BUSINESS PLAN

NAME:KEVIN KIBET KURUI

D/MET/22022/046

SIGNATURE:………………..

DATE:

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 TABLE OF CONTENT

Contents
TABLE OF CONTENT......................................................................................................................1
DECLARATION...........................................................................................................................4
DEDICATION.............................................................................................................................5
ACKNOWLEDGEMENT...............................................................................................................6
EXECUTIVE SUMMERY..............................................................................................................7
BUSINESS DESCRIPTION.............................................................................................................7
1.2 MARKET PLAN.....................................................................................................................7
1.3 ORGANIZATION PLAN AND MANAGEMENT...........................................................................7
1.4 PRODUCTION AND OPERATION PLAN...................................................................................7
1.5 FINANCIAL PLAN................................................................................................................8
CHAPTER ONE...............................................................................................................................9
1.0 BUSINESS DESCRIPTION..........................................................................................................9
1.1 BACKGROUND OF THE OWNER.............................................................................................9
1.2 BUSINESS LOCATION AND ADDRESS.....................................................................................9
1.4 FORM OF BUSINESS OWNERSHIP.......................................................................................11
1.4 TYPE OF BUSINESS.............................................................................................................11
1.5 PRODUCTS AND SERVICES..................................................................................................11
1.6 JUSTIFICATION OF OPPORTUNITY.......................................................................................11
1.7 INDUSTRY..........................................................................................................................11
. 1.8 GOALS OF BUSINESS OR OBJECTIVES.....................................................................................12
1.8.1 Goals..........................................................................................................................12
1.8.2 Objectives...................................................................................................................12
1.9 Entry and growth strategy.............................................................................................12
1.9.1 Entry plan...................................................................................................................12
1.9.2 Growth plan...............................................................................................................12
CHAPTER TWO............................................................................................................................13
2.0 MARKETING PLAN..............................................................................................................13
2.1 CUSTOMERS......................................................................................................................13
2.2 MARKET SHARE.................................................................................................................13
2.3 COMPETITION...................................................................................................................13

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 2.4 METHODS OF PROMOTION AND ADVERTISING....................................................................15
2.5 ADVERTISEMENT...............................................................................................................15
2.6 PRICING STRATEGY............................................................................................................15
2.7 SALES TACTICS...................................................................................................................15
2.8 DISTRIBUTION STRATEGY...................................................................................................16
CHAPTER THREE.........................................................................................................................17
3.0 ORGANIZATIONAL STRUCTURE AND MANAGEMENT PLAN..................................................17
3.1 ORGANIZATION STRUCTURE..........................................................................................17
3.2PERSONEL AND DUTIES.......................................................................................................18
3.3 OTHER PERSONEL QUALIFICATION AND RESPONSIBILITIES..................................................18
3.4RECRUITING, TRAINING AND PROMOTION...........................................................................19
3.4 1 RECRUITMENT............................................................................................................19
3.4.3 PROMOTION...............................................................................................................19
3.5: RENUMERATION AND INCENTIVES.....................................................................................20
3.5.1: RENUMERATION........................................................................................................20
3.5.2: INCENTIVES................................................................................................................20
CHAPTER FOUR...........................................................................................................................21
4.0 OPERATIONAL AND PRODUCTION..........................................................................................21
4.1 PRODUCTION STRATEGY....................................................................................................21
4.2 : PRODUCTION PROCESS....................................................................................................22
4.3 REGULATIONS AFFECTING OPERATION..............................................................................22
a) Health regulations...............................................................................................................22
b) Safety regulations...................................................................................................................22
c) Government regulations..........................................................................................................22
CHAPTER FIVE.............................................................................................................................23
5.0 FINANCIAL PLAN..............................................................................................................23
5.1 PRE-OPERATIONAL COST..................................................................................................23
5.2 WORKING CAPITAL REQUIREMENTS...................................................................................24
5.3 PROJECTED CASH FLOW STATEMENT.................................................................................24
5.4 .A PR0F0RMA INCOME STATEMENT...................................................................................26
5.4.B PROFORMA BALANCE SHEET...........................................................................................27
6.5 BREAK EVEN LEVEL............................................................................................................28
5. 6 PROFITABILITY RATIO EXPECTATION..................................................................................29
5.7 DESIRED CAPITALAISATION................................................................................................30
5.8 PROPOSED CAPITALISATION..............................................................................................30
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 DECLARATION
I here by declarer that this business plan is my original work

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 DEDICATION
I wish to dedicate my work to my father EVAN KIPKURUI KIBOSS and mother
MARGAREAT KIBOSS for their upright moral and financial support having remaining
relentless

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 ACKNOWLEDGEMENT.
First I want acknowledge the Almighty GOD for bringing me this far and keeping me safe
and sound

The development of this business plan took support and guidance 0f people whom I wish to
thank.

I also wish to pay my tribute to MADAM DORIS KINYA and MADAM for helping me to
improve my skill on entrepreneurship

I also thank my father and mother for their moral and unrelentless support also my brothers
ant sisters together with friends whose motivation keep me moving forward.

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 EXECUTIVE SUMMERY

BUSINESS DESCRIPTION

The name of the business will be called KIBOSS HARDWARE ENTERPRISE. The name
KIBOSS come from my family name and was chosen in honor of my name and gained status
in the business.

The business will be located at Eldoret Chepkorio in Keiyo South along Eldoret Ravine
road past Kaptagat Dealing with Building and Construction tools and equipments

The postal contact address for the business will be

KURUI’S HARDWARE ENTERPRISE

P.O.BOX 1313-3100

CHEPKORIO,ELDORET.

TELEPHONE: 0758344721

EMAIL:kevinkurui1185@gmail.com

1.2 MARKET PLAN

The market open to any interested or need of building materials but mostly target
construction i.e. schools ,site construction, hospital churches and business premises. The firm
through establishing market strategies roll be competent enough to enable it’s secure
customers through competing with other firms

1.3 ORGANIZATION PLAN AND MANAGEMENT

The organization structure will consist of a manager whom is the sole proprietor of the
business. The enterprise will run with the help of storekeeper two loader, driver and a
security guard.

1.4 PRODUCTION AND OPERATION PLAN

This entails the materials to be used, maintenance cost and repair together with the
replacement methods it also covers the inside layout of the premises to undertake the
business , strategies to be employed to win the market share ,mouthly expenses of material
and below its operation process is covered under this section . Regulation affecting the
operation is also considered

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1.5 FINANCIAL PLAN

This shows the financial required for the proposed business to start and run its operations and
services. The pre-operational cost to be incurred before starting of the enterprise .

The financial statement in this chapters shows the investment of the business and profit
gained and their ratio for the years consecutive.

Source Amount (ksh.)

Personal savings 150000
Bank loan 200,000
Family contributions 100,000
Friends contributions 50,000
Total 500,000

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 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BACKGROUND OF THE OWNER

The proposed business will be owned by KEVIN KIBET KURUI who will be the manager of
the business.

The proposed business will be operating under the name KIBOSS Hardware Enterprise and
it will be registered.
The aim of using the name is because it is unique in the area, easy to pronounce, easy to
remember. The name also signifies rapid changes in production quality, quantity, and
expansion that the business is intended to undergo. The name also came up after conducting
an extensive research and found out that no business was operating under the same name
hence assuring the business of its security once it starts operating.

Logo of the business

The aim of using the logo is because it is unique as well as a sign of quality and quantity
assurance.

1.2 BUSINESS LOCATION AND ADDRESS

The proposed business will be located along Eldoret Ravine Highway at Chepkorio small
market located in Keiyo south county in Rift Valley Region. The main reason for locating the
business in the area is because of unlimited market for the products which has resulted to
high demand from the customers. On the other hand, the area has good infrastructure, steady
supply of resources good security and is situated in a strategic position centred oon a junction
at a small town which is approximately 45km from Eloret town.

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 The business will be operating under the following address:,

KURUI HARDWARE ENTERPRISE,

P. O. BOX 1313-3100,
CHEPKORIO ELDORET,
TELEPHONE 0758344721
Email: kibosshardware enerprise

@gmail.com

MAP SHOWING BUSINESS LOCATION

RAVINE
U
ROAD

KIPKWEN Small centre

shop
centre

Chebole
Green
Equity bank pastures

Shops and Chebole

Chepkorio market Hotel bakery

KEY Dcs office

head
Direction quarters

Market place

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1.4 FORM OF BUSINESS OWNERSHIP
The intended business, Construction and Repair Company will be a sole proprietorship. This
is because it will be started and operated by KEVIN KIBET KURUI . In addition, the start-up
capital will be from KEVIN KIBET KURUI who will be the sole owner of the business.

The reasons why this form of business ownership was chosen are because few legal
formalities are required to start; little capital is required to start and operate effectively, due to
direct contact with customers on the start of the business, the sole owner of the business
enjoys all profits from the business alone and finally, it facilitates easy decision making.The
weakness and strength will be handled strategically.

1.4 TYPE OF BUSINESS

The business enterprise will be dedicated to the production and servicing of construction
tools materials and equipment of quality and of correct quantity so as to achieve customers
satisfaction thus expanding the business growth and expansion.

1.5 PRODUCTS AND SERVICES

The proposed business will be engaging in the marketing of building and construction
products and services e.g tools equipment and materials encountered in building field ; i.e ,
course and fine aggregates , blocks , bricks , different type of roofing sheets , cement and all
variety of nails among many more. The sells will be done in small and large scale to schools,
hospitals, individuals and the corresponding team under construction.

1.6 JUSTIFICATION OF OPPORTUNITY

The main factor that favours the choice of this proposed business opportunity and its location
is because of high demand for the products by the customers; limited number of services in
the area that cannot cater for consumers’ demand more effectively, availability of qualified or
skilful personnel who enhances quality production to meet the market demand.

The specific needs into the business venture are to capitalize on the available resources and
utilize them to meet consumers’ demands and maximize on profits. The business will be
creating employment to the jobless people; will ensure maximum security of its employees,
consumers, suppliers, and the entire society to improve their living standards.

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1.7 INDUSTRY.

KIBOSS hardware enterprise will fall under service industry whereby it will be dealing with
buying then selling building and construction materials, tools and equipment’s . The business
will be at an average level since it will be at the starting stage , with an average number of
employees of at least five; storekeeper, two loaders ,a driver and one security guard and the
business managed by the aloe proprietor. The business will cop slowly with the problem of
overstocking and under stocking being the major seasonal factor.

. 1.8 GOALS OF BUSINESS OR OBJECTIVES

1.8.1 Goals
The business intends to have both the long term and short goals.

1.8.2 Objectives
a) To produce modern, products for good quality.
b) To ensure cheap and available construction and repair services.
c) To create more employment to the community in the area.
d) The business work to strive and expand to other areas or locations before a period of
two-three years of operation.

The business intends to maximize on its profits in that for an approximated period of one
year, it will be able to open more branches of the same in the area in order to gather for
consumers’ needs more effectively. The business also intends to diversify its products in both
local and international markets.

1.9 Entry and growth strategy

The business intends to produce quality products that will gather and guarantee human
consumption. In addition, the business also intends to utilize the available resources to
maximize on its profits more effectively and appropriately.

Enterprise intends to have both the entry and growth strategies into the market.

1.9.1 Entry plan

The business will employ unique advertising and promotional techniques that will make it
penetrate the market and be successful. The business will also be committed to producing
high quality products and in turn price them reasonably hence wining loyalty and
confidence of many customers.

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1.9.2 Growth plan
The business will also employ high technology in production process to enhance efficiency
and greater production to gather for market demand and customer satisfaction and in turn
facilitate the growth and expansion of the business.

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 CHAPTER TWO

2.0 MARKETING PLAN

KIBOSS Hardware Enterprise intends to sell its products and other related services to its
customers both locally and internationally. The business will price its products reasonable and
employ unique advertising and promotional techniques that will make it gain more customers
to meet the market expectation. The business will also directly distribute products both in
wholesale and retail prices from the business premises through authorized agents. This will
guarantee the customers of quality products at reasonable prices hence retaining the
customers’ confidence to the business to enhance its expansion.

2.1 CUSTOMERS
The enterprise will gain a high percentage of its customers from within and around the
business premises. The customers comprise of all classes of people such as the youth, teenage
and the old who are relatively qualifying prospects. Mainly the business targets all the
building site and engineering fields such as institution facilities, market stores, hospitals and
storey buildings.

The business also is situated at a strategic position surrounded by day to day construction
development in the centre and government institutions which will usually place orders on the
quality products from the enterprise.

2.2 MARKET SHARE

Business name Population Percentage

KIBOSS hardware 4,000 23
enterprise
Kilgi hardware 4,500 19
Kipkwen hardware 3,000 13
Talai and sons hardware 3,000 9
enterprise
Total 27,000 100

Market share after three years

2.3 COMPETITION
KIBOSS hardware enterprise is expected to encounter a stiff competition from other small
and of hardware enterprises in the region its competitors some of which are located around

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 the enterprise and others some kilometres away from the business premises. The
representation of the key competitors, their size, location, advantages, and weaknesses and
how Construction and Repair Company will capitalise on their weaknesses will be as shown
below.

Business Strengths Weaknesses

KIBOSS Quality Cash flow problem.
hardware products Competition
enterprise Variety of
products
Experience
personel
Conducive
working
environment.
Kilgi Flexible Poor staffing.
hardware skilled Poor selling tactics.
LTD personel
Kipkwen Quality Lack of employee motivation.
hardware products High prices .
Affordable.
Talai and Stability. Poor public relation.
sons Strategically Slow decision making.
hardware positioned Poor staffing
enterprise Expirienced
personel
Enough
stocking

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2.4 METHODS OF PROMOTION AND ADVERTISING.

KIBOSS hardware enterprise will employ unique promotional and advertising techniques to
make products and other related services from the enterprise known to its potential
customers.

2.5 ADVERTISEMENT

The business intends to use use posters, journals calendars and signposts . The business
samples and pictures of its products to be displayed in form of pictures to win the confidence
of the audience towards the products of the confidence of the business. The business intends
to spend approximately ksh.500 monthly for a period of four months. The effectiveness of
this advertising process will therefore be measured by the rate at which the sales are
increasing in the business during and after advertising period.

2.6 PRICING STRATEGY

The firm intends to price its products and other services related reasonably. The
business will therefore carryout an intensive marketing research on the available prices
to come up with an appropriate price for its products. The main factor that will
influence the price setting are the customers which the business would like to retain by
quoting reasonable prices to them. The prices of the products will not be fixed because
of credit that will be offered depending on the terms and conditions of the business. The
business will also offer after – sale – service for every purchase of goods made by
customers who will live within the business premises as well as discounts to attract and
retain the potential customers.

2.7 SALES TACTICS

The business will use various methods to reach its potential customers. The business will use
some of its authorised agents to sell its products on its behalf. On the other hand, the business
will employ qualified salesmen who will directly to the customers around the area.
Occasionally, the business will recruit more sales force that will affect the sales of the
business hence motivate the customers by increasing their commissions for any increased
sales and in turn increase their wages for a certain percentage.

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2.8 DISTRIBUTION STRATEGY.

KIBOSS hardware enterprise intends to use different distribution channels that will be the
most appropriate to its products. Basically, the business will mainly use road transport to
distribute its products to its consumers. This is because the means of transport is relatively
cheaper and flexible hence it is reliable and suitable to both the business and the consumers.
The business will also be using its agents located in different areas in town to distribute its
products to its consumers and intends to spend approximately a third of the preserved cash
for specifically transporting matters only.

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 CHAPTER THREE
3.0 ORGANIZATIONAL STRUCTURE AND MANAGEMENT PLAN.
3.1 ORGANIZATION STRUCTURE
MANAGER

STORE KEEPER

LOADERS
SECURITY GUARD

DRIVER

KIBOSS hardware enterprise will be under the management of the above colique with
various head of department’s i.e. Manager, storekeeper, loaders and security guard

SITE LAYOUT

Reception

Store

Manager ‘s
office

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 Washroom

Changing room

Security

3.2PERSONEL AND DUTIES

1. BUSINESS MANAGER.

KIBOSS hardware enterprise will be under the management of KEVIN as the owner of the
business . He will be the overseer of all the activities carried out in the firm.

He owns the business under the following qualifications ;

 Graguate in craft in building construction and technology.

 Computer literate.
 Fluent in English and kiswahili. Mother language

DUTIES AND RESPONSIBILITY.

 Responsible for decision making
 Formulating policies that govern enterprise operations
 Recriut employees for work
 Organize training of employees in their areas of specialization

2. STOREKEEPER.

 Graduate in craft in Building and Construction Technology.

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  Aged atleast 25 years.
 Fluent in English and Kiswahili.mother language
 Be innovative.

DUTIES AND RESPONSIBILITY.

 Assists in preparation of the budget.

 Handle cash flow.
 Prepare accounting reports ,payroll record of salaries.

3.3 OTHER PERSONEL QUALIFICATION AND RESPONSIBILITIES.

The enterprise will be in need of the above colique's ,i,e a driver ,two helpers and one
security guard.

1. DRIVER.
 Attain to obtain a driving liscence.
 Experience of more than five years.
 Aged 30years.

DUTIES.

 Transporting materials and stalk from the wholesale.

 Distributing of goods to various customers of the business.

2. LOADERS

The business will be in need of at least two loaders whom will assist in offloading , loading
and arranging the store .

The loaders should have the following qualifications;

 At least have artisan certificate in Building an Construction Technology.

 Fluent in English and Kiswahili.mother language
 Aged between 22- 30 years.

3. SECURITY GUARD.

QUALIFICATIONS;

 Atleast have experience from any department of security ,e.g;KK or G4S security.

DUTIES;.
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  Ensure maximum security in the firm .
 Reporting at any agency in business surrounding.

3.4 RECRUITING, TRAINING AND PROMOTION.

3.4 1 RECRUITMENT.
The business will advertise all the posts except of the manager, by use of posters to announce
for vacancies with detailed description. The applicants will be shortlisted and later called for
interviews, those whom attain the qualifications will be sent letters of appointment.

3.4.2 TRAINING.

The newly appointed employees will be trained by the manager in application of problem
solving , good comduct and technical skills . The appointed employees will be given brief
introduction of the various business activities and handling of customers.

3.4.3 PROMOTION.
Promotion will be based on one's merits and period of time experience relevantly on the
individual hardwork and qualification on the field concerned.

3.5: RENUMERATION AND INCENTIVES.

3.5.1: RENUMERATION.
Salaries and allowance will be awarded accordingly to the level of education and experience
in the field .The work done will be mentioned on daily basis and recorded and salary gained
monthly .

3.5.2: INCENTIVES.
Incentives will be awarded to boost the morale of the employees providing quality work .
Free breakfast tea at 10.30AM and free lunch will also be offerd .

RENUMERATION AND INCENTIVES TABLE.

JOB TITLE NUMBER SALARIES HOUSE MEDICAL TOTAL.

OF PER ALLOWANCE ALLOWANC
PERSONEL MONTH E

Manager 1 18000 1200 600 2600

Storekeeper 1 13000 500 300 13800

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 Driver 1 10000 300 300 10600

Loaders. 2 8000 200 300 8500

Security 1 600 200 300 6500

guard

Total 6 55000 200 1800 59200

CHAPTER FOUR.

4.0 OPERATIONAL AND PRODUCTION.

Kiboss Hardware Enterprise will offer products of standard quantity and quality to achieve
the customers satisfaction on the other hand promoting customer's loyalty hence improving
the business growth. The business will major on advertising itself locally and campaigning
through internet so as to capture huge number of customers promoting wide sell. The firm
will be doing analysis on seasonal factors to cop with the issue of under stocking and
overstocking of the products .

4.1 PRODUCTION STRATEGY.

Records will be kept systematically and estimation analyzed concerning the amount of sells
encountered throughout the period to control the issue of under stocking and
overstocking .Bills will ensure to cover its bills so as to enable the business run smoothly by
settling with the rent bills , electrical bills, water bills and assurance bills.

EQUIPMNT QUANTITY OF UNIT COST TOTAL COST

TOOLS THE PRODUCTS
ANDMATERIAL

Bags of cement 200bags 4000 80000

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 50bags 2000 10000

Bags of lime

Addmixture 50kg 100 5000

DPCandDPN 100m 50 5000

Water tank 10 of diff sizes 2000-15000 50000

Iron sheet 500pcs 600 30000

Wheelbarrows 10 1200 72000

Spades 50pcs 150 7500

Measuring tool 1dozen - 7500

Mattocks 1d0zen - 500 0

Trowel 1dozen - 4500

Cutting tool 1dozen - 9000

Impelling tools 1dozen - 4500

Paint 1dozen - 20000

Boards 5 pcs of board - 10000

Nails 50kg 50kgs 500

4.2 : PRODUCTION PROCESS.

Kiboss hardware enterprise is looking forward to laying down comprehensive strategies as far
as production of its items as well as delivery of related services ti it's customers is concerned.

The strategies include how the business will acquire its equipment in order to maximize
creativity and innovation from its employees in designing of its products.

4.3 REGULATIONS AFFECTING OPERATION

These are factors that will affect the business operations and will have a great impact on the
success or failure of the business. The regulations will help to curb any accident and
misunderstanding that may occur in future. The regulations will be there to ensure that the
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employees are comfortable and feel secure when undertaking any operations as their health
and safety is safeguard. These regulations will include the following.

a) Health regulations
Health regulations which will ensure that the employees’ well-being is ensured and any
employee who may contract a disease while undertaking his duty will be compensated.

b) Safety regulations
A safety regulation which will ensure that the employees operate in a safe environment which
is free from accidents and protective clothing is provided to them to ensure their safety.

c) Government regulations
Government regulations which will ensure that the business is registered and obtains a
trading license specifying the type of the business to operate before getting the permission to
commence its operation.

CHAPTER FIVE

5.0 FINANCIAL PLAN

Kiboss hardware enterprise will deal on the financial cash flow covering on the stocked
material. Services carries out by the business and salary wages according to enable the
business to run smoothly.

5.1 PRE-OPERATIONAL COST

Before the business enterprise starts it’s operation will take into account in the acquisition
of the facilities that will be necessary for the business to start it’s operation. All
preliminary item will be settle as shown in the table

ITEM COST

RENT 5000

LICENSE 2000

INSURANCE 1500

TRANSPORT 1500

POSTAGE 300

WATER BILL 500

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 ELECTRICITY 500

ADVERTISEMENT 1000

MEDICAL BILL 3000

UNIFORM 1500

TOTAL 15300

5.2 WORKING CAPITAL REQUIREMENTS

ITEM YEAR 1 YEAR 2 YEAR 3

Stock of raw material 250000 280000 350000

DEBTORS - 20000 40000

CASH BANK 200000 150000 100000

CASH HAND 150000 250000 280000

5.3 PROJECTED CASH FLOW STATEMENT

Item Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Cash
in flow

Cash 60000 59920 65420 70620 75300 80400 84100 87280 89960 92120 9427 85919
at 0 0
bank

Cash 2811 28260 284100 285600 28860 290100 29160 29310 29310 294600 296100 2976 34722
sales 00 0 0 0 0 0 00 00

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Debto
rs

Total 34260 343820 351020 35772 363900 37050 37570 38033 384560 388220 3918 44421
cash 0 0 0 0 0 70 60
in

Cash
out
flow

Purch 2000 20200 204000 206000 20800 210000 21200 21400 21600 218000 220000 2220 25320
ase 00 0 0 0 0 0 00 00

Salary 5920 59200 59200 59200 59200 59200 59200 59200 59200 59200 59200 5920 71040
&wag 0 0 0
es

Electri 480 480 500 500 520 500 500 520 520 540 550 550 6160
city

Allowa 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 50400
nce

Permit

Water 500 500 500 500 500 500 500 500 500 500 500 500 6000
exp

Transp 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 18000
ort

Teleph
one

Adver 1000 1000 1000 1OOO 1000 1000 1000 1000 1000 1000 1000 1000 12000
tismen
t

license 3500 3500

Intrest 500 500 500 500 500 5OO 500 500 500 500 500 500 6000

Insura
nce

Medic 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
al exp

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Unifor 1500 1500
m

Renov 1500 1500 3000

ation

Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000

Total 2211 28288 278400 280400 28240 283500 28640 28842 29042 292440 293950 3219 33767
cash 00 0 0 0 0 0 50 80
out

surplu 6000 59720 65420 70620 75300 80400 84100 87280 89960 92120 94720 6992 92911
s 0 0 0

Accum 11972 125140 136040 14592 155700 16450 17138 17724 182080 186390 1641 17283
ulatio 0 0 0 0 0 90 00
n

5.4 .A PR0F0RMA INCOME STATEMENT

ITEMS YEAR 1 YEAR 2 YEAR 3

SALES 3472200

LESS PURCHES 2532000

GROSS PROFIT 940200 1040200 1190200

EXP

RENT 60000 60000 60000

ELECTRICITY 6160 6660 7660

WATER 6000 62OO 6500

TRANSPORT 18000 19000 20000

LICENCE 3500 3500 35OO

PERMIT

INSURANCE 15000 20000 20000

MEDICAL EXP 24000 25000 25000

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 RENOVATION 3000 3000 3000

ADVERTISEMENT 12000 12000 12500

UNIFORM 15OO 3000 3000

EXPENSES 149160 158360 161160

NET PROFIT BEFORE 791040 881840 1029040

TAX

NET PROFIT AFTER TAX 813633.6 740745.5 864393.6

5.4.B PROFORMA BALANCE SHEET

ITEM YEAR 1 YEAR 2 YEAR 3

CASH IN BANK 250000 150000 1000000

CLOSING STOCK 222000 572000 672000

DEBTORS

TOTALCURRENT ASSET 472000 722000 772000

FIXED ASSET

MACHINERY/EQUIPMENT 48000 48000 48000

LESS DEPRICIATION 18000 18000 18000

TOTAL COST 502000

LESS ACCUMULATION 30000 30000 30000

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 TOTAL FIXED ASSET 472000 722000 772000

CURRENT LIABILITY

CREDITORS

BANK LOAN 200000 250000 300000

ASSET/ SALES 672000 722000 772000

LIABILITY 149160 158360 161160

OWNERS EQUITY 522840 563640 610840

TOTAL LIABILITY 722840 813640 910840

NET PROFIT BEFORE TAX 149160 158360 161160

NET PROFIT AFTER TAX 23865.6 25337.6 25785.6

6.5 BREAK EVEN LEVEL

ITEM AMOUNT

FIXED COST

RENT 60000

WAGES SALARY 710400

INSURANCE 20000

LOAN AND INTEST 600

LICENCE 3500

UNIFORM 1500

MEDICAL EXP 24000

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 TOTAL FIXED COST 820000

VARIABLE COST

ELECTRICITY 6160

TRANSPORT 18000

WATER 6000

ADVERTISMENT 12000

TELEPHONE

RENOVATION 3000;

TOTAL VARIABLES 45160

CONTRIBUTION MERGIN

SALES 3472200

VARIABLE COST 45160

CONTRIBUTION
MERGIN=Contribution ( 100)/sales

3427040(100)/3472200

=98.699%

=99%

BREAK EVEN POINT

Fixed cost(100)/contribution mergin

820000(100)/3427040

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 23.92%

5. 6 PROFITABILITY RATIO EXPECTATION

a) Gross profit ratio

gross profit /sales (100)

940200(100)/3472200

=27%

b)return on equity (ROE)

net profit after tax (100)/owners equity

791040(100)/522840

c)RETURN INVESTMENT (R.O.T)

NET PROFIT AFTER TAX+LOAN(100)/TOTAL INVESTMENT

791040+200000(100)/250000

=396.416%

5.7 DESIRED CAPITALAISATION

ITEM AMOUNT

Pre-operational cost 15300

Working capital 250000

Total fixed assets 672000

TOTAL 937300

5.8 PROPOSED CAPITALISATION

ITEM AMOUNT

BANK LOAN 200000

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 OWNERS EQUITY 737300

TOTAL 937300

APPENDIX I

PRESIDENT’S PHOTO

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