MWERO TOOLS AND

ELECTRICAL

MWERO MUZI

BUSINESS PLAN SUBMITTED TO KENYA NATIONAL

EXAMINATION COUNCIL AS PARTIAL FULFILMENT OF
AWARD OF DIPLOMA IN SOCIAL WORK AND COMMUNITY
DEVELOPMENT.

NOVEMBER 2022 SERIES

DECLARATION
I declare that this is my original work and has not been presented to any other college for award
of any certificate.

NAME : MWERO MUZI

SIGN …………………………………..

DATE ……………………………………..

The business plan project has been submitted to Kenya National Examination council Board with
my authority as supervisor.

MD.MARIAM

ii
DEDICATION

I dedicate this project to my family for financial and moral support.

iii
ACKNOWLEDGEMENT
I wish to acknowledge my sincere gratitude to all who has greatly attributed to the
accomplishment of this project. I wish to give my sincere gratitude to Md.mariam my supervisor.
He has guided through writing of this project. Special thanks to my parents both biological and
spiritual for their financial support, encouragement and prayers.

I also give ma sincere gratitude’s to my God for it was in Him that all this was accomplished.

iv
Table of content

Contents
DECLARATION..............................................................................................................................................ii
DEDICATION................................................................................................................................................iii
ACKNOWLEDGEMENT.................................................................................................................................iv
1.0 EXECUTIVE SUMMARY...........................................................................................................................1
1.1 BUSINESS DESCRIPTION.........................................................................................................................1
1.2 MARKETING PLAN..................................................................................................................................1
1.3 ORGANISATION AND MANAGEMENT....................................................................................................1
1.4 OPERATION /PRODUCTION PLAN..........................................................................................................1
1.5 FINANCIAL PLAN....................................................................................................................................1
CHAPTER TWO.............................................................................................................................................2
2.0 BUSINESS ADMINISTRATION.................................................................................................................2
2.1 BUSINESS NAME....................................................................................................................................2
2.2 BUSINESS LOCATION..............................................................................................................................2
2.3 TYPE OF OWNERSHIP.............................................................................................................................2
2.4 TYPE OF BUSINESS.................................................................................................................................3
THE ENTRY AND GROWTH STRATEGY..........................................................................................................3
2.5 Products and services............................................................................................................................4
2.6 Business industry...................................................................................................................................4
2.7 Business justification............................................................................................................................4
2.8 goals of the business.............................................................................................................................4
CHA PTER THREE..........................................................................................................................................5
3.1 MARKETING PLAN.................................................................................................................................5
CUSTOMERS................................................................................................................................................5
3.2 POTENTIAL CUSTOMERS........................................................................................................................5
3.3 MARKET PLAN.......................................................................................................................................5
3.4 COMPETITORS.......................................................................................................................................6

v
3.5 ADVERTISING AND PROMOTION STRATEGY..........................................................................................6
3.6 PRICING STRATEGY................................................................................................................................7
3.7 SALES STRATEGY....................................................................................................................................7
3.8 DISTRIBUTION STRATEGY......................................................................................................................7
CHAPTER FOUR............................................................................................................................................9
4.0 ORGANIZATIONAL PLAN........................................................................................................................9
4.1 ORGANIZATIONAL STRUCTURE..............................................................................................................9
4.2 KEY MANAGEMENT PERSONEL.............................................................................................................9
4.3 OTHER PERSONEL................................................................................................................................10
4.4 RECRUITING ,TRAINING AND PROMOTION OF PERSONEL...................................................................11
4.4.2 TRAINING..........................................................................................................................................11
4.5 RENUMERATION AND INCENTIVES FOR PERSONEL.............................................................................12
4.6 LICENCE AND PERMIT AND BY- LAW....................................................................................................12
4.7 SUPPORTING STAFFS AND SERVICES...................................................................................................12
CHAPTER 5.................................................................................................................................................13
5.0 OPERATIONAL PLAN............................................................................................................................13
5.1 OPERATIONAL FACILITIES AND CAPACITY PLAN..................................................................................13
5.2 OPERATIONAL STRATEGY....................................................................................................................15
5.2.2 MONTHLY LABOUR REQUIREMENT..................................................................................................15
5.3 OPERATIONAL PROCESS......................................................................................................................17
5.4 REGULATION AFFECTING OPERATION.................................................................................................17
CHAPTER 6.................................................................................................................................................17
6.0: FINANCIAL PLAN................................................................................................................................17
6.1: PREPARATION COST...........................................................................................................................17
6.2: WORKING CAPITAL.............................................................................................................................18
6.3: PROJECT CASH FLOW..........................................................................................................................19
6.4: PROFORMA INCOME STATEMENT.....................................................................................................23
6.5: PROFORMA BALANCE SHEET..............................................................................................................24
6.6 BREAK EVEN ANALYSIS........................................................................................................................25
6.7: PROFITABILITY RATIO.........................................................................................................................26
6.8: DESIRED FINANCING...........................................................................................................................27

vi
vii
1.0 EXECUTIVE SUMMARY

1.1 BUSINESS DESCRIPTION

The business will bear the name Mwero tools and electrical

The business will be located in Voi town Taita taveta county. The business will be operating
under one roof. The major activity will be to offer electrical installation services, maintenance
and sales of electrical accessories. The owner will be the sole proprietor.

1.2 MARKETING PLAN

The business will thrive to ensure that it gets a good share through offering quality and
affordable services and sales. The customer shall be reached through advertisement promotion
and also through diverse use of photocopied leaflets. The business expects to capture as excellent
market share through studying the weakness of competitors and improving them to enhance
growth.

1.3 ORGANISATION AND MANAGEMENT

This is where business strength lies. The Business wills employee 6 employees. The proprietor
will act as the top manager. The employee will be required to meet certain qualification in order
to be employed. The salary of employees shall be increased as per output of each individual.
Before the business kicks off the proprietor shall ensure that the business is registered and has
acquired the relevant license.

1.4 OPERATION /PRODUCTION PLAN

The enterprise will operate under the premise divided into for rooms. Almost all employees will
have room operate from in order to boost production. All installation will be done according to
the IEE REGULATION and inspected by qualified personnel before being commissioned to
operate.

1.5 FINANCIAL PLAN

The proposed business requires 500,000, the capital will come from owner saving loan and
friends contribution.
CHAPTER TWO

2.0 BUSINESS ADMINISTRATION

2.1 BUSINESS NAME

The business name will be Mwero tools and electronics. This is because of the nature of the
products and also attraction of the customers.The business requires a total amount of five
hundred thousand shillings[500000] to start off.

NO SOURCE AMOUNT PERCENTAGE

1 Owners saving 300000 60%
2 Donation from friends and relatives 125000 25%
3 Bank loan 75000 15%

2.2 BUSINESS LOCATION

Mwero tools and electricals shall have the following address

Power flex general Electrical

P.O BOX 0154

Voi Kenya

MOB:0792138047

EMAIL: mweromuzi75@gmail.com

2.3 TYPE OF OWNERSHIP

Mwero tools & electricals will be created under sole proprietorship form of a business unit
owned by Muzi mwero.The main reason for choosing this type of from of business are

I] For easy decision making

2
 Ii] For easy rising of starting capital

Iii] For flexibility of the business

2.4 TYPE OF BUSINESS

Mwero tools & electricals will be trade and service offering micro business which will be
dealing with selling industrial machines spare parts and all electricals accessories. There will be
also repair and maintainance of industrial machine at an affordable price.The business will be
having three employee who will be

i]Manager

ii]sales and repair person

iii]sales and marketing person

The business will aim to add stock after every single month.The business will also aim to beat all
other competitors at the end of five years.

THE ENTRY AND GROWTH STRATEGY

Mwero tools & electricals will offer 10% discount in any goods sold worth ten thousand and
above. It will also provide overalls and t shirts to any customers who will buy goods worth more
than ten thousand shillings and above.

It will make sure that the shop does not lack products so that the customers not to miss any
commodity at any given time.

It will also offer free delivery to any customer who are in nearby town like
mwatate,wundanyi,maungu and sagala.

3
2.5 Products and services
The variety of goods that will be offered include; Grinders, Drills, Circularsaw, Power saws,
Router machine, Cable wires, Prepay and post pay meter, Circuit brakes, Capacitors, Compactors
and others.

Some of the service that we will provide includes;

1. Free diagnosis of machines whenever they brought them for repair and maintenance
2. After sell free delivery for the commodity bought from our shop.
3. We will offer discount on the product bought by each and every customer.

2.6 Business industry

Mwero tools & electricals belong to trade and service industry.

It is a medium size business which uses a simple and modern technology.

2.7 Business justification

The business will start due to high demand of products in voi town, availability of product and
even presence of the customers .

2.8 goals of the business

The goal of the business will be archived as the owner of the business will be satisfying the need
of the customers by ensuring they sale and repair products in affordable prices.

The business will aim to make profit and expand the business by the end of each year

4
CHA PTER THREE

3.1 MARKETING PLAN

CUSTOMERS

3.2 POTENTIAL CUSTOMERS

Mwero tools & electricals will target all the welding customers in voi town and nearby
areas.

INDIVIDUAL CUSTOMERS

Mwero tools & electricals will be also target the people who are constructing houses in VOI
area.it will also target far places customers like Mombasa,Nairobi and Taveta.

3.3 MARKET PLAN

The total expected population of customers is 3,000.

The market share is 1,200

The percentage of share will be (1200x100),(3000)=40%

5
 MARKET SHARE

COMPETITORS 60%

Tuva tools& electrical

3.4 COMPETITORS
Mwero tools & electricals will face a stiff competition from Tumaini tools an general
hardware, Power spring electrical, Taita distributors and Kevo electrical.

More effort will be emphasized since it has variety of brand and work s for long hours.

COMPETITORS MWERO KEVO POWER TUMAINI

TOOLS SPRING
LOCATION VOI KARAKOO VOI KARIAKO
O
PRICE OF PRODUCTS LOW HIGH LOW HIGH
AVAILABILITY OF MANY FEW MANY FEW
PRODUCTS
QUALITY OF PRODUCTS GOOD LOW LOW AVERAGE

WORKING HOURS 12 10 10 12

6
3.5 ADVERTISING AND PROMOTION STRATEGY
3.1.1 ADVERTISING STRATEGY

The products will be advertised in social media like face book, whastApp and instergram so
that it reaches large volume of people.

Any one who will bring a new customer will be given a t-shirt for free.

It will also advertised on two radio station twice a week for one month for sh 800 per
advertisements. Which will cost a general amount of sh 6400 per month

3.1.2 PROMOTION STRATEGY

Mwero tools & electrical will use sale promotion so as to encourage customers to buy
more products

3.6 PRICING STRATEGY

Mwero tools & electrical will price its products and services depending with the price of
other competitors
The prices of the much products and services rendered will be negotiable so that to attract
customers and due change of demand of the product and services. Some products will be
fixed in price since there prices will be common to the competitors

3.7 SALES STRATEGY

Incase Mwero tools & electrical is to offer credit sales therefore the credit will be
considered to be offered to frequently potential customers. The large shopping will also
be given 10% discount of the total goods bought. There will be credit policies which they
include
I]No credit sale to new customers
Ii]No credit sale of above 10000 per month
III]No customers will be offered a credit sales of good worth over 200/= unless it’s a
company.

7
3.8 DISTRIBUTION STRATEGY
The channel distribution of the business will be wholesale to retail then final
customers .There will be also sale direct to final customers, the means of transport will be
road which will be costing 15000 per month. Power flex general electrical will face
problem of pour road during rainy season which may force the sales men to carry the
products to the final customers.

8
CHAPTER FOUR

4.0 ORGANIZATIONAL PLAN

4.1 ORGANIZATIONAL STRUCTURE

MANAGER

SALES & REPAIR PERSON SALES&MARKETING PERSON

4.2 KEY MANAGEMENT PERSONEL

Mwero Muzi will be the owner of the business aged 25 years.

9
 MANAGER SALES&REPAIR SALES
PERSON &MARKETING
PERSON
QUALIFICATION -Having a diploma in -certificate in electrical -certificate in sales and
S business administration &electronic engineering marketing
-knowledge in computer -knowledge in computer
accounting accounting
EXPERIENCES - 2years experience in tools -at least one year - eight months
town power tools and experience in related experience in the same
machineries. field field
DUTY & -Recruiting and dismissing -receive and repair faulty -sales and market
RESPONSIBILITI of staffs machines products
ES - decision on how to meet -make sales and charge -ensures goods are
the end goals of the repair cost to the stored well
business customers -ensure customers get
there required products
in time

4.3 OTHER PERSONEL

CASUAL WORKER

QUALIFICATIONS

Should be having at least a primary education certificate .Should be humble and

having good communication skills.

DUTIES AND RESPONSIBILITIES

-Cleaning the business premises

-Delivering goods with the help of the customer

-Delivering important messages to the relative people

10
 SECURITY GUARD

QUALIFICATION

-Should be having at least a primary education certificate

-should be healthy and energetic enough.

DUTIES AND RESPONSIBILITIES

-To keep security in the business premises

-The workers will be paid monthly and also received overtime payment incase they will
work past the working hours.

4.4 RECRUITING ,TRAINING AND PROMOTION OF PERSONEL

4.4.1 RECRUITMENT

Means of recruitment will be advertisement through posters which will be posted

all over the places around the premises.

It will be also advertised on social media like WhatsAPP and Facebook.

4.4.2 TRAINING
The business will train its members before assign duties to them.

This will help in improvement of high productivity in the business.

4.4.3 PROMOTION OF PERSONEL

Performance appraisal will lead to promotion of some employees in power flex

electrical

11
 High discipline well performance of job and faithfulness will lead to increasement
of salary.

Dismissal of employees may also occur due to the following reasons

I]if there is indiscipline cases

Ii] Mismanagement of funds

Resignation may take place due to age if one reached the retirement age,prolonged sickness or
death.

4.5 RENUMERATION AND INCENTIVES FOR PERSONEL

PERSONEL NO SALARY PER OTHER TOTAL
MONTH BENEFIT
MANAGER 1 20000 20000
SALES AND 1 10000 2000 12000
REPAIR
PERSON
SALES AND 2 7000 1000 8000
MARKETING
PERSON
CASUAL 1 4000 1000 5000
WORKER
SECURITY 1 4000 1000 5000
GUARD
TOTAL 58000

4.6 LICENCE AND PERMIT AND BY- LAW

The business will require a single business permit from Taita Taveta County according to
the local license Authority which cost 6500 with KRA charges inclusive.

12
4.7 SUPPORTING STAFFS AND SERVICES
The business will acquire bank services through Equity Bank in VOI TOWN.It will help in
saving money which will be collected in daily bases.It will also have

Its lawyer incase there is any legal case, he or she will be responsible at it.

CHAPTER 5

5.0 OPERATIONAL PLAN

5.1 OPERATIONAL FACILITIES AND CAPACITY PLAN

ITEM NO REQUIRED COST PER ITEM TOTAL COST
COMPUTER 1 10000 10000
TELEPHONE 2 2000 4000
TABLE 2 500 1000

13
CHAIR 4 200 800
FUN 2 2000 4000
DRAWS 2 1000 2000
GRAND TOTAL 21800
Power flex will purchase its facilities on Cash bases

5.1.1 MAINTAINANCE AND REPAIR OF MACHINERY AND EQUIPMENTS

Computer will have general services after every two month.

Funds will be serviced after every one month and chairs and table will be cleaned every
day.

5.1.2 PROPOSED WORKSHOP LAYOUT

STORE
MANAGER’SOFFICE TOILET

DISPLAYED SHOP REPAIR WORKSHO

ENTRY EXIT

14
 5.1.3 OTHER EQUIPMENTS

ITEM NO REQUIRED COST PER UNIT TOTAL

Generators 1 20000 20000
Calculators 2 1000 2000
Blowers 1 4000 4000
Total 26000

5.2 OPERATIONAL STRATEGY

5.2.1 MONTHLY MATERIAL REQUIREMENT

TYPE OF FREQUENCY QUANTITY COST PER TOTAL COST

MATERIAL UNIT
Grinders weekly 5pcs 8000 40000
drills weekly 4pcs 4000 16000
.Sanding papers Weekly 100pcs 50 5000
Cable wires Monthly 2roles 3000 6000
jigsaw Monthly 5 5000 25000
blowers Monthly 3 4000 12000
Circular saw Monthly 5 5000 3000
Total 134000

15
 5.2.2 MONTHLY LABOUR REQUIREMENT
5.2.2.1 DIRECT LABOUR

NO OF WORKERS SALARY PER NO EMPLOYEES TOTAL

MONTH
MANAGER 20000 1 20000

,5.2.2.2 INDIRECT LABOUR

NAME OF SALES PER NO OF TOTAL

WORKERS MONTHt EMPLOYEES
SALES AND 8000 2 16000
MARKETING
PERSON
REPAIR PERSON 12000 1 12000
CASUAL WORKER 5000 1 5000
SECURITY GUARD 5000 1 5000
TOTAL 29000

5.2.3 MONTHLY OPERATIONAL EXPENCES

MONTHLY OVERHEADS

ITEM AMOUNT
ELECTRICITY 1500
RENT 20000
TRANSPORT 5000
ADVERTISEMENT 9000

16
BUSINESS CARDS 1200
PHONE CREDIT 2000
TOTAL 28700

5.2.4 COST OF OPERATION

Monthly material cost+ monthly labor cost +monthly overheads expenditure.

COST AMOUNT
MATERIAL COST 134000
LABOUR COST 49000
OVERHEADS EXPENDITURE 28700
TOTAL 201700

5.3 OPERATIONAL PROCESS

Receiving products from suppliers

Recording of the stock

Arrange them at the store

Supply to the customers and displayed them.

5.4 REGULATION AFFECTING OPERATION

The business should have a trading license to operate annually. The employees and the business
should be insured by a liable insurance company.

17
CHAPTER 6

6.0: FINANCIAL PLAN

6.1: PREPARATION COST

Cost incurred before starting;

Rent/lease 10,000

Power 5,000

Water 1,000

Advertisement 2,000

Inventory 54,650

Machine and equipment 103,500

Transport 5,000

Repair and maintenance 34,000

License 10,000

TOTAL= 217,150

6.2: WORKING CAPITAL

Items First Year Second Year Third Year
Current assets
Stock 100,000 100,000 100,000
Cash in hand 30,000 40,000 50,000
Cash in bank 55,000 60,000 62,000
Debtors 15,000 20,000 25,000
Total current assets = 200,000 = 220,000 = 237,000
Current liabilities 18,000 20,000 30,000

18
Bank overdrafts 40,000 50,000 60,000
Creditor 30,000 40,000 35,000
Total current = 88,000 = 110,000 = 125,000
liabilities
Working capital 288,000 310,000 362,000

19
 6.3: PROJECT CASH FLOW
Item JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC Total
Cash in flow

Sales 220,00 221,00 222,00 223,00 224,00 225,00 226,00 226,00 228,00 229,00 230,00 231,00 2,706,00
0 0 0 0 0 0 0 0 0 0 0 0 0
Debtors 15,000 20,000 25,000 20,000 80,000
Total outflow 220,00 236,00 222,00 223,00 244,00 250,00 226,00 227,00 228,00 229,00 230,00 251,00 2,786,00
0 0 0 0 0 0 0 0 0 0 0 0 0
Cash outflow
Purchase 21,000 22,000 23,000 24,000 25,000 26,000 27,000 28,000 29,000 30,000 31,000 32,000 318,000
Salaries 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 1,200,00
0 0 0 0 0 0 0 0 0 0 0 0 0
License&Per 10,000 10,000
mit
Electricity 3,000 4,000 5,000 2,000 3,000 4,000 6,000 5,000 4,000 3,000 2,000 6,000 47,000
Water 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 1,300 1,200 2,000 2,100 19,000
Loan Payment 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 50,400
Insurance 15,000
Telephone 6,000 1,100 1,000 1,200 1,300 1,800 1,700 2,600 1050 1060 3,000 4,000 25,810
Transport 2,500 2,000 2,600 2,700 2,800 3,000 3,100 3,000 3,200 33,000 30,000 31,000 34,300
Advertisement 2,000 2,100 2,200 2,300 2,500 2,400 2,300 2,200 2,100 2,000 2,100 2,200 26,400
Total Outflow 164,90 136,70 139,40 137,90 140,40 143,10 146,10 146,90 144,85 144,76 174,30 181,50
 0 0 0 0 0 0 0 0 0 0 0 0
Net cash 55,100 99,300 82,600 85,100 83,600 81,900 79,900 79,100 83,150 84,240 55,700 69,500
Accumulated 55,100 154,40 237,00 322,10 405,70 487,60 567,50 646,60 729,75 813,99 869,69 939,19
cash 0 0 0 0 0 0 0 0 0 0 0

Item JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC Total
Cash in flow

Sales 220,00 221,00 222,00 223,00 224,00 225,00 226,00 226,00 228,00 229,00 230,00 231,00 2,706,00
0 0 0 0 0 0 0 0 0 0 0 0 0
Debtors 15,000 20,000 25,000 20,000 80,000
Total outflow 220,00 236,00 222,00 223,00 244,00 250,00 226,00 227,00 228,00 229,00 230,00 251,00 2,786,00
0 0 0 0 0 0 0 0 0 0 0 0 0
Cash outflow
Purchase 21,000 22,000 23,000 24,000 25,000 26,000 27,000 28,000 29,000 30,000 31,000 32,000 318,000
Salaries 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 1,200,00
0 0 0 0 0 0 0 0 0 0 0 0 0
License&Per 10,000 10,000
mit
Electricity 3,000 4,000 5,000 2,000 3,000 4,000 6,000 5,000 4,000 3,000 2,000 6,000 47,000

21
Water 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 1,300 1,200 2,000 2,100 19,000
Loan Payment 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 50,400
Insurance 15,000
Telephone 6,000 1,100 1,000 1,200 1,300 1,800 1,700 2,600 1050 1060 3,000 4,000 25,810
Transport 2,500 2,000 2,600 2,700 2,800 3,000 3,100 3,000 3,200 33,000 30,000 31,000 34,300
Advertisement 2,000 2,100 2,200 2,300 2,500 2,400 2,300 2,200 2,100 2,000 2,100 2,200 26,400
Total Outflow 164,90 136,70 139,40 137,90 140,40 143,10 146,10 146,90 144,85 144,76 174,30 181,50
0 0 0 0 0 0 0 0 0 0 0 0
Net cash 55,100 99,300 82,600 85,100 83,600 81,900 79,900 79,100 83,150 84,240 55,700 69,500
Accumulated 55,100 154,40 237,00 322,10 405,70 487,60 567,50 646,60 729,75 813,99 869,69 939,19
cash 0 0 0 0 0 0 0 0 0 0 0

22
Item JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC Total
Cash in flow

Sales 220,00 221,00 222,00 223,00 224,00 225,00 226,00 226,00 228,00 229,00 230,00 231,00 2,706,00
0 0 0 0 0 0 0 0 0 0 0 0 0
Debtors 15,000 20,000 25,000 20,000 80,000
Total outflow 220,00 236,00 222,00 223,00 244,00 250,00 226,00 227,00 228,00 229,00 230,00 251,00 2,786,00
0 0 0 0 0 0 0 0 0 0 0 0 0
Cash outflow
Purchase 21,000 22,000 23,000 24,000 25,000 26,000 27,000 28,000 29,000 30,000 31,000 32,000 318,000
Salaries 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 1,200,00
0 0 0 0 0 0 0 0 0 0 0 0 0
License&Per 10,000 10,000
mit
Electricity 3,000 4,000 5,000 2,000 3,000 4,000 6,000 5,000 4,000 3,000 2,000 6,000 47,000
Water 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 1,300 1,200 2,000 2,100 19,000
Loan Payment 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 50,400
Insurance 15,000
Telephone 6,000 1,100 1,000 1,200 1,300 1,800 1,700 2,600 1050 1060 3,000 4,000 25,810
Transport 2,500 2,000 2,600 2,700 2,800 3,000 3,100 3,000 3,200 33,000 30,000 31,000 34,300
Advertisement 2,000 2,100 2,200 2,300 2,500 2,400 2,300 2,200 2,100 2,000 2,100 2,200 26,400
Total Outflow 164,90 136,70 139,40 137,90 140,40 143,10 146,10 146,90 144,85 144,76 174,30 181,50
0 0 0 0 0 0 0 0 0 0 0 0
Net cash 55,100 99,300 82,600 85,100 83,600 81,900 79,900 79,100 83,150 84,240 55,700 69,500
Accumulated 55,100 154,40 237,00 322,10 405,70 487,60 567,50 646,60 729,75 813,99 869,69 939,19
cash 0 0 0 0 0 0 0 0 0 0 0

24
6.4: PROFORMA INCOME STATEMENT
ABBY’S SEEDS AND CEREALS DISTRIBUTORS Proforma income statement for years
starting 2024

ITEMS 2024 2025 2026

Sales 2,706,000 3,700,000 4,705,000
Cost of goods 706,000 1,700,000 2,705,000
Gross profit 2,000,000 2,000,000 2,000,000
Overhead expenses
Salary and wages 1,200,000 1,300,000 1,300,000
License & permit 10,000 15,000 20,000
Loan payment 50,400 55,000 53,000
Electricity 47,000 49,000 51,000
Water bill 19,000 20,000 21,000
Insurance 15,000 18,000 20,000
Transport 34,300 35,000 35,500
Telephone 25,810 26,000 26,500
Advertisement 26,400 27,000 27,800
Total overhead expenses 1,427,910 1,545,000 1,554,800
Net profit before tax 572,090 455,000 445,200
Provision for tax(30%) 171,627 136,5000 133,560
Net profit after tax 400,463 318,500 311,640

25
6.5: PROFORMA BALANCE SHEET
ITEM As per Opening As per year As per year
1/1/2024 31/12/2025 31/12/2025

Assets
Current assets
Cash 30,000 40,000 50,000
Stock 100,000 100,000 100,000
Debtor 75,000 80,000 85,000
Total current assets 205,000 220,000 235,000
Fixed assets
Motor vehicle 34,300 34,400 34,500
Machinery 12,000 15,000 20,000
Tools and equipments 91,500 93,000 94,000
Motor vehicle 137,800 142,400 148,500
Total assets 342,800 362,400 381,500
Current liabilities
Creditors 30,000 40,000 50,000
Bank overdraft 40,000 50,000 60,000
Total current liability 70,000 90,000 110,000
Long term loan
Bank loan 50,400 50,600 50,800
Owner equity 550,000 560,000 570,000
Net profit 400,463 318,500 311,640
Total long term 1,000,863 929,100 932,440
liability
Total liability and 1,070,863 1,019,100 1,042,440
equity

6.6 BREAK EVEN ANALYSIS

Particulars Amount
26
Fixed assets 10,000
License 1,200,000
Salary & wages 15,000
Insurance 50,000
Loan payment 50,400
Total fixed assets 1,275,400
Variable cost
Advert 26,400
Transport 34,300
Electricity 47,000
Water bill 19,000
126,700
Total

(i) Total contribution (iii) Contribution margin

percentage

= Sales- Variable cost =total contribution ×100

2,706,000-126,700 Sales

= 2,579,300 = 2,579,300×100

2,706,000
= 95.32%

(ii) Total fixed cost (iv) Break even analysis

= 1,275,400 = Fixed cost

contribution

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 = 1,275,400

95.32

= 13,380.19303

6.7: PROFITABILITY RATIO

They are ratios that are used to calculate the profitability.

1. Gross profit margin

Gross profit ×100
Sales
2,000,000×100
2,706,000
= 73.91%

2. Return on equity
Net profit after tax ×100
Owner’s equity

400,463 × 100

550,000

= 72.6%

3. Return on investment
Net profit after tax × 100
Total investment
400,463 × 100
1,070,863
=37.3%

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6.8: DESIRED FINANCING
Item Amount
Pre-operation cost 103,500
Working capital 288,000
Fixed assets 109,800
Total desired financing = 500, 300

6.9: PROPOSED CAPITALIZATION

1 Owners saving 300000

2 Donation from friends and relatives 125000
3 Bank loan 75000

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