BUSINESS PLAN

YEGO’S TIMBER SEASONING COMPANY.

PRESENTED BY: COLLINS KIPYEGO

INDEX NUMBER: 523102/0136

ADM. NO: DCE/0055/21F

CENTER NAME: ALDAI TECHNICAL TRAINING INSTITUTE

CENTER CODE: 523102

COURSE CODE: 2707

PAPER NO: 2707/ 305B

SUPERVISOR: MADAM VIBIAN.

A BUSINESS PLAN SUBMITTED TO THE KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILLMENT FOR THE AWARD OF DIPLOMA IN CIVIL ENGINEERING AT ALDAI TECHNICAL TRAINING
INSTITUTE

EXAMINATION SERIES NOVEMBER 2023 SERIES

i
DECLARATION.
I wish to declare that this is my own original work and that it has not been presented to any other
examining body for the purpose of the award of Diploma or certificate.

CANDIDATE’S NAME:

INDEX NUMBER: ………………………………………………………………………………

SIGNATURE: …………………………………………………………………………………….

DATE:

……………………………………………………………………………………………...

This project has been submitted to the Kenya national examination council with the approval of my
supervisor.

SUPERVISOR’S NAME:

DATE: …………………………………………………………………

SIGNATURE: ………………………………………………………...

ii
DEDICATION.

I dedicate this business plan to my parents for both moral and financial support which greatly
contributed to the success of the business of this plan, without them I could not have come this far.

May God bless them abundantly.

iii
ACKNOWLEDGEMENT
My sincere thanks go to my supervisor Mr. Olunga James for the fruitful discussion and providing me
with reliable suggestions and guidance in the completion of my project by going through the manuscript
and correcting where necessary.

Thanks also go to God who saw me through successfully. Heartfelt thanks also go to Aldai technical
Training institute for accepting me as a student and for providing me with the opportunity of carrying
out the project.

iv
EXECUTIVE SUMMARY

Every year, approximately 10,000 people around Toloita and Moiben regions seek well-seasoned timber
services for the purpose of construction project, these services include: wooden door and windows
making, tanks and other services that are related to woodwork works, however since, the potential
service providers to offer the service are not near these potential clients; the nearest place they can get
the service is either from Eldoret or even farther away; this therefore tends to be a precious business
gap for woodwork seasoning, this business plan for Des Timber Seasoning Company, which is proposed
to be situated along Moiben-Toloita Road; thus is designed to propose a couple of mechanism,
measures, and ways for acquiring the necessary resources in which the Des Timber Seasoning Company
business can thrive and even expand into a number of branches not only within Moiben Sub-county, but
across the entire Uasin Gishu County, this would be after an immense research about the market of
woodwork products for building which has clearly been shown by the presence of gap as stated above, it
would also be after closely identifying the strength and weaknesses that the sole proprietor would have
to navigate through the competitiveness of the other business in the industry as (NORTH, 2016) states.

Des Timber Seasoning Company would be located along Moiben-Toloita road, in Moiben Sub- County,
in Uasin Gishu County, approximately 10 meters from the highway, and would solely be owned by
Desmond Kiprop who is currently a student at Aldai Technical Training Institute undertaking a Diploma
in Civil Engineering in the final year of study. He intends to spearhead the opening of the business on
January 2023 after consolidating and putting together the necessary resources such as: financial and
human resources. The business tends to start with a capital of KSH 1,500,000 which the sole proprietor
intends to consolidate from a number of sources. One of the sources would be KSH 200,000
contribution from friends, KSH 600,000 from the proprietor’s savings and finally KSH 700,000 loan from
KCB bank. The human resources would constitute 6 employees; the sole proprietor who would be the
manager of the business, 3 wood scientists for technical duties of treating the wood, 1 accountant and 1
cleaner. However, the number of these employees would be subjected to change depending with the
business would be performing in each financial year. In addition, the business accounts department
would be preparing books of accounts such as balance sheet and ledgers after every transaction has
been made and after every financial year, which would help in determining the financial position of the
business.

The sole proprietor, who would be Desmond Kiprop will be the core manager responsible for the
decisions for daily running of the business to success. The other employees of Des Timber Seasoning
Company would be receiving the orders from the owner of business; however, the allapproach
communication channels would still be acceptable; i.e., the top-down and bottom-up communication
approaches would be adopted. The Des Timber Seasoning Co. business would also adopt various
marketing strategies in order to increase the potential customers and donors for the business. These
include: Social media marketing, local radio advertisement, newspaper advertisement and other
advertisement channels that are deemed suitable in increasing the clients to purchase the steelwork
products.

DECLARATION. ..................................................................................................................................ii

DEDICATION. .................................................................................................................................... iii

v
ACKNOWLEDGEMENT ....................................................................................................................... iv

CHAPTER ONE....................................................................................................................................1

1.1 BUSINESS DESCRIPTION....................................................................................................................... 1

1.2 MARKETING PLAN................................................................................................................................ 1

1.3 ORGANIZATION PLAN .......................................................................................................................... 1

1.4 PRODUCTION PLAN/OPERATION PLAN ............................................................................................... 1

1.5 FINANCIAL PLAN .................................................................................................................................. 2

CHAPTER TWO...................................................................................................................................2

2.0 BUSINESS DESCRIPTION....................................................................................................................... 2

2.1 BUSINESS NAME .................................................................................................................................. 2

2.2 BUSINESS LOCATION AND ADDRESS ................................................................................................... 3

2.3. FORM OF OWNERSHIP ....................................................................................................................... 3

2.4 TYPE OF BUSINESS ............................................................................................................................... 3

2.5 PRODUCTS/SERVICES........................................................................................................................... 3

2.6 INDUSTRY ............................................................................................................................................. 4

2.7 GOALS OF BUSINESS ............................................................................................................................ 4

2.8 ENTRY AND GROWTH STRATEGY ........................................................................................................ 4

CHAPTER THREE.................................................................................................................................5

3.0 MARKETNG PLAN................................................................................................................................. 5

3.1 CUSTOMER .......................................................................................................................................... 5

3.2 MARKET SHARE.................................................................................................................................... 5

3.3 COMPETITION ...................................................................................................................................... 5

3.4 PRICING STRATEGY. ............................................................................................................................. 6

3.5 SALE TACTICS ....................................................................................................................................... 6

3.6 SALES TEAM. ........................................................................................................................................ 6

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 3.7 SELLING POLICY AND TIMING .............................................................................................................. 7

3.8 DISTRIBUTION STRATEGY .................................................................................................................... 7

CHAPTER FOUR..................................................................................................................................8

4.0 ORGANIZATIONAL STRUCTURE ........................................................................................................... 8

4.1 ORGANIZATIONAL CHART.................................................................................................................... 8

4.2 KEY MANAGEMENT PERSONNEL/BUSINESS MANAGERS ................................................................... 8

4.3 REMUNERATION AND INCENTIVES FOR PERSONNEL ....................................................................... 11

4.4 LICENSE, PERMITS AND BY-LAWS ...................................................................................................... 11

4.5 OTHER SUPPORT SERVICES................................................................................................................ 12

CHAPTER FIVE.................................................................................................................................. 12

5.0 OPERATIONAL/PRODUCTION PLAN .................................................................................................. 12

5.1 OPERATIONAL PLAN .......................................................................................................................... 12

5.2 PRODUCTION FACILITIES ................................................................................................................... 12

5.3 TOOLS AND MATERIALS..................................................................................................................... 12

5.4 PRODUCTION STRATEGY ................................................................................................................... 13

5.5 COST OF MATERIALS AND EQUIPMENTS .......................................................................................... 13

5.6 PRODUCTION PROCESS ..................................................................................................................... 14

5.7 REGULATIONS AFFECTING OPERATIONS. .......................................................................................... 14

5.8 SUPPORT SERVICES ............................................................................................................................ 15

CHAPTER SIX.................................................................................................................................... 15

6.0 FINANCIAL PLAN ................................................................................................................................ 15

6.1 PRE-OPERATIONAL COST. .................................................................................................................. 15

6.2 WORKING CAPITAL ESTIMATES ......................................................................................................... 16

6.3 PROFORMA CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DEC 2023 (1ST YEAR) ................. 18

6.3.1 PROFORMA CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DEC 2024, (2ND YEAR) ........... 20
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 6.3.2 PROFORMA CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DEC 2025, (3ND YEAR)............. 22

6.4 PROFOMA PROFIT LOSS ACCONT FOR YEAR 1 (2023) ................................................................... 25

6.5 PROFOMA PROFIT AND LOSS ACCOUNT FOR YEAR 2 (2024)......................................................... 26

6.6 PROFOMA PROFIT AND LOSS ACCOUNT FOR YEAR 3 (2025)......................................................... 28

6.6.1 BALANCE SHEET AS AT THE BEGINNING OF OPERATION 2023 ...................................................... 30

6.7 BALANCE SHEET AS AT 31ST DECEMBER 2023 ............................................................................... 32

6.8 BALANCE SHEET AS AT 31ST DECEMBER 2024 ............................................................................... 33

6.9 BREAK EVEN CHART. .................................................................................................................. 36

6.9.3 BREAK EVEN ANALYSIS ................................................................................................................... 37

6.9.4 DESIRED FUNDING .......................................................................................................................... 37

6.9.5 PROPOSED CAPITALIZATION .......................................................................................................... 37

viii
CHAPTER ONE
1.0 EXECUTIVE SUMMERY

1.1 BUSINESS DESCRIPTION

The name of the business is called DES TIMBER SEASONING COMPANY. The business is a sole
proprietorship owned by Mr. Desmond, who is currently in the third year of study, undertaking a
diploma in civil engineering course at Aldai Technical Training Institute. The enterprise is destined to
start its operation in the year 2023 upon the completion of my diploma level. The enterprise aims at
creating employment and making profit.

The name shows that the business will be dealing with buying and selling of seasoned timber products
like roofing timber, fencing posts, building posts, etc.

The business is located near Toloito center, along Eldoret-Kabenes road at approximately 50 meters off
the highway.

1.2 MARKETING PLAN

The main customers will be from within Moiben, Toloito, Iten and the entire Eldoret town. There is
competition from the other competitors but I intend to use skills in promoting the business. The firm will
offer the best services to customers and ensure that all the goods are sold at the right price.

1.3 ORGANIZATION PLAN

The business shall employ qualified personnel in different sections of the business. The vacancies will be
advertised on posters and through the media. The business shall require other support services such as
postal services, insurance, banking and telephone.

1.4 PRODUCTION PLAN/OPERATION PLAN

The business will start on January 2023 upon completion of school. The business will operate from
Monday to Friday at 8:00a.m and close at 6:00p.m. The operation on Saturday will be from 8:00a.m and
close at 2: 00p.m in the afternoon.

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The initial requirement of capital will be from my own personal savings, friends, loan and from family.

SOURCE AMOUNT IN KSHS.

Personal savings 600,000

Family & Friends 200,000

Loan 700,000

TOTAL 1, 500,000

1.5 FINANCIAL PLAN

The business shall be determining the performance of every year to show whether the business is
getting a profit or loss. The business shall work hard to ensure that the business is getting a profit.

CHAPTER TWO
2.0 BUSINESS DESCRIPTION
2.1 BUSINESS NAME
The name of the business is DES TIMBER SEASONING COMPANY. The name is quite significant for easy
identification of the business. The name of the business shows that the shop will be dealing with selling
of seasoned timber products like roofing timber, fencing posts, building posts, etc.

The capital will from savings, family, loan and from friends. The contribution will be as follows.
Savings 100,000

Loan 50,000

Friends 60,000

Family 120,000

Total 330,000

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2.2 BUSINESS LOCATION AND ADDRESS
The business is located at Moiben town near the stage to facilitate the transportation of products.

Communication and correspondence will be facilitated through my vital part office box and phone. The

address of my business will be as follows: -

DES TIMBER SEASONING COMPANY,

P.O BOX 7,

Moiben.

2.3. FORM OF OWNERSHIP

The type of business will be sole proprietorship. The reason for starting up a sole proprietorship business
is because it needs less capital. I shall employ casual and temporary a worker to help me in my business.
This brings about the way of creating job opportunities to people around the village.

2.3.1 RESIDENCE

The owner of the business lives in Uasin Gishu county.

2.4 TYPE OF BUSINESS

The business is going to be the Timber Seasoning Company that deals with buying timber from farmers,
treating them and selling them to retailers. It will be a trade type business. The business would like to
provide services to its customers who for example offer after sale services. Customers who buy in large
quantities will be given transport and discount.

2.5 PRODUCTS/SERVICES
The business is intended to sale different types of timber products.

Company timber products.

ITEM PRODUCT FEATURE

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 1 Building posts New

2 Roofing poles New

3 Fencing poles New

4 Columns New
supporting
woods

2.6 INDUSTRY
The business belongs to trading and it will be small scale business. It will be characterized by the fact
that there is no big equipment of those found in large scale wood seasoning companies. Also, services
offered will be limited.

The numbers of workers who will be working are in small members as compared to that of large trading
industry.

2.7 GOALS OF BUSINESS

i. The primary goal of the business is to make profit which will act as a driving force in accomplishing
its objectives. ii. To create employment opportunities within the area for example villager like form
four leavers and class eight leavers.
iii. Promoting the living standard of people.

iv. Attracting more customers hence beating the competitors.

2.8 ENTRY AND GROWTH STRATEGY

I will penetrate and own acceptance in the market and offering quality products and affordable or fair
prices for its customers compared to those of existing competitors from the town.

I will also conduct promotions services and try to access customers’ need. The promotions conducted
by: -

i. Advertising the product.

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 ii. Salesmanship of which will be the great priority since these will be limited ability to
advertise heavily.

CHAPTER THREE
3.0 MARKETNG PLAN
The marketing of the product is on the basis of the success of the enterprise. It makes one to know if the
project is making profit or loss.

3.1 CUSTOMER
The market is very wide and congested such that my enterprise alone cannot satisfy it; DES

TIMBER SEASONING COMPANY will be targeting the following customers: -

1. Schools and technical institutes;

Various schools from around will be buying the seasoned wood for example; for fencing,
building projects.
2. Farmers around Eldoret town.
Eldoret town is the district headquarters and headquarters of North Rift hence farmers,
builders, contractors and government enterprises from all over the county, will find easy spot
for well-seasoned woods for their desired projects.

3.2 MARKET SHARE

At the start of the business, it is expected to capture at least 60% of the market share and the remaining
40% will be shared amongst competitors. The seasoned wooden products produced are on high demand
by the people within the district especially customers from within the town.

3.3 COMPETITION
As much as I am concerned for aiming success of my business, I know that there are many competitors
aiming to outdo me. As an entrepreneur I will try to know the number of my competitors in the town. As
far the only competitors are: -

i. CHEP WOOD PRODUCTS CO.,

P.O BOX 10, Moiben.

The competitor mainly sells the following products: Electric poles, timber and plywood.

5
 ii. KAREN SEOSONED WOOD LTD,

P.O BOX 77, Moiben.

The competitor has mainly specialized in fencing poles.

To manage them in their competition I need to: -

1. Increase the supply

2. Provide public relation with my customers.
3. Increase the number of employees.
4. Diversify the types of wood products

3.4 PRICING STRATEGY.

In order to success in my business enterprise well, pricing necessary. It will depend on the quality of the
products bought and the pricing of the competitors. Therefore, the prices are to be 5% lower than that
of the competitors. Pricing of the products will be established when all the calculating relating to the
direct costs and indirect costs have been made and their difference found.

3.5 SALE TACTICS

One of the major driving forces which will make the customers enter the enterprise is by listing all the
products sold in well-designed sign boards. The products will be displaced well on shelves making
customers to see well the products.

Tenders will be allowed to supply products to supply products to the institutions are to the farmers
around.

3.6 SALES TEAM.

Inside the warehouse that will be three people. One will be on the customer and two will be remaining
products required by the customers.

In order to motives my workers, these will be a lunch break between 1: 00p.m – 2:00 p.m and salary

increment whenever there’s highest number of sale at the end of the month.

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3.7 SELLING POLICY AND TIMING
Customers are served according to time they come and treated nicely because they are the most
important people in the business. i.e., first come, first serve. Customers who order any product will be
reached at any distance or means possible.

3.8 DISTRIBUTION STRATEGY

There are methods adopted to reach potential customers at appropriated time with appropriated goods.
These will be distribution of products for those customers who will require the products in bulky by
means of offering transporting as after sale service.

7
CHAPTER FOUR
4.0 ORGANIZATIONAL STRUCTURE
Organization structure involves the running of the business smoothly by proper assignment of duties
among employees.

4.1 ORGANIZATIONAL CHART

MANAGER

MARKETING MANAGER

ACCOUNTANT SUPERVISOR

MANUAL WORKERS SECURITY GUARD

4.2 KEY MANAGEMENT PERSONNEL/BUSINESS MANAGERS

JOB DESCRIPTION

MANAGER

QUALIFICATION

1. Should be a holder of a diploma in accountancy.

2. Computer literate.
3. Should have at least 2 years working experience.
4. Should be at least 30 years old and above.

8
DUTIES

1. Financial decision maker of the business.

2. Hiring of workers.
3. Training of employees.
4. Delegate duties to workers. `
5. Solving problems in case it arises.
6. Maximizes and minimizing profit strategies.
7. Plan and organize the business by assigning duties to employees.

Salary Kshs.27,000 per month.

SUPERVISOR

Qualification

1. Have diploma in business management.

2. Computer literate.
3. Providing at least 2years experience as a supervisor.
4. Be at least 25 years old and above.

Duties and responsibilities

1. Ordering for the new stock.

2. Delegate duties to workers.
3. Providing quality services to customers.
4. Decision making.

Salary Kshs.18,000 per month.

ACCOUNTANT

Qualification

1. Should be holder of CPA 1 certificate.

9
 2. Should be computer literate.
3. Should have at least 1 year working experience.
4. Should be at least 25 years of age.

Duties and responsibilities

1. Maintaining records of the business.

2. Providing finance for purchase of new products.
3. Handling of finances.

Salary Kshs.18, 000 per month

MANUAL WORKER

Qualification

1. Should be form four leavers.

2. Hardworking.
3. Healthy.
4. Willing to work effectively and efficiently.

Duties and responsibilities

1. Loading and down loading products to the vehicle or from the vehicle.
2. Transferring products from store to the shop.

Salary Kshs.4,000 per month.

SECURITY

QUALIFICATION

1. Should understand both English and Kiswahili languages.

2. Must have certificate of good conduct.
3. Should be 25 years old and above.

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Duties and responsibilities

1. Providing security within the business.

2. Reporting any necessary message to the concerned personnel.

Salary Kshs.3,000 per month.

SALARIES

The table below shows salaries

OCCUPATION SALARY PER MONTH (KSHS.)

MANAGER 27,000

SUPERVISOR 18,000

ACCOUNTANT 18,000

MANUAL WORKER 4,5000

SECURITY GUARD 4,000

4.3 REMUNERATION AND INCENTIVES FOR PERSONNEL

All employees in the business will be paid their wages and salaries according to their position of the
work. Salary increment will depend on the workers productivity from hard work. Overall salary
increment will depend on the expansion of the business. Overtime and off duties will be introduced to
the casual workers and accountants. It will motivate them to work harder.

4.4 LICENSE, PERMITS AND BY-LAWS

License, permits and by-laws are very important in the business to avoid disturbance by the local
government organizations. The permit shall clarify if my enterprise is legal. This will include trade license
which will be provided by the ministry of commerce and industry at the country under the laws of Kenya
at the cost of Kshs.1,000 per year. I am supposed to have the county council license which will be
provided by Uasin Gishu county council at the cost of Kshs.5,000 per month and Kshs.60,000 per year.

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4.5 OTHER SUPPORT SERVICES
For the success of my business, I will require support from other services like: -

i. Book-keeping and accounting services.

ii. Postal services

This is mainly needed to enhance faster means of communication more easily where there
is agent need of products by certain customers, they will be able to communicate to me
through mobile phone.
iii. Legal services.

iv. Banking services.

Involves way of banking money and the type of bank especially the fixed deposit accountant
and KCB bank.
v. Business management and consultancy services.

CHAPTER FIVE
5.0 OPERATIONAL/PRODUCTION PLAN
5.1 OPERATIONAL PLAN
The operational plan shows how the business will operate its product services. Thus, enables to have
quick and effective performance hence saving time and money. The enterprise will be able to meet its
goals and serve the customers well.

5.2 PRODUCTION FACILITIES

The business manufactures wooden products which are bought from the suppliers when they are still
raw. Therefore, the machines that would be used for this task would be gigantic.

5.3 TOOLS AND MATERIALS

The following equipment are to be used in my business. It would be purchased using part of the capital
to enhance efficiency in its operations and services offered.

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 ITEM AMOUNT (KSHS)

Fork Lift 400,000 (hired) 100,000

Truck (hired)

FURNITURE 4,500

SHELVES 4,000

TOTAL 508,500

5.4 PRODUCTION STRATEGY

These are the methods to be used by the enterprise to ensure that there is increase in sales. The
business will ensure that the stock should be at good quality through the year. This will help me in
retaining my customers and to compete with other competitors.

5.5 COST OF MATERIALS AND EQUIPMENTS

EXPENSES MONTHLY ANNUAL COST

13
 INSURANCE AND 5,000 60,000

RENT 4,000 48,000

TELEPHONE 500 6,000

ADVERTISING - 5,000
PROMOTION
400 48,000
WATER
600 7,200
ELECTRICITY
10,500 131,000
TOTAL

5.6 PRODUCTION PROCESS

The entire production of the business commences from the drawing boards. It is necessary to offer a
good framework structure and to be followed to avoid wastage.

5.7 REGULATIONS AFFECTING OPERATIONS.

For a better and smooth running of a business there should be rules and regulations to be attained.

They include: -

1. Trade license
I intended to get a trade license from Uasin Gishu county, which will permit the legal running of
the business and better achievement of its goals.
2. Health regulations.
The wood seasoning company should ensure that cleanliness is maintained so that it can meet
requirements of ministry of health. And the workers put on the head gears to protect their ears
against noise coming from the machines.
3. Tax
Business pays taxes to the government which include value added tax (VAT). It is usually 10%.

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5.8 SUPPORT SERVICES
i. Banking

The business will get banking services from the national bank at Nakuru branch. Financial
transactions concerning the business will be carried out through the bank.
ii. Postal services

The business will get postal services provided by the Kenya postal corporation. It will enable
easier communication with the customers. The postal address will be: -
DES TIMBER SEASONING COMPANY,

P.O BOX 7, Moiben.

iii. Insurance

The business will be insured to cover against the risk which might happen. The business will
contact insurance company to offer the services.

CHAPTER SIX
6.0 FINANCIAL PLAN
6.1 PRE-OPERATIONAL COST.
These are costs that the business incurs before it starts.
ITEM KSHS.

Stationary 2,000

Advertisement 2,000

Telephone 8,000

Insurance 6,500

Office furniture 16,500

Rent 5,000

Stock 200,000

15
License 9,000

TOTAL 261,500

6.2 WORKING CAPITAL ESTIMATES

Working capital is the current assets minus liabilities.
CURRENT ASSETS 2020 2021 2022

Stock 200,000 300,000 415,000

Bank 68,000 190,000 170,000

Cash 3,200 89,000 120,500

TOTAL 300,000 570,000 705,500

IABILITIES 2017
CURRENT L 2018 2019

Creditors 110,000 100,000 97,000

16
Working capital 190,000 470,000 608,500

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 6.3 PROFORMA CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DEC 2023 (1ST YEAR)
PARTICULARS JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC

Cash Inflow

Beginning cash 1,800,000 793,683 897116 960779 1011512 1058745 11077638 1135171 1148404 1185737 1212520 1251153

Sales 332,400 350,600 320350 290400 310400 280060 240800 260150 270400 272450 290300 300120

Debtors - 6,000 - 6000 - 7000 - - 9000 - 8000 -

Total cash inflow 2,132,400 1,150,283 1217466 1257179 1321612 1345805 1348438 1395321 1427804 1460187 1510820 1551273

CASH OUT
FLOW

Purchases 166,200 152,300 160200 150600 170400 141100 120600 150450 150200 150200 160200 160200

Furniture and 191,500 - - - - - - - - - - -

fitting

Tools & 885,000 - - - - - - - - - - -

Equipment

Premises / rent 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000

Registration - - - - - - - - - - - -

Trade License 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500

Creditors - 5,000 - 3,000 - 5,500 - 4,500 - 6,000 8,000 -

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Advertisement 500 500 500 500 500 500 500 500 500 500 500 500
& Promotions

Water bills 200 200 200 250 300 150 400 250 200 200 200 200

Transport 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500

Telephone 300 300 300 300 300 300 300 300 300 300 300 300

Electricity bills 450 450 450 500 550 600 450 400 350 450 450 450

Insurance 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Postage 300 300 300 300 300 300 300 300 300 300 300 300

Loan repayment 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667

Salary 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300

Interest on Loan 250 250 250 250 250 250 250 250 250 250 250 250

Miscellaneous 500 1000 1500 1500 2000 2000 2000 1500 1500 1000 1000 1000

Total cash out 1,338,717 253167 256667 245667 262867 238167 213267 246917 242067 247667 259667 251667
flow

Balance b/d 793,683 897116 960799 1011512 1058745 1107638 1135171 1148404 1185737 1212520 1251153 1299606

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 6.3.1 PROFORMA CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DEC 2024, (2ND YEAR)
PARTICULARS JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC

CASH INFLOW

Beginning cash 1299606 1693239 2267772 3046605 3457838 3910121 4438604 4914887 5377490 6120073 6641206 7277389

Sales 997200 1120400 1300000 991200 1031200 1061000 990700 1000400 1290600 1080600 1227000 1345950

Debtors - 2000 2000 4000 - - 4000 6000 - 3500 3500 -

Total cash inflow 2296806 2815639 3569772 4041805 4489038 4971121 5433304 5921287 6668090 7204173 7871706 8623339

CASH OUT
FLOW

Purchases 498600 450300 420100 480600 480600 430500 420350 440200 450200 460300 490800 498500

Furniture and - - - - - - - - - - - -
fitting

Tools & - - - - - - - - - - - -
Equipment

Premises / rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000

Registration - - - - - - - - - - - -

Trade License 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500

Creditors 6500 - 4500 2500 - 3500 - 5500 - 5000 4500 -

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Advertisement & 500 500 500 500 500 500 500 500 500 500 500 500
Promotions

Water bills 250 250 250 250 250 250 250 250 250 250 250 250

Transport 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500

Telephone 300 300 300 300 300 300 300 300 300 300 300 300

Electricity bills 400 400 400 450 450 350 350 350 350 500 550 450

Insurance 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Postage 400 400 400 400 400 400 400 400 400 400 400 400

Loan repayment 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667

Salary 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300

Interest on Loan 250 250 250 250 250 250 250 250 250 250 250 250

Miscellaneous 3400 2500 3500 3800 3200 3500 3100 3000 2800 2500 3800 2600

Total cash out 603567 547867 523167 583967 578917 532517 518417 543717 548017 562967 5943178 596217
flow

Balance b/d 1693239 2267772 3046605 3457838 3910121 4438604 4914887 5377490 6120073 6641206 7217389 8027122

21
 6.3.2 PROFORMA CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DEC 2025, (3ND YEAR)
PARTICULA JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC
RS

CASH INFLOW

Beginning cash 802712 9760955 114785 131613 152387 173068 196526 2196958 242486 266129 2903635 316731
2 88 21 54 37 0 3 46 79 2 85

Sales 274230 2730600 267150 304640 303275 334924 327104 3259330 335850 342874 3643200 365620
0 0 0 0 0 0 0 0 0

Debtors 3500 3800 - 4200 - 6500 5500 - 3000 - 3500 -

Total cash 107729 1249553 141500 162119 182715 206625 229318 2522891 276101 300417 3268330 353293
inflow 22 55 58 21 04 77 00 3 46 19 52 85

CASH OUT 914100 910200 890500 870400 866500 905200 860800 880900 895600 902300 910800 914050
FLOW

Purchases

Furniture and - - - - - - - - - - - -
fitting

Tools & - - - - - - - - - - - -
Equipment

22
 Premises / 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000
rent

Registration - - - - - - - - - - - -

Trade License 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500

Creditors - 8000 - 4000 - 3500 3500 - 3000 5000 - 5000

Advertisemen t 650 650 650 650 650 650 650 650 650 650 650 650
&
Promotions

Water bills 250 250 250 250 250 250 250 250 250 250 250 250

Transport 1,500 1,500 1,500 450 450 1,500 1,500 1,500 1,500 1,500 1,500 1,500

Telephone 400 400 400 400 400 450 450 450 450 450 450 450

Electricity bills 450 450 450 450 350 350 350 400 400 500 500 450

Insurance 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Postage

Loan 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667 16,667
repayment

23
Salary 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300 66,300

Interest 250 250 250 250 250 250 250 250 250 250 250 250
on Loan

Miscellaneou 2900 3600 3300 3800 3300 3700 3000 4400 3500 3000 4000 2900
s

Total cash out 101196 1016767 988767 973167 964667 100731 962217 980267 997167 100536 1009867 101706
flow 7 7 7 7

Balance b/d 976095 1147858 131613 152387 173068 196552 219695 2424864 266129 290363 3167318 343123
5 8 21 54 37 60 83 36 79 52 5 18

24
6.4 PROFOMA PROFIT LOSS ACCONT FOR YEAR 1 (2023)
ITEM KSHS. KSHS.

Sales 430,000

Stock 200,000

Purchases 120,000

320,000

Closing stock 80,000

240,000

Gross profit 190,000

EXPENSES

Stationary 2,000

Advertisement 2,000

Telephone 8,000

Insurance 6,500

Office furniture 16,500

Rent 5,000

Licenses 9,000

TOTAL 49,000

Net profit 141,000

25
Tax 30% 42,300

Net profit after tax 98,700

6.5 PROFOMA PROFIT AND LOSS ACCOUNT FOR YEAR 2 (2024)

ITEMS KSHS. KSHS.

Sales 550,000

Stock 300,000

26
Purchases 150,000

450,000

Closing 110,500

339,500

Gross 210,000

EXPENSES

Stationary 2,000

Advertisement 3,000

Telephone 6,000

Insurance 7,000

Rent 8,000

Transport 12,500

Salary 15,000

Electricity 12,000

TOTAL 65,500

Net profit 145,000

Tax 30% 43,500

27
 Net profit after tax 101,500

6.6 PROFOMA PROFIT AND LOSS ACCOUNT FOR YEAR 3 (2025)

ITEM KSHS KSHS

Sales 700,000

Stock 410,000

Purchases 180,000

590,000

28
 Closing stock 130,000

460,000

Gross profit 240,000

EXPENSES

Stationary 2,500

Advertisement 2,800

Rent 6,000

Transport 11,500

Insurance 7,000

Salary 15,000

Electricity 12,000

Maintenance 7,500

Total 100,000

Net profit 140,000

Tax 30% 42,000

29
Net profit after tax 98,000

6.6.1 BALANCE SHEET AS AT THE BEGINNING OF OPERATION 2023

KSHS. KSHS.

Fixed assets 347,000

Office equipment 153,000

Furniture 500,000

Current assets

Cash at bank 68,000

Cash at hand 32,000

Stock 200,000

Debtors 100,000

30
 410,000

Liabilities

Creditors 11,500

Accruals 21,100

131,600

178,400

678,400

Finance by:

Owner equity 400,000

Loan 200,000

Profit _________

Friends gift 78,400

TOTAL 678,400

31
6.7 BALANCE SHEET AS AT 31ST DECEMBER 2023
ITEM AMOUNT IN KSHS. AMOUNT IN KSHS.

Office equipment 3500,000

Depreciation 10,000

340,000

150,000

Furniture 50,000

Depreciation 145,000

485,000

Current assets

Cash at hand 77,500

Cash at bank 192,500

Stock 310,000

Debtors 35,000

615,000

Liabilities

Creditors 102,000

Accruals 30,650

132,650 482,350

967,350

32
Financed by:-

Owner’s equity 400,000

Loan 300,000

Profit 75,425

Friends gift 191,350

967,350

6.8 BALANCE SHEET AS AT 31ST DECEMBER 2024

ITEM AMOUNT KSHS. AMOUNT KSHS.

33
Office equipment 340,000

Depreciation 100,000

330,000

Furniture 145,000

Depreciation 5,000

145,000

34
 5,000

140,000

470,000

Current assets

Cash at bank 178,650

Cash at hand 108,850

Stock 400,500

Debtors 64,500

752,500

Liabilities

Creditors 94,000

Accruals 43,300

137,300 615,200

1,085,200

Financed by: -

Owner’s equity 475,425

Loans 400,000

Profit 72,170

Friends gift 137,605

35
 1,085,200

6.9 BREAK EVEN CHART.

SALES

PROFIT
600,000

BREAK EVEN POINT

PROFIT AT
ANTICIPATED LEVEL
500,000 OF SALES

VARIABLE COST
400,000

300,000 MARGINAL
LOSS
SAFETY

200,000
FIXED COST

100,000

1 2 3 4 5 6 7 8 9 10 11 12

MONTHS

36
6.9.3 BREAK EVEN ANALYSIS
This is the point where sales are made without making profit
FIXED COSTS AMOUNT

Rent 5000

Insurance 5000

Salary 15000

TOTAL 25000

6.9.4 DESIRED FUNDING

Details 2022 2023

Own saving 250,000 350,000

Loan 300,000 400,000

Friends and family 100,000 100,000

Contributions

Total 650,000 850,000

6.9.5 PROPOSED CAPITALIZATION

Details Amount

Own savings 600,000

Loan 700,000

Additional funding from friends 200.000

Capital

37
 1,500,000

38