer
10% discount to any customer of our product, free delivery of products will also be
offered to those who buy goods in bulky while less transportation charges will be made to
those who buy goods in small quantity. After sales services will be offered to our
customers e.g. free gifts to our students like school socks, rulers and pens, free dust coats
to workers and also free tiers. This will attract more customers who purchase in bulk will
receive after sale services for free i.e. any purchase above 5,000 shillings will be
proceeded by free transport services.

14
 2.5.2 ADVERTISEMENT.
This will also be done purposely to create awareness to the customers of the new business in the
area and offer knowledge of products and services offered, it will include: giving free samples,
reducing prices, proper packaging, creating awareness on those who have no idea of existence of
the business and its products . This will be through:
a) Personal selling
This will be done by being directly contacting customers and convincing them that the products
we offer are the best in terms of quality and quantity preference. The potential customers will
give their opinions and view about same.
b) Advertising
This will be done through posters, bill boards and leaflets placed in strategic places showing the
pricelist and the variety of goods offered. It will also show location of the business.

2.6 PRICING STRATEGY

Pricing is an important determinant of market share and profitability. Cathryn’s fashion will
calculate its fashion price based on:
i) Demand for product- it will be considered if the demand is low or high.
ii) Sales target of the business- price will be set so as to reach the target.
iii) Price in which the product is acquired by the business
iv) Price of competitors- price will be set a bit lower so as to blind the competitors.
Quality of goods offered.
The business will receive the raw materials at 110,500 shillings from joy suppliers.
The stock shall be stabilized at 10,000 shillings in the first year, 15,000 shillings in the second
year and 40,000 in the third year.
2.7 SALES TACTICS
The goods will be sold both directly and indirectly. they will be sold directly in that, customers
would have to be in contract with the owner while purchasing good and it will be indirectly also
since some customers will have to purchase online through the business agents. In online
purchasing, payment of goods will be made as soon as goods are delivered.

2.8 DISTRIBUTION STRATEGY

Since Cathryn’s fashion are not perishable though they are delicate, any channel of distribution
will be put in place for product distribution. The business will use direct channel of distribution
whereby, it will sell directly to the final customers or fellow wholesalers and no middle men will

15
be involved, since the railway is just a few miles from the premises, most of delicate products
will be transported by train, for emergency supply. Road transport will be used since the business
has its own van for transportation, this will however be inconvenience by the frequent jams on
major road in the Mombasa – Nairobi highway. For this reasons, product distribution via roads
will be carried out only during the night to avoid delays due to heavy road congestions and jams.
From either external or internal suppliers depending on the product, the Cathryn’s fashion
materials will be transported to the business premises for sale to other wholesalers who then sell
to their retailers or patients depending on the type of the business or directly to the final
consumers i.e. students.

16
 CHAPTER THREE
3.0 ORGANISATION AND MANAGEMENT PLAN.
3.1 THE ORGANISATION CHART

MANAGER

HUMAN RESOURCE
TREASURER SECRETARY CASHIER
MANAGER

SECURITY CLEANERS TRANSPORTERS AUDITORS

3.2 MANAGING DIRECTOR QUALIFICATIONS, DUTIES AND RESPONSIBILITIES.

3.2.1 QUALIFICATIONS.

The qualification of the managing director will be as follows:

- Certificate folder in fashion and design
- National identification card
- Above 18 years

DUTIES AND RESPONSIBILITIES OF THE MANAGING DIRECTOR.

He or She should be a problem solver. Be able to solve problem when rises.
He or She should be a risk taker. Able to take any risk to enable the business to run effective.
He or she should maintain information inside and outside of the fashion house.

17
He or she will maintain business operations and work with clients

3.2.3 OTHER PERSONNEL, NUMBER, QUALIFICATION, DUTIES AND

RESPONSIBILITIES AND SALARY TO BE PAID.
PERSONS NUMBER QUALIFICATION DUTIES AND SALARY
RESPONSIBILIT
Y
Account 2 Above 18 years Follow up financial 15,000 each
auditor Work experience audits compliance.
of 2 years and Checking all
above financial work
activities
Transporters 1 Be able to drive Transporting of 12,000 each
properly. ordered outfits
Above 18 years. from one place to
another.
Ferrying stock to
the business.
Cleaners 2 18 years and above Sweeping, mopping 6.000 each
and dusting the
premises
Security 2 18 years and above Securing Cathryn’s 10,000 each
fashion house by
patrolling property
inspecting
buildings.
Keeping security
tight and ensuring
the place is secure
for conducing
business

3.3 RECRUITMENT, TRAINING AND PROMOTION.

3.3.1 RECRUITMENT
In order for the business to get qualified personnel the following advertisement process
will be followed.
(i) Advertisement
(ii) Application of the post advertised above by the interested candidate
(iii) Submission of the document to the human resources
(iv) Verification of submitted document by the candidate
(v) Selection of the candidate
(vi) Interview of the selected candidate
(vii) Giving feedback to both the qualified and non-qualified

18
3.3.2 TRAINING
In order to provide the necessary skills the business will consider the following training method,
to work or carry out their own work effectively.
i) Seminar- this will be one of the method which will be used to ensure to equip the
trainers with skills.
ii) Conferences- the business will be able to take their trainees for conferences so as to
gain skill to work effectively
iii) Benchmarking- the trainees will be equipped with knowledge and skills through this
method

3.3.3 PROMOTION
For employees to be given motivation they will be promoted from one level to another
considering the following factors:
i) Performance-based on the work done, punctuality in the work.
ii) Experience- the work experience will enable one to be high qualified in the work.
iii) Level of education.
iv) The growth of the business.

3.4 REMUNERATION AND INCENTIVES

3.4.1 REMUNERATION
The following factors will be considered by the business for the payment of salary to the
employees:
i) Income generation of the company- the income that the business gain will be
considered during payment
ii) Government policy- the payment of tax
iii) Responsibility to be carried out- the work done by each employee will be considered
during payment.
iv) Level of education- based on the level of education the employees will be paid
differently

3.5 LICENSE, PERMIT AND BY-LAW

3.5.1 LICENSE
For the business to run smooth and effectively, the business will require a license. The
license will cost 10,000 shillings each year.
19
3.5.2 PERMIT
The business will acquire a permit from the county government of Mombasa which will cost
2,100 per year which will last for three years then renewed after then.

3.5.3 BY-LAWS
Cathryn’s fashion design house will be operated under the following rules and regulations:
i) Healthcare- it will be required to offer health insurance this will essentially reduce the
number of workers to be covered in business.
ii) Building regulation- maximum care will be observed during construction and
maintenance to avoid collapsing of the building.
iii) All the employees will be required to be punctual and honest in their work.

3.6 SUPPORT SERVICES.

There will be supportive services which are beneficial, they are set up tasks such as
installation and configuration, staff training and up skilling, remote monitoring and
management, telephone, email or online support, rapid response etc.

3.6.1 BANKING SERVICES.

The business will be using KCB bank in keeping their money to ensure security of the
money
3.6.2 INSURANCE COMPANY.
The business will insure the business due risk incase or fine outbreak or theft. In addition
there will be compensation insurance for the employees to work in the business.

3.6.3 SECURITY SERVICES.

The business will ensure that security is increased by the use of CCTV and even manual
whereby security officers will be allocated to ensure the safety of the customers and the
product.

20
CHAPTER FOUR
4.0 PRODUCTION AND OPERATIONAL PLAN
4.1 PRODUCTION SERVICE AND DESIGN AND DEVELOPMENT
4.1.1 PRODUCTS
The business will ensure that all the products are available by buying and storing them in
high quality.
4.1.2 SERVICES.
4.1.3 DESIGN AND DEVELOPMENT.
In order to attract more customers to increase level of sale, the business will use the
following methods, tie and dyeing. The business will have products or ready-made outfits as
well as stitched and designed women and men wear for example balloon dress; off shoulder.

4.2 PRODUCTION AND OPERATION FACILITIES AND CAPACITY.

FACILITY CAPACITY AMOUNT(KSH)
SEWING MACHINE 7 256,500
FURNITURE 10 60,000
CUTTING MACHINE 2 80,000
RAW MATERIALS 15 140,000
TOTAL 482,500

2ND table resenting production and operation overhead expenses.

WERHEAD EXPENSES AMOUNT
PERMIT 2,100
LICENCE 10,000
RENT DEPOSIT 15,000
TOTAL 27,000

4.3 PRODUCTION AND OPERATION PROCESS.

DESIGN DRAWING DRAFTING SPREADING IRONING
FINISHING INSPECTION STRETCHING PACKAGING SALES
TRANSPORTATION.

21
BUSINESS PREMISES LAYOUT.
EXIT

STORE
SHOW ROOM

ENTRANCE

MAIN BUSINESS
OPERATION
WASHR
OFFICE OOM

22
 CHAPTER FIVE
5.0 FINANCIAL PLAN
OVERVIEW.
This chapter will deal with all the financial plans to be put into practice and aimed at the
achievement of Cathryn’s goals and objectives. It shows the business potential and capability
focused on profitability. The plan shows the financial requirement which include pre-
operational cost, working capital required, projected cash flow, proforma income statement,
proforma balance sheet, break-even analysis, profitability ratios, desired financing and
proposed capitalization for the Cathryn’s fashion.
The business is intended to start its operation on 1st January 2023 with the capital of 600,000
the amount will be raised as follows:
i) Owners savings = 300,000
ii) Loan bank = 150,000
iii) Sacco = 150,000
Total 600,000

5.1 PRE- OPERATIONAL COST.

These are the expected cost to be made before the business comes into operation.
They include:
ITEMS AMOUNT
SEWING MACHINE 256,500
FURNITURE 60,000
CUTTING MACHINE 80,000
RAW MATERIAL 140,000
PERMIT 2,100
LICENCE 10,000
RENT DEPOSIT 15,000
TOTAL 509,000

5.2 ESTIMATING OF WORKING CAPITAL

It is the remarking capital after meeting the re-operational cost.

Working capital – invested capital – preoperational cost.
600,000 – 509,000 = 91,000

23
 5.3 PROJECTED CASH FLOW STATEMENT
A cash flow existence in any business is justified as it helps the business anticipant when there
will be surplus and deficits of the funds hence the necessary measures.

5.3.1. PROJECT CASH FLOW PROJECTION FOR THE YEAR 2023

DETAILS JAN FEB MARCH APRIL MAY JUN JULY AUG SEP OCT NOV DEC TOTAL

OPENING 91,000 63,000 142,500 222,500 242,500 347,500 387,500 382,500 395,000 431,000 454,000 484,000 3,400,500
CASHFLOW

SALES 150,000 200,000 210,000 225,000 235,000 200,000 170,000 190,000 205,500 210,000 220,000 235,000 2,450,500

TOTAL 241,000 263,000 352,500 447,500 497,000 547,500 557,500 572,500 601,000 641,000 674,000 791,000 5,851,000
CASHFLOW

EXPENSES

PURCHASE 20,000 30,000 40,000 45,000 60,000 70,000 75,000 77,000 80,000 87,000 90,000 100,000 774,000

SALARIES 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 888,000

INSUARAN 20,000 20,000

CE

LOANS 30,000 40,000 70,000

2,000 1,500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 13,500
ELECTRICI
TY
ADVERTS 10,000 10,000 10,000 10,000 10,000 10,000 60,000

PERMIT 2,100 2,100

LICENCE 10,000 10,000

RENT 30,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 195,000

TOTAL 178,000 120,500 130,000 185,000 150,000 160,000 175,000 177,000 170,000 187,000 190,000 200,000 2,032,600
CASH OUT
FLOW
NET CASH 63,000 142,500 222,500 262,500 347,500 387,500 382,500 395,500 431,000 454,000 484,000 519,000 3,818,400

24
 5.3.2 PROFORMA CASH FLOW FOR THE YAER 2024

DETAILS JAN FEB MARCH APRIL MAY JUN JULY AUG SEP OCT NOV DEC TOTAL

OPENING 519,00 411,900 427,800 432,000 452,000 456,000 476,500 486,000 511,000 519,425 516,425 531,425 5,739,475
CASHFLOW

SALES 180,000 200,000 210,000 215,000 220,000 230,000 237,500 240,000 242,325 220,000 260,000 280,000 2,734,825

TOTAL 699,000 611,900 637,800 647,000 672,000 686,500 714,000 726,000 753,000 739,425 776,425 811,425 8,474,300
CASHFLOW

EXPENSES

PURCHASE 90,000 95,000 100,000 105,000 110,500 120,000 123,000 125,000 128,900 133,000 140,000 150,000 1,420,400

SALARIES 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 888,000

INSUARANCE 20,000 20,000

LOANS 60,000 60,000

ELECTRICITY 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000

ADVERTS 15,000 15,000 15,000 15,000 15,000 15,000 15,000 105,000

PERMIT 2,100 2,100

LICENCE 10,000 10,000

RENT 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000

TOTAL CASH 287,100 185,000 205,000 195,000 215,500 210,000 228,000 215,000 233,900 223,000 245,000 255,000 2,697,500
OUT FLOW

NET CASH 411,900 427,800 432,000 452,000 456,500 476,500 486,000 511,000 519,425 516,425 531,425 556,425 5,776,800

25
 5.3.3 PROFORMA CASH FLOW FOR THE YEAR 2025

DETAILS JAN FEB MARC APRIL MAY JUN JULY AUG SEP OCT NOV DEC TOTAL
H

OPENING 556,42 424,32 579,325 639,32 719,325 779,325 861,125 921,125 978,125 1,011,62 1,061,22 1,093,41 9,624,690
CASHFLOW 5 5 5 5 5 5

SALES 300,00 315,00 290,000 295,00 300,000 305,000 310,000 317,000 320,000 327,000 332,210 370,415 3,781,625
0 0 0

TOTAL 856,42 749,32 869,325 934,32 1,019,32 1,084,32 1,171,12 1,238,12 1,298,12 1,338,62 1,393,43 1,463,85 13,406,31
CASHFLOW 5 5 5 5 5 5 5 5 5 5 0 5

EXPENSES

PURCHASE 100,00 80,000 120,000 125,00 130,000 133,200 140,000 170,000 176,500 187,400 190,000 200,000 1,752,100
0 0

SALARIES 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 888,000

INSUARANC 20,000 20,000

E

LOANS 80,000 80,000

ELECTRICIT 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Y

ADVERTS 20,000 20,000 20,000 20,000 20,000 20,000 20,000 140,000

PERMIT 2,100 2,100

LICENCE 10,000 10,000

RENT 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000

TOTALCASH 422,10 170,00 230,000 215,00 240,000 223,200 250,000 260,000 286,500 277,400 300,000 310,000 3,084,200
OUT FLOW 0 0 0

NETCASH 424,32 579,32 639,325 719,32 779,325 861,125 921,125 978,125 1,011,62 1,061,62 1,093,43 1,153,85 10,322,11
5 5 5 5 5 5 0 5

26
 5.4 PROFORMA CASH FLOW PROJECTION FOR THE 1ST THREE
YEARS
DETAILS YEAR 2023 YEAR 2024 YEAR 2025
OPENING CASH 3,663,500 5,739,975 9,634,770
SALES 2,450,500 2,734,825 3,781,625
TOTAL CASH 6,114,000 8,474,800 13,416,395
INFLOW
EXPENSES
PURCHASE 774,000 1,420,400 1,752,100
SALARIES 888,000 888,000 888,000
TOTAL CASH OUT 1,662,000 2,308,400 2,640,100
FLOW
NET CASH 4,452,000 6,166,400 10,776,295

5.5 PROFORMA INCOME STATEMENT

It shows income generation of the business depending on the sales and expenses whereby
expenses have been reduced and sales increased.
5.5.1 PROFORMA INCOME STATEMENT FOR THE
FIRST YEAR 2023
DETAILS JAN FEB MARCH APRIL MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL

SALES 150,000 200,000 210,000 225,000 235,000 200,000 170.000 190,000 205,500 210,000 220,000 235,000 2,450,500

PURCHASE 20,000 30,000 40,000 45,000 60,000 70,000 75,000 77,000 80,000 87,000 90,000 100,000 774,000

GROSS 130,000 170,000 170,000 180,000 175,000 130,000 95,000 113,000 125,500 123,000 130,000 135,000 1,706,500
PROFIT
EXPENSES

SALARIES 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 888,000

ELECTRICITY 2,000 1,500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 13,500

RENT 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000

INSUARANCE 20,000 20,000

CASH FLOW 111,000 90,500 90,500 90,500 90,500 90,500 90,500 90,500 90,500 90,500 90,500 90,500 1,083,500
OUT

NET PROFIT 19,000 79,500 79,500 89,500 84,500 39,500 4,500 22,500 35,000 32,500 39,500 44,500 570,000

NET PROFIT 19,000 98,500 178,000 267,500 352,000 391,500 396,000 418,500 453,500 486,000 525,000
B/D
NET PROFIT 19,000 98,500 178,000 267,500 352,000 391,500 396,000 418,500 453,500 486,000 525,500 570,000
C/D

5.5.2 PROFORMA INCOME STATEMENT FOR THE YEAR 2024

27
DETAILS JAN FEB MARCH APRIL MAY JUNE JULY AUG SEP OCT NOV DEC

SALES 205,000 200,000 210,000 215,000 220,000 230,000 237,500 240,000 242,325 250,000 260,000 280,00

PURCHASE 90,000 95,000 100,000 105,000 110,500 120,000 123,000 125,000 128,900 129,000 140,000 150,00

GROSS 115,000 105,000 110,000 110,000 109,500 110,000 114,500 115,000 113,425 121,000 120,000 130,00
PROFIT

EXPENSES

SALARIES 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000

ELECTRICITY 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

RENT 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000

INSUARANCE 20,000

CASH FLOW OUT 110,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000

NET PROFIT 5,000 15,000 10,000 20,000 19,500 20,000 24,000 25,000 23,425 31,000 30,000 40,000

NET PROFIT 570,000 620,000 635,000 645,000 665,000 684,500 704,500 728,500 753,500 776,925 807,925 837,92
B/D

NET PROFIT 620,000 635,000 645,000 665,000 684,500 704,500 728,500 753,500 776,925 807,925 837,925 877,92
C/D

28
 5.5.3 PROFORMA INCOME STATEMENT FOR THE YEAR 2025
DETAILS JAN FEB MARCH APRIL MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL

SALES 300,000 315,000 290,000 295,000 300,000 305,000 310,000 317,000 320,000 327,000 332,210 370,41 3,781,62
5 5

PURCHASE 100,000 80,000 120,000 125,000 130,000 133,200 140,000 170,000 176,000 187,400 190,000 200,00 1,752,10
0 0

GROSS 200,000 235,000 170,000 170,000 170,000 171,800 170,000 147,000 144,000 139,600 142,210 170,41 2,029,52
PROFIT 5 5

EXPENSES

SALARIES 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 74,000 888,000

ELECTRICIT 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Y

RENT 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000

INSUARANC 20,000 20,000

E

CASH FLOW 110,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 1,100,00
OUT 0

NET PROFIT 90,000 145,000 80,000 80,000 80,000 81,800 80,000 57,000 54,000 49,600 52,210 80,415 930,025

NET PROFIT 877,925 967,925 1,112,925 1,192,925 1,272,925 1,352,925 1,434,725 1,514,7 1,571,725 1,625,725 1,675,325 1,727,5
B/D 25 35

NET PROFIT 967,925 1,112,92 1,192,925 1,272,925 1,352,925 1,434,725 1,514,725 1,571,7 1,625,725 1,675,325 1,727,535 1,807,9
C/D 5 25 50

29
 5.6 PROFORMA STATEMENT FOR THE THREE YEARS.
DETAILS 2023 2024 2025
SALES TOTAL 2,450,500 2,734,825 3,781,625
PURCHASE 774,000 1,420,400 1,752,100
GROSS PROFIT 1,676,500 1,314,425 2,029,525
EXPENSES
SALARIES 888,000 888,000 888,000
ELECTRICAL BILL 13,500 12,000 12,000
TOTAL EXPENSES 901,500 900,000 900,000
NET PROFIT 775,000 493,200 1,129,525

5.7 PROFORMA BALANCE SHEET

FIXED ASSORTS AMOUNT CAPITAL AND AMOUNT
NON-CURRENT LIABILITIES
ASSERTS
SEWING MACHINE 256,500 CAPITAL 450,000
CUTTING MACHINE 80,000
FUNITURE 60,000
LIABILITIES
CURRENT ASSERTS LOAN FROM THE 150,000
BANK
RAW MATERIALS 140,000 CREDITORS 100,000
PERMIT 2,100
LICENCE 10,000
CASH IN HAND 151,400
TOTAL 700,000 700,000

5.8 BREAK-EVEN ANALYSIS

It is a point where the business will either be making profit or loss i.e.
TOTAL REVENUE = TOTAL EXPENDITURE

TOTAL VARIABLE COST.

ITEMS AMOUNT
PURCHASE 774,000
STATIONARIES 19,700
ELECTRICITY 13,500
FUEL 90,000
TOTAL 887,200

30
 1. TOTAL MARGIN CONTRIBUTION.
=SALES – TOTAL VARABLE COST
2,450,500 – 921,500
= 1,529,000

2. CONTRIBUTION MARGIN PERCENTAGE.

CONTRIBUTION/SALES * 100
1,529,000/2,450,500 * 100
=62.4%

3. TOTAL FIXED COSTS.

ITEMS AMOUNT
SALARIES 888,000
INSUARANCE 10,000
LOAN REPAYMENT 60,000
TOTAL 958,000

4. BREAK EVEN POINT

TOTAL FIXED COST/CONTRIBUTION MARGIN PERCENTAGE * 100
958000/62.4% * 100
=153,525

5.9 PROFITIBILITY RATIOS.

5.9.1 GROSS PROFIT PERCENTAGE.
GROSS PROFIT/SALES * 100
1,676,500 / 2,450,500 * 100
=68.41%

31
 5.9.2 RETURN ON EQUITY
NET PROFIT/(CAPITAL INVESTED + NET PROFIT) * 100
775,000/1,475,000 * 100
=52.5%

5.9.3 RETURN ON SALES

= NET PROFIT / SALES * 100
775,000/2,450,500 * 100
= 31.6%

5.10 DESIRED FINANCING.

PRE OPERATIONAL COST + WORKING CAPITAL
509,000 + 91,000
= 600,000

5.11 DESIRED FINANCING.

1. OWN SAVINGS-450,000
2. BANK LOAN-150,000
3. CREDITORS-100,000

32