BUSINESS PLAN

TITLE: MAMA JAYDON BEAUTY SHOP

PRINTED BY: BRENDA ELIZABETH

CENTER NAME: RAMOGI INSTITUTE OF ADVANCED TECHNOLOGY

PAPER NO:

CENTER CODE:

INDEX NO:

COURSE: OFFICE ADMINISTRATOR

PRINTED TO: THE CBET EXAM BODY FOR THE AWARD OF PARTIAL;

FULLFILMENT OF CERTIFICATE IN OFFICE ADMINISTRATOR

SUPERVISOR: MR MATHEW GEK

EXAM SERIES: JUNE/JULY 2024.

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 DEDICATION
My sincere gratitude goes to my supervisor for his guidance, patience and many hours he

dedicated into guiding me through his research proposal. Thanks also to the supportive staff and

to my college colleagues for their positive encouragement and for the support in caring out this

study. May God bless you.

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 DECLARATION
This project is my real work, never been presented in any other institutions for an award.

Brenda Elizabeth

Signature _______________________date ______________

Supervisor:

Signature _________________________date_______________

33
 ACKNOWLEDGEMENT
Above all I thank my God for giving good health and spirit to enable me carry out this research,

thank you all for support me and may almighty God bless you abundantly.

To my family especially my dad I thank you for the support towards this business plan.

I also give thanks to my colleagues and classmates for the positive support in carrying out this

study.

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Contents

DEDICATION............................................................................................................................................2
DECLARATION..........................................................................................................................................3
ACKNOWLEDGEMENT.............................................................................................................................4
EXECUTIVE SUMMARY.............................................................................................................................8
CHAPTER ONE:.........................................................................................................................................9
1.0: BUSINESS DESCRIPTION........................................................................................................................9
1.1: NAME OF THE BUSINESS.......................................................................................................................9
LOCATION....................................................................................................................................................9
CUSTOMERS................................................................................................................................................9
1.2: FORMS OF THE BUSINESS.....................................................................................................................9
TYPE OF BUSINESS.......................................................................................................................................9
1.3: GOALS OF THE BUSINESS....................................................................................................................10
ADVANTAGES............................................................................................................................................10
1.4: JUSTIFICATION OF THE BUSINESS OPPORTUNITIES............................................................................10
1.5: SIZE AND GROWTH PROSPECTS OF THE MARKET...............................................................................11
1.6: UNIQUENESS OF THE BUSINESS..........................................................................................................11
1.7: ENTRY STRATEGY................................................................................................................................11
1.8: NATURE OF THE BUSINESS.................................................................................................................11
1.9: COMPETITIVE PRICING STRATEGY......................................................................................................11
1.10: MANAGEMENT OF THE BUSINESS....................................................................................................11
1.11: PROFITABILITY..................................................................................................................................12
CHAPTER TWO.......................................................................................................................................13
2.0 MARKETING PLAN................................................................................................................................13
2.1 CUSTOMERS........................................................................................................................................13
2.2 COMPETITION......................................................................................................................................13
STRENGTH AND WEAKNESS.......................................................................................................................13
2.3 MARKET SHARE....................................................................................................................................14
PRICING STRATEGY....................................................................................................................................14
Competition Price......................................................................................................................................14
2.4 DEMAND FOR THE PRODUCT...............................................................................................................14
2.5 PRODUCTION COST.............................................................................................................................14
2.6: ADVERTISING AND PROMOTION STRATEGY.......................................................................................15

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Advertising.................................................................................................................................................15
Promotion.................................................................................................................................................15
DISTRIBUTION STRATEGY..........................................................................................................................15
SALES TACTICS...........................................................................................................................................15
2.7 NUMBER OF EMPLOYEES.....................................................................................................................15
Manager Qualifications.............................................................................................................................16
Duties........................................................................................................................................................16
Supervisor Qualifications...........................................................................................................................16
Duties........................................................................................................................................................16
Salesperson Qualifications.........................................................................................................................17
Duties........................................................................................................................................................17
Accounting Officer Qualifications..............................................................................................................17
Duties........................................................................................................................................................17
Subordinate Employees Qualifications......................................................................................................18
Duties........................................................................................................................................................18
Trainees Qualifications..............................................................................................................................18
CHAPTER THREE:...................................................................................................................................20
3.0: ORGANIZATION STRUCTURE...............................................................................................................20
3.1: RECRUITMENT, TRAINING AND PROMOTION.....................................................................................21
RECRUITMENT...........................................................................................................................................21
TRAINING...................................................................................................................................................21
MOTIVATION.............................................................................................................................................22
REWARD....................................................................................................................................................22
3.2: LICENCE AND PERMIT.........................................................................................................................22
CHAPTER FOUR......................................................................................................................................24
4.0 OPERATIONAL AND PRODUCTION PLAN.............................................................................................24
4.1 PRODUCT FACILITY AND CAPACITY......................................................................................................24
4.2 PRODUCTION STRATEGY......................................................................................................................24
MONTHLY MATERIALS REQUIRED.............................................................................................................25
MONTHLY LABOR REQUIRED.....................................................................................................................25
MONTHLY OPERATIONAL EXPENSES.........................................................................................................26
COST OF PRODUCTION..............................................................................................................................26
4.3 SERVICE DESIGN AND DEVELOPMENT.................................................................................................26

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 CHPATER FIVE:.......................................................................................................................................28
5.0: FINANCIAL PLAN.................................................................................................................................28
5.1: PRE- OPERATIONAL COST...................................................................................................................28
5.2: ESTIMATION OF WORKING CAPITAL...................................................................................................29
5.3: CASH IN FLOW PROJECTION YEAR ONE (1).....................................................................................30
5.4: PRO-FORMA INCOME STATEMENTFOR THE YEAR ENDING 2018 – 2025...........................................31
5.5: PRO-FORMER BALANCE SHEET AS AT 31st DEC 2025..........................................................................32
5.6: BREAK EVEN ANALYSIS.......................................................................................................................33

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 EXECUTIVE SUMMARY
The proposed business, Mama Jaydon Beauty Shop, will be strategically located in Kisumu

Town, Kisumu County, and directly opposite KCB Bank Kenya. The primary activities of the

shop will include offering a wide range of beauty products and services. These services will

encompass hair styling, nail care, skincare treatments, and the sale of high-quality beauty

products.

The aim of Mama Jaydon Beauty Shop is to meet the growing demand for beauty services and

products within the local community, providing convenient and professional services to enhance

customer satisfaction and reduce the need for customers to travel to distant locations for their

beauty needs. Recognizing a gap in the market, the business intends to offer comprehensive

beauty solutions tailored to the preferences and needs of the local clientele.

Mama Jaydon Beauty Shop will be structured with a clear organizational hierarchy to ensure

efficient management and operations. The shop will have a team of skilled assistants and

professionals dedicated to delivering top-notch services, helping the business achieve its goals

and targets.

By positioning itself as a one-stop beauty destination, Mama Jaydon Beauty Shop aims to

become a trusted and preferred choice for beauty enthusiasts in the region.

Personal saving Ash. 400,000

Bank loan Ksh. 300,000

Friends and family Ksh. 200,000

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 CHAPTER ONE:

1.0: BUSINESS DESCRIPTION

1.1: NAME OF THE BUSINESS

The name of the business is Mama Jaydon Beauty Shop. The name is given to the business due

to its popularity and fashionable beauty products and services, hence it will attract customers.

LOCATION
The business is located in Kisumu County. It is situated in Kisumu Town just opposite KCB

Bank; it’s a tall building painted pink with the name "MAMA JAYDON BEAUTY SHOP"

written in black.

KCB BANK
MEGA PLAZA
HUDUMA CENTER ROAD

MASENO UNIVERSITY
MAMA JAYDON TOWN CAMPUS
BEAUTY SHOP

CUSTOMERS
The main reason for situating my business in this area is to capture the customers around there

since it is densely populated, including being near a school, namely, Kisumu High School. The

proximity to the school provides a steady customer base, with students, staff, and parents likely

to utilize the beauty services offered.

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1.2: FORMS OF THE BUSINESS
The business is a sole proprietorship as it requires a relatively small amount of capital to start.

Additional funding will be sought through bank loans. As profits increase, the business will

expand to serve more areas in Kisumu County.

TYPE OF BUSINESS
The business will cater to both wholesale and retail customers in the area, providing readily

available beauty products and services.

1.3: GOALS OF THE BUSINESS

The main aim of the business is to make a profit.

The business should double its starting capital as soon as it commences operations.

In the first year, the business will focus on strengthening its presence and generating increasing

profits annually.

The business will also ensure all workers are provided with the necessary protective clothing and

high-quality equipment to fulfill its objectives.

ADVANTAGES
i. To create job opportunities for both local and foreign citizens.

ii. ii. To utilize local resources to produce useful beauty products.

iii. iii. To contribute to the development of good facilities and communication networks

in the community.

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1.4: JUSTIFICATION OF THE BUSINESS OPPORTUNITIES
The business location was chosen due to its easy accessibility and good security. The area is

secure, with a police station nearby. The road infrastructure is excellent, making transport easy.

Additionally, the densely populated area, with a mix of young and old residents, ensures a steady

demand for beauty products and services.

1.5: SIZE AND GROWTH PROSPECTS OF THE MARKET

The business will start as a medium-sized enterprise and expand as demand increases. New

beauty products and services will be introduced to attract more customers, leading to increased

sales and profits. The growth prospects are high given the dense population of Kisumu County.

1.6: UNIQUENESS OF THE BUSINESS

Mama Jaydon Beauty Shop will offer high-quality beauty products and services tailored to the

needs of the local community. Unlike other beauty shops, it will provide a wide range of

products and personalized services to meet diverse customer preferences.

1.7: ENTRY STRATEGY

The beauty shop will generate awareness and sales through wholesale tactics and referrals.

Engaging with wholesalers will help understand market trends and effectively approach the

market.

1.8: NATURE OF THE BUSINESS

The business aims to provide high-quality beauty products and services, leveraging skilled

personnel and a strategic location to meet customer needs effectively.

1.9: COMPETITIVE PRICING STRATEGY

The business will offer affordable prices for its beauty products and services, making them less

expensive compared to other firms in the same business. This competitive pricing will help

attract and retain customers.

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1.10: MANAGEMENT OF THE BUSINESS
With three years of experience in marketing and retail, the shop owner has the expertise to

manage the business effectively. An advisory team with retail experience will support the

business to ensure its success.

1.11: PROFITABILITY
Start-up costs for the first year are estimated at 2,000,000 KES, with the owner investing 25% of

the total amount. Annual sales are projected to increase, with losses expected to be minimal. By

the second year, sales are expected to grow by 20%, ensuring the business becomes profitable.

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 CHAPTER TWO

2.0 MARKETING PLAN

2.1 CUSTOMERS
Our primary target customers are individuals working and residing in town. We will focus on

attracting both local residents and those from nearby areas, especially given the shop's

convenient location.

2.2 COMPETITION
The business will face competition from existing beauty shops like Bogoria Beauty Shop and

Apparel Beauty Shop in the area. Below is a comparison of their strengths and weaknesses

against Mama Jaydon Beauty Shop:

STRENGTH AND WEAKNESS

NAME OF THE STRENGTHS WEAKNESSES

BUSINESS

BOGORIA BEAUTY - Financial stability - Lack of personalized customer

SHOP - Popularity of the business care

- Proper site location - Limited range of beauty services

APPAREL BEAUTY - Good customer - Inadequate funding

SHOP relationships - Unstable customer base

- Proper site location

- Food security in the area

2.3 MARKET SHARE

To capture a significant market share, the business will engage in vigorous promotion and

advertisement of its beauty products and services. By providing high-quality services and

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personalized customer care, Mama Jaydon Beauty Shop aims to secure a substantial market

share, despite the stiff competition.

PRICING STRATEGY
The business will consider the following factors when determining the prices for its products and

services:

Competition Price
Prices will be set competitively to prevent customers from seeking alternatives. The shop will

offer high-quality beauty services at competitive rates, ensuring affordability and value for

money.

2.4 DEMAND FOR THE PRODUCT

The demand for beauty services in the area is high due to rapid development, including the

construction of more schools and hospitals. Mama Jaydon Beauty Shop will leverage this high

demand by offering a wide range of beauty services to gain profit.

2.5 PRODUCTION COST

Production costs include:

Cost of Acquiring Materials: Ensuring the procurement of high-quality beauty products.

Operational Costs: Efficient use of resources to provide meaningful beauty services, reducing

wastage by employing qualified personnel.

2.6: ADVERTISING AND PROMOTION STRATEGY

Advertising
The business will use various channels for advertising, including radios, social media,

newspapers, and television.

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Promotion
Offering after-sales services like complimentary calendars to customers.

Providing discounts on beauty services for the first customers to promote repeat business.

DISTRIBUTION STRATEGY
Beauty products will be sold directly to customers in-store. To attract more customers, the

business will also offer free delivery for bulk purchases to wholesalers and retailers in the area.

SALES TACTICS
The business intends to offer the following discounts:

Cash Discount: Applied to services exceeding a certain amount, e.g., Ksh 15,000.

Quantity Discount: For bulk purchases, either reducing the price or providing discounted

transport.

Additionally, credit facilities will be available to trustworthy customers after the first year of

operation.

2.7 NUMBER OF EMPLOYEES

Mama Jaydon Beauty Shop will be staffed by the following personnel.

Manager Qualifications
Diploma in sales and marketing.

Good communicator.

Disciplined, honest, and goal-oriented.

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Duties
Planning and coordinating activities.

Making overall business decisions.

Striving to prosper in a competitive market.

Measuring employee performance.

Recruiting and dismissing employees as necessary.

Supervisor Qualifications
Degree in beauty and cosmetology.

Good communicator.

Disciplined, goal-oriented, and honest.

Duties
Ensuring effective business operations.

Supervising employees to ensure quality service.

Assigning duties to employees.

Monitoring employee health and safety.

Salesperson Qualifications
Credit in sales and marketing.

Good communication skills.

Honest, disciplined, confident, and hardworking.

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Duties
Collecting customer orders.

Advertising the business.

Gathering customer feedback.

Attending shows and exhibitions to stay updated on market trends.

Accounting Officer Qualifications

Master's in accounting.

Disciplined, honest, and good communicator.

Duties
Budgeting.

Handling financial matters.

Pricing products and services.

Financial planning.

Subordinate Employees Qualifications

KCSE Certificate.

Honest, disciplined, and hardworking.

Duties
Cleaning the shop.

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Assisting with customer service.

Advertising the business locally.

Trainees Qualifications
Pass in beauty and cosmetology.

Hardworking, honest, and good communicator.

Duties

Training employees on equipment use.

Providing guidance within the organization.

Taking care of the organization’s equipment.

Security Qualifications

Hardworking and good communicator.

Form four graduate.

Kenyan citizen.

Duties

Ensuring the safety of the premises.

Keeping records of visitors.

Maintaining a secure environment.

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 CHAPTER THREE:

3.0: ORGANIZATION STRUCTURE

MANAGER

33
 SUPERVISOR ACCOUNT
OFFIUCER

SECURITY SALESMAN SUBBODINATE TRAINERS ACCOUNTE

STAFF R

3.1: RECRUITMENT, TRAINING AND PROMOTION

Mama Jaydon’s Beauty Shop supply house will recruit its employee locally so as to enable

creation of job opportunities and this will also make the business to gain more customers in the

local area.

The following are ways the business will recruit its employee.

RECRUITMENT
I. ADVERTISEMNT

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 The business will identify the vacancies and advertise through posters and job

websites of Mama Jaydon Beauty Shop.

The business will also advertise job vacancies through local radio and television to

meet the people from the area Kisumu town.

II. INTERVIEW

This method will be applicable to shortlisted whose diplomas and testimonials will be

satisfied managed and the candidate interviewed on concerning the job present.

This method will also be used to get qualified employer who have good skills to join

and work with the company and also eliminating unskilled employees.

TRAINING
The business will also offer for the employees in the organisation through various ways i.e.

taking employers to attend seminars and exhibition to get more skills.

The business will also offer training for its employers in the organisation through calling some

trainers to train them once in a month as this enabling them to acquire more skills.

MOTIVATION
The business will offer morals to its employers in various ways giving the employees more

allowances hence enabling positive attitude towards their job thus preventing the business form

collapsing.

Their salaries and wages shall also be increased by 20% per year hence giving them morale

towards their job.

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REWARD
The business will offer reward to its employees in a certain circumstances like when the business

gain more profit after paying all the debts and calculating all the amount of expenses then

employees will be given reward according to their top ranked up to subordinate staff for them to

have morale.

3.2: LICENCE AND PERMIT

Mama Jaydon Beauty Shop will use local authority to get legal identity for their peace in the area

NAME: BUSIENSS LICENCE

USE : BUSINESS OPERATION

COST : 2000

DURATION :1 YEAR

ORIGIN : MINISTRY OF TRADE

CHAPTER FOUR

4.0 OPERATIONAL AND PRODUCTION PLAN

4.1 PRODUCT FACILITY AND CAPACITY

The business needs to have certain facilities in place before it begins operations. These facilities

are essential for the daily running of the beauty shop and for providing services to customers.

Below are the equipment and their functions:

Facial Treatment Machine: Used for various facial treatments and skincare routines.

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Manicure and Pedicure Kits: For nail care services including cleaning, shaping, and decorating

nails.

Hair Styling Equipment: Includes hair dryers, straighteners, curlers, and other styling tools.

Makeup Kits: Professional makeup products for different occasions.

Massage Beds and Chairs: For providing massage and relaxation services.

Waxing Kits: For hair removal services.

4.2 PRODUCTION STRATEGY

Mama Jaydon Beauty Shop anticipates having a high service capacity to meet the increasing

demand from customers in the area. To ensure quality service and avoid interruptions, the

business will require the following materials monthly.

MONTHLY MATERIALS REQUIRED

MATERIAL QUANTITY PRICE PER UNIT TOTAL AMOUNT

Skincare Products 10 sets 500 5,000

Nail Polish and Accessories 30 bottles 200 6,000

Hair Styling Products 20 units 300 6,000

Massage Oils 10 bottles 400 4,000

Makeup Kits 15 kits 700 10,500

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Waxing Supplies 10 packs 500 5,000

TOTAL 36,500

MONTHLY LABOR REQUIRED

POSITION NO. OF STAFF MONTHLY SALARY TOTAL AMOUNT

Manager 1 20,000 20,000

Supervisor 1 15,000 15,000

Beauticians 3 12,000 36,000

Hair Stylists 2 10,000 20,000

Manicurists 2 8,000 16,000

Security 2 7,500 15,000

TOTAL 11 122,000

MONTHLY OPERATIONAL EXPENSES

DESCRIPTION AMOUNT (KSH)

Electricity Bill 6,000

Transport 7,000

Water Bill 3,500

Telephone Bill 5,000

Insurance 2,000

TOTAL 23,500

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COST OF PRODUCTION
The total monthly cost of production is calculated as the sum of labor and other expenses:

Monthly labor Expenses=122,000+23,500=145,500

Monthly labor Expenses=122,000+23,500=145,500

4.3 SERVICE DESIGN AND DEVELOPMENT

Service Design The services offered will be designed by our trained beauty professionals. They

will create tailored beauty treatments based on the latest trends and customer preferences.

Services include facials, manicures, pedicures, hair styling, makeup application, massages, and

waxing.

Service Development

All services available at the beauty shop will be clearly listed with their respective prices,

making it easy for customers to choose without needing to inquire with the staff, thus saving

time.

4.4 REGULATION

The business must comply with several government regulations, including:

Health Permit

Obtained from the Ministry of Health.

Environmental Permit

Also obtained from the Ministry of Health to ensure environmental standards are met.

Safety Regulations

Ensuring workers operate in a safe environment, regulated by the Ministry of Labor.

33
Work Permit

Obtained from the city council office to legally operate the business.

CHPATER FIVE:

5.0: FINANCIAL PLAN

5.1: PRE- OPERATIONAL COST

These are the initial costs a business has to incur before the operation commences

ITEM KSH KSH COST KSH

Fixed assets

Designing machine 150000

Advanced rent payment 30000

Business permit 10000

Legal fees 5000

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Insurance 1000

Consultancy fee 20000

Electricity installation 2000

TOTAL 7000 1000 210000

5.2: ESTIMATION OF WORKING CAPITAL

MAMA JAYDON BEAUTY SHOP WORKING CAPITAL FOR THE YEARS ENDING 2025

ITEM YEAR ONE KSH YEAR TWO YEAR THREE

Stock of raw 100000 200000 200000

materials 50000 100000 250000

Work in progress 300000 450000 600000

Stock of finish goods 30000 40000 60000

Debtors 150000 150000 200000

Cash in hand 50000 500000 750000

Cash in bank

TOTAL 600000 1440000 2060000

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ESTIMATED

WORKING

CAPITAL

33
 5.3: CASH IN FLOW PROJECTION YEAR ONE (1)

JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DEC TOTAL
Cash inflow KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH KSH
Cash sales 400000 410000 430000 500000 540000 550000 560000 600000 610000 600000 640000 650000 6460000

Credit sales 10000 8000 9000 10000 9000 8000 7600 8000 10000 9000 8000 9000 105800

Cash in hand 50000 70000 70000 50000 50000 50000 70000 70000 50000 50000 50000 80000 680000

Cash at bank 150000 10000 150000 150000 100000 100000 150000 100000 150000 150000 100000 150000 1555000

Total cash flow 610000 588000 659000 710000 669000 708000 787800 808000 760000 809000 8480000 809000 87485800
0 0
Cash outflow

Cash purchases 100000 100000 100000 100000 150000 150000 200000 200000 200000 200000 200000 200000 1100000

Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
Salary & wages 59000 59000 59000 59000 59000 59000 59000 59000 59000 59000 59000 59000 708000

Telephone 1000 1200 1000 10000 12000 1000 1000 1200 1200 1000 1000 1000 12800

Transport 10000 12000 8000 13000 7000 9000 11000 6000 14000 10000 11000 9000 124000

Electricity bill 1000 1000 900 1100 100 800 1700 1000 700 1300 1000 1000 120000

Water bill 2000 1800 2200 200 2300 1700 2000 2000 1900 2100 200 2000 24000
Advertisement 9000 1200 9000 6000 36000

Bank loan repay 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 66000
10%
Total cash 188000 187000 183100 200100 232500 233500 286200 288200 288400 285400 292000 284000 2950800
outflow 0
Available cash 4220000 401000 475900 509900 466500 501600 519800 471800 474500 523600 556000 525000 5841600

Accumulative 422000 823000 129890 180880 227530 274980 325140 377120 4243000 4766600 5322600 5847600
cash 0 0 0 0 0 0

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5.4: PRO-FORMA INCOME STATEMENTFOR THE YEAR ENDING 2018 – 2025

ITEM 31st DEC 2018( KSH) 31st DEC 2019 (KSH) 31st DEC 2025 (KSH)
Sales 6460000 6580000 6750000
Opening sales 8795500 8850500 8900000
Purchases 1850000 1850000 1900000
1064500 1070000 1080000000
Less closing stock 0 6650500 6700500
5961500 4050000 4099500
4684000 2530000 2650500 6750000
Gross profit 1776000 6460000 6570000 6580000 6750000 2650500
Loss expenses 64600000 1776000 2530000
Rent 72000 72000
Salary and wages 72000 7080000 7080000
Telephone 708000 56000 56000
Transport 56000 120000 120000
Electricity 120000 24000 24000
Advertisement 24000 12000 12000
Bank loan 12000 72000 72000
repayment (2%)
Water bill 72000 18000 18000
Repair and 18000 15000 15000
maintenance
Total expenses 15000 1097000 1097000
Net profit tax 1097000 1433000 1553000
679000 1776000 253000 253050 2650500 2650500
Less provision for 1776000 679000 1483000 1553500
tax
Net profit after tax 33950 71650 77675
645050 1361350 1475875

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5.5: PRO-FORMER BALANCE SHEET AS AT 31st DEC 2025

ITEM 31st DEC 2018 (KSH) 31st DEC 2019 (KSH)

Fixed assets
Designing machine 150000 150000
Loss depreciation 5% 7500 172500
Products 100000 100000
Loss depreciation 5% 5000 95000
Equipment 50000 50000
Loss depreciation 2500 475000
285000
Current assets
Stock 450000 450000
Debtors 105000 1050000
Cash at bank 100000 100000
Cash at hand 50000 50000
Total current assets 705000 705000 990000
Current liabilities
Bank loan 300000
Total current liability 300000 300000
Capital 690000 990000

Finance by current 990000

assets
Loss liabilities 300000
Net profit 6900000
645000
44950

5.6: BREAK EVEN ANALYSIS

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VARIABLE EXPENSE AMOUNT (KSH)

Purchases 1350000

Telephone 56000

Transport 120000

Electricity 24000

Water 18000

TOTAL COST 2068000

Fixed cost

Rent 72000

Salary and wages 708000

TOTAL FIXED EXPENSES 780000

Total contribution =sales –variable

=6460000-206800

= Ksh. 4392000

Contribution margin percentage = (contribution Margin* 100) /sales

= (4392000*100) /6460000

=68%

Total fixed cost = Ksh. 780000

Breakeven of sales=total fixed cost

= (780000*100)/68

FINANCING

33
ITEM AMOUNT (KSH)

Pre-operational cost 230000

Working capital 680000

TOTAL DESIRED FINACIAL 910000

PROPOSED CAPITALISATION

ITEM AMOUNT (KSH)

Own contribution 400000

Fund from bank loan 300000

Funds from family and friends 200000

TOTAL 900000

EXPECTED PROFITABILITY RATIO

Gross profit ratio % = gross profit * 100 / sales

= (1776000*100) /6460000

=27.5%

Return on investment =net profit after tax-interest * 100

= (679000*100)/40000

‘ =15.8%

Return inequity% =new profit after*100

= (645050*100)/90000

=71.67%.

33