BUSINESS NAME : ELECTRAL WATERS SUPPLY ENTERPRISE

PRESENTER : WAIRIMU GERALD MAINA

EMAIL : geraldkahiga2030@gmail.com

TELEPHONE : 0797099704

INDEX NO : 2291010916

PAPER NAME : BUSINESS PLAN

PAPER CODE : 1305/316

PRESENTED TO : KENYA NATYIONAL EXAMINATION

COUNCILFOR THE AWARD OF CRAFT
CERTIFICATE IN PLUMBING

EXAMINATION SERIES: JULY 2024

SUPERVISORS NAME : Mr. LINUS

DECLARATION
I declare that the project for Wairimu Gerald Maina and has not been presented to any other
institution for award of any certificate.

CANDIDATE NAME…………………………..

SIGN………………………………………………….

DATE…………………………………………………

SUPERVISOR NAME ……………………………

SIGN……………………………………………........

DATE……………………………………………………

i
DEDICATION
I dedicate this business plan to my mother Jemimah Wairimu and, brother John Njoroge.

Without forgetting my fellow colleagues for supporting me with the necessary materials I
needed. My supervisor Mr. Linus who mentored me throughout the process of the research. He
was a great source of motivation and encouragement.

ii
ACKNOWLEDGEMENT
I would like to express my great appreciation to all mighty God for he has enabled me to reach
this far. I also acknowledge my family for the great support they have offered to me especially
my mum.

I also acknowledge my teacher for the assistance gave me. Finally I appreciate my friend for the
ideological assistance they offered to me.

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Table of Contents
DECLARATION............................................................................................................................................i
DEDICATION...............................................................................................................................................ii
ACKNOWLEDGEMENT............................................................................................................................iii
EXECUTIVE SUMMARY...........................................................................................................................1
1.0 BUSINESS DESCRIPTION................................................................................................................1
2.0 MARKET PLAN.................................................................................................................................1
3.0 ORGANIZATION AND MANAGEMENT PLAN............................................................................1
4.0 OPERATION AND PRODUCTION PLAN.......................................................................................1
CHAPTER ONE............................................................................................................................................2
BUSINESS DESCRIPTION..........................................................................................................................2
1.1 BUSINESS NAME..............................................................................................................................2
1.1.1 VISSION.......................................................................................................................................2
1.1.2 MISSION......................................................................................................................................2
1.1.3 CORE VALUE.............................................................................................................................2
1.2 BUSINESS LOCATION AND ADRESS...........................................................................................2
1.2.1 BUSINESS ADRESS............................................................................................................3
1.2.2 LOCATION MAP........................................................................................................................3
1.3 FORM OF BUSINESS OWNERSHIP................................................................................................4
1.4 TYPE OF BUSINESS..........................................................................................................................4
1.5 PRODUCTION AND SERVICES......................................................................................................4
1.6 JUSTIFICATION OF THE BUSSINES..............................................................................................4
1.6.1 STRENGTH..................................................................................................................................4
1.6.2 WEAKNESS.................................................................................................................................5
1.6.3 OPPORTUNITY...........................................................................................................................5
1.6.4 THREATS.....................................................................................................................................5
1.7 THE INDUSTRY.................................................................................................................................5
1.8 BUSINESS GOALS............................................................................................................................5
1.8.1 SHORT TERM GOALS...............................................................................................................5
1.8.2 LONG TERM GOALS.................................................................................................................6
1.9 THE ENTRY AND GROWTH STRATEGY.....................................................................................6
1.9.1 Entry plan......................................................................................................................................6
1.9.2 Growth plan..................................................................................................................................6
CHAPTER TWO...........................................................................................................................................7
2.0 MARKET PLAN.....................................................................................................................................7
2.1 CUSTOMERS......................................................................................................................................7

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 2.2 MARKET SHARE...............................................................................................................................7
2.3 COMPETITION..................................................................................................................................8
2.3.1 IDENTIFY COMPETION............................................................................................................8
2.3.2 COPIYING WITH COMPETION................................................................................................8
2.4 METHOD OF PROMOTION..............................................................................................................8
2.5 PRICING STRATEGY........................................................................................................................9
2.6 SALES TACTICS................................................................................................................................9
2.7 DISTRIBUTION STRATEGY............................................................................................................9
2.8 CUSTOMER SERVICES....................................................................................................................9
CHAPTER THREE.....................................................................................................................................10
3.0 ORGANIZATION AND MANAGEMENT PLAN..........................................................................10
3.1 MANAGEMENT TEAM..................................................................................................................10
3.2 ORGANIZATION CHART...............................................................................................................10
3.2 KEY MANAGEMENT.....................................................................................................................11
3.2.1 GENERAL MANAGER.............................................................................................................11
3.3 OTHER PERSONNEL......................................................................................................................11
3.3.1 SALES MANAGER...................................................................................................................11
3.3.2 ACCOUNTANT.........................................................................................................................12
3.3.3 STOREKEEPER.........................................................................................................................12
3.3.4 SECRETARY.............................................................................................................................13
3.3.5 CLEANER..................................................................................................................................13
3.3.6 WATCHMAN.............................................................................................................................13
3.4 RECRUITMENT/TRAINING/PROMOTION..................................................................................13
3.5 REMUNIRATION AND INCENTIVES..........................................................................................14
Incentives.................................................................................................................................................14
3.6 LICENCE, PERMITS AND BY LAWS...........................................................................................15
3.7 SUPPORT AND SERVICES............................................................................................................15
CHAPTER FOUR.......................................................................................................................................17
4.0 PRODUCTION PLAN..........................................................................................................................17
4.1 PRODUCTION, FACILITIES AND CAPACITY............................................................................17
4.1.2 FIRM LAYOUT.........................................................................................................................18
4.2 PRODUCTION STARATEGY.........................................................................................................18
4.3 PRODUCTION PROCESS...............................................................................................................19
4.4 GOVERNMENT REGULATION.....................................................................................................19
CHAPTER FIVE.........................................................................................................................................20
5.0 FINANCIAL PLAN...........................................................................................................................20

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5.1 PRE–OPERATIONAL COST...........................................................................................................20
5.2WORKINGCAPITAL........................................................................................................................20
5.3 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING DEC 2023.....................22
5.4 PROFOR MAIN COME STATEMENT...........................................................................................23
5.5 PRO–FOR MAIN COME STATEMENT OF FINANCIAL POSITION.........................................24
5.6 BREAK EVEN CALCULATION.....................................................................................................25
5.6.1 BREAK–EVENPOINT...................................................................................................................26
5.7 PROFITABILITYRATTIOANALYSIS...........................................................................................26
5.8 DESIRED FINACE...........................................................................................................................27
5.9 PROPOSEDCAPITALIZATION......................................................................................................27

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EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION
The name of the business will be Lifeline Hardware and Plumbing solution and it will issue all
about plumbing services, water pressuring, blockages tank installation and others. The business
is located at Murang’a town opposite Vidhu Ramji Secondary 3km from Murang’a level 5
Hospital.

P O BOX

MURANG’A

PHONE NO: 0797099704

The business will be partnership form of business and provide high quality product to its
customers. Also provide improved modern services such as hessian toilets, improved kitchen
sink and pipes of different kind. The main objectives of the project include profit making.

2.0 MARKET PLAN

Customers of this project will be real estate agents, homeowners, facility managers, contractors
in a building construction and small business owners. The business shall plan the selling price of
the product to slightly competition than those of the competitors.

3.0 ORGANIZATION AND MANAGEMENT PLAN

The partners shall be in charge of general management. All workers shall be responsible to the
business. The business manager shall be miss carolyn a holder of certificate in plumbing
department of building. The key function of management personnel shall consist of purchasing
officer, account clerk, watchman, driver and secretary. All the management must be qualified
certificate and must be capable to carry out the work signed. There will be recruitment of
employees with qualified certificate, with qualified experience will join the team.

4.0 OPERATION AND PRODUCTION PLAN

The business shall require equipment to enhance offering of quality services to customer’s
facility which will cost the total amount of 122200/monthly. Materials requirements and out of
the total monthly labour cost 65000/and it will comprise regulation affecting it's development
such regulation include environment health and safety of workers.

1
CHAPTER ONE

BUSINESS DESCRIPTION
1.1 BUSINESS NAME
The proposed business name will be Electral Waters Supply and Enterprise life line is a name I
came up with after observing that water is the source of all life as to many humans can’t have
without water .The end gives a proper idea about the business .

Lifeline hardware and solutions aim is to come up with ways of solving problems in pipes
drainage system and to supply clean water to the customers. Finally in order to know about the
business I will advertise through word of mouth, billboards, posters, newspapers and also
printing shirts the name of the business.

1.1.1 VISSION
The business will be intended to expand and become a pipe and appliance manufacturing
company.

1.1.2 MISSION
The business is expected to improve customer’s relation and in future to improve the modes of
installation. To serve and treat customers with loyalty and honesty.

1.1.3 CORE VALUE

The management will be dedicated to its duty in order to enhance more profit and sales of
product at lower price than the competitor.

1.2 BUSINESS LOCATION AND ADRESS

The business will be located in Murang’a town approximately 3km from Murang’a level 5
hospital opposite Vidhu Ramji secondary school. The enterprise decided to locate this business
in this area because in this area because of the following reasons;

i. Monopoly business using the supplied water

ii. Many young population who will act as the workers.

iii. Place is highly populated

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 iv. Tarmacked road which enables proper transport

1.2.1 BUSINESS ADRESS

Lifeline building hardware and plumbing solutions

P.O BOX:

Murang’a Kenya

TEL:0797099704

EMAIL: geraldkahiga2030@gmail.com

1.2.2 LOCATION MAP

MURANG’A

3
1.3 FORM OF BUSINESS OWNERSHIP
Since it’s a sole protractor business the owner will be the manager 50% of the amount required
will be contributed by the manager and the other 50% will be contributed from other sources like
loan, family and friends.

Owner 15000050%

Family and friends 7500025%

Bank loan (equity) 7500025%

The advantages of using this form of ownership is that easy decision making ,profit enjoyed by
the owner alone unlike a partnership where there are many owners, however low capital is
required to start and run the business

1.4 TYPE OF BUSINESS

The business will majorly a retail type of business because it will be purchasing and selling the
plumbing product to customers directly or even through the middle men reason for using middle
men is because the business may be unable to reach the individual customers.

1.5 PRODUCTION AND SERVICES

The business will be offering the following services

Installation of appliances and water systems.

Maintenance of hot water systems;

Hot water supply system

Cold water supply system

1.6 JUSTIFICATION OF THE BUSSINES

1.6.1 STRENGTH
Attachment will be provided to store keeping and agricultural drip-line students.

1. Highly conducive environment

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 2. Use of modern technology

3. Siren environment.

4. High security in the restaurant.

1.6.2 WEAKNESS
1. Lack of adequate finance

1.6.3 OPPORTUNITY
1. Expansion potential by opening other sub-branches country wide

2. Infrastructure of other services within the locality

3. Good will

1.6.4 THREATS
1. Inability to cope with sophisticated technology that is emerging
2. Economic instability
3. Strong competitors

1.7 THE INDUSTRY

The business will be under service and building industry offering installation, repair and
maintenance services for both hot and cold water systems at an affordable price.

As per my competitors in the market I will make sure that my company is second largest in the
whole country which offers quality building facilities.

1.8 BUSINESS GOALS

1.8.1 SHORT TERM GOALS
The business short goals will be

 Create employment to the youth.

 To pay the loan obtained during establishment of the business

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  To have modern tools like hydraulic benders available in the hardware
 To be best in terms of delivery of products and services.

1.8.2 LONG TERM GOALS

 Expansion of the business by establishing more branches in other towns.
 Training youth to be highly skilled plumbers.
 To make profit of more than 45%
 Enhance provision of high quality prices at an affordable prices with an aim of satisfying
customers needs.

1.9 THE ENTRY AND GROWTH STRATEGY

1.9.1 Entry plan
In order to gain acceptance and to be able to penetrate into the market, the manager will advertise
the institute through the TV news paper and roadshows.

The business will also provide sponsorship to the weak students and provide link age for jobs

1.9.2 Growth plan

The business is expected to grow at high rate which will lead to opening of sub-branches all over
the country in order to improve the technology and the living standard so four nation.

6
CHAPTER TWO

2.0 MARKET PLAN

2.1 CUSTOMERS
The business main customers will be institutions, individuals, homes and water companies the
business will be targeting the local resident within the area.

The contractors will be like plumbers will be the domain customers.

2.2 MARKET SHARE

The market around Life line hardware ware and plumbing solutions seems to be changing since
all competing business are trying their best within the shortest time possible to grow. Since new
buildings are being established and water repairs will always grow day in day out. The business
has great chance to grow and hope that it is able to cope with the completion.

WILSON PLUMERS 28%

JUMBOS HARD WARE 14%
THE SONS PIPE FITTINGS 35%
GLORY PIPE FITTINGS 23%

Sales

23% 28%
MUKUYNI PLUMBERS
KERUBO HARDWARE
KENMUNTO PIPE FITTINGS
NISHIKE PIPE FITTINGS
14%
35%

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2.3 COMPETITION
2.3.1 IDENTIFY COMPETION
Main competition against the business will be;

1. Water companies

2. Individual plumbers.

3. Established plumbing organizations.

2.3.2 COPIYING WITH COMPETION

The business will deal with completion by;

1. Recruiting highly skilled and qualified plumbers from known institutions.

2. Offer affordable prices to both old and new customers.

3. Offering services to meet the clients expectations.

2.4 METHOD OF PROMOTION

There will be use of posters, business cards, Radio \ televisions to advertise the business.

The business will use this type of media since they are used by most people and many people
will get to see and hear the adverts within a short period of time.

Citizen TV-SH 20000 per month

Posters and billboards_7000 per month

Total cost per month will be as follows

20 000+7000=27 000

The effective of this promotion will be noticed by the increase in profit made at the end of the
month.

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2.5 PRICING STRATEGY
The will be lowered and affordable to all compared to the competitive business and and also
offer discount to loyal customers. The business will also offer credit payment plans which will
allow the customers to pay later even after the job is done.

This will attract more customers to the business hence the client will refer to the business to their
family and friends.

2.6 SALES TACTICS

Offering discount to both new and old customers to attract more customers.

Offering free repair to the appliances in-case of damage within the first three months after
installation.

2.7 DISTRIBUTION STRATEGY

Lifeline hardware and plumbing solutions will distribute services directly to the customers. This
is due to that the business will get its products from identified manufactures. Who are authorized
by the government.

2.8 CUSTOMER SERVICES

The business will offer free maintenance to the appliances in-case of breakage or failure within
the first three months after installation of water system to both new and old customers.

9
CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT PLAN
3.1 MANAGEMENT TEAM
The constitution of the management will include the manager, assistant manager, accountant,
storekeeper, secretary, cleaner and a watchman. Management will be consultative where by
employees will come together and make decision together. Employment policies will be
implemented professionally in recruiting and giving promotion to employees who will work hard

Employees will be motivated through appreciation of the work done recognizing their hard work
involving the main decision making, giving them incentive like bonus, tea break, lunch and
commission.

3.2 ORGANIZATION CHART

MANAGER

ASSISTANT MANAGER

OTHER PERSONNEL

ACCOUNTANT SALES MANAGER STORE KEEPER

SECRETARY
CLEANER WATCHMAN

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3.2 KEY MANAGEMENT
3.2.1 GENERAL MANAGER
The owner of the business shall be the manager who will sponsor the business. The proprietor
should have experience of work and should be able to run the business with maximum
supervision in all departments.

The manager should be a good planner, decision maker, honest in her work and humble.

DUTIES AND RESPONSIBILITIES

 To employ workers independent department

 To manage the records of the business by checking the books of accounts
 To make decisions for the business endeavor
 To sponsor the business by giving it more capital

3.2.2 ASSISTANT MANAGER

He is the head of the business in the absence of the manager

QUALIFICATION
 A diploma holder building and construction.
 Should have 2year’s experience
 Should be computer literate
 Should be 25year’s and above

3.3 OTHER PERSONNEL

3.3.1 SALES MANAGER
The sales manager is responsible for the sales department. He should organize his department to
achieve goals and objectives of the business. He should also have a team of sales personnel
whom he assigns duties and responsibilities

DUTIES AND RESPONSIBILITIES

 He prepare sales budget which should meet the goals and objectives of the business
 He direct sand controls sales activities including sales room sand by sales stand

11
  He keeps records of sales with suitable analysis
 He coordinates advertising policy

QUALIFICATIONS
 He should be a diploma holder in sales and marketing
 He should have an experience of not less than 3 years
 He should have a good conduct

3.3.2 ACCOUNTANT
He/she is the one who is responsible for recording and controlling the financial affairs of the
business

DUTIES AND RESPONSIBILITIES

 Calculating the profits and maintaining the balances sheet

 Settling debt owned by the business
 Preparing statement of accounts
 Responsible for credit control

3.3.3 STOREKEEPER
DUTIES AND RESPONSBILITIES

 Ensures that goods supplied have not expired

 To ensure that only quality good are supplied
 To ensure that good are bought on time.

QUALIFICATION

 He should be a diploma holder of storekeeping

 He should have an experience of at least 2 years
 He should be 25year sand above

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3.3.4 SECRETARY
DUTIES AND RESPONSIBILITIES

 Acts as a coordinator between the manager and customer

 Makes pay slips for the employees
 Acts as an office messenger

QUALIFICATIONS

 He should be a diploma holder

 He should be a computer literate

3.3.5 CLEANER
DUTIES AND RESPONSIBILITIES

 Ensure clean lines sin the working place

QUALIFICATIONS

 He should have record of health from any government dispensary

 He should be a form four leaver

3.3.6 WATCHMAN
QUALIFICATIONS

 He should be able to communicate in English and Kiswahili

 He should have 25 years and above

3.4 RECRUITMENT/TRAINING/PROMOTION
RECRUITMENT
Recruitment of staff should be based on skills, experience and training one has undergone. Job
vacancies will be advertised through posters, road shows and youth forum. Application letters
shall be received from the applicants and those who will meet the requirements will be
shortlisted and called for an interview.

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 After the interview, appointment letters will be sent to those who will qualify to inform them
when to report to the job
Poaching

The business manager will be moving round the premise where after the allocation of the work a
certain premise who is hard working then he will be poached to the business.

3.5 REMUNIRATION AND INCENTIVES

Remuneration will vary according to seniority and experience of an employee

POSITION BAS/ H/ CO/ALLOWANCE MED/ALLOWANCE MONTHLYSALARY

SALARY ALLOWANCE
Manager 20,000 3,000 2,000 5,000 30,000
Ass/Manager 18,000 2,000 2,000 5,000 27,000
Accountant 15,000 2,500 1,500 5,000 24,000
Storekeeper 12,000 2,000 2,000 4,000 20,000
Secretary 10,000 2,000 2,000 3,000 17,000
Sales 10,000 2,000 2,000 3,000 17,000
Manager
Cleaner 2,000 1,500 1,000 1,000 5,500
Watchman 4,000 1,500 1,000 1,500 8,000
Clark of work 4,000 250 400 13,950

TOTAL 91,000 27,500 13,500 16,500 148,500

Incentives
Employees will be entitled with incentives in order to motivate them to perform their duties well.
This will include;

 Free lunch

 Free breakfast

 Over time allowance

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3.6 LICENCE, PERMITS AND BY LAWS
License

i. Trading license

This will give the business ago a head. The license will be obtained from the Ministry of Trade
through the County Council of Murang’a at a cost of 3500 which will be renewed yearly.

Permits
 Municipal license

Municipal council of Murang’a will allow the organization to undertake its operations in the
region. This will be issued by Murang’a Municipal Council operating in the region at the cost of
2,000 renewed yearly.

The permit and certificate that will be required by the organization to pay taxes.

LAWS

The business will follow the rules and regulations set by the municipal council of Murang’a,

Labor Act

This will be provided by the ministry of labor which requires employees to work for 8hours a
day in-case of over time they should be paid it as per the agreement

Also the ministry requires pregnant women to be given a maternity break for two or more
months

Public Health Act

The law requires the business to maintain high standards of health in the working place

3.7 SUPPORT AND SERVICES

Insurance

The business and its premises will be insured against any risk that may arise like fire and theft.
The insurance cover will be required from Amaco Insurance Company. The employees will also

15
be insured against accidents and any other loss and cater for funeral expenses and pay hospital
bills. The cover will be CFC assurance Company.

Banking services

Depositing and withdrawing of money will be a daily undertaking. Borrowing of loans will also
be essential for the organization to aid these needs, the organization will open a bank account
with Equity Bank Murang’a Branch. The improvement in technology i. e .introduction of ATM
card will facilitate the services.

Postal Services

Through the postal address that the business owns, customers will use it in place that orders, seek
quotation and communicate to their enterprise.

The enterprise will use Murang’a post office and mobile phone as a bridge of communication to
its customers.

Medical services

Since the business will be dealing with sharp tools and equipment which can cause injuries the
business will take its employees to the nearby dispensary in case of an accident and the business
will pay as part of its bill.

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 CHAPTER FOUR

4.0 PRODUCTION PLAN

4.1 PRODUCTION, FACILITIES AND CAPACITY
MACHINERY&EQUIPMEN QT SUPPLIE UNITCOST(KSHS TOTALCOS
T Y R ) T

Torque wrench 30 Huduma @20,000 180,000

distributer
Goggles 66 Martin @500 33,000
company.
Internal pipe wrench 3 Thayo @13,000 37,000
store
Ratcheting pipe thread set 5 Big @25,000 12,500
brother
works
Mole grips 7 Murang’a @1,000 7,000
ltd
Press fitting system 5 Umoja @500 2,500
sons
Metals
Pipe and tube benders 3 County @1000 3,000
metals

Total 61,000 276,000

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4.1.2 FIRM LAYOUT

METAL EQUIPMENT
STORE

RECEPTION ROOM

ACCOUNTANT
OFFICE
PLASTIC MATERIAL STORE

PRACTICAL AREA

MANAGER’S OFFICE
CORRIDOR

4.2 PRODUCTION STARATEGY

When a customer comes into the business she/he will be served by counter attendants at the
counter and if he/she purchase more goods the business vehicle will transport the products into
the customers, the production manager will ensure that the good are of good quality in that they
can last for years without being torn

The business will make sure that the sales manageres able to convince the customers that the
products have good quality by giving them guarantee.

The business will inspect on the specification of the customers so that it can be able to purchase
more quality of good and service which are bought by many people

After the goods are fully branded they will be displayed on shelves and racks

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The customers will be served on the first come first serve basis even those who will make orders
by telephone.

The workers should be frequently in contact with the customers whenever they see them.
Coming to purchasing from the business and they should have confidence, honest and humble

This will make the customers to have confidence and trust of their service

Whenever the customers has order the products by telephone the business will ensure that they
are delivery to him/her on time

4.3 PRODUCTION PROCESS

The product will be bought from various suppliers then after which the supplier will deliver the
product to the premise after which the accountant will verify the calculation of payment and the
quantity of the product helped by the storekeeper after which then the store keeper will be
required to brand the commodity with the business name after which then it will be sort
according to the make and price as well in store accordingly then send to business shelf for sale.
Where the consumer will purchase product and the installation is required then the business will
send a plumber to carry out the investigation after being send to the owners place and then
prepares quotation of the same, the accountant will carry out the investigation and then sends
feedback to the consumer and when consumer agrees then he will make the payment of labour
and material and then plumber will be send to do the installation.

4.4 GOVERNMENT REGULATION

Factors which will affect production/ operation includes:-

HEALTH REGULATIONS-Workers should be wearing dust coats while serving customers.

Also during the pandemic workers should ensure that they put on their masks.

SAFETY REGULATIONS–all workers should wear protective cloths while in job. Ensure fire
extinguishers are available in working rooms and all employees should be trained on how to use
it. There should be enough lighting and ventilation in working rooms. First aid kits should be
available and all workers should have an insurance cover.

ENVIRONMENTAL REGULATIONS:-Ensure proper ventilation, lighting and enough space

within the working rooms. Pollution products will be placed in one side to reduce air conduction.

19
 CHAPTER FIVE
5.0 FINANCIAL PLAN
In this plan there will be clear arrangement of services of finances use to purchase assets
payment to labor and purchase of materials used in business.

5.1 PRE–OPERATIONAL COST

These are the cost that the business shall occur before fully operations. These include insurances
cover, loan documentation advertisement cost of machinery and equipment.

ITEM AMOUNT(KSHS)
Rent 36,000
Advertisement 18,000
License 10,000
Transport 5,000
Stationary 2,000
Stock and materials 300,000
TOTAL 371,000

5.2WORKINGCAPITAL
Working capital is those of current assets and current liabilities. The current assets are those will
be required in the business for the purpose of managing the business like machines equipment
debtors and cash at hand.

CURRENT ASSETS
ITEM YEAR2023 YEAR2024 YEAR2025
Stock 300,000 350,000 400,000
Debtors 60,000 70,000 60,000
Prepayment 40,000 45,000 50,000
Cash 200,000 150,000 250,000
Total 600,000 615,000 760,000
CURRENT LIABILITIES
Creditors 50,000 60,000 100,000
Overdraft 40,000 50,000 80,000
Total 90,000 110,000 180,000
Working capital 510,000 50,500 58,000

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These current liabilities are those incurred cost like electricity water, telephone tax, security and
repair and maintenance.

21
 5.3 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING DEC 2024

ITEM JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Beginning 27,000 287,40 302,000 315,10 328,20 342,20 342,45 354,97 359,470 377,23 378,83 383,23
Bal. 0 0 0 0 0 0 0 0 0
Cash Sales 120,00 125,00 130,000 135,00 140,50 145,00 150,00 155,00 161,000 169,00 180,00 200,00
0 0 0 0 0 0 0 0 0 0
Cash from 10,000 9,000 9,000 8,000 7,500 7,500 9,000 10,000 8,500 8,500 9,000 7,000
Debtors
Total Cash in 400,00 421,40 441,000 458,10 476,20 494,95 513,97 524,47 539,050 554,73 567,83 590,23
flow 0 0 0 0 0 0 9 0 0 0
Cash outflow
Cash 60,000 87,000 96,000 99,000 103,00 109,00 118,00 125,00 132,000 144,00 152,00 174,00
Purchases 0 0 0 0 0 0 0
Salary and 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000
wages
Advertisemen 5,000 5,000 3,000 4,000 3,000 4,000 3,500 3,000 3,400 5,000 5,000 4,200
t
Electricity 500 500 300 350 350 300 500 400 400 400 500 500
Miscellaneous 400 300 200 150 200 180 300 320 320 200 400 400
Transport 1,500 1,400 1,200 1,200 1,500 1,500 1,500 1,000 1,00 1,300 1,500 1,000
Creditors 1,000 1,000 800 1,000 1,500 800 1,500 1,000 500 800 1,000 500
Taxes
Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
License 15,000
Insurance 5,000
Water 200 200 200 200 200 200 200 200 200 200 200 2400
Total payment 112,60 114,40 125,900 129,90 133,75 139,98 154,50 154,92 161,820 175,90 184,60 204,80
0 0 0 0 0 0 0 0 0 0
Balance/F 287,40 302,00 315,100 328,20 342,65 354,97 359,47 369,55 377,230 378,83 383,23 385,43
0 0 0 0 0 0 0 0 0 0

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5.4 PROFOR MAIN COME STATEMENT
ITEM YEAR 1 2021 YEAR 2 2022 YEAR 3 2023
Sales 900,000 880,000 900,000
Less 280,000 220,000 270,000
Gross profit 620,000 660,000 630,000
EXPENSES
Salaries and wages 264,000 270,000 284,000
Rent 36,000 36,000 36,000
Electricity 11,350 12,250 12,500
Advertisement 10,000 18,000 20,000
Stationary 2,000 2,000 2,000
Depreciation 1,480 1,800 2,000
Interest 60,000 60,000 60,000
License 4,500 4,500 4,500
Drawing 180,000 180,000 180,000
Repair and maintenance 2,000 2,000 2,000
Total expenses before taxes 571,330 570,550 554,500
Net profit–tax profit 48,670 69,450 75,500
Tax provision 7,790 11,112 12,080
Net profit after tax 40,880 58,338 63,420
N/B

Gross profit=Sales tax

Net Profit=Gross profit–Total expenses

Net profit=Net profit–Tax provision

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5.5 PRO–FOR MAIN COME STATEMENT OF FINANCIAL POSITION

INCOME 2,075,000
Purchase stock 3,890,000
Loan 3,000,000
Own Equity 2,000,000
Partners 3,000,000
Gross Profit 2,075,000
10,890,000
Expenses 9,835,000
Electricity 113,700
Salaries 1,727,200
Transport 438,700
Telephone 32,900
Insurance 154,600
Repairs 100,500
Advertisement 18,900
Building 2,000,000
Fittings 26,000
Machinery 3,232,000
Water 20,000
Creditors 540,000
Licenses 14,000
Totals 8,380,500
Net Profit 8,380,500
1,454,500
Allow12%netprofit
112/100X1, 454 ,500 =1,629,040
Allow2%for taxation=18(100X1,629,040)=1,596,469.2
Net profit after tax1,596,459.2

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5.6 BREAK EVEN CALCULATION
ITEM COST
License 4,000
Insurance 6,000
Rent 62,200
Postage 9,000
Salaries 3,600,000
Stationery 41,600
TOTAL 482,800

VARIABLE COST

ITEM COST
Electricity 98,000
Advertisement 90,000
Maintenance 235,000
Water bills 13,000
Transport 62,000
Telephone -
TOTAL 434,000
Sales=288,000

Contributions=Sales–variables

= 2,446,6000

Contribution margin=ContributionX100/Total sales

=2,446,000/2,880,000X100

=117.74%

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5.6.1 BREAK–EVENPOINT
=fixed cost/variable cost

=482,800/434,000

=1:1

BREAKEVEN TURN OVERS

=Fixed cost/contributionmarginX100

=48,800/117.74

=4100.56

BREAKEVEN UNITS

=Contribution margin fixed cost

=117.74/482,800

=0.00244

5.7 PROFITABILITYRATTIOANALYSIS
Grosspercentagefortheyear2019=Gross profit/salesX100

=13,980,000/2,888,000X100

=48.54%

Return Equity(capital)=Net profit tax/OwnerequityX100

=139,800/5,000,000X100

=2.80

Return of investment=net profit offer/total investmentx100

=139,800/2,880,000

=4.85

Gross percentage for the year2020=Gross profit/salesX100

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 =6,470,000/3,187,000X100

=203.01%

Return Equity (capital) =Net profit tax/OwnerequityX100

=12,570,000/5,000,000X100

Return of investment=net profit offer/totalinvestmentx100

=12,570,000/3,187,000

=KSH.3944

5.8 DESIRED FINACE

This is the amount required to start and operate the business pre–operational cost

Pre–operational cost 2,860,100

Working Capital 1,328,100

Miscellaneous 220,000

TOTAL

5.9 PROPOSEDCAPITALIZATION
Personal contribution 50,000

Loan from bank 50,000

Relatives/period contribution 20,000

TOTAL 120,000

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