TITLE OF THE DOCUMENT: BUSINESS PLAN

BUSINESS NAME :SANBALAT BUILDING AND CONSTRUCTION COMPANY

PRESENTED BY : DENZEL NAMUCHEVULE WEKESA

INDEX NUMBER : 5031112288

ADMISSION NO: BC-DCE/26623/21

INSTITUTION : THE KITALE NATIONAL POLYTECHNIC

COURSE CODE:2707

PAPER CODE: 305

COURSE: DIPLOMA IIN CIVIL ENGINEERING

SUPERVISOR: MR SIMON ODENYO

EXAM SERIES: JULY2024

PRESENTED TO THE KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILLMENT OF THE AWARD OF A DIPLOMA IN CIVIL ENGINEERING.
DECLARATION

I declare that this business plan is my original work and it has never been presented to any
examination body for any award of academic qualifications.

NAME : DENZEL NAMUCHEVULE WEKESA

SIGNATURE: ...........................................

DATE:......................../...................../2024

SUPERVISOR : MR SIMON ODENYO

SIGNATURE :.........................................

DAT : ............................./............/2024
 DEDICATION
I dedicate this business plan to my lovely family for their financial and moral support they have
accorded to me throughout my studies.
 ACKNOWLEDGEMENT
I would like to extend my sincere gratitude to my parents and siblings who contributed to the
success of my business plan.

Special thanks also to my supervisor for guiding me throughout this research. May God bless us
all.
 Table of Contents
DEDICATION............................................................................................................................................iii
ACKNOWLEDGEMENT.............................................................................................................................iv
Table of Contents................................................................................................................................v
EXECUTIVE SUMMARY.........................................................................................................................1
FINANCIAL PLAN............................................................................................................................2
CHAPTER ONE......................................................................................................................................3
1.0 BUSINESS DESCRIPTION.....................................................................................................................3
1.1 BUSINESS NAME...............................................................................................................................3
1.2 BUSINESS LOCATION AND ADDRESS..................................................................................................3
1.3 FORM OF OWNERSHIP.......................................................................................................................3
1.4 TYPE OF BUSINESS.............................................................................................................................3
1.5 PRODUCTS AND SERVICES.................................................................................................................3
1.6 JUSTIFICATION OF OPPORTUNITIES...................................................................................................4
1.6.1 The market.....................................................................................................................................4
1.6.2 Infrastructure..................................................................................................................................4
1.6.3 Suppliers of items...........................................................................................................................4
1.6.4 Electricity, water and security........................................................................................................4
1.7 INDUSTRY..........................................................................................................................................5
1.8 BUSINESS GOALS AND AMBITIONS....................................................................................................5
1.8.1 Long-term Goals.............................................................................................................................5
1.8.2 Short-term Goals............................................................................................................................5
1.9 ENTRY AND GROWTH STRATEGY.......................................................................................................5
CHAPTER TWO.....................................................................................................................................7
2. 0 MARKETING PLAN.............................................................................................................................7
2.1 POTENTIAL CUSTOMERS....................................................................................................................7
2.1.1. Hawkers.........................................................................................................................................7
2.1.2 Institutions......................................................................................................................................7
2.2 MARKET SHARE..................................................................................................................................7
2.3 COMPETITION....................................................................................................................................7
 2.4 PROMOTION AND ADVERTISING.......................................................................................................9
2.4.1 Promotions.....................................................................................................................................9
2.4.2. Advertising.....................................................................................................................................9
2.5 PRICING STRATEGY............................................................................................................................9
2.6 SALES TACTICS.................................................................................................................................10
2.7 DISTRIBUTION STRATEGY.................................................................................................................10
CHAPTER THREE.................................................................................................................................11
3.0 ORGANIZATIONAL PLAN..................................................................................................................11
3.1 ORGANIZATIONAL STRUCTURE........................................................................................................11
3.2 KEY MANAGEMENT PERSONNEL.....................................................................................................11
3.3 OTHER BUSINESS PERSONNEL.........................................................................................................12
3.4 RECRUITMENT, TRAINING AND PROMOTION..................................................................................12
3.4.1 Recruitment..................................................................................................................................12
3.4.2 Training.........................................................................................................................................12
3.4.3 Promotion.....................................................................................................................................12
3.5 REMUNERATION AND INCENTIVES..................................................................................................12
3.6 LICENSES AND PERMITS...................................................................................................................13
3.7 SUPPORT SERVICES..........................................................................................................................13
CHAPTER FOUR..................................................................................................................................15
4.0 OPERATIONAL PLAN........................................................................................................................15
4.1 PRODUCTION FACILITY AND EGUIPMENT........................................................................................15
4.1.1 Tools and Equipment....................................................................................................................15
4.2 PRODUCTION STRATEGY..................................................................................................................15
4.2.1 Monthly materials required..........................................................................................................16
4.3 PRODUCTION PROCESS....................................................................................................................16
4.4 REGULATION AFFECTING OPERATION.............................................................................................16
4.4.1 Safety regulations.........................................................................................................................16
4.4.2 Labor Hour....................................................................................................................................16
4.4.3 Cleanliness....................................................................................................................................16
CHAPTER FIVE....................................................................................................................................17
5.0 FINANCIAL PLAN..............................................................................................................................17
5.1 PRE-OPERATIONAL COSTS...............................................................................................................17
5.1.1 Pre-operational expenses.............................................................................................................17
5.2 WORKING CAPITAL..........................................................................................................................18
5.3 CASH FLOW STATEMENT.................................................................................................................20
5.4 PROFORMA INCOME STATEMENT FOR SANBALAT BUILDING AND CONSTRUCTION COMPANY
LIMITED.................................................................................................................................................24
5.4.1 Proforma income statement for the year ending Dec YEAR 1......................................................24
5.4.2 Proforma income statement for the year ending Dec 2...............................................................25
5.4.3 Proforma income statement for the year ending Dec 3...............................................................26
5.5 Proforma balance sheet forSANBALATBuilding and Construction company limited.......................27
5.5.1 Proforma balance sheet as at 31st Dec 2024.................................................................................27
5.5.2 PROFORMA BALANCE SHEET AS AT 31ST DEC 2024.......................................................................28
5.5.3 PROFORMA BALANCE SHEET AS AT 31ST DEC 2025.......................................................................29
5.6FINANCIAL ANALYSIS........................................................................................................................30
5.6.1 BREAK EVEN FOR THE YEAR 2024.................................................................................................30
5.6.2 BREAK EVEN FOR THE YEAR 2024.................................................................................................31
5.6.3 BREAK EVEN FOR THE YEAR 2025.................................................................................................32
5.7 DESIRED FINANCING........................................................................................................................32
5.8 PROPOSED CAPITALIZATION............................................................................................................32
5.9 EXPECTED PROFITABILITY RATIO.....................................................................................................33
 EXECUTIVE SUMMARY
BUSINESS DESCRIPTION

The proposed business will engage in the selling of a wide variety of valuable building and
construction materials and goods and provision of services such as painting and also provision of
safety clothes from different collections. It will be located in Kanduyi town in Bungoma
county.The proposed business will be called SANBALAT Building and Construction company
limited.

MARKETING PLAN

The business will advertise it's commodities through the local media such as radio, television,
use of posters and also publicity. Potential customers will be able to know more about the
business through these. The business will also use social media platforms such as Facebook,
Twitter, Instagram so as to reach the intended target group.

ORGANIZATIONAL PLAN

The proposed business will be a private limited company managed by a board of directors
chosen by the shareholders. The decisions in the business will be made consultatively. The
business will be organized from the top management to the juniors from the board of directors,
general manager, supervisor and finally operatives.

Recruitment will be done through advertisements on posters and social media after which the
shortlisted candidates will be invited to an interview and the best ones selected. In order to
operate smoothly the business will acquire a trade license from the county government and use
other support services such as banking, postal and insurance.

OPERATIONAL PLAN

The proposed business will require a premise from which it will operate from, whereby it should
be spacious, free air circulation and free from accidents also more room for business expansion.

1
Lovell Building and Construction company limited intends to obtain high quality, durable goods
at an appropriate retail price in bulk and offer it at market price that facilitates a good profit
margin and maintains its customers on the other hand. The business will operate as from 8am to
5pm on week days and from 8am to 12 pm on Saturdays.

FINANCIAL PLAN
The proposed business will require capital of Ksh.1million to start. Part of this amount will be
raised from a bank loan and the rest from personal savings and family funding. The loan will be
taken from Equity bank and expected to be repaid in a period of three years after the start of the
business.

The proposed business intends to achieve a firm and sound financial management system which
will help it in making informed financial decisions to avoid misuse of funds.

2
 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The proposed name of the business will be SANBALAT Building and Construction company
limited which will offer best quality building and construction materials as well as services to the
people.

1.2 BUSINESS LOCATION AND ADDRESS

SANBALAT Building and Construction company limited will be located in Kanduyi town,
Bungoma county .

P.o Box 50200-31,

Kanduyi,

email address;sanbalatconstructioncompany@gmail.com.

1.3 FORM OF OWNERSHIP

The proposed business will be private limited company managed and run by a board of directors
chosen by shareholders and decisions will be made consultatively.

1.4 TYPE OF BUSINESS

The business will be SANBALAT Building and Construction company limited engaged in the
selling of a wide variety of construction materials as well as provision of services such as
painting, demolition etc.The business will provide customers who will buy in large quantities
discounts, after sales services and at times credit to regular customers. The business will deal
with selling of goods at affordable prices.

1.5 PRODUCTS AND SERVICES

The proposed business intends to deal with products and goods and supply according to
customer’s choice. Various professionals such Engineers, Surveyors and institutions are potential
customers to the business. Such customers will need materials to carry out their works which will
be provided to them efficiently.

3
1.6 JUSTIFICATION OF OPPORTUNITIES
This business will be necessary in this location because there will be a ready market. This is the
fact that it is centrally placed in town and also the growing population will provide large number
of customers from all groups of people from varying races ages and sexes will have their needs
satisfied. It will provide employment for the people from the local community.

Also availability of materials from the local community such as sand and natural stones.

Availability of water and electricity in the area which makes it easy to run the machines and also
availability of a good transport and communication system to enable transportation of materials.

The intended business will be expected to grow strong through sales, promotions, advertisement
and free services. This location is more favorable due to the following factors;

1.6.1 The market

The presence of market ground this area provides and attracts the eyes of different kinds of
people travelling by their private or public vehicles and people who come to the market.The
large population also increases the number of customers.

1.6.2 Infrastructure
There is favorable infrastructure around the business location because many tarmac feeders roads
pass through the Centre.

1.6.3 Suppliers of items

Materials will be easily supplied due to availability of good transport and communication
systems and also availability of needed materials of construction.

1.6.4 Electricity, water and security.

These will be available and in sufficient capacity. The building is secure as there are guards in
place both day and night.

1.6.5 Human Resource and Labor

In the center, there are many people who will be employed under various forms hence making it
easier for cheap labor availability.

4
1.7 INDUSTRY
The proposed business will fall under service industry and also sales industry which will deal in
the provision of wide variety construction goods and materials as well as service provision.

The business will succeed its competitors by getting more customers by purchasing quality
goods and products and also services and selling them at affordable prices to these customers.

1.8 BUSINESS GOALS AND AMBITIONS

1.8.1 Long-term Goals

To provide high quality construction materials at affordable prices
To provide job opportunities to the local community
To provide job opportunities to the local community
To provide construction services at cheaper affordable prices

1.8.2 Short-term Goals

To have cleared bank loan

1.9 ENTRY AND GROWTH STRATEGY

Radio broadcast twice per week

Posters and charts along roadside

Shows and exhibitions

Market research to find out what is wanted in the market so as to know what currently sales

Listening to what people say to understand people's needs in the market

The entry strategy will be based on public relations, advertisements and pricing tactics. The
business will publicise itself through posters and flyers to ensure that all potential customers are
aware of it's existence. The first services will be offered at affordable prices so as to attract many
customers. Advertisement through the media will be used.

GROWTH STRATEGY

The business will expand by maintaining equitable services and good relation among the
employees and customers. Provision of 15% discount for every month to my regular customers

5
There will be ploughing back of profits to facilitate growth

The business will use it's profits and savings to expand the business by opening other branches in
the region.

6
CHAPTER TWO

2. 0 MARKETING PLAN

2.1 POTENTIAL CUSTOMERS

This intends to describe how the proposed business will offer it's services, how it will make itself
known to the public and also identifies customers and competitors ie pricing, selling and
promotion will be implied.
The business will print posters which will be mounted in the region to inform customers of it's
existence, billboards will also be provided for the purpose of advertising and use of media such
as radio, television and social media platforms such as Facebook, Twitter, Instagram will be
used. The following are the customers that will obtain their materials and services
fromSANBALATbuilding and construction company:

2.1.1. Hawkers
They are traders who sell their products alongside streets in the open.SANBALATBuilding and
Construction company will provide items such as tiles at a wholesale price so that they can get
profit as they sell items outside. The kind of customers will buy on a daily basis from the
company increasing sales in the intended business.

2.1.2 Institutions
Various institutes such as secondary schools, primary schools will be potential customers
toSANBALATBuilding and Construction company. This kind of customers will be frequent
customers purchasing construction materials for building the schools and also repairing it.

2.2 MARKET SHARE

Under market share the business will talk about the population

Due to the growing population 60%of the people are carrying out construction works for both
residential and commercial purposes, this rises the need for construction of more Houses.

2.3 COMPETITION
The proposed business will have competitors from the surrounding environment providing the
same products and services but the business will thrive due to the following factors :

7
 Better location of the business

Good relation with customers which these other businesses lack

Affordable construction services and materials

Better and equitable services due to high skilled and knowledge obtained by the employees.

A table giving comparison between the competitors

Particulars Age Time of Forms of Staff Image Products Equipment Locations

operation operation

Jumbo Eight 9.00am Partnership No skills Good Scale Well- Kenyatta avenue
suppliers years 5.00 pm No image rules, equipped but opposite bank of
motivation levelling no wearing Africa
staffs, out

Elegant Three 8.30 am Partnership Poorly Poor Safety Not well Lusaka road opposite
Wholesalers years 6.00 pm trained image boots, equipped County hospital
No ranging
motivating rods
tactics
No uniforms

Lovell To be Will open Private Will have Will , Well equipped Kanduyi town,
Building and started from limited well trained have cement ,bu with best Bungoma town
Construction in 1 8.00 am company Will have very ilding quality and
company year 5.00 pm uniforms good stones,ove quantity
limited. time Allowances image ralls, iron materials
sheets ,
tiles,
Reflectors,
tapes

8
2.4.1 SWOT Analysis table.

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

a) Entrepreneurs has New Business Able to expand the Risk
management skills business
b) Demand for the Limited Business Fewer business in the Competition
products market
c) Market for the Seasonal changes Poor economy and
products inflation

2.4 PROMOTION AND ADVERTISING

2.4.1 Promotions
The business proposes to practice various promotions methods such as giving discount,
providing hire purchase service, giving after sales service and providing free sample.

2.4.2. Advertising
The proposed business will use posters and notices for advertising. The proposed business will
also use media such as local newspaper and television to advertise their goods. The business will
use 3% of its capital for advertising and this will be done during weekends and part time to
attract many customers.

2.5 PRICING STRATEGY

The supply and demand curve determine pricing of goods and services offered. The business
intends to consider the use of transport, cost, demand of the product and the availability of the
product to set it's price. The factors that influence pricing are the demand and availability of the
product in the market.

The Business price list will be as follows

9
ITEM PRICE PER ITEM DISCOUNT
Iron sheets Ksh900-2000 Discount will be 20% for more

Building stone Ksh50-100 than 100 items purchased on

Cement Ksh600-800 total costs

Tiles Ksh 700-1500

2.6 SALES TACTICS

The business will be selling construction materials directly to the customers who order them to
avoid middle men and also required services will be offered to them. The business staff will also
offer after sales services to the customers. Sales promotion will be employed so as to cover a
wide area.

2.7 DISTRIBUTION STRATEGY

The customers will access goods by coming to the premise and ordering the number of items
required and one worker will assist customer to the nearby transporting place for loading and off-
loading at the destination.

At expansion, the business will have its own means of transportation which help the customers to
transport goods to their destination hence customers will not have difficulties on transporting
their goods.

The proposed business will motivate those involved in distributing by giving them a commission
on extra item distributed above the allocated number for each day. This will increase sales.

10
 CHAPTER THREE

3.0 ORGANIZATIONAL PLAN

3.1 ORGANIZATIONAL STRUCTURE

Lovell Building and Construction company limited will be a private limited company run by a
board of directors who will make decisions consultatively, the general manager, the accountant,
supervisor and operatives.

Board of directors

General manager

Accountant Supervisor Operatives

3.2 KEY MANAGEMENT PERSONNEL

3.2.1 General Manager

The general manager will be the one managing SANBALAT Building and Construction
company while assisted by the supervisor. The manager should be academically qualified.

3.2.2 Supervisor

The supervisor helps the manager. The supervisor will have to be a diploma holder in purchasing
suppliers management, must possess qualities such as ability to work without supervision. Good
11
communication skill and innovative. The responsibilities of the supervisor are to keep sales.
Purchasing of equipment and items for selling, collecting cash from daily distribution and
ensuring that the cash is distributed, sold and carrying out stock taking weekly to ensure that
physical stock of items match as per records.

3.3 OTHER BUSINESS PERSONNEL

3.3.1 Accountant

The proposed business will hire an accountant who will be in charge of business transactions and
operatives who will be helping out the clients . As the business grows, number of operatives will
be increased .

3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1 Recruitment
This is the process of searching for prospective employees and stimulating them to apply for jobs
in an organization.SANBALATBuilding and Construction Company intends to utilize the
qualified people who reside from neighboring region.

Other people shall access the information about the advertisement on website, social media
platforms and posters. Applicants shall be invited for interview and qualified personnel will be
considered for interviews.

3.4.2 Training
To ensure that the workers are up to date in technology and everyday to day current issues in
building and construction field by sending them to seminars and workshops to enhance
performance and productivity.

3.4.3 Promotion
This will be done at the expansion of the business in that vacant position will be created.
Excellent capabilities for development must been shown in a state in order to quality for
promotions and a determined staff in his/her work will deserve promotion. Promotion in the
intended business will also be for motivational purpose to the staff.

3.5 REMUNERATION AND INCENTIVES

The remuneration and incentives of SANBALAT Building and Construction company will be as
shown in the table.

12
Job Title Number Basic Pay Incentives Mandatory Net Pay
required
General Manager One (1) Ksh 18,000 4,000 1,500 23,500
Supervisor One (1) Ksh. 14,000 2,000 500 16,500
Accountant One (1) Ksh 12,500 1,500 300 14,300
Operatives Four (5) Ksh 50,000 4,000 1000 55,000

TOTAL 7 Ksh 94,500 Ksh 11,500 Ksh 3,300 Ksh 109,300

3.6 LICENSES AND PERMITS

The proposed business will obtain it's certificate of incorporation and a trading license worth
5000 KSHS from the government for it to start it's operations.

3.7 SUPPORT SERVICES

Lovell Building and Construction company will require support services such as banking
services, transport and communication services, postal services as well as financial services.

Banking services

EQUITY BANK LIMITED

PO BOX 50200-30

BUNGOMA

Insurance services

The proposed business will require this service for insurance cover of the firm assets, which
include human resource, properties from fire, theft, accident while at work.

The insurance service comfortable for the intended business will be;

Jubilee insurance company

P.o Box 50200-32

Bungoma

13
Postal services

Postal services will be needed for sending and receiving letters and documents to and from the
proposed business customers.

ADDRESS

KENYA POSTAL SERVICES

PO Box 50200-33

Bungoma

14
 CHAPTER FOUR

4.0 OPERATIONAL PLAN

4.1 PRODUCTION FACILITY AND EGUIPMENT

The proposed business will require a premise from which it will carry out it's operations which
includes manufacture and store of building and construction materials. This will be rented within
Kanduyi town. The premise should also have offices for respective personnel. The monthly rent
for the premises will be Ksh10,000.

The business will require furniture such as table and chairs which will cost approximately Ksh
10,000.The business will require telephone for communicating with potential customers which
will cost Ksh2, 000. The facility that will be required by the construction company will be as
follows;

4.1.1 Tools and Equipment

ITEM No. required COST
Computer 1 25,000
Cash register 1 1,000
Furniture 3 1,200
Shelves 2 600
Short stand 6 1,000
Chairs/ tables 3 dozens 200
Hangers 2 1,000

Total 18 30,000

4.2 PRODUCTION STRATEGY

Lovell Building and Construction company limited will produce high quality construction
materials from locally available resources such as natural stones, sand, water and also cheap
labour from the surrounding area, materials produced will be sold both locally and in the entire
region. The following are the material requirements for theSANBALATBuilding and
Construction company limited.

15
4.2.1 Monthly materials required
Type of Source Quantity Cost per Total ( Ksh)
material material ( Ksh)
Receipt sheet Bungoma 14( 8*10 inch) 1,200 1,214
Catalogue Stationaries Box 24 7,200
Ink Box 600 1,000
Cello tape 2 Dozens 120 240
Paper bags 36 dozens 36 1,296
Total 7,380 15,950

4.3 PRODUCTION PROCESS

The business will produce construction materials from locally available resources using locally
available cheap labour, this will save on production costs at the same time increasing profit
margins.

4.4 REGULATION AFFECTING OPERATION

4.4.1 Safety regulations

There will be fire extinguishers in the company to help in case of fire breakout. Workers will be
provided with masks when they are loading and offloading construction materials and overalls
and gloves will be issued for safety.

4.4.2 Labor Hour

Lovell Building and Construction company limited will be operating from 8am to 5 pm. This
will aim at attracting customers keen on reliability. Work will be informed on time accordingly
so as to work affectively.

4.4.3 Cleanliness
This will be observed in the entire premise as it will be done every morning and thoroughly on
weekends .Cost incurred regarding safety regulations and cleanliness of the business will be
included.

16
 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COSTS

For any business to take off the ground and operate effectively finance is required but more
important is how effective the firm can be able to achieve a sound financial management.

This chapter is dedicated to exploring various financial status of the business when a capital of
Ksh 1,000,000/= is raised. The capital will be from the following source as listed below.

SOURCE AMOUNT (Ksh)

Personal savings 400,000

Bank loan 600,000

Total capital 1000,000

The loan from the bank will be repaid within the first three years of operation at interest of 16%
per annum. This loan will be obtained from Equity bank of Kenya.

5.1.1 Pre-operational expenses

Lovell Building and Construction company limited pre-operational expenses will induct.

Expenses Amount ( Ksh)

Insurance 20,000
License and permits 7,000
Advertisement and promotion 5,280
Post office box 3,000
Furniture and fittings 45,200
Electricity 5,000
Tools and equipment 61,200
Water 2,500
Stock 37,380
Rent 7,000
Acquisition of a telephone 2,500
Miscellaneous 3,000
TOTAL 199,060

17
 5.2 WORKING CAPITAL
The working capital for the business will be as follows; the year 2023, 2024 and2025

ITEM 2023 2024 2025

Current Assets Ksh Ksh Ksh
Cash in hand 26,673 11,268 274,451
Cash in bank 600,000 1,300,000 2,000,000
Debtors 24,180 - 6,283
Stock 37,380 40,000 52,000

Total Current Assets 688,233 1,351,268 2,582,734

Less Current Liabilities
Bank loan 80,000 120,000
Creditors 94,677 117,505 20,000
Total current liabilities 174 677 238 505 20,000
Working capital 513 556 1,112,763 2,562 724

Working capital 2023 = Ksh 513 556

2024 = Ksh 1,112 763

2025 = Ksh 2,562 734

18
PARTICULARS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
S
Cash inflow Ksh. Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh
Beginning cash - 69180 95660 133520 178700 222850 265233 286073 346723 393723 467473 554323 3,253,43
8
Sales 870,000 9000 10600 121500 135000 150000 156000 165000 171000 180000 200000 220000 2,388,10
0
Debtors 4200 1000 20000 25,200
Total cash in flow 1110000 78180 106260 259200 313700 372850 422233 451073 517723 593723 667473 774323 5,666,73
8
cash outflow
pre-operational 195060 195,060
Purchases 29000 30000 35500 40500 45000 5000 52000 55000 57000 60000 65000 69000 588,000
Salaries &wages 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 216,000
Insurance 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24,000

Credit 1267 32110 16200 14100 14100 20000 94,670

License & permits 7,000 7,000
Stationary 980 1800 940 1000 1000 500 700 2000 400 1200 1000 1500 13,020
Advertisement 1200 1200
Water 400 400 400 400 350 350 350 350 400 450 450 450 4,750

Electricity 1800 1800 18000 18000 18000 1800 1800 1800 1800 1800 2000 2000 22,000
Telephone 900 1000 1000 1500 1500 1500 1500 3000 3000 2000 2000 5000 19,400

Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60,000
Transport 1000 1000 10000 1000 500 500 1000 1000 1000 1500 1500 1500 13,000

Loan repayment 10000 10000 10000 10000 10000 10000 10000 10000 80,000

19
Interest on loan 3200 3200 3200 3200 3200 3200 3200 3200 25,600
Repair & maintenance 500 500 200 500 500 500 500 500 500 500 500 500 5,700
Miscellaneous 2000 2000 2000 2000 2000 2000 2000 2000 2500 2500 2500 2500 28,000
Total cash outflow 257840 63500 67340 73700 90850 96617 130160 103850 121000 122250 126250 146650 1,396,40
0
Net cash 852160 14680 38920 185500 222850 276233 292073 347223 396723 471473 541223 627673 4,270,38
8

5.3 CASH FLOW STATEMENT FORSANBALATBUILDING AND CONSTRUCTION COMPANY LIMITED

5.3 CASH FLOW STATEMENT FOR THE YEAR 2

20
PARTICULARS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTA
LS
Cash inflow Ksh. Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh
Beginning cash 626673 666673 701473 727413 755613 815513 874163 927068 927068 994118 1133160 1225218 104998
03
Sales 204000 207000 207000 21000 210000 216000 225000 234000 240000 255000 264000 270000 274200
0
Debtors
Total cash in flow 830673 873673 908473 937413 965613 1031513 1099163 1161068 1234118 1307718 1397160 1495218 132318
03
cash outflow
Purchases 68000 69000 69000 70000 70000 72000 75000 78000 80000 85000 88000 90000 914000
Salaries &wages 50000 50000 50000 50000 50000 50000 50000 50000 5000 50000 50000 50000 600000
Insurance 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 36000
Credit
License & permits 7,000 7,000
Stationary 1800 2000 1850 2100 800 900 700 2500 1200 1300 25000 2500 20150
Advertisement 1500 5000 6000 7300 19800
Water 400 400 400 400 450 450 450 450 450 450 450 450 5200

Electricity 1800 1800 1800 2000 2000 2000 2000 2000 2000 2000 2000 2000 239000
Telephone 1500 1600 1600 1800 900 1000 2000 2000 2000 2000 2000 2000 20400
Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Transport 1500 1500 1500 2000 2000 2000 2000 2000 2000 2000 2500 2500 23500
Loan repayment 10000 10000 10,000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
Interest on loan 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 5200 40400

21
 Repair & 800 800 800 800 800 800 800 800 800 800 800 800 9600
maintenance
miscellaneous 2500 2500 2500 2500 2500 2500 2500 2500 3000 3000 3000 3000 32000
Total cash outflow 164000 172200 181060 181800 150100 157350 172095 166950 181400 174550 171950 183950 205740
5
Net cash 666673 701473 727413 755613 812213 874163 874163 927068 994118 1133160 1225218 1311268 101317
67

6.3 CASH FLOW STATEMENT FOR THE YEAR 3

PARTICULARS JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTA
LS
Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh Ksh
Cash inflow Ksh.
Beginning cash 1311268 1348268 1399208 145551 1513251 1570901 1619951 1689301 1738601 1819101 1899551 1975501 193446
13
Sales 255000 267000 270000 270000 270000 285000 294000 303300 351000 315000 288600
0
Debtors 6283 6283
Total cash in flow 1566368 1615268 1675551 1729551 1789351 1855901 1913951 19992301 2053601 2134101 2223551 2555301 116800
0
cash outflow

22
Purchases 85000 89000 90,000 90000 92000 95000 98000 101000 105000 105000 108000 110000 36000
Salaries &wages 109000 100000 100,000 100000 100000 100000 100000 100000 100000 100000 100000 100000 20000

Insurance 300 300 300 300 300 300 300 300 300 300 300 300 3600
Credit 1000 10000 20000
License & permits 7000 7000
Stationary 2000 2000 2000 2000 2000 2000 2500 2500 3000 3000 3500 3500 30000
Advertisement 700 1000 1400 6000 7300 20000 29900

Water 500 500 500 500 450 450 450 450 500 550 550 550 30500
Electricity 2500 2500 2500 2500 2500 2500 2200 2200 2500 2500 2500 3000 120000
Telephone 2000 2000 2000 2000 2000 2000 2000 2500 3500 3000 3000 3500 30000
Rent 10000 10000 10000 10000 10000 10000 10000 10000 1000 10000 10000 10000 120000
Transport 2000 2000 2000 2000 2500 2500 2000 3000 3000 3000 3000 3000 30000
Repair & 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
maintenance
Miscellaneous 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3500 3500 37500
Total cash outflow 218000 216000 216200 216200 218450 235950 224650 224560 2345500 234550 248050 281050 279710
0
Net cash 1348268 1399268 1459551 1513351 1570901 1619951 1689301 1738601 1819101 1899551 1975501 2274451 203071
96

23
 5.4 PROFORMA INCOME STATEMENT FOR SANBALAT BUILDING AND
CONSTRUCTION COMPANY LIMITED

5.4.1 Proforma income statement for the year ending Dec YEAR 1
Year 2020 Ksh Ksh
Sales 1,782,000
Add debtors 24,180
Less purchase 588 000
Gross profit 1,218,180
Less expense
Salaries & wages 216, 000
Insurance 24, 000
License & permits 6, 000
Stationary & postage 13, 020
Advertisement 25, 500
Water 4,750
Electricity 22, 000
Telephone 19, 400
Rent 60, 000
Transport 13 ,000
Bank charges 25,600
Repair & maintenance 6,000
Miscellaneous 27,000
Total expenses 462 270
Net profit 755,910
10/100*755,910/provision for 75,591
tax
Net profit after tax 680,319

24
 5.4.2 Proforma income statement for the year ending Dec 2
Year 2021 Ksh Ksh
Sales 2,742 000
Less purchase 914000
Gross profit 1,828,000
Less expense
Salaries & wages 600,000
Insurance 30,000
License & permits 10,000
Stationary & postage 19,650
Advertisement 33,300
Water 5,150
Electricity 23,900
Telephone 19, 400
Rent 60, 000
Transport 23,500
Bank charges 38,400
Repair & maintenance 9,600
Miscellaneous 32,000
Total expenses 904,900
Net profit 923,100
10/100*923,100/provision for 92,310
tax
Net profit after tax 830,790

25
 5.4.3 Proforma income statement for the year ending Dec 3

Year 2022 Ksh Ksh

Sales 3,504,000
Add debtors 256 283
Less purchase 1,168,000
Gross profit 2,592,283
Less expense
Salaries & wages 1,200,000
License & permits 36,000
Stationary & postage 30,200
Advertisement 57,000
Water 6,000
Electricity 3,000
Telephone 30,000
Rent 120,000
Transport 30,000
Bank charges 40,000
Repair & maintenance 12,000
Miscellaneous 37,500
Total expenses 1,582,000
Net profit 1,010,083
10/100*1,010,083/provision 10,1008
for tax
Net profit after tax 909 075

26
 5.5 Proforma balance sheet for SANBALATBuilding and Construction company limited

5.5.1 Proforma balance sheet as at 31st Dec 2024

Fixed assets KSH KSH Liabilities Ksh Ksh
Furniture 45,200 Capital + profit 60,363
Computer 25,000 Gross profit 680,319
Tools & Equipment 36,200 582,576
Total fixed assets 106,400

Current assets Current liabilities

Debtors 24,180 Bank loan 80,000
Cash in hand 26,673 Creditors 94,677
Cash in bank 600,000
Stock 37,380 Total current 174,677
Total current assets 688,233 liability
Total assets 854,996 Total liabilities 854,996

27
 5.5.2 PROFORMA BALANCE SHEET AS AT 31ST DEC 2024
Fixed assets KSH KSH LIABILITIES KSH KSH
Furniture & fitting 45,200 Capital + net profit 392,173
Computer 25,000 Gross profit 830,790
Tools & equipment 40,000 1222963
Total fixed assets 110,200

Current assets Current liabilities

Debtors 1351268 Bank loan 120,000
Cash in hand 1461468 Creditors 118,505
Stock Total current / 238505
Total current assets liabilities
Total assets Total liabilities 1461468

5.5.3 PROFORMA BALANCE SHEET AS AT 31ST DEC 2025

Fixed assets KSH KSH LIABILITIES KSH KSH

28
Furniture & fitting 60200 Capital + net profit 1,808 859
Computer 50,000 Gross profit 909 075
Tools & equipment 45,000 2717934
Total fixed assets 155,200
Current assets Current liabilities
Debtors 256283 Creditors
Cash in hand 274451 20,000
Stock 200000 Total current /
Total current assets 730,734 liabilities 20,000
Total assets 885,934 2,737,934

29
5.6FINANCIAL ANALYSIS

5.6.1 BREAK EVEN FOR THE YEAR 2024

FIXED COSTS VARIABLES COSTS
Item Cost Item Costs
Salaries & wages 216,000 Stationary postage 13,020
Insurance 24,000 Advertisement 25,500
License & permits 6,000 Water 4,750
Rent 60,000 Electricity 22,000
Repair & maintenance 6,000 Telephone 19,400
Bank charges 25,600 Transport 13,000
Miscellaneous 27,000
Purchases 58,800

TOTAL 337,600 183,470

Break even =

= Ksh. 562,66

30
5.6.2 BREAK EVEN FOR THE YEAR 2024
FIXED COSTS VARIABLES COSTS
Item Cost Item Costs
Salaries & wages 216000 Stationary postage 19650
Insurance 24000 Advertisement 33300
License & permits 6000 Water 5150
Rent 60000 Electricity 23900
Repair & maintenance 6000 Telephone 19400
Bank charges 25600 Transport 23500
Miscellaneous 32000
Purchases 914000

TOTAL 337,600 1,070,900

Break even = Fixed Cash = 74800

1-Variable cost = 1-1070900

= sale s- 274200

= Ksh. 1,228,243

31
5.6.3 BREAK EVEN FOR THE YEAR 2025
FIXED COSTS VARIABLES COSTS
Item Cost Item Costs
Salaries & wages 1200000 Stationary postage 30200
Insurance 36000 Advertisement 57000
License & permits 120000 Water 6000
Rent 60000 Electricity 29900
Repair & maintenance 12000 Telephone 30500
Transport 30000
Miscellaneous 37500
Purchases 1,168,000

TOTAL 1,428,000 1,389,100

Break even = Fixed Cash = 1428000

1-Variable cost = 1-1389100

= sale s- 3504000

= Ksh. 2,299,536

5.7 DESIRED FINANCING

ITEM AMOUNT
Preparation 100,000
Working capital 600,000
Fixed assets 300,000
TOTAL 1,000,000
5.8 PROPOSED CAPITALIZATION
Owner’s contribution =400,000
Bank loan = 600,000
Total capital =Ksh1, 000,000

32
5.9 EXPECTED PROFITABILITY RATIO
Gross profit margin for the First 3 years

Year 1
Gross profit = sales-total direct cost
= 1,782,000-462,270
Ksh 1,319,730

Gross profit margin =

=
= 74.06%
Year 2
Gross profit = sales-total direct cost
= 2742000-904900
Ksh. 1,837,100

Gross profit margin =

=
= 67%
Year 3
Gross profit = sales-total direct cost
= 3 504 000- 1 582,000
Ksh 1,922,000

Gross profit margin =

=
= 55%

33