DOCUMENT: BUSINESS PLAN

PAPER CODE : 1920

PRESENTER : MOKONO IAN ONSARE

INDEX NO: 552001/0137

CENTRE: RIFT VALLEY INSTITUTE OF SCIENCE &
TECHNOLOGY

CENTRE CODE: 552001

PRESENTED TO: KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILLMENT
FOR THE AWARD OF DIPLOMA IN ICT

SUPERVISOR: MR. MARITIM

SERIES: MARCH 2024
TABLE OF CONTENTS

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

DEDICATION..........................................................................................................................vi

ACKNOWLEDGEMENT.......................................................................................................vii

EXECUTIVE SUMMARY....................................................................................................viii

2.0 Marketing plan...............................................................................................................viii

3.0Organizational Management Plan.....................................................................................viii

4.0 Production Plan...................................................................................................................ix

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

1.0 BUSINESS DESCRIPTION...............................................................................................1

1.1 Business Name.....................................................................................................................1

1.2 Business Location and Address...........................................................................................1

1.3 Form of ownership...............................................................................................................2

1.4 Type of the Business............................................................................................................2

1.5 The Products Service...........................................................................................................2

1.6 Industry................................................................................................................................2

1.7 Justifications of the Opportunity.........................................................................................3

1.8 Entry and Growth Strategy..................................................................................................3

CHAPTER TWO.......................................................................................................................4

2.0 MARKETING PLAN..........................................................................................................4

2.1 Customers............................................................................................................................4

2.2 Market Share........................................................................................................................4

2.3 Competition.........................................................................................................................5

2.4 Methods of Promoting and Advertising..............................................................................5

2.5 Pricing Strategy...................................................................................................................6

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2.6 Service Tactics.....................................................................................................................7

2.7 Distribution Strategy............................................................................................................8

CHAPTER THREE...................................................................................................................9

3.0 ORGANIZATION STRUCTURE.......................................................................................9

3.1. Organization Structure........................................................................................................9

3.2 Other Business Personnel..................................................................................................11

3.3 Recruitment Training and Promotion of Personnel...........................................................12

3.4 Remuneration and Incentives for Personnel......................................................................14

3.5 License Permits and By Laws............................................................................................15

3.6 Other Support Service........................................................................................................16

CHAPTER FOUR...................................................................................................................17

4.0PRODUCTION|OPERATIONAPLAN..............................................................................17

4.1 Plant Facilities and Equipment..........................................................................................17

4.2 Production Strategy\Process............................................................................................18

Indirect Labour........................................................................................................................18

4.3 Production Process.............................................................................................................19

4.4 Regulations Affecting Operations.....................................................................................19

CHAPTER FIVE.....................................................................................................................21

FINANCIAL PLANS OF THE BUSINESS AND THE FLOW OF THE ORGANIZATION

.................................................................................................................................................21

5.1 Pre-Operational Costs........................................................................................................21

5.2 Working Capitalfor the 1ST Year........................................................................................21

5.3 Working Capital for the 2nd Year.......................................................................................21

5.4 Working Capital for the 3rd Year.......................................................................................22

5.5 Projected Cash Flow Statement forthe Year Ended 31st December 2019.........................23

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5.6 Project Cash Flow For The Year Ended Dec 2020............................................................24

5.7 Project Cash Flow forthe Year 2021.................................................................................25

5.8 Pro-Forma Balance Sheet..................................................................................................26

Pro-forma balance sheet as at 31st Dec 2020...........................................................................26

5.9pro-Forma Balance Sheet As At 31st Dec. 2021.................................................................26

5.10 For the Year 2022............................................................................................................27

5.11 Expected Profitability Ratios...........................................................................................28

5.11.1 Profitability Ratio forthe Year 2020.............................................................................28

5.11.1forthe Year 2020............................................................................................................28

5.11.2Pro-Forma Balance Sheet As At 31st Dec. 2020............................................................29

5.12 Break Even Analysis........................................................................................................30

5.12.1 forthe Year 2018...........................................................................................................30

5.12.2 Profitability Ratio forthe Year 2021.............................................................................31

5.13 Desired Finance...............................................................................................................32

5.13.1 Proposed Capitalization................................................................................................33

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DECLARATION
I declare that this is my original work and it has never been presented anywhere for any award
either a certificate, Diploma Degree to the best of my knowledge.

NAME …………………………………………………………………………………

SIGNATURE………………………………………DAT E…………………………….

This project has been submitted with the approval of my supervisor Mr. Maritim

SUPERVISOR …………………………………………………………………………….

SIGNATURE……………………………………….. DATE ……………………………

v
DEDICATION

I dedicate this business plan to my lovely parents and friends for their financial support
that they gave me through the start until the completion of the business plan.

vi
ACKNOWLEDGEMENT
I take this opportunity to thank all those who took part in the completion of this work. I am
greatly indebted to my supervisor Mr. Maritim; for his valuable professional support. I also
extend my gratitude to my friends who assisted me with his computer which made the whole
process of typing the business plan a lot easier. I also thank my course mates whom we worked
together to the success of this work.

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EXECUTIVE SUMMARY
The proposed business will be registered as COMPUTER REPAIR AND MAINTENANCE.
The business will be sole proprietorship. It will be located in Kisumu town. The major activities
of the business will be repairing computer hardware and providing antivirus for the computers to
work effectively and effectively.

1.0 Business description

The proposed business will be registered by the name COMPUTER REPAIR AND
MAINTENANCE that will be located at Naivass mall in Kisumu town. The type of business
ownership is to be ventured as a sole proprietorship.

2.0 Marketing plan

The marketing plan describes how the business intends to sell its hardware products and offer its
services. It identifiers the customers and competition. It also outlines the pricing of the repair
products and promotions strategies. The key features of marketing plan are:

 Customers
 Market share
 Competition
 Methods of promotion and advertising
 Pricing strategy
 Service tactics

3.0 Organizational Management Plan

The organizational plan is to employ highly qualified staffs to ensure smooth running of the
business. Reasonable salary will be awarded to improve their living standards and welfare staff
selection will be done in a such way that everybody will be appointed to do what he/she rained
on to ensure proper utilization. Conducive environment shall be ensured that the premises are
well kept. Every employee will be signing a contract on joining the organization clear rules and
regulations will indicate upward mobility of staff which will be based on individual performance,

viii
every employee suggestions on how they can improve their work will be taken positively by
management to ensure that they exercise and develop their talents to further benefit the business.

4.0 Production Plan

COMPUTER REPAIR AND MAINTENANCE will come up with ways to improve the
business; this will be by offering Quality service at average cost compared with its competitors.
To ensure that more customers are comfortable with the services offered to their machines thus
attracting more customers, Customers will also be made or feel what should available.

5.0 The Financial Plan

The chapter is about capital of the business required to commence its estimated working capital,
cash flow, profoma invoice, income statements, balance sheet and profit statement e.g.

 Loans from banks Kshs.200,000

 Friends kshs.5000
 Relatives Kshs.300,000
 Personal savings Kshs.3,953,500
 Total Kshs.4,458,500

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 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 Business Name
The proposed business will be registered by the name COMPUTERREPAIRAND
MAINTENANCE will be located at Naivass mall in KISUMU town.

1.2 Business Location and Address

The business is to be located at Naivass mall in Kisumu Town.

Address and telephone number are;

COMPUTER REPAIR AND MAINTENANCE,

P.O BOX 55,

KISUMU.

TEL: 0794505296

EMAIL:claiveodanga@gmail.com.

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The location of the business was convenient because of accessibility of good transport
network with availability of electricity, clean water supply and nearby upcoming
institutions. The roads are tarmacked which leaves penetration even during rainy season.
Population at large is high and there is low competition in the area according to
research carried out.

1.3 Form of ownership

Computer repair and maintenance will be a sole proprietorship enterprises and the overall boss
will be the proprietor. The owner of the business attained his skills in I.C.T and he has
experience of handling electronics.

1.4 Type of the Business

Computer repair and maintenance will be a service and distributors providing business. It will be
buying, selling, distributing and reserving of the computers. The proposed business will be
buying computers from the major producers.

1.5 The Products Service

The services will enlighten people with knowledge and skills in different type of
technology . The product and services will be lightly recommended by customers in that;
the business will be near institutions hence quicker services to the customers. The services
will be of high quality in modern technology .

The following will be serviced:

 Repair of hardware facilities

 Troubleshooting
 Provision of antivirus
 Selling of computer hardware parts
 Selling of application softwares

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1.6 Industry
The proposed type of business COMPUTER REPAIR AND MAINTENANCE falls under
servicing industry , the license will be necessary to start the business.

The next challenge in industry is the rate of change in technology due to the upcoming
of new model of computers and it needs higher capital to get new softwares every time
that suit the technology.

1.7 Justifications of the Opportunity.

The research done by the proprietor in the past few years shows that there is a large
and ready market of the increasing population and future of the entrepreneur in the
current business scene is to fulfill in the pledges in time.

The location of business is suitable and will be centered since it’s in a town which is
densely populated with willing and able customers. There are some upcoming institutions
and development of technology by use of computer technology. However those who were
there either lack spare parts while others lack tools to handle situation.

Good accessibility due to perfect infrastructure and its development motivated the
entrepreneur in this field of commuter distributing as the business is to be set in a town
due to high populations in Kenyan towns. This will offer a reasonable market. also a
business will involve modern computers as possible as to move with the speed of the
world

1.8 Entry and Growth Strategy

The business will offer discount on large computers bought by certain customers and
also requires signboard to indicate business presence, location and the type of business it
is engaged in. The business will enter the market through announcement using channels
such as Capital FM,NRG radio ,citizen TV, Easy FM and classic FM and offering
discounts to regular customers.

The funds such as ploughed back profit, loans and higher purchase will facilitate growth
of the enterprise by assisting, obtaining more assets, increase stocks, employ more assets,
employ more work force and more models of computers. Once this is done into ready

3
market, the growth and expansion of the business will be fast hence helping the
business to more up to the tertiary level.

CHAPTER TWO

2.0 MARKETING PLAN

2.1 Customers
Customers give the rightful picture of the business. They determine where the business
should be proceed or cease in its activities. They also dictate the expansions,
distributions and growth of a business from research conducted, the enterprise is to
depend entirely on demographic location of the town as its major customers .

The customers will be categorized as follows;

a) Irregular customers
1. Small scaled business such as hotels
2. Individuals
3. Community groups

b) Potential customers
1. Secondary and primary schools.
2. College and institutions
3. Hospitals

2.2 Market Share

The business will serve its customers living at appropriate area of 30 square kilometers
with good number of competitors coming from surrounding markets. As observed on
market researched, the business enterprise against competitors and have implication that is
60% of all customers will go to Darco Computer repair while 40% for neighboring
competitors. This is because we found that 60% were unsatisfied with the poor quality

4
products offered by competitors. We found that customers are ready to shift to other
enterprises which produces quality products at affordable prices

5
2.3 Competition

A competitor is an entrepreneur operating in the same field of your operation either

directly or indirectly . Competitors will either be offering the same products as yours or
substitute to yours .

The proposed business will face stiff completion from other private distributers and
established organization dealing in similar business.

The business main competitors is the private distributers since this are a number within
the county. We expect stiff completion from them. Apart from their strength they have
several weaknesses ;

I. Inadequate managerial skills due to lack of technological knowhow.

II. Mishandling of customers.
III. Their businesses are not expanding.
IV. Overpricing
V. Low quality computers

Privileges enjoyed by our competitors;

1. Have established markets

2. Enjoy good profits from high pricing of goods
3. Financially sound
4. Already in operation hence established good names.

2.4 Methods of Promoting and Advertising.

The enterprise intends to inform the targeted customers about existence as soon it begins
through the following methods;

i. Use of posters
ii. Using free samples and gifts
iii. Use of press system

6
The above methods will be used after four months or thrice per year depending on
number of customers. moreover , signposts will be put in the routes leading to the
premises. Name and address will be clearly shown as well as products offered . one
month after the promotion survey process should be carried out to measure effects of the
advertisement and promotion within the area.

2.5 Pricing Strategy

The repairing of the devices depends on expected profits of the spare parts and also
operational expenses . the force of the repair and demand will also determine market price
of the facilities. From the estimate:-

Particulars shillings

Monitor6000

Keyboard 3000

Mouse 600

CPU 10000

Speakers 2300

Flash discs 1GB 450

2GB 1100

4GB 2250

8GB 4500

16GB 7650

32GB 8900

Particulars shillings

Antivirus 1000

LFloppy disc 50

7
Discount will be offered to those customers who purchase in huge quantities as well as
credit will be allowed to reliable customers. Free transports to your institution .the business
will price its products according to direct cost and indirect cost. this will help us know the
amount of profit to be generated. After summing up direct and indirect costs of days of
the sale the selling price will be higher than the cost price in order to make profits.
Quantity discounts will be offered according to quantity ordered.

2.6 Service Tactics

The enterprise will use various service technique which ranges from personal services and
through good order to offer services through good service procedures and technique. The
volume of services will be increased and maximize profit at reduced operational expenses
and inputs cost. After services, sales such as delivering both hardware and software goods
to various customers premises when they purchase in large quantities will be exercised
selling of goods will be strictly in cash basis unless good business relationship has been
established to those customers who would like to purchase on credit.

In recruitment and retention of sale the business will use the following tactics

i. Commission ;The more the sale the greater the commission given
ii. Friends and colleagues ; well-known friends and colleague to the entrepreneur will
be given first priorities to employment if only they qualify.
iii. Head hunting’s; particular competent personnel will be recruited from the market
after critical survey in their field.

The business will use public vehicle services and motor bicycle to transport hardware
resources for repairing computers its to our enterprise where roads are ragged to market
its services .the selected agents will be interviewed for their honesty and faithfulness.

8
2.7 Distribution Strategy
As the operation kicks off , the business will offer its services with the nearby institution
because of weakness in finance to eliminate servicing costs as much as possible. as a
matter of fact -it would be expensive hiring an independent transporter therefore a direct
channel will be used. This means the business will provide transport for distribution
which is quite efficient.
The means of transport to be used will be by road i.e. By use of business van. The major
distribution problem would be the breakdown of the van of the time of work and also
language barrier.
Thereby drivers to qualify for the job got to aver at least a certificate of knowledge in
mechanical motor. And to also increase the number of vans so as serve a large
population in the diverse area of coverage.

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 CHAPTER THREE

3.0 ORGANIZATION STRUCTURE

This chapter will show and describe the duties, qualification and rules of command
within the business organization. The business will employ several numbers of workers.

3.1. Organization Structure

GENERAL MANAGER

ACCOUNTANT MANAGER SALES MANAGER TRANSPORT MANAGER

SALES REPRESENTATIVE

CASHIER LEANER WATCHMAN RECEPTIONIST DRIVER

THE GENERAL MANAGER

The business will be headed by general by the name Mokono Ian Onsare one assistant
with help from other employees.
Qualification
 Aged21 years.
 Diploma holder in Information Communication Technology

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Roles and responsibilities
 Direct and manage business.
 Maintain harmonious relationship within workers
 Making decision concerning business
 Delegate authority and responsibility to other workers.
 Recruitment of new workers
 Signing financial statement concerning financial levels
 Set rules and regulations governing day to day running of business activities.

ACCOUNTANT
Qualification;
 should be a holder of CPA and computer literate
 Should have 3years work experience.
 should have experience in electronics
 he\she should have good communication speech
 good working track record

Roles and responsibilities

 Keeping records daily of activities performed.

 Balancing the purchase and sales hence determining profit margins
 payment of workers
 Prepare financial statement

TRANSPORT MANAGER
Qualifications
 Should have at least a certificate in administration
 have at least two working experience
 should have a diploma in accountancy
 should have a valid driving license

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3.2 Other Business Personnel
This include subordinate staff
Sales representative
Qualifications
 should a holder in diploma in sales and marketing
 good working record
 Aged 20-27 years old
 Should have good communication skills
 Holder of a diploma in accounting from a recognized school.

Roles and responsibility

 advertising services which are offered in the enterprise
 Taking cash sales for certification to the manager.
 Responsible for creating good public relation between the business and customers to
portray the good image of organization.

CASHIER
Qualifications
 Computer literate
 At least 2years experience
 Aged between 25-30 years.
 Should have a certificate of good conduct.
Roles responsibilities
 Take and account all the money realized by the business
 paying workers

Drivers
Qualifications;
 should have a certificate of good conduct
12
  Must have a certified license from a well-recognized driving school.
 Skills and knowledge in mechanics will be added advantage.
 Should have at least two years’ experience
Roles and responsibilities
 To drive any vehicle as instructed by the transport manager .
 to communicate to the transport manager about the condition of the business
vehicle.

CLEANER
Qualification
 Should at least be a form four-leaver
 should be above 20 years

Roles and responsibility

 Carry out general daily cleaning.

WATCHMAN
Qualification;
 Aged 27 years.
 Speak English and Kiswahili fluently.
 At least be in position of form four certificate
-have a certificate of good conduct.
Roles and responsibility
 To ensure safety of organization vehicles.
 Give directions to customers.
 Guard business during day and night.

3.3 Recruitment Training and Promotion of Personnel

During recruitment it depends solely on the individual workers needed. It’s a choice first
preference, it will be given to a person with experience and who will meet the
qualification of such position.

13
 This is done in two methods namely;

 advertisement
 interviews

ADVERTISEMENT

The business is to advertise the job on all position except the owner manager using
local newspaper throughout frontal districts. The applicants are required to send a grand
written application.

INTERVIEWS

Date of the interview of shot listed applicant is to be send by the manager. The essence
of conducting interviews is to ensure that right people are employed for the right job
opportunity in the business operation and environment.

The firm will organize for seminars and workshop to its staff to further their knowledge
and equip them with various skills. This will to all who will be interested members who
would like to further their studies are to be sponsored by the business on one condition
that has to work for the business at least two after completion of the studies in order to
recover the money sport during training . This is to be done on part time, the process is
to enable trainers to acquire new technologies .

Promotion will benefit those who are permanent having good conduct advantaged are
those with best performance in their work . promotion are to be offered to employees
according to the factor stated under;

i. Performance and good services

ii. Promotion is to be strictly in merit
iii. Experience in work

14
Experience in work

Incentives are to motivate employees to work harder and includes extra payment on
salaries , payments on salaries, leave offs overtime payments etc.,. Salaries should be on the
first saturday of the month.

POSITION LEAVE SICK RELAXATION

Manager 25 7 1 hr
Accountant 20 7 1 hr
Supervisor 25 7 1 hr
Transport manager 25 7 1 hr
Driver 20 7 1 hr
Watchman 20 7 1 hr
Cleaner 20 7 1 hr

Other incentive include-housings

 Giving soft loans
 promoting the hardworking personnel
 Advanced payment is allowed

3.4 Remuneration and Incentives for Personnel

Salary scale for each employee in the enterprise is as follows

PERSONNEL NO. OF EMPLOYEES AND ALLOWANCES OTHERS TOTALS

THEIR BASIC SALARY
Manager 1 30000 3000 2000 3500
Accountant 1 25000 2000 1500 28000
Sales rep 1 20000 2000 1200 23000
Cashier 2 15000 1000 1000 34000
Transport 1 20000 1500 1000 22000
manager
Receptionist 2 10000 1000 500 23000
Driver 3 80000 1000 500 28000
Watchman 3 5000 1000 500 19500
Cleaner 3 6000 1000 500 15000

15
All employees will be briefed on their respective line of operation and their expectation
as per the firm objectives.

Through effective supervision the employees will be monitored to evaluate their

performance and their contribution to the firms

Hardworking employees will be awarded with their

 salary increments
 soft loan award
 Incentives
 promotions

3.5 License Permits and By Laws

The business will follow the procedures and regulations set according to local
government act.

To be operational the business should have a license. This is to be provided by the DCS
Office and the KISUMU municipality council for 5000 shillings and 3000 respectively.
The business will require as to start operating when the permit will be obtained from
KISUMU municipal council.

The business shall be strictly be abided by all the bylaws located to it i.e. -local
government law

Trade description laws

The business will be operating as from 7:00am to 5:00 pm during week days and 8:00
to 12:00pm during weekends.

 No employees should be off duty without permission.

 Management meeting will be done after every six months
 Dishonest and misconduct among employees will lead to penalty and end
employment contracts

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3.6 Other Support Service.
A bank account will be deposited and withdrawn only by the manager through directors
who can access credit account . The business will be insured against natural calamities
and also employees will be insured against accidents . AMACO INSURANCE COMPANY
will be chosen to take ones form. Transport service will be offered under transport manager.
The business will maintain its comments with Kenya commercial bank KISUMU branch,
whereas postal services will be sending and receiving mails and it will be done

through this address P.O box 55 KISUMU and telephone contacts will be 054-2850 and
mobile will be 0794505296

Email will be claiveodanga@gmail.com

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 CHAPTER FOUR

4.0PRODUCTION|OPERATIONAPLAN
This concern with fully utilization of available resources with an aim of minimizing the
input cost and maximizing the output

4.1 Plant Facilities and Equipment

The plant intends to purchase a piece of land as its basic facility in which the business
premises building are to be constructed .soon after the construction of the building and
structure as the recommended standard. The essential equipment is to be acquired.

The facilities required for the business at the start as shown below.

MACHINERY PRICE PER ITEM TOTAL COST CAPACITY

TOOLS AND (KSH)
EQUIPMENT
Electric 2000 1000 5
Millimeter 650 3900 6
Winding material 750 1500 2
Screw drivers 100 1200 12
Spanners 130 1300 10
Pliers 250 2000 8
Gloves 100 1000 10
IC holder 120 960 8
Safety goggles 120 600 5
Aprons 600 4800 8

The business shall be required to maintain and repair its premises and all the equipment
that it all uses in the cause of production.

This may include re-carpeting of the floor, painting of the wall and repair of broken
furniture other appliances that need such appliances that may need services. That are
unrepaired will be disposed after bought.

The cost of repair and maintenance is expected to this amount is Kshs.13000 per year.
This may change intime.

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Destiny computer distributer is starting business therefore it has no promises. As per
agreement of intending to pay a price of land the business has enough money. The
premises will be positioned to create room for office workshop, store and parting area.

4.2 Production Strategy\Process

The sources of production of spare parts shall be selected from numerous and supplies
within Kisumu and Kapsabet town. On the same products various factors will be
considered . This will include quality products and services offered by producer and
suppliers before order is made.

Some of the monthly materials will include gloves, aprons ,gloves, pliers spanners, and
their costs will be depending on supplies the business will contract

Duo to uncertain number to be received , production expenses like transport ion will be
variable according to the demand of specific times.

The business ought to employ highly skilled workers whether directly or indirectly .

Indirect Labour
TITLE SKILLS COSTS/MONTHS
Manager Management skills 11000
Accountant Accountancy skills 6500
Security men Security procedures 3000
Total labor cost 55500

The monthly production overhead per month

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ITEMS KSHS

Electricity 40000

Post office 5000

Telephone 60000

Promotion 4000

Water 8000

Maintenance 20000

Wages 30000

Totals 167000

Total cost of production will be 167000per month

4.3 Production Process.

The process is shown in the flow diagram below

Reception -recording all facts -recording services required

Testing - selling and buying

Rains prolong and consistent heavy rains is usually expected in the area.

This will affect undertaking of business activities. Transport of products and accessibility of
the business will be offered

4.4 Regulations Affecting Operations

The business will keenly observe then laws stipulated by the government for permits and
license should be obtained before and soon after business operation alongside with
permits for there is constant monthly tax of 3000 per year and its necessity according to
government policy.

In every enterprise there must be first aid kit which should be given to injured person
before being taken to a doctor

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Taxes should be paid yearly according to income tax department. All those are under
department of commerce and industry in the frontal district headquarters . provision and
insurance of adequate materials like gloves , aprons are looked upon as pertains safety
regulations of employees.

For uniqueness and trademark the business will ensure there is no other business
operating under the same name to avoid copyright competition and business criminals.

The business will ensure no pollution to the environment, thus workers should maintain
good health regulations.

Improved disposal of wastes products from the firm may lead to closure of business in
that the ministry of environment has set governing disposal of waste materials to keep
environment clean and neat

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 CHAPTER FIVE

FINANCIAL PLANS OF THE BUSINESS AND THE FLOW OF THE ORGANIZATION

This chapter will include all the financial plans of the business and the flow of the organization

5.1 Pre-Operational Costs

Item Amount (ksh)
Transport 800000
Tool and Equipment 2000000
License and permits 300000
Insurance 120000
Furniture and fitting 987000
Miscellaneous 200000
Total 4407000

5.2 Working Capitalfor the 1ST Year

This is money needed for day today operation of the business estimated working capital

Item Amount (ksh)

Rent 19000
Electricity 6000
Salaries 131000
Water bills 1000
Fuel 33000
Advertisement 7500
Repair and maintenance 12000
Telephone bills 10000
Total working capital 219500
5.3 Working Capital for the 2nd Year
Item Amount (ksh)
Rent 19000
Electricity bills 6000
Salaries 131000
Water bills 1000
Fuel 33000
Advertisement 7500
Repair and maintenance 12000

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5.4 Working Capital for the 3rd Year
Item Amount per month (ksh)
Rent 19000
Electricity bills 6000
Salaries 131000
Water bills 1000
Fuel 33000
Advertisement 7500
Repair and maintenance 12000
Telephone bills 10000
Total working capital 219500

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 5.5 Projected Cash Flow Statement forthe Year Ended 31st December 2025
I T E M J A N F E B MAR A PR MAY J U N J U L A U G S E P O C T N O V D E C TOTAL
Cash in flow
Balance B/F 72000 602000 1150500 1646500 2215500 3357500 3883500 4471000 5095000 5726800 31004300
Services&sales 1880000 1350000 1320000 1300000 1310000 1320000 1330000 1340000 1350000 1370000 1390000 2200000 15580000
Debtors 50000 50000 60000 60000 60000 65000 70000 75000 80000 90000 660000
Total in flow 1380000 1350000 1370000 1350000 1370000 1380000 1390000 1405000 1420000 1450000 1470000 231000 16265000
C ash outflow
Purchases 680000 620000 620000 610000 610000 615000 620000 635000 636000 635000 638000 680000 6889000
Salaries 131000 131000 131000 131000 131000 131000 131000 131000 131000 131000 131000 1461000
E q u i p m e n t 550000
Maintenance 50000 40000 30000 20000 140000
License&permits 7000
W a t e r 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 11000
E l e c t r i c i t y 5 0 0 0 5 0 0 0 5 5 0 0 6 0 0 0 5 0 0 0 5 5 0 0 5 5 0 0 6 0 0 0 5 5 0 0 5 0 0 0 57000 7 0 0 0 113000
Advertisement 10000 10000 5000 1000 20000 30000 6 6 0 0 0
F u e l 30000 30000 33000 30000 30000 33000 33000 30000 33000 30000 35000 40000 330000
T e l e p h o n e 10000 10000 12000 12000 10000 12000 12000 12000 12000 10000 13000 15000 130000
Miscellaneous 10000 8 0 0 0 9 0 0 0 9 0 0 0 9 0 0 0 9 0 0 0 9 0 0 0 9 0 0 0 9 0 0 0 9 0 0 0 9 5 0 0 10000 9 9 5 0 0
I n s u r a n c e 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 55000
Total outflow 1308000 820000 821500 854000 801000 811500 816500 874000 832500 820000 838200 9202700 17497900
Net cash flow 72000 530000 548500 496000 569000 508500 573500 526000 587500 624000 631800 138900 6984100
A c c C a s h 72000 602000 1150000 1646500 2215500 2784000 3357500 3883500 4471000 5095000 5726800 7116100 38048400

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 5.6 Project Cash Flow For The Year Ended Dec 2026
I T E M J A N F E B MAR A PR MAY J U N J U L A U G S E P O C T N O V D E C TOTAL
C ash in flow
Balance B/F 7116000 7992550 7992550 8550500 9048450 9606900 10175350 10761300 11312250 11863200 12450650 132636000
Services&sales 1400000 1370000 1350000 1330000 1340000 1350000 1360000 1370000 1395000 1420000 1050000 2300000
Debtors 60000 60000 60000 70000 70000 7 0 0 0 0 8 0 0 0 0 9 0 0 0 0 8 0 0 0 0 9 0 0 0 0 100000 120000
Total in flow 1460000 1430000 1410000 1400000 1410000 1420000 1440000 1460000 1470000 1510999 1750000 2420000
Cash outflow
P u r c h a s e s 652000 650000 648000 650000 652000 652000 655000 660000 665000 666000 673000 681000
S a l a r i e s 137580 137000 137550 137550 137350 137550 137550 137550 157000 137000 137550 157000
E qui pm e n t 50000
Maintenance 236000 50000 40000
license&permits 7000
W a t e r 1000 1000 1000 1000 1000 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0
E l e c t r i c i t y 6 0 0 0 6 0 0 0 5 5 0 0 65000 6000 6 0 0 0 5 5 0 0 6 5 0 0 5 5 0 0 6 0 0 0 6 5 0 0 8 0 0 0
Advertisement 20000 10000
F u e l 33000 33000 33000 30000 33000 3 3 0 0 0 3 3 0 0 0 3 0 0 0 0 3 3 0 0 0 3 5 0 0 0 4 0 0 0 0
Telephone 8000 8000 8000 7000 8000 8 0 0 0 8 0 0 0 7 0 0 0 8 0 0 0 8 0 0 0 9 0 0 0 10000
Miscellaneous 9 0 0 0 9 0 0 0 9 0 0 0 8 0 0 0 9 0 0 0 9 0 0 0 9 0 0 0 7 0 0 0 9 0 0 0 9 0 0 0 1 0 0 0 0 1 1 0 0 0
Insurance 5000 5000 5000 5000 5000 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0 5 0 0 0
Total outflow 1164550 849550 847050 907050 851550 851550 854050 909030 919050 922550 937050 992530
Net cash flow 295450 58000 562950 492950 558450 565450 585450 550950 550950 587450 813950 1427450
A c c C a s h 7411550 7992500 8555500 9048900 9606900 10175350 10701300 11312250 11862200 12450650 13623600 14691050

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 5.7 Project Cash Flow forthe Year 2027
I T E M J A N F E B M AR A P R M AY J U N J U L A U G S E P O C T N O V D E C TOTAL
C ash in flow
Balance B/F 14691050 14946500 15602050 16254050 16804050 17361550 17929050 18514050 19662050 19679550 20356550 21208000
Services&sales 1500000 1470000 1450000 1430000 1440000 1450000 1460000 1480000 1500000 1550000 1720000 2450000
Debtors 7 0 0 0 0 7 0 0 0 0 7 0 0 0 0 8 0 0 0 0 8 0 0 0 0 8 0 0 0 0 9 0 0 0 0 100000 9 0 0 0 0 110000 130000 150000
Total in flow 1570000 1540000 1520000 1510000 1520000 1530000 1550000 1580000 1590000 265000 1850000 2600000
Cash outflow
P u r c h a s e s 700000 677000 695000 700000 702000 702000 705000 707000 714000 718000 726000 740000
S a l a r i e s 144500 144500 144500 144500 11445000 144000 1445000 144500 144500 144500 144500 174500
E qui pm e n t 100000
Maintenance 250000 60000 60000 50000 30000
license&permits 7000
W a t e r 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
Electricity 6 0 0 0 6 0 0 0 6 5 0 0 6 5 0 0 6 0 0 0 5 0 0 0 5 5 0 0 7 0 0 0 8 0 0 0 6 5 0 0 7 0 0 0 9 0 0 0
Advertisement 50000 30000 30000 20000 40000
F u e l 35000 35000 35000 33000 35000 35000 35000 33000 33000 40000 45000 50000
Telephone 9 0 0 0 9 0 0 0 9 0 0 0 8 0 0 0 9 0 0 0 9 0 0 0 9 0 0 0 8 0 0 0 9 0 0 0 9 0 0 0 1 0 0 0 12000
Miscellaneous 7 0 0 0 7 0 0 0 9 0 0 0 6 0 0 0 7 0 0 0 7 0 0 0 7 0 0 0 6 0 0 0 7 0 0 0 8 0 0 0 9 0 0 0 1 0 0 0 0
Insurance 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000
Total outflow 1314500 884500 868000 960000 962500 962500 965000 1032000 972500 983000 998500 1222500
Net cash flow 285500 655500 652000 550000 557300 567500 585000 548000 617500 677000 878500 1372500
A c c C a s h 14946500 15602050 16254056 16804000 17361550 17929059 18514050 19062050 19679500 29359550 21208050 22585550

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5.8 Pro-Forma Balance Sheet

Pro-forma balance sheet as at 31st Dec 2025

ITEM AMOUNT AMOUNT
Fixed assets
Equipment 550000
Vehicles 120000
Totals 175000
Less 5% depreciation 875000
Total assets 1662500
Current assets
Cash in hand 2372100
Cash at bank 4744000
Deptors 660000
Stock 250000
Total current assets 10276100
Creditors 2600000
Working capital 2634000
Financed by KCB
Startup capital 4407000
Overdraft 2297600
Total 11938600 11938600

Sales of year III = 19,700,000

Break-even point = Total Assets × Sales

Sales – Total variable cost

= 4,892,500 × 19,700,000

19,700,000 – 3,380,800

= Ksh. 5,906,064.636

5.11 Expected Profitability Ratios

This is the ratio used in a fixed to assist the performance of the business.

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5.11.1 Profitability Ratio forthe Year 2026

i) Gross profit ratio = Gross profit sales × 100%

5.11.1forthe Year 2020

Sales of Year II = 19230000
Break-even point = Total fixed Assets × Sales
Sales – Total variable Assets
= 4,037,500 × 19,230,000
19,230,000– 3,042,600
= Ksh. 4,796,392

5.12 Break Even Analysis

This is the point when the business is neither running at a profit nor loss

5.12.1 forthe Year 2018

Sales of the year I 18, 170,000

Break-even point = Total Fixed Assets × Sales

Sales – total variable cost

= 1,662,500 × 18,170,000

18,170,000 – 2,778,700

= Ksh. 1,962,642.557

= 7,669,000 × 100%

18,170,000

=43.9%

ii) Return on Equity = Net profit (After tax) × 100

Owners’ Equity

= 4,242,800 × 100

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 18,170,000

= 23.4%

iii) Return on Investments = Net profit after tax × 100

Total Investment

= 4,242,800 × 100

11,938,600

= 35.5%

5.12.2 Profitability Ratio forthe Year 2021

1) Gross profit = Gross Profit sales × 100%

= 7, 697, 00 × 100

19,230,000

= 40%

2) Return on Equity = Net profit before tax × 100%

Owners’ Equity

= 4,895,900 × 100%

19,230,000

= 25.5%

1) Return on Investment = Net profit After tax × 100%

2) Total investment

= 4,893,900 × 100%

15,262,450

= 32.1%

6.7.3 Profitability Ratio for the year 2015

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1) Gross profit = Gross profit sale × 100%

= 7,969,000 × 100

19,200,000

2) Return on Equity = Net profit after tax × 100%

Owners’ Equity

= 4,894,000 × 100%

19,700,000

= 24.8%

3) Return on investment = Net profit (after tax) × 100%

Total Assets

= 4,894,000 × 100%

16,807,000

= 29.1%

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APPENDIX: Location of the proposed company.

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