Professional Documents
Culture Documents
Alexander Agrovet-Business-Plan
Alexander Agrovet-Business-Plan
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DECLARATION
I hereby declare that this is my original work and has never been presented anywhere for the award of
diploma in general Agriculture at KNEC.
Signature Date
APPROVAL
This business plan has been submitted for examination with my approval as Cambridge Universal College
Supervisor.
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Dedication
I wish to dedicate this business plan to my family who encourage me and for the support she gave me
financially to ensure that I type and print the business plan
Lastly I wish to dedicate this business plan to my friends who are pursuing the same course and those
who are yet to do same research.
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Acknowledgment
I would like to thank the institution at large for following me to pursue the course this course also for
conducive environment for learning and research and activities which took place for this business.
Also I acknowledge our supervisor for the guidance and support he gave unto me throughout the
research
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Table of Contents
DECLARATION.......................................................................................................................................ii
Dedication..................................................................................................................................................iii
Acknowledgment.......................................................................................................................................iv
CHAPTER ONE........................................................................................................................................1
EXECUTIVE SUMMARY...................................................................................................................1
1.0 BUSINESS DESCRIPTION...........................................................................................................1
1.1 MARKETING PLAN......................................................................................................................1
1.2 ORGANISATION OR MANAGEMENT PLAN..........................................................................1
1.3 PRODUCTON / OPERATION PLAN...........................................................................................1
CHAPTER TWO.......................................................................................................................................3
2.1 BUSINESS DESCRIPTION..........................................................................................................3
2.2 BUSINESS NAME..........................................................................................................................3
2.3 BUSINESS LOCATION................................................................................................................3
2.4 FORM OF OWNERSHIP..............................................................................................................4
2.5 TYPE OF BUSINESS..............................................................................................................5
2.6 PRODUCT AND SERVICES..................................................................................................5
2.7 JUSTIFICATION.....................................................................................................................6
2.8 INDUSTRY...............................................................................................................................7
2.9 BUSINESS GOAL....................................................................................................................7
2.10 ENTRY AND GROWTH STRATEGY..................................................................................8
CHAPTER THREE...................................................................................................................................9
MARKET PLAN...................................................................................................................................9
3.0 INTRODUCTION...........................................................................................................................9
3.1 CUSTOMERS..................................................................................................................................9
3.2 COMPETITORS......................................................................................................................9
3.3 MARKET SHARE.................................................................................................................10
3.4 METHODS OF PROMOTION AND ADVERTISEMENT................................................11
3.5 PRICING STRATEGY..........................................................................................................12
3.6 SALES TACTICS...........................................................................................................................12
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3.7 DISTRIBUTION STRATEGY................................................................................................12
CHAPTER FOUR...................................................................................................................................14
ORGANISATION AND MANAGEMENT.......................................................................................14
4.0 INTRODUCTION..................................................................................................................14
4.1 ORGNISATION STRUCTURE...................................................................................................14
4.2 KEY MANAGEMENT PERSONNEL.........................................................................................15
4.3 OTHER PERSONNEL.................................................................................................................15
4.4 RECRUITMENT, TRAINING AND PROMOTION OF STAFF.............................................18
4.4.1 RECRUITMENT......................................................................................................................18
4.4.2 TRAINING...............................................................................................................................18
4.4.3 PROMOTION..........................................................................................................................18
4.5 REMUNERATION AND INCENTIVES....................................................................................19
4.5.1 REMUNERATION..................................................................................................................19
4.5.2 Incentives..................................................................................................................................19
4.6 LICENSE, PERMIT AND BY-LAWS.........................................................................................20
4.7 OTHER SUPPORT SERVICES...................................................................................................21
CHAPTER FIVE.....................................................................................................................................21
5.0 PRODUCTION PLAN..................................................................................................................21
5.1 PRODUCTION FACILITIES AND CAPACITIES..................................................................21
5.2 PRODUCTION STRATEGY......................................................................................................23
5.4 REGULATION AFFECTING OPERATION......................................................................26
CHAPTER SIX........................................................................................................................................27
6.0 FINANCIAL PLAN.......................................................................................................................27
6.1 PRE-OPERATIONAL COST.......................................................................................................27
6.2 WORKING CAPITAL STATEMENT........................................................................................28
6.2.1 SALES SCHEDULE FOR THE YEAR................................................................................28
6.2.2 PURCHASE SCHEDULE FOR THE YEAR...........................................................................29
6.4 ANNUAL PAYMENT OF CREDITORS....................................................................................36
6.5 PROFOMA INCOME STATEMENT..................................................................................36
6.6 PROFOMA BALANCE SHEET...........................................................................................38
6.7 THE BREAK -EVEN POINT...............................................................................................39
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6.8 THE BREAK – EVEN POINT..............................................................................................40
6.9 PROFITABLE RATIOS..........................................................................................................41
6.9 DESIRED FINANCING........................................................................................................42
CHAPTER ONE
EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION
The name of the business will be ALALE AGRO-VET. Which will be owned by Mr. Alexander
Limo . the business will be a sole proprietorship type of business and it will be located Kitale.
The business main activity will be buying and selling of veterinary drugs , Agricultural
chemicals , horticultural, fertilizer and animal feed. It will also offer consultancy service for
farmers. The commence on 10th January 2025 after the owner completes his Diploma course in
General Agriculture Cambridge Universal College. He will have gathered enough knowledge
and the necessary capital to start and run the business.
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Production process will be planned well to ensure the efficient flow of goods from the suppler to
the final consumer. The business will operate under licensed board. And it will obtain its licence
from Ravine municipal council.
Sources Amount
Personal savings 300,000
Contribution from friends and relatives 100,000
Loan from bank 1,200,000
Total 2,500,000
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CHAPTER TWO
The business main activity will be buying and selling of veterinary drugs, agricultural chemicals,
horticultural seeds, fertilizers and animal feeds. It will also offer consultancy service to farmers .
the business will commence on 8th January, 2025 after the owner completes his diploma in
General Agriculture at Cambridge Universal College, he will have gathered enough knowledge
and the necessary capital to start and run the business.
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2.3 BUSINESS LOCATION
The business will be located at Rift Valley Province, Trans nzoia county, Kitale town. It will be
situated opposite Kenol Kobil Petrol station .
i Availability of security
ii High population within the place.
iii Good infrastructure e.g good transport system.
iv Availability of electricity and water.
v Nearness to dairy farmers and agricultural farmers.
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2.5 TYPE OF BUSINESS
The business will be both trade service type of business. It will be selling goods in retail and
wholesale basis and it will also offer some services to customers.
The business will be selling goods to its customers and offering to its customers such goods
includes:
Veterinary drugs
The business will be selling veterinary drugs which are both injectable and non- injectable. The
injectable drugs will include; alamsine, pen-strap Oxy-vet and multivitamin.
The non-injectable drugs are mostly used for deworming. These include; Albefas 10%,levafas
extra, Nilzan and diamond.
Agricultural chemicals
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This include pesticide tactic, tixfex, almatix stedatone and sypletix.
Horticultural seeds
They include potato seeds, flower seed, cabbage seeds, maize seeds, spinach seed and carrot
seeds. This helps farmers to get high quality seeds.
Fertilizer
Fertilizer include; CAN, used as top dressing, DAP and Urea. This will increase crop
productivity.
Animal feed
Animal feed include; dairy meal, CKL extra sunflower, stock hak, madick and tricks.this helps to
increase milk productivity.
SERVICES
Consultancy services
The business will offer consultancy services to it customers for example on how to
solve problems facing low milk productivity, poor crop production and how to
successfully using available resources e.g water and land.
The service will be offered to farmers through various ways for example when a
farmer buys goods , thus goods will be packed in a way that it can be easy handled.
Goods can also be carried for the customer to the bus stage and this will greatly
improve the morale of customers buying from the business.
2.7 JUSTIFICATION
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Choosing the type of business which has been favoured by adequate market from high
population and the main economic activity of the of the community living within Trans nzoia
county.
This makes the business to have high demand of its goods and services throughout the year .the
business will out complete its competitors due to its location in the town where it will receive
many customers. It will also have goo infrastructure which will facilitate the transportation of
goods and services to customers. It will also have enough packing space for customers to park
their cars. The community will benefit from the business because the business will employ
workers from within and outside the district.
2.8 INDUSTRY
The business falls under trade industry. It will be giving out services to its customers like
consultancy services to farmers. The business will use labour in most of its operation and
requires an average number of ten employees who are well trained and qualified to give out
services . it will be large scale type of business.
Through the owners hardwork and determination of the business, the business will have a short
and long term goal for the achievement of it.
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iii To market the business extensively in the area so as to create awareness and get
customers informed of the extenstence of the Agro-vet.
b. short term goals
i To create self-employment.
ii To make small profit and its initial stage in order to extend its existence in the market.
Entry strategy
ALALE AGRO-VET will enter the market through advertisement within and outside the district.
The business will be issuing free T-shirt and shoes to those customers who will organize sports
activities like cross country and football tournament in order to market its products and services.
The business will also erect Bill boards along the highway i.e Ravine to Eldoret ,Ravine to
Nakuru to attract more customers.
1.1 Growth
The business plan to buy a new pick up vehicle in order to enable the business to transport goods
from the supplier to the potential customers.
The vehicle will be used during advertisement so as to reach many customers. The business also
plans to expand its operation to the neighbouring towns like Marigat, Karbarnet, Nakuru so as to
bring goods and services close to its customers.
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CHAPTER THREE
MARKET PLAN
3.0 INTRODUCTION
The identifies the customers to the business, the price of the product, competitors and the
distribution as well as promotion strategy.
3.1 CUSTOMERS
These are people who come to the business to buy goods and services that are offered at
affordable price. They are categorized as follows :
i Individual customers
These are customers buying the goods and services for personal usage. This will include daily
customers and new customers. The business will expect more than Ksh 35000 from these
customers per mounth.
ii Institutional customers
Mercy Girls High School, Poror High school and Bondeni day will be the potential customers to
the business. The expected market share from them will be Ksh. 100,000 per month.
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These are customers who will buy goods in large quantities for sale purpose and those buying for
personal stock. They will include retailers and wholesalers. The business expects a market share
of approximately Ksh.250,000 weekly from these customers.
The business will expect the sales to the higher during raining season, this due to the fat that
many farmers start planning soon as it rains.
3.2 COMPETITORS
The business will face competition from the already existing Agro-vets on the town. These are
mainly;
a. Ogilgei Agro-vet
b. Baltoo Agro-vet
Ogilgei agro-vet is a large scale Partnership located 200m away from Alale Agro-vet and sales
mainly veterinary drugs, horticultural seeds, Agricultural chemicals from tools and equipment’s,
while Baltoo Agro-vet is a small sale business about 60m away from ALALE AGRO-VET and
also deals with the selling of vertinary drugs, horticultural seeds, and Agricultural chemicals.
Below is a table showing the strength and weakness for the three business.
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-Proper customer care.
The business is targeting an approximate of 350,000 people. The approximate population in the
location is about 800,000 and the reason is due to existence of other agro-vets like Ogilgei and
Baltoo Agro-vet. The business also aims at getting customers of approximately 100miles away
from the business location.
a. Alale Agro-vet will be strategically positioned in where the customers can easily
see.
b. Alale offers discounts to its customers and high quality products.
c. Ogilgei is enjoying the popular name.
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1) Business exhibition and trade shows. The business will participate in trade shows
and exhibitions to promote the business goods and services.
2) Free sample
Frequent customers will be given free samples e.g T-shirts, shoes and calenders
bearing business name and logo.
3) Commodity development projects
The business will also involve itself in the community projects for example
creation of awareness on HIV/AIDS.
3.4.2 Advertisement
The business will advertise its products through various methods of advertisement such as poster,
radio stations like Kss FM, KBC and citizen. Radio will advertise an interval of two times per
year pach costs of advertisement will costs Ksh. 15,000.
ALALE AGRO-VET
By considering the products, quality and services, the price will be flexible. There will be room
for bargain by the customers which will then promote customer satisfaction. The prices will
increase when the demand is high and decrease when the demand is low. Every item product will
have a specified contribution of certain amount to be used to pay for the business license, rent ,
water,electric bills, transport, wages and salaries.
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3.6 SALES TACTICS
For the success of the business trade, cash discount will be offered to customer service like after
sale service will be offered.
The business will also offer free samples to daily customers hence they will end up coming again
and again. A qualified sales person will also be employed so that he/she can maintain good
customer seller relation which will portray a very good picture of the business hence attract and
maintain them.
This refers to the ways in which the owner will ensure that goods and service reach the
customers who buy products in retail, sale will be made to them on the spot.
For customers who are outside the location of the business i.e outside the district the distributors
will use the business vehicle to transport the products to them.
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workers in -high competition
time
- Good
management
- Good
customer
relation.
i) The business will ensure that the goods are being ordered in time so as to be
delivered in time and be sold.
ii) The business will slightly reduce the prices of the commodities from those of its
competitor
CHAPTER FOUR
The business will operate as a team with the manager at the top then the accountant distributors,
salesmen, and marketing officer in the middle level management and finally watchman, drivers
and cleaners in the bottom.
Manager
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Accountant
Salesman
Distributors
Marketing officer
These will be the general manager who will perform the following duties and responsibilities.
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iii) He will be in charge of wages and salary.
Qualification
Qualification
Qualification
Qualifications
Qualification
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iii) Certificate of good conduct
iv) Good communication skills
v) 3 years relevant experience in a busy company
vi) Should be 30years old of age
Qualification
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4.4 RECRUITMENT, TRAINING AND PROMOTION OF STAFF.
4.4.1 RECRUITMENT
Recruitment is the process of discovering the source of man power to meet the recruitment of
staffing schedule and employ effective measure for attracting the manpower in adequate number
for effective selection of an efficient work force.
i) Educational institution
ii) Advertisement
iii) Unsolicited application
The manager will advertise its job through the news in the local radio. This should be done
basing on the following Qualifications.
4.4.2 TRAINING
The business will organize refresher course on the job training for the employees this may be in
form of attending seminars, conferences and Agricultural shows which will update on the
experience performance .
4.4.3 PROMOTION
The business will promote its emloyees according to abilities and performance based on the
results yield. For one to be promoted he/she should have worked for at least one year.
4.5.2 Incentives
Incentives will be provided to the employees to promote work morale among them. Below are
the incentives that will be offered to employees.
i) Bonus award – bonus will be awarded as an incentive. When sales increase hence
high profit in the business.
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ii) Overtime pay – overtime pay will be awarded to any employee who has worked
overtime depending on the performance.
iii) Medical allowances – a medical allowance of 500 per month will be awarded to the
employees.
iv) Staff tea – this will be provided as a welfare provision for the employees. The
employee will drink tea at 10.30 am and at 4.00pm during working days.
v) Commission –This will be provided when the employees sell the goods and services
in a large quantity and gain more profit than expected. The employees will be entitle
to earn salary as shown below.
a. Registration
The business will be registered under the business name ALALE AGRO-VET by paying the
registration fee of Ksh 50,000 for the business to operate legally. This will be paid by the
business as provided by the law.
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b. License
The license will be acquired from Ravine municipal council upon payment of Ksh 2,500. The
business license will be renewed on expiry which is an annual basis.
c. Permit
Permit will be applied through a legal process by the business. This especially when the business
intends to transport its goods and services to its customers in rural areas.
d. Health certificate
This will be acquired from the Ministry of Public health and sanitation upon the fulfillment of
health requirements in the business premise.
The certificate will be renewable after every five months upon payment of Ksh 1000.
e. Labour laws
The business will comply with all labour laws to ensure good industrial relation in the business
e.g trade dispute Act (CAP 234), employment Act (CAP 238). The business will adopt
arbitration as a machinery to solve dispute in the business
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Kitale
Tel No-0718021315
Insurance service Amaco Insurance Company
P.O Box 1281
Ravine
Health services Ravine District Hospital
P.O Box 281,
Ravine
Tel : 0725037912
CHAPTER FIVE
5.0 PRODUCTION PLAN
INTRODUCTION
This shows the breakdown of equipment materials and other necessary requirement to facilitate
production of goods and services.
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bookshop
TOTAL 54,900 171,000
The computer will be used for storing data and information, Access internet and calculation
which are voluminous and complicated.
The calculators are used for working simple calculations e.g addition and subtraction of figures.
The tables will be used while writing an act as a base where computers rest while chairs are used
for sitting by both workers and customers.
The wheelbarrow will be used to offer after sale services like transport to the customers who buy
goods in large quantities.
The cloves will be used by the workers to protect themselves from harmful chemicals and drugs.
The masks also serve the same purpose which protects the workers from inhaling harmful
chemicals.
Table
Stores
Shelves
Entry Entry
Entry Chaiis
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Managers office entry Accountant office
Table
Clock rooms
The business will transport the goods direct from the suppliers to reduce the chances of delays
and reduce the cost of expenses. Marketing will be carried out during the planting season and
harvesting season to enable the business to sell more.
Discount will also be offered to customers who buy goods in bulky as to keep them coming.
OVERHEADS COST
Rent 3,000
Water 250
Electricity 1,300
Registration fee 50,000
Rent / license 25,000
Telephone 120
Advertisement 1,500
Transport 10,000
TOTAL 92,250
The total cost per month = direct labour cost – overhead cost
= Ksh 118,750
i) Ordering
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The manager of the business will place an order to the supplier and the supplier upon receiving
the order will supply the goods as prescribed by the order.
ii) Receiving
After receiving the order, the supplier will supply the goods to the business upon the half
payment will be made through the M-pesa service provided by safaricom mobile company and
the goods will be delivered to the business.
iii) Storing
After the business receives the products they are stored till demand arises.
iv) Selling
After storage, the goods are sold to customers who are in need of it. These are factors which are
likely to order the production process. These are both internal and external factors.
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ii) Adhering to the government set policies and by-laws.
The government regulation should be adhered to ensure that free transactions is legal and
acceptable by the government policies. Below is the table showing the regulations affecting
operations.
CHAPTER SIX
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The financial plan shows the financial requirements of the business venture, it also provides the
proposed source and use of the finance. All the finance information is contained in profoma
income statement and break-even point.
ITEM AMOUNT
Machinery and equipment 145,000
Furniture and fittings 30,000
Electricity deposits 1,300
Permit 2,500
License 2,500
Water 250
Registration fee 50,000
Telephone 1,200
Advertisement 15,000
Transport 10,000
Rent 3,000
Postage 210,000
Miscellaneous 500,000
Insurance 5,000
Maintenance 80,000
1,05600
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The required capitalization
DETAILS AMOUNT(Ksh )
Loan from bank (KCB) 1,200,000
Owners contribution 300,000
Friends and relatives 1,000,000
TOTAL 2,500,000
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January 30,000
February 25,000
March 20,000
April 15,000
May 30,000
June 2,000
July 10,000
August 150,000
September 15,000
October 20,000
November 15,000
December 15,000
TOTAL 230,000
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6.3.1 Cashflow Statement for the Year Ended 31st December 2025
Item Jan Feb March April May June July August Sept. Oct. Nov. Dec Totals
Cash in flow
Cash sales 180,000 193,500 171,000 202,500 180,000 189,000 162,200 193,500 184,500 207,000 198,000 153,000 2,214,00
0
Collection - 20,000 21,500 19,000 22,500 20,000 21,000 18,000 21,500 20,500 20,500 23,000 227,500
from Debtors
Bank Loan 300,000 - - - - - - - - - - - 300,000
Borrowing 100,000 - - - - - - - - - - - 100,000
from Friends
Borrowing 100,000 - - - - - - - - - - - 100,000
from Relatives
Owner’s 700,000 - - - - - - - - - - - 700,000
contribution
Total Cash 1,380,000 213,500 192,500 221,500 202,500 209,000 183,300 211,500 206,000 227,500 218,500 176,000 3,641,50
Inflow 0
Cash out flow
Cash purchase 80,750 68,000 60,350 63,750 59,500 59,500 42,500 68,000 51,000 68,000 68,000 59,500 748,850
Payment to - 143,250 12,000 10,650 11,250 10,500 10,500 7,500 12,000 9,000 12,000 12,000 121,650
creditors
Pre-operational 850,000 - - - - - - - - - - - 850,000
cost
Salaries 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 57,500 690,000
&wages
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Electricity 1,100 1,100 1,100 1,100 1,150 1,150 1,150 1,150 1,150 1,150 1,150 1,150 13,600
Insurance 25,000 - - - - - - - - - - - 25,000
Advertising 3,000 - - - 3,000 - - - 3,000 - - - 9,000
Selling expense - 900 900 1,000 1,200 1,000 800 1,000 800 700 900 100 9,300
Telephone - 1,000 1,000 1,000 1,000 1,000 1,000 1,200 1,200 1,200 1,200 1,200 12,000
Postage 100 150 125 125 125 125 125 125 140 110 100 150 1,500
Transport - 150 150 160 160 180 180 150 150 170 150 200 1,800
Interest on loan 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Loan - 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 55,000
repayment
Repair & - - - - - 8,000 - - - - - 12,000 20,000
maintenance
Water 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Total Cash 1,020,350 150,950 89,225 143,185 142,785 93,255 121,655 144,525 134,840 145,730 148,900 147,200 2,592,50
outflow 0
Net Cash 359,650 62,550 103,275 78,315 59,715 115,775 61,345 66,975 71,160 81,770 69,600 28,800 1,158,93
0
Accumulated 359,650 422,200 525,475 603,790 663,505 779,280 840,625 907,600 978,760 1,060,530 1,130,130 1,158,93
Cash 0
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6.3.2 Cash Flow Statement for the Year Ended 31st December 2026
Item Jan Feb March April May June July August Sept. Oct. Nov. Dec Totals
Cash in flow
Cash sales 180,000 190,000 200,000 250,000 170,00 190,000 162,200 200,000 185,00 210,000 198,000 155,00 2,290,0
0 0 0 00
Collection - 205,000 18,000 240,000 22,500 15,000 22,000 18,000 16,000 23,400 20,000 26,000 225,400
from Debtors
Bank Loan 300,000 - - - - - - - - - - - 300,000
Borrowing 100,000 - - - - - - - - - - - 100,000
from Friends
Borrowing 100,000 - - - - - - - - - - - 100,000
from Relatives
Owner’s 700,000 - - - - - - - - - - - 700,000
contribution
Total Cash 1,380,00 210,500 218,000 274,000 192,50 205,000 184,000 218,000 201,00 233,400 218,000 181,00 37,115,
Inflow 0 0 0 0 400
Cash purchase 80,000 70,000 65,000 64,000 55,500 40,500 55,000 60,000 50,000 68,000 65,000 59,000 732,000
Payment to 14,500 - 13,000 10,000 10,000 15,000 8,000 7,500 12,000 9,000 5,000 9,000 113,000
creditors
Pre- 850,000 - - - - - - - - - - - 850,000
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operational
cost
Salaries 57,500 58,000 57,500 57,500 57,500 57,500 58,000 58,000 57,500 57,500 57,500 57,500 691,500
&wages
Electricity 1,100 1,100 1,100 1,100 1,150 1,150 1,150 1,150 1,150 1,150 1,150 1,150 13,600
Insurance 25,000 - - - - - - - - - - - 25,000
Advertising - - - 3,000 - - - - 3,000 - - - 6,000
Selling - 900 900 1,000 1,100 800 700 300 500 400 1,200 1,000 8,800
expense
Telephone - 1,000 1,000 1,000 1,000 1,200 1,000 1,000 1,200 1,000 1,000 1,000 11,400
Interest on 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Loan
Loan - 5,000 5,000 - 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 50,000
repayment
Repair - - - - - 8,000 - - - - - 12,000 20,000
&maintenance
Water 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Total Cash 1,005,10 138,170 145,640 139,770 133,43 131,350 131,030 135,140 132,49 144,230 138,050 147,75 2,522,1
outflow 0 0 0 0 50
Net Cash 374,900 72,330 72,360 134,230 59,070 73,650 52,970 82,860 68,510 89,170 79,950 33,250 1,193,2
50
Accumulated 374,900 447,230 519,590 653,820 712,89 786,540 839,510 922,370 990,88 1,080,0 1,160,000 1,193,2
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Cash 0 0 50 50
6.3.3 Cash flow Statement for the Year Ended 31st December 2027
Item Jan Feb March April May June July August Sept. Oct. Nov. Dec Totals
Cash in flow
Cash sales 150,000 130,000 180,000 200,000 160,000 210,000 140,000 100,000 180,000 190,000 200,000 150,000 1,990,000
Cash from - 20,000 17,000 20,000 25,000 17,000 24,000 15,000 20,000 24,500 26,000 30,000 238,500
debtors
Bank Loan 300,000 - - - - - - - - - - - 300,000
Borrowing from 100,000 - - - - - - - - - - - 100,000
Relatives
Borrowing from 100,000 - - - - - - - - - - - 100,000
Relatives
Owner’s 700,000 - - - - - - - - - - - 700,000
contribution
Total Cash 1,350,000 150,000 197,000 220,000 185,000 227,000 164,000 115,000 200,000 214,400 226,000 180,000 3,428,500
Inflow
Cash purchase 50,000 70,000 60,000 40,000 50,000 40,000 50,000 60,000 40,000 65,000 60,000 50,000 700,000
Payment to - - 13,000 16,000 10,000 16,000 9,000 8,000 12,000 9,000 8,000 6,000 102,000
creditors
Pre-operational 850,000 - - - - - - - - - - - 850,000
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cost
Salaries &wages 57,500 58,000 57,500 57,500 57,500 57,500 58,000 58,000 57,500 57,500 57,500 57,500 691,500
Electricity 1,100 1,100 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 14,500
Insurance 25,000 - - - - - - - - - - - 25,000
Advertising - - - - - - - - 3,000 - - - 6,000
Selling expense 200 900 900 1,100 1,100 800 700 300 500 400 1,200 1,000 9,000
Telephone 1,000 1,000 1,000 1,000 1,000 1,100 1,100 1,100 1,100 1,100 1,100 1,100 12,700
Postage 100 150 120 120 120 120 120 120 100 100 100 100 1,370
Transport - 120 120 160 160 180 160 170 140 180 200 100 1,680
Interest on Loan 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Loan Repayment 5,000 5,000 - 5,000 5,000 5,000 - 5,000 5,000 5,000 5,000 5,000 50,000
Repair & - - - - - 8,000 - - - - - 10,000 18,000
Maintenance
Water 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Total Cash 991,800 138,170 135,740 136,770 128,030 130,950 122,230 135,840 122,490 141,430 136,250 133,950 2,504,550
Outflow
Net Cash 358,200 11,830 61,260 83,230 56,970 96,050 41,770 20,840 77,510 73,070 89,750 46,050 1,016,530
Accumulated 358,200 370,030 431,290 514,520 571,490 667,540 709,310 730,150 807,660 880730 970,480 1,016,530
Cash
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6.4 ANNUAL PAYMENT OF CREDITORS
MONTH AMOUNT (Ksh)
January 40,000
February 50,000
March 55,000
April 52,000
May 45,000
June 50,000
July 50,000
August 48,000
September 38,000
October 42,000
November 50,000
December 52,000
TOTAL 574,000
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Electricity 18,870 14,700 86,000
Transport 81,000 85,000 5,000
Maintenance 5,000 5,000 28,000
Insurance 21,000 25,000 1,500
Telephone 1,200 1,800 480,000
Loan repayment 440,000 480,000 2,500
Permit 2,500 2,500
Registration fee 50,000
Miscellaneous 500,250 26,840 24,980
TOTAL
TAX = 5,000
=316,370
=316,370 – 5,000
=311,370
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6.6 PROFOMA BALANCE SHEET
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6.7 THE BREAK -EVEN POINT
This is the period when the business will make neither profit nor loss
Contribution margin %
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6.8 THE BREAK – EVEN POINT
i) Contribution margin
= total sales – variable costs
=5,015,000 – 788,160
= Ksh 4,226,840
ii) Contribution margin percentage
= contribution margin
Total sales
= 4,226,840 x 100%
5,015,000
= 84.28%
= 3,032,000
= fixed cost
Contribution margin in %
= 3,032,000 3,597,532.036
0.8428
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= 3,597,532
This will help the enterprenuer to determine the performance of the business over a specific
period of time.
4,641,000 x 100%
501,500
= 92.5%
321,340 x 100%
300,000
= 107.1%
50
321,340 x 100%
2,500,000
= 12.8%
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