BUSINESS NAME: TUMMAINI HARDWARE

PRESENTER: AMBROSE WAMALWA BARASA

INDEX NO: 6161030132

COURSE: DIPLOMA IN ACCOUNTANCY

EXAM CENTER: THE SIGALAGALA NATIONAL POLYTECHNIC

CENTER CODE: 616103

SUPERVISOR: SHIPAAKA PROTUS

EXAM SERIES: JULY,2024

PRESENTED TO: THE KENYA NATIONAL EXAMINATION

COUNCIL FOR THE AWARD OF DIPLOMA IN ACCOUNTANCY

Table of Contents
DEDICATION............................................................................................................................................3
ACKNOWLEDGEMENT.............................................................................................................................4
EXECUTIVE SUMMARY.............................................................................................................................8
CHAPTER ONE..........................................................................................................................................9
BUSINESS NAME......................................................................................................................................9
1.0 BUSINESS DESCRIPTIONS...................................................................................................................9
1.0.1 BUSINESS NAME.............................................................................................................................9
1.1 VISION AND MISSION........................................................................................................................9
1.1.1 MISSION..........................................................................................................................................9
1.1.2 VISION.............................................................................................................................................9
1.2 BUSINESS LOCATION, ADDRESS AND LOGO......................................................................................9
1.3 FORMS OF BUSINESS OWNERSHIPS.................................................................................................10
1.4 TYPE OF BUSINESS...........................................................................................................................11
1.5PRODUCT AND SERVICES..................................................................................................................11
1.6JUSTIFICATION OF OPPORTUNITY.....................................................................................................11
1.7TYPE OF INDUSTRY...........................................................................................................................12
1.8 GOALS OF THE BUSINESS.................................................................................................................12
1.8.1 SHORT TERM GOALS.....................................................................................................................12
1.8.2 MEDIUM TERM GOALS.................................................................................................................12
1.8.3 LONG TERM GOALS.......................................................................................................................13
1.9 ENTRY AND GROWTH STRATEGY.....................................................................................................13
1.9.1 ENTRY...........................................................................................................................................13
1.9.2 GROWTH STRATEGY.....................................................................................................................13
1.10 SWOT ANALYSIS.............................................................................................................................13
1.10.1 STRENGTH...................................................................................................................................14
1.10.2 WEAKNESS..................................................................................................................................14
1.10.3 OPPORTUNITIES..........................................................................................................................14
CHAPTER TWO.......................................................................................................................................15
2.0 MARKETING PLAN............................................................................................................................15
2.1 CUSTOMERS.....................................................................................................................................15
2.2 COMPETITOR ANALYSIS...................................................................................................................15
2.3 MARKET SHARES..............................................................................................................................16
2.4 PROMOTIONAL AND ADVERTISING STRATEGY................................................................................17
2.5 PRICING STRATEGY..........................................................................................................................17
2.6 SALES TACTICS.................................................................................................................................17
2.7 DISTRIBUTION STRATEGY.................................................................................................................18
2.8 CUSTOMER SERVICES.......................................................................................................................18
CHAPTER THREE.....................................................................................................................................19
3.0 ORGANIZATION STRUCTURE............................................................................................................19
3.1 THE ROLES OF MANAGING TEAM....................................................................................................20
3.1.1 THE C.E.O......................................................................................................................................20
3.1.2 THE MANAGING DIRECTOR...........................................................................................................20
3.1.3 SENIOR ACCOUNTS OFFICER.........................................................................................................20
3.1.4 MARKETING DIRECTOR.................................................................................................................20
3.1.4 CHIEF SECURITY OFFICER..............................................................................................................21
3.1.6 THE CLERK.....................................................................................................................................21
3.1.7 THE ORDINARY STAFF...................................................................................................................21
3.2 THE QUALIFICATIONS......................................................................................................................21
3.2.1 THE C.E.O......................................................................................................................................21
3.2.2 THE MANAGING DIRECTOR...........................................................................................................22
3.2.3 THE SENIOR ACCOUNTS OFFICER..................................................................................................22
3.2.4 THE MARKETING DIRECTOR..........................................................................................................22
3.2.5 THE SENIOR SECURITY OFFICER....................................................................................................22
3.2.6 THE COMMON STAFF....................................................................................................................22
3.4 RECRUITMENT, TRAINING AND PROMOTION..................................................................................23
3.5 REMUNERATION AND INCENTIVES..................................................................................................24
3.6 THE LEGAL AND STATUTORY REQUIREMENTS.................................................................................24
3.7 SUPPORTING SERVICES....................................................................................................................25
CHAPTER FOUR......................................................................................................................................26
PRODUCTION PLAN AND OPERATIONS..................................................................................................26
4.1 PRODUCTION PLAN FACILITIES AND CAPACITY UTILIZATION..........................................................26
4.2 PRODUCTION AND OPERATION STRATEGY......................................................................................26
4.3 PRODUCTION PROCESS....................................................................................................................27
4.4 REGULATIONS THAT MAY AFFECT OPERATIONS..............................................................................28
4.5 OPERATION TIMETABLE AND WORK SCHEDULE..............................................................................28
CHAPTER FIVE........................................................................................................................................29
FINANCIAL PLAN:...................................................................................................................................29
5.1 PRE- OPERATION EXPENSES:............................................................................................................29
5.2 CASH FLOWS:...................................................................................................................................30
5.3 PROFITABILITY RATIOS.....................................................................................................................34
DECLARATION

I hereby declare that this is the original copy of my own work from the knowledge acquired in
class , researches and findings in various fields and has never been submitted to KNEC for award
of certificate

Presented by :AMBROSE WAMALWA

Sign : …………

Date : …………

Supervised by : SHIPAAKA PROTUS………………………

Sign: ………………

Date : …………….
DEDICATION
I dedicate this piece of work to my parents, family members and friends for their financial
support and encouragement they offered to me.
ACKNOWLEDGEMENT

I acknowledge the Almighty God for the far ,protection and his faithfulness unto me since I
started this work till now .I acknowledge my parents for supporting me both financially and
maturation in life throughout the period of writing work .
EXECUTIVE SUMMARY

BUSINESS DESCRIPTION

This will contain the nameof the business, location of the business, address of the business, form
of business ownership , type of business, goods and services offered in the business, justification
of the business opportunities, the industry of the business, goals of the business and entity
growth strategies of the business

MARKETING PLAN

Here I will discuss about my customers, the market share, competition, advertising and sales
strategy which will make my business to run smoothly

ORGANIZATION AND MANAGEMENT PLAN

This contain the business manager and qualification, key personnel, recruitment, training and
promotion, enumeration and incentitives, licence permits and by laws and support service

PRODUCTION/OPERATION PLAN

This will contain production or operational facilities and capacity, production strategy,
production process and regulations affecting operations.

FINANCIAL PLAN

This will discuss about the subtopics which are the main keys for me starting up a business. This
are operation cost and working capital
CHAPTER ONE

1.0 BUSINESS DESCRIPTION

Tumaini hardware is the proposed name of my business which will be located at Bungoma –
Kakamega highway. It will be sole proprietorship form of business which will be mainly
sponsored by myself.

1.1 BUSINESS NAME AND LOGO

The name of my business will be Tumaini hardware. The name Tumaini is a Swahili word which
means giving hope whereby customers Will have hope in whatever they are purchasing. I chose
on this name because it is easy to pronounce, remember and it is attractive to customers.
 1.2 LOCATION AND ADDRESS

My business will be located at Bungoma – Kakamega highway opposite petrol station,

UKEJESHO PLAZZA ground floor room number one. My business will have a communication
address which will be easy accessible. Address will be

TUMAINI HARDWARE

P.O.BOX 309

BUNGOMA

EMAIL;ambrosewamalwa001@gmail.com

My other alternative address will be 0797566418

LUSAKA ROAD MUTREMKO ROAD

PETROL STATION

BUNGOMA-KAKAMRGA ROAD

HOSPITAL ROAD TOWN IN ROAD

TUMAINI HARDWARE

1.3 BUSINESS OWNERSHIP

My business will be a sole proprietorship form of business. It shall have one manager qualified
with a PhD in business management. The method of entry will be putting a sign post near
premises posters and also advertisement. I decided that I operate a sole proprietorship because I
would like to invest more than my starting capital. The form of business is easy to manage and
run which will give me a humble time to manage. Also profit realised from the business will be
enjoyed by myself and decision making over the business shall be upon my head.
 1.3.1 PROPRIETOR PROFILE

The owner of the business will be Ambrose Wamalwa of age 28 years an accountant officer a
holder of a diploma in accountancy certification.

NAME AGE PROFESSIONAL WORK CURRENT

QUALIFICATION ESPERIENCE RESIDENT

Ambrose 28 years An accountant 2 years Bungoma county

Wamalwa officer
Barasa

1.3.2 CAPITAL

The amount of capital that I intend to invest in Tumaini hardware is 500000 Kenyan shillings.
This amount will be raised by my own savings, friends and family members and the loan from
the bank in order to enable me run my business well.

Source amount

Personal savings 200000

Friends and family 150000

Loan from bank 150000

 1.4 TYPE OF BUSINESS

Tumaini hardware is a start-up business and intends to sell the products to customers with
moderate price.

The products will be acquired from my different suppliers as I will be dealing with a wide range
of products such as cement, nails, iron sheets, spades, wheelbarrows which will be supplied in
differently. It is a unique business which will involve the provision of service six days in a week
and handling customers in a proper way.

1.5 PRODUCTS AND SERVICES

My business will offer the following products services; cement, iron sheets, nails of all inches,
wheelbarrows, spades , all types of wires and the list is long.

Those who will buy in bulk will be offered free services. Since it is a hardware, I will provide
quality products for customers to be happy with the products. When customers makes purchases
I will be in a position to offer quality incentives like t-shirts printed with the business name
which is also a way of advertising.

1.6 JUSTIFICATION OF BUSINESS OPPORTUNITY

I chose the title Tumaini hardware because it is unique as compared to the competitors title. The
security around the premises where my business is located is good. The population is so
supportive towards my business and there is also a good transport and communication network
around my hence making it easy to run and manage it.

A part from this my workings hours will be differ from those of my competitors, I will make
sure that my customers are satisfied with the items they buy. I will also ensure I sell the items
with a fair price than the competitors.

1.7 THE INDUSTRY

My business will be under building and construction industry whereby all materials that are used
in the building and construction are available. This industry will largely occupy my business
because all the materials that my business will be requiring will be coming from this industry
hence it’s very largely depended on.
 1.8 BUSINESS GOALS AND OBJECTIVES

In this business I intended to achieve the following goals

1.8.1 SHORT TERM GOALS

I want to be my own boss, create job opportunities in order to earn a living and satisfy customers
needs by supplying goods and services to them

1.8.2 LONG TERM GOALS

I intended to open up more branches of my business , create more job opportunities in order to
improve and earn a living for the people. Purchase of lorry which will met transportation of
goods and services to make it easier.

1,9 ENTRY AND GROWTH STRATEGY

I will make by business popular and known through advertising using posters, printed t-shirts
and signboards. Increase in sales and materials will lead to expansion of my business by using
retained earnings and profit. I will offer free services to those who will be buying on large scales.

1.9.1 SWOT ANALYSIS

AREA STRENGTHS WEAKNESS OPPORTUNITY THREATS

ORGANIZATIO -readily -high payment of -hiring of -inadequate

N available labour salaries workforce funds
MANAGEMENT
-cheap labour -mostly -employement of
unskilled some labour
force

FINANCE -acces of finance -equity not -openning fixed -being insolvent

is easy generating deposit account competitors have
returns of capital higher captive
-availability of
loans from -the loan
financial repayment is
 institution cumbersome

STAFF Qualified staff Inadequate Availability of competitors

that is creative qualified staff skilled and
and innovative unskilled labour

OPERATION Good Difficult Managerial Competitors,

PLAN infrastructure, operation by tactics, high capital
accessibility of manager entrepreneur
the location by tactics
customers

MARKETING Advertising and Lack of targated Surplus demand High

offering quality clients, of product competition, low
products, well inadequate funds price of products
informed of for
market trends advertisement
through research

CHAPTER TWO
2.0 MARKETING PLAN

2.1 CUSTOMERS

Tumaini hardware will serve all types of customers of all level. My major target is on locals
where I think they will largely buy my products like those building in Bungoma National
Polytechnic and around. My hardware will sell quality and quantity products to customers and
they will pay for their products either on the counter by selling cash for the low and middle level
earners but for the higher level earners they will use the checks or credit cards.

2.2 MARKET SHARE

The size of the market will be 100% where by Tumaini hardware will target to occupy 50% of
the market while other hardware like Faulu will occupy 30% and Ebenezer hardware will occupy
20% of the share.

The business will be closing at 9.00 pm unlike others which always closes at 7.30pm to 8.00pm.
My hardware will be opening at 7.00am compared to other competitors who open at 8.30am so
as to achieve my target and get more profit

Sales

Tumaini hardware 50
Faulu hardware
Ebenezer hardware

2.3 COMPETITION
My main competitors will be Faulu hardware and Ebenezer hardware. My business will
encourage use of modern skills and technology in production and much sells leads to higher
quality production and much sales.

I know Tumaini will not encounter stiff competition due to our location and also workers are
committed to work hard in achievement of our goals that have been set. I will make sure that it
has enough capital and employ qualified personnel who will improve the productivity of the
business enterprise. I will also make sure that the opening and closing hours of my business
differ from the competitors to avoid stiff competition.

2.4 PRICING STRATEGY

At the start of the business, I will offer the goods and services at a discount prices to lure
customers into a business deal. The money after sell will be received in cash form, cheque and
through M-pesa services. My business will not standardize the price but will encourage
negotiation with customers.

2.5 ADVERTISING AND SALES PROMOTION

Tumaini hardware will use different ways of advertising in order to attract as many customers as
possible. Some of the ways will be use of signboard, radio and television stations, stickers,
magazines, printed t-shirts and it will make my business to be known all over.

2.6 SALES TACTICS

Tumaini hardware will be using motor vehicles to reach many customers and sending
personalized messages. I will also be demonstrating the functions and importance of my products
and encouraging customers to come for more other products and services.

2.7 DISTRIBUTION STRATEGY

My business will employ a direct distribution channel where I shall be dealing directly with the
customers all through. This will enable in bonding with them to build genuine relationships with
them. I will also buy a pick up for transporting goods to distance customers at a negotiable price
and carts to supply products to the nearby customers

CHAPTER THREE
 3.0 ORGANIZATION AND MANAGEMENT PLAN

The diagram below illustrate the organizational structure of Tumaini hardware.

GENERAL MANAGER

ASS. MANAGER SUPPLY MANAGER ACCOUNT CLERK SUPERVISOR

3.1 KEY PERSONNEL

S/N JOB TITLE QUALIFFICATION DUTIES AND WAGES AND

AND RESPONSIBILITIES SALARY
REQUIREMENT

1 GENERAL -Should be 30 years -creating and 40,000

MANAGER and above managing business
budget
-Should be able to
perform duties such -overseeing business
as analyzing and opportunities
estimating the
-issuing payrolls
number of customers

2 ASSISTANT -should be 30 years Analyse, estimate the 40,000 and

MANAGER and above number of customers allowance of
3000
-should be a Kenyan
citizen

3 ACCOUNT CLERKS Should able to update -update business 40,000 and

business record and records allowance of
financial records 2000
-update financial
 records

4 SUPPLY MANAGER -should have skills in -update business 70,000 and

business and development allowance of
agraduate 2000
-update business
-should be able to records
update business
records and business
development

TOTAL 213,200

3.2 OTHER PERSONNEL

S/N JOB TITLE QUALIFFICATION DUTIES AND WAGES AND

AND RESPONSIBILITIE SALARY
REQUIREMENT S

1 STORE Must be 20 years -update all staff 50,000 and

KEEPER and above development allowance of
2000
-store verification

2 SUPPLIERS -must have driving Transportation of 50,000 and

licence motor vehicles to allowance of
various destination 2000
-must have 3 years
experience in
driving

TOTAL 104,200
3.3 TRAINING, RECRUITMENT AND PROMOTION

My business will recruit the members through the following ways

 Using newspaper
 Through interview
 Application of forms

The business will train it’s members so that they gain skills and knowledge required to increase
the profits.

The training Will be by the role of playing and outdoor training. The business will promote its
workers after every two years based on performance education level.

3.4 RENUMERATION

PERSONNEL NUMBER BASIC TYPES OF MONTHLY

SALARIES ALLOWANCES ALLOWANCES

GENERAL 1 40,000 medical 4000

MANAGER

ASS. 1 40,000 housing 3000

MANAGER

ACCOUNT 1 40,000 housing 2000

CLERK

SUPPLY 1 70,000 housing 2000

MANAGER

STORE 1 50,000 housing 2000

KEEPER

SUPPLIERS 1 50,000 travelling 2000

TOTAL 6 290,000 15000

3.5 LICENCES, PERMITS AND BY LAWS

For smooth running of my business within an organisation must adhere to the laws and
regulations governing the business in terms of providing products. I will ensure I get a truck
licence from local government offices and licenced.

3.6 SUPPORT SERVICES

Tumaini hardware will have the advisory services from the business experts and the potential
advisors who will stimulate proper running of the business to attain it’s goals in future.

II Security

This service will be offered by the mwangaza being the major security company.

Address:www.mwangaza.co.ke

Mwangaza Ltd P.O.BOX 89 Bungoma

They will ensure that they report unwanted people around the premises to the authority and
patrol the whole night to make sure that the premises is well safe guarded. Premium pay rolls per
year ksh.210000.

II Insurance

The services will be provided by the mwangaza insurance company to the business.

Address :Mwangazacamp@gmail.com

Mwangaza insurance company P.O.BOX 249 Bungoma.

CHAPTER FOUR

4.0 OPERATIONAL PLAN

At the start -up, I will safety most of the work before the business start to flourish.

4.1 PRODUCTS/SERVICE DESIGN

Long lasting motor vehicles engines carrying business logo made in Dubai by Mwangaza
company.
Tyres
It will be made in Mombasa Kenya company and it takes 60,000 to obtain one pair of tyre
Spare parts
They will be imported from the United States of America company and it will take 30,000 to
obtain them.
CCTVS
They will be made in Korea republic company. It will take 100,000 to obtain one CCTV which
are useful as security to our business.
4.2 PRODUCTION FACILITY

S/N ITEM SUPPLIER QUANTITY UNIT COST TOTAL

DESCRIPTION COST

1 Legitimate United state 20 boxes 70,000 1,400,000

spare parts supplier

2 Tyres Mombasa 7 pairs 560,000 560,00

Kenya
supplier

3 CCTVS Kenya 10 pairs 200,000 200,000

republic
company

4 Long lasting Dubai 12 pairs 2,400,000 2,400,00

engines supplier
TOTAL 4,560,000

4.3 PRODUCTION FACILITY, REPAIR AND MAINTENANCE

ITEM DESCRIPTION WHO TO COST OF

REPAIR REPAIR

1 Legitimate Mombasa Kenya 100,000

engine company

2 Tyres Along Kisumu 200,000

road company

3 CCTVS The Nairobi 10,000

satellite company

4 Spare parts Eldoret company 20,000

TOTAL 230,000

4.4 PRODUCTION STRATEGY

Here is the cost that don’t change with the production
Variable cost=500000
Fixed cost+variable cost
330000+200000
Total cost=530000

4.5 PRODUCTION PROCESS

Step 1: assembling all the equipments and materials
Step 2: location of strategic position for the easy access of customers to buy equipments
Step 3: each appliance is divided in unviolated platform
Step 4: security guards are brought up to protect our property from being stolen
Step 5: cost operation and service is not expensive
Step 6: upon setting of this industry of selling motor vehicles the accomodation of the visitors
when come from different places are also available.

4.6 REGULATIONS AFFECTING OPERATIONS

The owner of the proposed business will abide by the regulations for the business to run
smoothly.
The government requires that the business should have a business licence permit. This is the
general permission on how to run the business in the country. It operates in the manner that it has
a life of a year and the cost is 7000
Safety regulation act
I will install a CCTV in order to keep a close eye on the people getting in and out of the
premises. There will be fire extinguisher incase of fire outbreak.
Environment act
Disposal of empty stock bags will be by recycling them and some of them that cannot be
recycled be burnt. There will be dustbin to enhance easiy disposal of waste.
Health regulation
All the staff members of the proposed business will be covered by the NHIF and while all the
working places will be provided with safety attires which will protect them from injuries. This
will be realised by the use of safety boots and cloves together with the use of other necessary
clothes.

CHAPTER FIVE
5.0 FINANCIAL PLAN
INTRODUCTION
This strategic plan is showing on how Tumaini hardware will be operating to achieve its future
goals. The business will create a working schedule on which it will be able to show assets,
finance and liabilities will be managed.

5.I PRE-OPERATIONAL COST

ITEM COST

Business registration 5000

Trading licence and permit 2500
Rent deposit 5000
Insurance policy 1500
Machine, equipment, tools 10000
Stock 3000
Installation of electricity 50000
Water installation 4000
Telephone installation 15000
Internet installation 1000
TOTAL COST 87000

5.2 WORKING CAPITAL

Working capital=current assets-short term liabilities
Item Cost

Stock 50000
Debtors 10000
Cash at hand 100000
Cash at bank 150000
Total working capital 310000

Liabilities Cost
Creditors 50000
Short term loan 100000
Total 150000

Working capital=310000-150000
=ksh160000

5.3 PROJECT CASH FLOW FOR YEAR ONE

ITE JAN FEB MAR APRI MAY JUNE JULY AUG SEPT OCT NOV DE TOT
M C AL
Capit 500,0
al 00
Sales 350,0 20000 14800 16750 25000 40000 390,0 40500 40200 42000 4500 37825
200000
00 0 0 0 0 0 00 0 0 0 00 00
Debt 1000 5000 27150
50000 30000 40000 7500 20000 3500 4000 1500 25000 30000
ors 0 0 0
Total
8600 88510 80870 83990 89280 10546 12031 13310 13801 14160 1425 12946
cash 849600
00 0 0 0 0 00 00 00 00 20 720 640
flow
Purch 4000 10000 15000 2000 87500
5000 20000 15000 25000 30000 70000 85000 90000
ase 0 0 0 00 0
Paym
ent to 5000 1000 64500
60000 30000 45000 30000 35000 50000 55000 50000 60000 80000
credit 0 00 0
ors
salari 3140 3140 37680
31400 31400 31400 31400 31400 31400 31400 31400 31400 31400
es 0 0 0
rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
water 3500 3500 2500 5000 2800 2800 3500 2000 2000 1500 3500 3500 35600
electr
4000 4500 4000 2500 3500 3500 5000 3500 3500 3500 3000 2500 43000
icity
trans
2000 2500 2200 3500 2600 2600 1500 3000 3000 1500 2000 5000 31400
port
telep
1000 1500 2000 2800 1500 1500 2500 3500 3500 4500 2500 3000 29800
hone
statio 1000
4000 4000 5000 2000 2500 5500 8000 6000 6000 6000 6500 66000
nery 0
Loan
1500 10000 1200 61100
paym 20000 25000 5000 40000 50000 6000 45000 90000 95000
0 0 00 0
ent
Intere 5000 1000 75400
52000 60000 50000 60000 65000 30000 25000 80000 90000 92000
st 0 00 0
Repai
5000 5000 4000 3000 25000 5000 1100 5000 45000 35000 2500 2500 46180
r
Adve 4500 4000 3500 6000 2000 3000 10000 2500 2300 3600 4000 1500 46900
rtisin
g
Taxes 3000 2500 1500 2500 1000 1200 1500 1100 1600 3000 3500 2500 24900
Mail 1500 1500 1000 3000 800 1200 6600 7000 1800 2000 1900 3000 31300
Other
5000 6000 2000 15000 6000 1500 10000 2500 2800 2500 1500 3000 44300
s
Total
2249 25440 19910 21710 24170 24550 27860 37790 41408 49030 5929 37211
out 184700
00 0 0 0 0 0 0 0 0 0 00 80
flow
Net 6351 63070 60960 62280 65110 80910 92450 95310 96602 92572 8328 92254
664900
Cash 00 0 0 0 0 0 0 0 0 0 20 60

PROJECT CASH FLOW YEAR TWO

ITE JAN FEB MAR APRI MAY JUNE JULY AUG SEPT OCT NOV DEC TOTA
M L
Bal 8329 63392 42872 37222 33110 35922 41942 45762 47862 52522 56252 60292 59842
b/d 20 0 0 0 2 0 0 0 0 0 0 0 40
Sales 3500 22000 19000 20000 25000 25300 26000 25900 27200 27500 27900 28500 32895
 0 0 0 0 0 0 0 0 0 0 0 0
Debto 1500 43300
20000 22000 21000 26000 25000 44000 35000 60000 55000 54000 60000
rs 0 0
Total
8833 67592 64072 59322 58702 63722 71942 75162 81062 85522 89552 94792 89977
cash
20 0 0 0 0 0 0 0 0 0 0 0 40
flow
Purch 5000 74900
55000 51000 56000 60000 61000 65000 62000 70000 75000 68000 70000
ase 0 0
Paym
ent to 6000 67900
50000 65000 61000 50000 48000 45000 56000 58000 60000 61000 65000
credit 0 0
ors
salarie 3140 37680
31400 31400 31400 31400 31400 31400 31400 31400 31400 31400 31400
s 0 0
rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
water 1500 1500 2000 2500 2400 3200 3000 2500 1600 1700 2200 3300 27400
electri
2000 1500 2200 1100 1000 2000 1700 2000 2500 1100 1300 1600 20,000
city
transp
1500 2000 1600 1900 1500 1600 2200 2500 2100 2300 2500 2600 24300
ort
teleph
1000 1200 1100 1500 1300 3200 1500 1400 1300 1200 1500 1600 17500
one
statio
3000 2500 1500 1900 1500 2000 2500 2300 2600 3000 1500 2900 27200
nery
Loan
2000 31400
paym 25000 22000 21000 25000 18000 30000 27000 29000 30000 32000 35000
0 0
ent
Intere 6000 77100
61000 63000 65000 64000 28000 68000 70000 74000 71000 72000 75000
st 0 0
Repai
4000 3000 6000 2000 1500 7000 2000 25000 2200 2400 3000 4000 40100
r
Adver
2000 1500 1700 2500 1600 1700 1900 2000 1600 3500 3300 3900 27200
tising
Taxes 5000 4500 6000 2000 2500 2200 2500 6100 2100 2200 2400 3500 41000
Mail 1000 1100 500 900 1100 3000 1500 1300 2000 1500 2000 1900 17500
Other 5000 4000 5500 2500 3500 3500 1600 2000 3000 4400 6000 5000 46500
 s

Total
2494 24720 26850 28220 22780 21780 26180 27300 28540 29270 29260 31520 32136
out
00 0 0 0 0 0 0 0 0 0 0 0 00
flow
Net 6359 42872 37222 31102 35922 41942 45762 47562 52522 56252 60292 63272 57841
Cash 20 0 0 0 0 0 0 0 0 0 0 0 40

PROJECT CASH FLOW YEAR THREE

ITE JAN FEB MAR APRI MAY JUN JUL AUG SEPT OCT NO DEC TOTA
M L E Y V L
Bal 6327 7407 77782 76782 68442 70012 72402 72322 67972 69582 7079 70222 85365
b/d 20 20 0 0 0 0 0 0 0 0 20 0 40
Sales 4000 3000 25500 20000 31000 30500 30000 26550 31700 32000 3250 34000 36375
00 00 0 0 0 0 0 0 0 0 00 0 00
Debto
2000 1500 2200 3000 2500 1600 2800 1700 2200 2400 2500 3000 27400
rs
Total
1034 1042 10350 97082 99692 10067 10268 99042 99892 10182 1035 10452 12201
cash
720 220 20 0 0 20 20 0 0 20 420 20 440
flow
Purch 6000 6500 7500 83400
62000 70000 71000 65000 68000 71000 73000 76000 78000
ase 0 0 0 0
Paym
ent to 6500 5000 7200
52000 60000 58000 68000 70000 72000 61000 68000 75000 77000
credit 0 0 0
ors
salarie 4300 4300 4300
43000 43000 43000 43000 43000 43000 43000 43000 43000 51600
s 0 0 0
rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000
water 2000 1800 2500 1600 1800 1700 1900 2200 2000 1900 1900 2000 23300
electri
2000 1500 1200 1500 1600 1500 1300 2100 1600 1300 1400 1500 18500
city
transp
2000 1500 1100 1600 1900 2000 2500 22000 2400 2600 3000 3100 25900
ort
teleph
1500 1200 1600 1300 2010 1600 1700 1500 1600 1500 1600 1500 18600
one
statio
5000 4000 5300 5500 6000 5200 5400 6200 5800 6000 6200 6200 65500
nery
Loan
2900 1500 2500 25900
paym 25000 16000 19000 26000 20000 19000 18000 22000 25000
0 0 0 0
ent
Intere 7000 6500 8000 83900
60000 72000 78000 50000 69000 75000 72000 68000 80000
st 0 0 0 0
Repai
500 4500 4300 4000 4100 5100 5600 2600 5200 600 5500 5500 47500
r
Adver
2500 4500 4000 5000 5000 21000
tising
Taxes 2500 2000 3000 2200 3000 32000 3000 3900 4000 4500 4500 4500 40300
Mail 1500 900 500 700 600 1000 1200 1000 800 1400 900 900 11400
Other
6000 4500 3500 3000 2800 5200 6200 3500 4200 5500 4200 6000 54600
s
Total
2940 2644 26720 28640 29680 28270 30360 31070 30310 31030 3332 34120 35936
out
00 00 0 0 0 0 0 0 0 0 00 0 00
flow
Net 7407 7778 76782 68442 70012 72402 72322 67972 69582 70792 7022 70402 86078
Cash 20 20 0 0 0 0 0 0 0 0 20 0 40

5.4 PRO-FORMA INCOME STATEMENT

ITEM YEAR 1 YEAR 2 YEAR 3

Sales 3782500 3280500 3637500

Less purchase (8750000) (749500) (834000)
Gross profit 2907500 2531500 2803500
Less expenses
Creditors 645000 679000 77100
Salaries 376500 376800 516000
Rent 60000 24000 48000
Water 35600 27400 23300
Telephone 29800 17800 18600
Electricity 43000 20000 18500
Advertising 46900 27200 21000
Stationeries 66000 27200 65500
Postage 31300 17800 11400
Transport 31400 24300 25900
Loan payment 611000 314000 259000
Interest 754000 77000 839000
Repair 46180 40100 47500
Net profit before tax 130520 164900 1348800
10% tax 13052 16490 13880
Net profit after tax 117468 148410 124920

5.5 PRO-FORMA BALANCE SHEET

PARTICULARS AMOUNT
Fixed assets

Machine 600000
Buildings 194000

Current assets
Cash at bank 769000
Cash at hand 640000
Debtors 300000
Stock 100000

Total assets 2603000

Current liability
Creditors 350000
Bank overdraft 750000
Owners equity 1503000
2603000

5.6 BREAK-EVEN POINT

Total contribution margin

Sales-variable cost
BEP=fixed cost/variable cost

=937200/2643300

=0.355 or 0.355x100%=35.5%

5.7 DESIRED FINANCE

Item Amount

Starting capital 500000

Working capital 160000

Pre operation cost 87000

Total desired finance 747000

5.8 PEROPOSED CAPITALIZATION

Source Amount

Personal savings 600000

Relative contribution 420000
Bank loan 500000
Total 1520000