NAME OF THE BUSINESS : WOMARK AUTO SPARES.

BUSINESS LOGO:

ADDRESS NUMBER : P.O BOX 18552, NYALENDA

KENYA
TELEPHONE NUMBER : 0768806726.

NAME OF THE BUSINESS : WOMARK AUTO SPARES

NAME OF THE PRESENTOR : MARK WASHINGTON OMONDI

INDEX NO : 7251020176

TO WHOM PRESENTED (KNEC)

(A business plan submitted to the Kenya National Examination Council in the

partial fulfillment for the requirement of the award of certificate in
Automotive Engineering.)

DATE OF PRESENTATION : 4th/10/2021

SERIES : NOVEMBER 2021

EXAMINATION CENTER (UTVC)

CENTER CODE : 725102

NAME OF THE SUPERVISOR : ALEX ODHIAMBO OTIENO

DECLARATION
Student declaration

I MARK WASHINGTON OMONDI hereby declare that the work here is both style and substance is
the original producer of my intellectual input by way knowledge and has never been submitted to any
examination body

NAME : MARK WASHINGTON OMONDI

SIGNATURE : ………………………………………………………

DATE : ………………………………………………………

Supervisor’s declaration

This business plan has been submitted to KNEC with approval of the college supervisor.

NAME : Mr Alex Odhiambo

SIGNATURE : ………………………………………………….

DATE : ……………………………………………………

ii
DEDICATION

First and foremost; I dedicate this work to my entire family for their financial support and ideas during
the presentation of this project.

ACKNOWLEDGEMENT

iii
I would like to express my special thanks of gratitude to the Almighty Father for bringing me this far and
for the protection he showed to me during my whole life.
My sincere gratitude also goes to my supervisor Mr.Alex Odhiambo Otieno for his time dedication to
me during my business plan preparation period. May God bless him abundantly.
I also wish to express my sincere gratitude to my family for their financial support that they have always
offered me during my learning period.
Lastly I would like to express my deepest appreciation to the entire Ugenya Technical and Vocational
College for their cooperation and to all those who provided me with the possibility to complete this
report.

Table of Contents

iv
DECLARATION..........................................................................................................................................................ii
DEDICATION.............................................................................................................................................................iii
ACKNOWLEDGEMENT..........................................................................................................................................iv
TABLE OF CONTENT…………………………………………………………………………………………………………………………………V

TABLE OF CONTENT………………………………………………………………………………………….…………………………………….VI
CHAPTER ONE...........................................................................................................................................................1
1.0: EXECUTIVE SUMMARY.................................................................................................................................1
1.1: BUSINESS DESCRIPTION.............................................................................................................................1
1.2: MARKETING PLAN..........................................................................................................................................1
1.3: ORGANISATION AND MANAGEMENT PLAN............................................................................................1
1.4: OPERATIONAL AND PRODUCTION PLAN.................................................................................................1
1.5: FINANCIAL PLAN............................................................................................................................................1
CHAPTER TWO..........................................................................................................................................................2
2.0 BUSINESS DESCRIPTION................................................................................................................................2
2.1 BUSINESS NAME..............................................................................................................................................2
2.2 BUSINESS LOCATION AND ADDRESS.........................................................................................................2
2.3 LEGAL FORM OF BUSINESS OWNERSHIP..................................................................................................2
2.4 BACKGROUND INFORMATION.....................................................................................................................3
2.5: BUSINESS LOGO..............................................................................................................................................3
2.6: BUSINESS ADDRESS.......................................................................................................................................3
2.7 BUSINESS OWNERSHIP...................................................................................................................................4
2.8 GOALS OF THE BUSINESS..............................................................................................................................4
2.9 ENTRY AND GROWTH STRATEGY...............................................................................................................5
CHAPTER THREE......................................................................................................................................................6
3.0 MARKETING PLAN...........................................................................................................................................6
3.1 CUSTOMERS......................................................................................................................................................6
3.2 MARKET SIZE....................................................................................................................................................6
3.3 COMPETITION...................................................................................................................................................8
3.4 ADVERTISEMENTS..........................................................................................................................................9
3.5 SALES PROMOTIONS.......................................................................................................................................9
3.6 PRICING STRATEGY........................................................................................................................................9
3.7 SALES TACTICS................................................................................................................................................9
3.8 DISTRIBUTION................................................................................................................................................10
CHAPTER FOUR.......................................................................................................................................................11
4.0: ORGANISATION AND MANAGEMENT PLAN..........................................................................................11
4.1. 0: KEY PERSONNEL.......................................................................................................................................11
4.1 1: THE MANAGER.......................................................................................................................................11
4.1.2: HUMAN RESOURCE MANAGER.........................................................................................................11

v
 4.2.0: MARKETING MANAGER..........................................................................................................................12
4.2.1: FINANCE MANAGER…………………………………………………………………………………………..………………..…..12
4.2.2:ACCOUNTANT…………………………………………………………………………………………………………………………..13

4.3: ORGANIZATIONAL CHART.........................................................................................................................13

4.4: RECRUITMENT, TRAINING AND PROMOTION.......................................................................................13
4.5: RENUIMERATION AND INCENTIVES......................................................................................................14
4.6: LICENSES, PERMITS AND BY-LAWS.........................................................................................................15
4.7: SUPPORT SERVICES.....................................................................................................................................16
CHAPTER FIVE........................................................................................................................................................17
5.0: OPERATIONAL AND PRODUCTION PLAN...............................................................................................17
5.1.0: OPERATIONAL PLAN.................................................................................................................................17
5.1.1: GOVERNMENT REGULATION.............................................................................................................17
5.1.2: NAME SEARCH...........................................................................................................................................17
5.1.3: BUSINESS NAME REGISTRATION..........................................................................................................17
5.1.4:BUSINESS LICENSE.....................................................................................................................................17
5.1.5:PIN CERTIFICATE........................................................................................................................................17
5.1.6:VAT CERTIFICATE......................................................................................................................................17
5.1.7:TAXATION.....................................................................................................................................................17

CHAPTER SIX...........................................................................................................................................................18
6.0: FINANCIAL PLAN.........................................................................................................................................18
6.1: PRE- OPERATIONAL COST..........................................................................................................................18
6.2: WORKING CAPITAL.....................................................................................................................................18
6.3.1: PROJECTED CASH FLOW FOR THE YEAR ENDED 31STDECEMBER, 2021......................................19
6.3.2: PROJECTED CASH FLOW FOR THE YEAR ENDED 31STDECEMBER, 2022..................................20
6.3.3: PROJECTED CASH FLOW FOR THE YEAR ENDED 31STDECEMBER, 2023..................................21
6.4: PRO-FORMA INCOME STATEMENTS FO THE YEARS 2021, 2022 AND2023......................................22
6.5: PRO-FORMA BALANCE SHEET FOR THE YEAR 2021, 2022 AND 2023...............................................23
6.6 BREAK EVEN POINT....................................................................................................................................24
6.6.1 BREAK EVEN POINT FOR THE YEAR 2021........................................................................................24
6.6.2: BREAK EVEN POINT FOR THE YEAR 2022.......................................................................................25
6.6.3 BREAK EVEN POINT FOR THE YEAR 2023........................................................................................26
6.7: PROFITABILITY RATIOS...........................................................................................................................27
6.7.1: FOR 2021...................................................................................................................................................27
6.7.2: FOR 2022...................................................................................................................................................27
6.9: PROPOSED CAPITALISATION................................................................................................................28
APPENDICES.............................................................................................................................................................29

vi
CHAPTER ONE

1.0: EXECUTIVE SUMMARY

1.1: BUSINESS DESCRIPTION

In this chapter it contains the name of the business, location, address, type of business and the section of
industry under which the business fall. It also gives the background information about the entrepreneur. It
also gives the products and services offered in the business.

1.2: MARKETING PLAN

In the marketing plan it contains the advertising strategy that will be taken by the business, promotion
strategy, the method of prizing of products and the type of customers expected in the business.

1.3: ORGANISATION AND MANAGEMENT PLAN

It is where description of structure of management is explained, qualification of personnel and their
responsibility. Type recruitment and training of employee for purpose of good production is also
explained. Regulatory bodies governing the business is outlined.

1.4: OPERATIONAL AND PRODUCTION PLAN.

The type of products to be offered will be; selling of vehicle spare parts and specifically for
customers who came so that their can buy in order go it to be replaced in his/her vehicle

1.5: FINANCIAL PLAN

In order to ensure that the business is monitoring and evaluating its activities, the financial plan part will
play a very big role by ensuring that funds are correctly utilized and controlled to enhance success of the
business hence achieving its goals and objectives.

1
CHAPTER TWO

2.0 INTRODUCTION
The name of the business is WOMARK AUTO SPARES.I choose this name because it contains the
name of the owner of the business (MARK WASHINGTON OMONDI),then I added the part AUTO
SPARES because it attracts customers.

2.1 BUSINESS NAME

The business shall bear the title name WOMARK AUTO SPATES.The name acts as an encouragement to
people so that they may keep in touch with technology and other accessories in order to change the
face of the local community by migrating from analog electronics to digital electronics.

2.2 BUSINESS LOCATION AND ADDRESS

The business shall be located at Prime plaza building along Tom Mboya Labour College road. It shall be
situated at the left side of the Tom Mboya Labour College and directly opposite Gate House on the other
side of the road. The location will be favorable due to the factor that it will be at a strategic place because
of the high population of Nyalenda town center. The infrastructure is encouraging since it is within the
town, where there are good roads and the network reception is very dependable.

Furthermore, security is very tight because Central police station is about 200meters away from the
building.

2.3 LEGAL FORM OF BUSINESS OWNERSHIP

WOMARK AUTO SPARES is intended to be established as a sole proprietorship form of business

that shall be managed by the owner, MARK WASHINGTON
The advantages of this kind of business ownership is that the decision will be made much quicker, the
profits will be enjoyed by the business owner, it will have less legal formalities during the formation of
the business and it will be flexible.

2
The disadvantages of this type of ownership is that; unlimited liabilities, a lot of work to be done thus
overwhelming the person in charge and lastly luck of good decision making since there will be no
consultation etc.

2.4 BACKGROUND INFORMATION

The proposed business will be owned by Mark Washington who is 22years of age Kisumu county who
completed his primary education in the year 2014and completed his Kenya National Examination Council
in the year 2018.Currently is in UTVC doing CERTIFICATE IN AUTOMOTIVE ENGINEERING.

2.5: BUSINESS LOGO

This business logo is with respect to some of products that are in the business.
It also contains the business slogan let’s take car servicing seriously''this slogan attract the people to come
to our business

2.6: BUSINESS ADDRESS

P.O BOX1547

EMAILADDRESS : womarkautospares@gmail.com

WEBSITE : www.womarkautospares.co.me

TELEPHONE NO : 0768806726

2.7 BUSINESS OWNERSHIP

The business will be owned the entrepreneur MARK WASHINGTON a sole proprietor who will be
responsible for the management and capital.

The capital for raising the business will be as follows:

3
2.8 GOALS OF THE BUSINESS
The business intends to achieve certain goals in the future after some reasonable period of time.
These shall help promote the business to a great deal and even attract more customers to the business.
The owner therefore is looking forward towards achieving the following objectives:-

Job creation

The business shall provide room for more employees in the society both skilled and unskilled. There
shall be the operators within the business who shall be assisting in daily activities of the business.
To the outsiders, this shall be helping them secure transportation of the goods and services to
customers various location.

Free learning on technical skills

The business intends upon expanding, to involve its employees in learning activities on technical
skills such as welding spray painting parts of the vehicle among other skills which shall provide
skills and knowledge to various people willing to receive such trainings. This shall also enable
the business to provide such skills to various people which shall lead to labour hiring from the
business in form of contracts and so income generation in the business.

Free goods delivery to customers

The business is looking forward to offer regular customers free transport to whoever shall
have purchased goods in large scale. This is intended to keep attracting more customers and
even to maintain the current customers by relieving them from transportation expenses which is
one of the areas affecting most customers and has even discouraged many customers in buying
commodities in bulk.

Offering support to the needy children

As a long term goal intended to be achieved, the business is expected through the owner who
shall be the manager to involved in helping the needy children mostly in line of education.
This is simply because of the increased number of school dropouts within the area due to
lack of school funds and yet they are capable, intelligent children who can perform well.

4
2.9 ENTRY AND GROWTH STRATEGY

Entry

On entry into the business, great considerations shall be taken into account in order to get rid of
extravagancies in the business which shall help secure business income by so controlling the
expenditures in the business. The business shall therefore use posters in doing its advertisements
which shall be distributed to a long radius within the area including the nearest small towns
such as Molem and Kondele. The posters shall contain the business location and items descriptions.
The customers shall be informed on more details of the business during the official launching
ceremony of the business which shall be held at the exact location of the business.

Growth strategy

More of the automotive spare parts shall be purchased to expand the business. There shall also be
employment of competent staff within the business to monitor the daily operation of the business
and to mobilize customers. Relevant trainings shall also be introduced to the employed members. The
owner is looking forward to opening more branches even the local towns nearby to offer
competition in the marketing of goods and services.

5
CHAPTER THREE

3.0 MARKETING PLAN

The business shall have various strategies to ensure it advances its market in order to cover a
large area zone. These shall involve the strategies of how the goods shall reach the targeted
customers who shall be individual customers and groups. The business shall ensure that every
market is made up of different customers consisting of the buyers with different needs. The
business intends to expand in marketing through gift offerings, free transportation of goods to
customers, by using reasonable pricing and having some promotions. There shall be full
description of the business which shall be displayed clearly on the signboards with distinct
information on the products that the business shall be dealing in. the business is intending to
attract customers both within the location and even the nearby local towns such as Molem and
Kondele and later expand its market to large towns such as Nyalenda.

3.1 CUSTOMERS
The business is intending to provide quality goods and services to customers in order to make
the customers be satisfied with the services they receive from the business. The business
therefore is looking forward to serving both domestic and institutional customers. In order to keep
the customers and even attract more customers into the business, there shall be reasonable
pricing of products which shall be determined by different classes of people and the production
cost of such items and the cost of obtaining some materials. The business shall therefore identify
its customers in various ways which may include:- the working class customers who are earning
high incomes and those earning low incomes. There shall be another category of those who
cannot afford to buy in bulk the commodities as the other people but can manage to purchase
some. This will mean that the business shall consider bringing in goods of another class so as to
enable the customer buy what is within his/he reach. The mode of payments shall be through
banking, M-pesa and cash. To the regular customers, goods shall be allowed to be purchased on
hire purchase terms where the deposit shall be paid and the remaining amount of money paid in
installments depending upon the agreement between the customer and the owner of the business.
This is intended to help customers who may be willing to obtain the commodities urgently but
do not have enough cash to do so instead they intend to pay on later dates. With these the
business is believed to shall have attracted more customers to the business.

6
3.2 MARKET SIZE
In the research that I carried out I found that this business it going to benefit around 45% of the customers
in the market which is a good percentage for a starting business.The average number of customers in the

7
3.3 COMPETITION
The business shall be in competition with Kisumu Auto Spares and Gateway Auto Spares has been stated
above. The business intends to face them in the market competition in order to maintain and
even attract other customers. The location of the business shall play a bigger role in attracting
most of the customers to the business. Also the business shall ensure good and proper
servicing to the customers. The business shall also offer after sale services such as goods
delivery to the customers. The business also intends to improve on other competitor’s
weaknesses in order to provide quality services and keep attracting more and more customers.
The below table shows some of the weaknesses and strength of the competitors compared to
the business.

Name Of The Business Strengths Weaknesses

-Have raised enough capital to -Poor business management
Kisumu Auto Spares open up other brunches. -No goods delivery to customers.
-Has been long in the market -No quality products.
-Lack enough capital.

-Its located in a town where the -Poor business management

population is high. -Offers transportation to customers
Gateway Auto Spares at a high cost.

-Has electrical accessories. -Has no enough capital

Willy Auto Spares
-Offers transportation of goods
to customers at a lower cost
-Good business management
strategies.
-Located where there is high
demand from people within.

8
3.4 ADVERTISEMENTS
In order to reach more customers at a wide range of radius from the business location, the
business shall advertise its products so as to create awareness to the customers and attract them to
the newly brought items into the market by the business. This also intended to maintain the
current customers. The most of advertisement that shall be convenient to the business shall be
through poster, signboards which shall be distributed in all the small towns and in the villages.
There shall also be indoor product display, direct personal contact to customers and as the
business shall have grown enough and stable, print media and electronic media shall be engaged
in the advertisements in order to attract customers from far place.

3.5 SALES PROMOTIONS

The business is looking forward to ensuring customers get correct and distinct information in
the kind of products that shall be dealt with in the business. This shall help in making customers
buy the products in large scale, attracting more customers attention to the business’ and also
ensuring customers are truly satisfied with the services and the products offered by the
business. In order to make this successful, the business will be looking forward to distributing free
calendars to customers after purchasing of goods from the business which shall also indicate what the
business is dealing with which products hence advertising the business more, offering free
additional items to customers after purchasing a product in order to make them keep visiting the
business, offering after sales services such as goods delivery to customer who happens to buy
goods in large quantity and offering goods and services at an affordable rate.

3.6 PRICING STRATEGY

Womark auto spares solution will set its price such that it achieve the maximum profit and also ensure
that the customers are comfortable with other similar business in the market

3.7 SALES TACTICS

In order to attract more customers and maintain the current customers into the business, there
shall be a few tactics to be used in the sale of products. The business shall allow easy payments
which shall include paying in repairing to regular customers who shall be offered period of time in order
to help them clear their payments. The business also looks forward to involve goods delivery in order to
attract customers and so Increase in the sales of goods and also provide room for more purchase of
commodities to customers.

9
3.8 DISTRIBUTION
It is intended that consumers closely link with the business in order to ensure they receive
quality services of delivery of goods. The business is focused on making good use of the
accessibility of the road networks to offer goods delivery to customers in various locations.
Some customers shall pick their goods at the business location while a room shall also be
provided to customers who may wish to order for goods then delivery is done to them and pay
later. The business shall obtain some products from the producers after which selling to the
customers shall follow. This is because the business shall not be able to produce some products but
can purchase from producers.

Producers/ manufacturers Wholesalers Retailers Customers

10
CHAPTER FOUR

4.0: ORGANISATION AND MANAGEMENT PLAN

The business intends to organize and manage the business through some strategic plans which
shall provide for a unified mechanism in which authority coordination and control of
common resources may effectively be exercised to achieve the set goals and objectives of the
business. This shall be enhanced by involving qualified, experienced and responsible personnel’s in the
business.

4.1. 0: KEY PERSONNEL

4.1 1: THE MANAGING DIRECTOR

The business will be managed by the owner; he will be taking the share of salary for the management.

QUALIFICATIONS

 Holder in diploma in business management

 A computer literate
 Above 35years
 A minimum experience of 5years
DUTIES AND RESPONSIBILITIES
 Solving organization problem
 Providing capital required
 Responsible for contract signing with other business organization
 Overall decision maker in matters that pertaining the business

4.1.2: HUMAN RESOURCE MANAGER

QUALIFICATIONS

 Diploma in human resource

 A minimum experience of 2years
 A computer literate
 Above 25years of age
DUTIES AND RESPONSIBILITIES
 Managing the resources of the business
 Giving report to the managing director
 Ensuring all products are available and in good quality and priced.
11
4.2.0: MARKETING MANAGER
QUALIFICATION

 Diploma in sales and marketing

 Above 25years of age
 Computer literate
 Working experience of 3 years
DUTIES AND RESPONSIBILITIES

He will be supervising on how the market of products are done. In case a customer buys a product in bulk
he will be one who offer transport to customers as discount. He also plan on how marketing of the
products is done.

FINANCE MANAGER

QUALIFICATIONS

 A holder in diploma in finance manager

 35 years of age and above
 A computer literate
 Working experience of not less than 3years in finance
DUTIES AND RESPONSIBILITIES
 To manage the money that is in the business
 Giving report of how the money is spent to the managing director
 Paying the workers
 Buying the products that are lacking in the business
ACCOUNTANT
 Diploma in accounting
 25years and above of age
 Working experience of not less than 3years in accounting
 Should be a computer literate
DUTIES AND RRESPONSIBILITY
 Offer receipt to the customers
 Giving report to the finance manager

12
4.3: ORGANIZATIONAL CHART

MANAGING DIRECTOR

ACCOUNTANT

FINANCE MANAGER

HUMAN RESOURCE MANAGER

MARKETING MANAGER

4.4: RECRUITMENT, TRAINING AND PROMOTION

RECRUITMENT

The business will advertise its vacant opportunities for employees through facebook, whatsapp.The
qualified people will be called later for an interview after that their will put in a probation for around one
month so as to determine they meet the standards of the business.

TRAINING

The business will be offering training to new employees and old employees to ensure that they are giving
quality services to our customers

PROMOTION

This is the process by which employees get to increase in their positions being held in the
business. The business therefore intends to offer promotions to workers who shall have shown
signs of love and commitment in delivering in their duties. There is also commission in volume of
sales. This is also intended to be done in any case there is a vacant position left within the
business at a higher rank.

13
4.5: RENUIMERATION AND INCENTIVES
RENUIMERATION

The business will ensure this is done to the employees depending upon the their qualifications
and positions held by the personnel in the business offices and how performance is done.

Position No. Salary Per Month Salary Per Year Totals Per
(Kshs) (Kshs) Year (Kshs)

Accountant 1 21,000 252,000 252, 000

Human resource 2 20,000 240,000 240,000
manager
492 ,000
Marketing 1 15,000 180,000 180,000
manager
Finance manager 1 19,000 228,000 228,000

408,000
Grand Total 900,000

INCENTIVES

this is one of the vital areas which determine the success of the business. the business therefore
intends to encourage workers to produce and perform duties effectively. This is to be achieved
through the following:-

 occasional medical allowance

 there shall be provision for overalls, gloves and gumboots for workers
 there shall be house allowance for the workers
 there shall be also internal recruitment which is also a technique of motivating workers.
 Internal promotions shall also be offered to workers after some given period of time

POSITION TYPE OF INCENTIVE MONTHLY(KSHS) YEARLY(KSHS)

Finance manager Medical allowance 3,000 36,000
14
 House allowance 4,000 48,000
Transport allowance 2,000 24,000
Accountant manager Medical allowance 3,000 36,000
House allowance 2,000 24,000
Transport allowance 1,000 12,000
TOTAL 15,000 180,000

4.6: LICENSES, PERMITS AND BY-LAWS

LICENSES,

This is a document which gives the business power to operate within an area. This shall be
obtained from the county council to prove that the business is owned by the owner.

Name – trading license

Use - authority trade practice

Cost - Kshs. 5,000

Duration – 6 months

Origin – county council

PERMITS

This is a document which temporarily give the business authority to carry out a particular trading
activity such as transportation of goods. This shall be obtained from the municipal council of Nyalenda
town.

BY-LAWS

The business shall have its by-laws from the Kenya legislative framework that governs employment
policies and practices or labour related issues in the country.

4.7: SUPPORT SERVICES

These are services that shall be involved in the business :-
15
  To provide professional advice and consultancy
 To identify potential investors
 To train workers
 To advertise products

The business therefore intends to involve services such as Banking, Insurance, and Public relations,
Advertisements, Electricity, Water and Business Lawyer.

BANKING

The business shall have an account with KCB where the daily deposits and withdrawals shall be
serviced. This is intended to guarantee safety of the business against insecurity ,for saving purposes
and also allow for emergency loans required.

INSURANCE

The business shall be insured to create safety from calamities such as fire policy, theft
policy ,motor vehicle policy and other risks which might interfere with the business running .

ELECTRICITY

The business shall be supplied with electricity from Kenya power and lighting company that will be used
to run the machines and provide ample lighting within the enterprise.

BUSINESS LAWYER

The business intends to involve a lawyer who shall help in assisting the business in cases of any
legal matters arising.

16
CHAPTER FIVE

5.0: OPERATIONAL AND PRODUCTION PLAN

The operation/production planning aim at ensuring that my planned list of products and services will be
produce that production deadlines will be met.

5.1.0: OPERATIONAL PLAN

This shall outline the activities involved in the production process, the schedule of production of
goods and services and also the activities arrangement for effective production.

5.1.1 GOVERNMENT REGULATIONS

My proposed business will have to comply with the following government regulation.

5.1.2: NAME SEARCH

My business will have a name which will be easy to access to government officials and also customers.
The business name will be Womark Auto Spares

5.1.3: BUSINESS NAME REGISTRATION

My business name registration will be done according to the law of Kenya.My business name will
be short in title and easy to interpret

5.1.4: BUSINESS LINCENSE

Business license is permit issued by government agencies that allow individual or companies to conduct
business within the organization

5.1.5: PIN CERTIFICATE

This is a personal identification number used while doing business in Kenya;this certificate will help me
to pay taxes without having problem with government.

5.1.6: VAT CERTIFICATE

Ha is a consumption tax imposed whenever a value is added applicable goods and services at each stage
of supply chain from production to consumption.

5.1.7: TAXATION
Taxation is term for when a taxing authority, usually a government levies or imposes a financial
obligation on its citizen.

17
CHAPTER SIX

6.0: FINANCIAL PLAN

6.1: PRE- OPERATIONAL COST

ITEM C0ST(KSHS)
Machine and equipment 206,000

Renovation of the premise 100,000

Market research 60,000

Licensing requirement 20,000

TOTAL 386,000

6.2: WORKING CAPITAL

PARTICULARS 2017 2022 2023
Current asset
Stock 75000 85000 95000
Cash on hand 40000 60000 60000
Cash at bank 350000 520000 650000
Debtors 200000 350000 350000
Total current assets 665000 1015000 1155000

Current liabilities
Creditors 129283 380559 518234
Loan 225000 125000 25000

Total current liabilities 354283 505559 543234

Working Capital 310717 509441 611766

18
 6.3.1: PROJECTED CASH FLOW FOR THE YEAR ENDED 31STDECEMBER, 2021
PARTICULARS JAN FEB MAR APRIL MAY JUN JULY AUG SEP OCT NOV DEC TOTAL
CASH INFLOW
OPENING BALANCE 50000 352700 387850 408468 420335 409406 391481 379560 380544 358915 364206 372301 50000
CASH SALES 29000 30250 30950 31500 32400 33500 24000 25200 36700 27000 28000 29500 358000
BANK LOAN 300000 300000
OWNERS FUNDS 75000 35000 25000 20000 21000 10000 12000 15000 25000 19000 17000 26000 300000
FRIENDS
CONTRIBUTION 10000 9200 6000 8000 8200 6000 6800 8000 10500 8300 10000 9000 100000
TOTAL CASH
INFLOW 464000 427150 449800 467968 481935 458906 434281 427760 452744 413215 419206 436801 110800
CASH OUTLOW
PURCHASES 7150 9150 9150 9150 9150 9150 9150 9150 9150 9150 9150 9150 109800
SALARIES 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 90000
WAGES 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
RENT 3600 3600 3600 3600 3600 3600 3600 3600 3600 3600 3600 3600 43200
LISCENCE 15000 15000
WATER 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400
ELECTRICITY 2400 2400 2400 2400 2400 2400 2400 2400 2400 2400 2400 2400 28800
TELEPHONE 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
ADVERTISEMENTS 500 500 500 500 500 500 500 500 500 500 500 500 6000
REPAIR AND
MAINTANANCE 500 500 500 500 500 500 500 500 500 500 500 500 6000
INSURANCE 7000 7400 14400
LOAN INTEREST 3750 3750 3750 3750 3546 3542 3438 3333 3229 3125 3021 2817 41051
TRANSPORT 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
LEGAL FEE 2032 2000 4032
MISCELLANEOUS 700 700 700 700 700 700 700 700 700 700 700 700 8400
LOAN REPAYMENT 8333 8333 8333 8333 8333 8333 8334 8334 8334 75000
CREDITORS 50000 25000 20000 46717 141717
TOTAL CASH
OUTFLOW 111300 39300 41332 47633 72429 67425 54721 47216 93829 49009 46905 46801 717800
CLOSING
BALANCE 352700 387850 408468 420335 409506 391481 379560 380544 358915 364206 372301 390000 390000

19
 6.3.2: PROJECTED CASH FLOW FOR THE YEAR ENDED 31STDECEMBER, 2022
PARTICULARS JAN FEB MAR APRIL MAY JUN JULY AUG SEP OCT NOV DEC TOTAL
CASH INFLOW
39000
OPENING BALANCE 0 368654 373913 397276 517243 524014 587689 545744 559628 570615 582206 581701 391000
CASH SALES 75000 67000 85000 83500 78200 75000 95000 75000 72000 75000 60300 59000 900000
BANK LOAN
OWNERS FUNDS 100000 100000 200000
FRIENDS
CONTRIBUTION 100000 100000
DEBT COLLECTION 120000 100000 50000 270000
TOTAL CASH
INFLOW 785000 435654 558913 580776 595443 649014 682689 620744 631628 645615 642506 640701 1860000
CASH OUTLOW
PURCHASES 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 240000
SALARIES 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 96000
WAGES 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000
RENT 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 50400
LISCENCE 20000 20000
WATER 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 18000
ELECTRICITY 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 31200
TELEPHONE 2400 2400 2400 2400 2400 2400 2400 2400 2400 2400 2400 2400 28800
ADVERTISEMENTS 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 96000
REPAIR &
MAINTANANCE 700 700 700 700 700 700 700 700 700 700 700 700 8400
INSURANCE 14000 10000 24000
LOAN INTEREST 2813 2708 2604 2500 2396 2292 2188 2083 1976 1875 1771 1667 26876
TRANSPORT 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
LEGAL FEE 2000 1500 2500 6000
MISCELLANEOUS 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
LOAN REPAYMENT 8333 8333 8333 8333 8333 8333 8333 8333 8334 8334 8334 8334 100000
CREDITORS 320050 100000 74224 494724
TOTAL CASH
OUTFLOW 416346 61741 161637 63533 71429 61325 136945 61116 61013 63409 60805 60701 1280000
CLOSING
BALANCE 368654 373913 397276 517243 524014 587689 545774 559628 570615 582206 581701 580000 580000

20
 6.3.3: PROJECTED CASH FLOW FOR THE YEAR ENDED 31STDECEMBER, 2023
PARTICULARS JAN FEB MAR APRIL MAY JUN JULY AUG SEP OCT NOV DEC TOTAL
CASH INFLOW
OPENING BALANCE 580000 242437 256979 279125 383375 229729 270887 326449 369616 436387 459437 539917 580000
CASH SALES 75000 85000 92500 99500 100000 120000 125500 138000 140000 125000 150000 249500 1500000
BANK LOAN
OWNERS FUNDS
FRIENDS
CONTRIBUTION
DEBT COLLECTION 200000 75000 75000 350000
TOTAL CASH
INFLOW 856000 327437 349479 453625 483375 349729 396387 539449 509616 561387 609437 789417 2430000
CASH OUTLOW
PURCHASES 26667 26667 26667 26667 26667 26667 26667 26667 26666 26666 26666 26666 320000
SALARIES 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 108000
WAGES 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 84000
RENT 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500 4500 54000
LISCENCE 22000 22000
WATER 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 21600
ELECTRICITY 2875 2875 2875 2875 2875 2875 2875 2875 2875 2875 2875 2875 34500
TELEPHONE 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 30000
ADVERTISEMENTS 875 875 875 875 875 875 875 875 875 875 875 875 10500
REPAIR &
MAINTANANCE 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
INSURANCE 20000 8800 28800
LOAN INTEREST 1563 1458 1354 1250 1146 1042 938 833 729 625 520 417 11875
TRANSPORT 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 38400
LEGAL FEE 3500 3500 7000
MISCELLANEOUS 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 15000
LOAN REPAYMENT 8333 8333 8333 8333 8333 8333 8333 8334 8334 8334 8334 8334 100000
CREDITORS 50000 180000 100000 32325 812325
TOTAL CASH
OUTFLOW 612563 70458 70354 70250 253646 78842 69938 169834 73229 101950 45520 69417 1710000
CLOSING
BALANCE 242437 256979 279125 383375 229729 270887 326449 369616 436387 459437 539917 720000 720000

21
6.4: PRO-FORMA INCOME STATEMENTS FO THE YEARS 2021, 2022 AND2023
PARTICULARS 2021 KSHS) 2022 (KSHS) 2023 (KSHS)
Sales 528,000 780,000 900,000
Less cost of goods sold 109,800 240,000 320,000
Gross profit 418,200 540,000 580,000
EXPENSES
Salaries 90,000 96,000 108,000
Wages 72,000 78,000 84,000
Rent 43,200 50,400 54,000
Licenses 15,000 20,000 22,000
Water 14,400 18,000 21,600
Electricity 28,800 31,200 34,500
Telephone 24,000 28,800 30,000
Advertisement 6,000 96,000 10,500
Repair and Maintenance 6,000 8,400 12,000
Insurance 14,400 24,000 28,800
Loan interest 41,051 26,876 11,875
Transport 24,000 36,000 38,400
Legal fee 4,032 6,000 7,000
Miscellaneous 8,400 12,000 15,000
Total Expenses 391,283 445,276 477,675

Net Profit before tax 26,717 94,724 102,325

Taxation (30%)
Net Profit after tax 18,702 91,883 99,256

22
6.5: PRO-FORMA BALANCE SHEET FOR THE YEAR 2021, 2022 AND 2023
PARTICULARS 2021 (KSHS) 2022 (KSHS) 2023 (KSHS)
Fixed Assets

Furniture and fixture 416,000 416,000 416,000

Less depreciation (25%) 104,000 104,000
Net fixed Assets 416,000 312,000 312,000
Current Assets
Cash on hand 40,000 60,000 60,000
Cash at bank 350,000 520,000 650,000
Debtors 200,000 350,000 350,000
Stock 75,000 85,000 95,000
Total current assets 665,000 101,5000 115,5000

TOTAL ASSETS 1,081,000 1,327,000 1,467,000

Current liabilities
Equity owners 700,000 700,000 700,000
Long term loans 225,000 125,000 25,000
Creditors 129,283 380,559 518,234
Retained earnings 26,717 121,441 223,766
TOTAL LIABILITIES 1,081,000 1,327,000 1,467,000

23
6.6 BREAK EVEN POINT

6.6.1 BREAK EVEN POINT FOR THE YEAR 2021

PARTICULARS VARIABLES FIXED
Purchases 109,800
Salaries 18,000 72,000
Wages 72,000
Rent 43,200
Licenses 10,500 4,500
Water 14,400
Electricity 28,800
Telephone 12,000 12,000
Advertisement 6,000
Repair and Maintenance 4,200 1,800
Insurance 10,800 3,600
Loan interest 8,250 33,001
Transport 16,800 7,200
Legal fee 4,032
Miscellaneous 4,200 4,200
TOTAL 315,750 185,533
(i) Contribution Margin = Total Sales - Variables

528,000 - 315,750

= Kshs. 212,250

(ii) Contribution Margin % = Contribution Margin x 100

Total Sales

= 212,250 x 100
528,000
= 40.20%
(iii) Break Even Point = Fixed
Contribution Margin %
= 185533
40.20
= Kshs. 4615.25
(iv) Total Fixed Cost = Kshs.185533

24
6.6.2: BREAK EVEN POINT FOR THE YEAR 2022
PARTICULARS VARIABLES FIXED
Purchases 240,000
Salaries 19,200 76,800
Wages 78,000
Rent 50,400
Licenses 20,000
Water 18,000
Electricity 31,200
Telephone 14,400 14,400
Advertisement 9600
Repair and Maintenance 4,200 4,200
Insurance 16,800 7,200
Loan interest 5,375 21,501
Transport 25,200 10,800
Legal fee 6,000
Miscellaneous 6,000 6,000
TOTAL 46,7975 21,7301

(i) Contribution Margin = Total Sales - Variables

= 780,000 - 467975

= Kshs. 312,025

(ii) Contribution Margin % = Contribution Margin x 100

Total Sales
= 312,025 x 100
780,000

= 40.00%

(iii) Break Even Point = Fixed

Contribution Margin %
= 217301
40

= Kshs. 5,432.53

(iv) Total Fixed cost = Kshs.217301

25
6.6.3 BREAK EVEN POINT FOR THE YEAR 2023
PARTICULARS VARIABLES FIXED
Purchases 320,000
Salaries 32,400 75,600
Wages 84,000
Rent 54,000
Licenses 22,000
Water 21,600
Electricity 34,500
Telephone 15,000 15,000
Advertisement 10,500
Repair and Maintenance 6,000 6,000
Insurance 8,640 20,160
Loan interest 7,125 4,750
Transport 19,200 19,200
Legal fee 7,000
Miscellaneous 75,000 75,000
TOTAL 566,465 231,210

(i) Contribution Margin = Total Sales - Variables

= 900,000 - 566,465

= Kshs. 333,535

(ii) Contribution Margin % = Contribution Margin x 100

Total Sales
= 333,535 x 100
900,000

= 37.06%

(iii) Break Even Point = Fixed cost

Contribution Margin %

= 231210
37.06
= Kshs. 6238.80
(iv) Total Fixed cost = Kshs. 231,210
26
6.7: PROFITABILITY RATIOS

6.7.1: FOR 2021

Gross profit %= Gross profit X 100
Sales
= 418200 X 100
528000

= 79.20%

Net profit % = Net profit X 100

Sales

= 26717 X 100
528000

= 5.06%

6.7.2: FOR 2022

Gross profit %= Gross profit X 100%

Sales

= 540000 X 100%

780000

= 69.23%

Net profit % = Net profit X 100%

Sales

= 94724 X 100%

780000

= 12.14%

6.7.3: FOR 2023

Gross profit %= Gross profit X 100%

Sales

= 580000 X 100%

900000

= 64.44%

27
Net profit % = Net profit X 100%

Sales

= 102325 X 100%

900000

= 11.37%

6.8: DESIRED FINANCING

PARTICULARS AMOUNT (KSHS.)
Pre- operational cost
416,000
Working capital
310,717
Long term assets
665,000

TOTAL
1,391,717

6.9: PROPOSED CAPITALISATION

Digital electronics and Electrical Accessories shall require Kshs. 700000 to commence its operations
as from January 2021. The amount shall be raised as follows.

PARTICULARS AMOUNT
Personal savings
300,000
Loan from Bank
300,000
Friend’s contributions
100,000

TOTAL
700,000

28
APPENDICES
BUSINESS LOCATION

WOMARK AUTO SPARES

P. O. BOX 18552,

OGINGA ODINGA AVENUE,

NYALENDA -KENYA

Customers shall be directed as per the map below in order to locate the exact business premises.

MEGA CITY PLAZA

TO
TO KISUMU
KISUMU

AND JAVA HOUSE

KENYA
TOM MBOYA FISHERIES
NYALENDA KISUMU ROAD

LABOUR ASSOCIATION
COLLEGE

MWALIMU
TOWN
NYALENDA

SACCO BANK

29