DECLARATION

I declare that this is my own original work and it has not been presented before to any
examination body for purposes of examination

STUDENT’S NAME : YVONNE ATIENO.

SIGNATURE : ……………………………
DATE : ……………………………

I declare that the candidate’s work is original and appropriate supervision was granted

SUPERVISOR’S NAME : MADAM RUTH

SIGNATURE : ……………………………
DATE : ……………………………
DEDICATION
I wish to dedicate this business plan to almighty God for his enduring love upon my life, besides
I dedicate this work to my beloved parent for their moral and financial support.
ACKNOWLEDGEMENT
To God be the glory for this far I have reached and whatever I have achieved is by his grace. I
cannot forget the guidance given to me by my supervisor. This work was quite involving and
needed encouragement from friends and colleagues.
Table of Contents
DECLARATION....................................................................................................................................i
DEDICATION.......................................................................................................................................ii
ACKNOWLEDGEMENT....................................................................................................................iii
EXECUTIVE SUMMARY...................................................................................................................1
BUSINESS DESCRIPTION/ LOCATION............................................................................................1
MARKETING PLAN............................................................................................................................1
ORGANIZATION AND MANAGEMENT..........................................................................................1
PRODUCTION.....................................................................................................................................1
FINANCIAL PLAN..............................................................................................................................2
CHAPTER ONE....................................................................................................................................3
BUSINESS DESCRIPTION.................................................................................................................3
1.1 BUSINESS NAME..........................................................................................................................3
1.2 THE LOCATION OF BUSINESS AND ADDRESS.......................................................................3
1.3 FORM OF THE BUSINESS OWNERSHIP....................................................................................4
1.4 TYPE OF BUSINESS.....................................................................................................................5
1.5 PRODUCTS AND SERVICES........................................................................................................5
1.6 JUSTIFICATION OF OPPORTUNITY..........................................................................................5
1.7 INDUSTRY.....................................................................................................................................5
1.8 GOALS AND OBJECTIVES..........................................................................................................5
1.9 ENTRY AND GROWTH STRAGETY...........................................................................................6
CHAPTER TWO...................................................................................................................................7
MARKET PLAN...................................................................................................................................7
2.1 CUSTOMERS.................................................................................................................................7
2.2 MARKET SHARE..........................................................................................................................7
2.3 COMPETITION............................................................................................................................10
2.4 METHODS OF ADVERTISEMENT AND PROMOTION...........................................................11
2.5 PRICING STRATEGY..................................................................................................................11
2.6 SALES TACTICS..........................................................................................................................11
2.7 DISTRIBUTION STRATEGY......................................................................................................12
CHAPTER THREE.............................................................................................................................13
ORGANIZATION PLAN....................................................................................................................13
3.1 MANAGEMENT PLAN...............................................................................................................13
3.1.2 RECRUITMENT, SELECTION, TRAINING AND PROMOTION..........................................15
3.5 LEGAL REQUIREMENTS OF PEOPLE’S PLAN......................................................................17
3.6 SUPPORT SERVICES..................................................................................................................18
CHAPTER FOUR...............................................................................................................................19
PRODUCTION/ OPERATION...........................................................................................................19
4.1 PRODUCTION CAPACITY.........................................................................................................19
4.2 PRODUCTION / OPERATION STRATEGY...............................................................................20
4.3 PRODUCTION PROCESS...........................................................................................................21
.............................................................................................................................................................21
4.4 REGUALTIONS AFFECTING PRODUCTION...........................................................................22
CHAPTER FIVE.................................................................................................................................23
FINANCIAL PLAN............................................................................................................................23
5.1 FINANCIAL REQUIREMENTS..................................................................................................23
5.1.1 PRESTART SEED CAPITAL.....................................................................................................23
5.1.3 GROWTH AND EXPANSION..............................................................................................24
5.2 TABLE OF ANTICIPATED FUNDINGS......................................................................................24
5.3 PROFOMA CASH FLOW PROJECTION FOR 12 MONTHS.....................................................25
5.4 PROFORMA INCOME STATEMENT PROJECTION FOR THE FIRST THREE YEARS.........26
PARTICULARS..................................................................................................................................26
1ST YEAR............................................................................................................................................26
2ND YEAR............................................................................................................................................26
3RD YEAR............................................................................................................................................26
116500.................................................................................................................................................26
23142...................................................................................................................................................26
5.5 PROFORMA BALANCE SHEET PROJECTION FOR THREE YEARS....................................27
5.6 CACULATION OF BREAK EVEN POINT.................................................................................28
5.6.1 CALCULATION OF RATIOS................................................................................................28
5.6.2 GROSS PROFIT MARK UP..................................................................................................28
5.8 DESIRED FINANCING...............................................................................................................29
5.9 PROPOSED CAPITALIZATION..................................................................................................29
EXECUTIVE SUMMARY

BUSINESS DESCRIPTION/ LOCATION

The proposed YVONNE'S STATIONERY STORE. shall be a sole proprietorship it shall be
located in Awendo along Migori road.
The business shall be a sole proprietorship with capital derived from personal savings, family
and friends, and a loan from bank. The goals shall be to provide quality services and creating
employment opportunities in order to gain maximum profits.
The enterprise is located at a suitable place where the customers can easily gain access to the
products because of the superior infrastructure available.

MARKETING PLAN
The enterprise has positively identified and classified the customers into; domestic, commercial
and institutional with a total consumption capacity of 85, 000 units.
Currently, the market is served by three competitors who can only supply 59,978 units living a
market gap of 43, 000 units.
The proprietor intends to capture this gap within the next three years of operation.

ORGANIZATION AND MANAGEMENT

The management will be in the able hands of Yvonne Atieno- the owner/manager who will be
overseeing the businesses operations heading a workforce of assistant manager, cashier,
secretary, and watchman and grounds man. The workers will be paid a competitive salary. The
business also intends to comply with relevant regulations governing such businesses such as the
National Social Security Act, CAP 259 among others.

PRODUCTION
The enterprise requires equipment to the tune of 617,000 shillings. The business will purchase its
provisions from reputable suppliers at good prices the facilities will be and acquired and
maintained internally.
The proprietor has also identified a purposeful plan to achieve efficiency and effectiveness of the
production function to exploit the projected market to beat completion in the area following the
processes involved in product and services provision which will satisfy the consumers wants.
The proprietor has put measures to ensure that the business abides by the rules and regulations
governing businesses and that affect production.
FINANCIAL PLAN

This chapter indicates financial plan of business beginning with pre-operatinal cost,working
capital, cash flow projects, calculations and balance shee, charts, rations showing financial of
business at end.

CHAPTER ONE

BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The name of the proposed business shall be YVONNE'S STATIONERY STORE. The name
‘YVONNE’ is a community name meaning winner. The second part of that name,
‘STATIONERY STORE’ reflects the central activity of that business.
The proprietor shall use the name YVONNE to show effort in the business. The name shall
always remind the entrepreneur of what the business is after. This shall encourage the customers
to always visit the business because the name is so big and meaningful and also easy to
understand.

1.2 THE LOCATION OF BUSINESS AND ADDRESS

YVONNE'S STATIONERY STORE shall be located in Kenya, Migori county. Along Migori-
Kehancha road .
The location is preferable because of the adequate market.Both primaly Secondary schools ,
colleges , hospital and administration centres can take breakfast ,breaktea,lunch and evening tea
from the cafe. The site is accessible to both motorists and people as it is the central business
district of Wiga Location where all the administrative operations are carried out. Hence there is
adequate security.

MAP OF GEMA COFFEE CAFE.

YVONNE STATIONERY STORE,

P.O.BOX 987,
MIGORI.

1.3 FORM OF THE BUSINESS OWNERSHIP

Proposed business shall assume the sole proprietorship form of business ownership. It shall be
owned by YVONNE ATIENO.
The sole proprietorship is preferred by the owner because;
• The sole trader enjoys all the profit alone.
• Share the secrets alone
• Decision-making is easy
 • Close supervision of the business.

1.4 TYPE OF BUSINESS

YVONNE'S STATIONERYSTORE is a commercial form of business, as a commercial type of
business it is to get involved in buying and selling of the Stationery materials e.g. reading
materials either in large quantity or small quantities packed without changing their nature form.
As a commercial business YVONNE'S is to purchase stationery materials from the suppliers and
then deliver them to the final customers.

1.5 PRODUCTS AND SERVICES

YVONNE'S STATIONERY shall offer the following products to his customers books,
novels.journals and magazines. The products offered by the proprietor will be of high quality,
high standard with different colours; shapes and sizes that are well packed according to their
sizes and weight. Immediately the business commences, the goods will be packed in small,
medium and large packs depending on the economic status of the customers to be satisfied.

1.6 JUSTIFICATION OF OPPORTUNITY

The idea of opening YVONNE'S STATIONERY STORE came to mind after realizing the high
demand of stationery materials around the area.
The population in that area also favored the marketing of the products. Security around Ting'a
market is also high that can safe guard the business premise all the time, besides, good transports
and networks was a good ideal for to business.

1.7 INDUSTRY
The proposed business falls under the stationery industry. The industry is a fast growing one
since there are a lot of activities going on.

1.8 GOALS AND OBJECTIVES

The proprietor intends to maximize profit by; reducing the operation cost by 16% after a period
of one year, increasing the sales volume by 5% per year and minimizing expenditures by at least
8% per year.
The proprietor also aims at providing quality products by; employing one experienced and
skilled person, buying at least one machine e.g. power saw per year and reduce customers
complains by 9% per year. The proprietor wishes to improve the living standard by providing
good social amenities e.g. good housing water supply, electricity and others to the employees by
0.5%, paying good wages by increasing their earnings by 3% per year sand providing incentives
to best farmers as a way of motivating them.

1.9 ENTRY AND GROWTH STRAGETY

YVONNE'S STATIONERY STORE intends to ENTER the market through creation of
awareness by advertisements in local radio stations as Ramogi fm.
The proprietor shall also use sign boards at strategic points such as junctions and posters shall be
pinned on the building and social places such as market centers, health centers and churches.
The proprietor plans to carry out trade fares and exhibitions during annual shows in the county.
This shall enable the business to be famous to provide discounts to the customers in order to
retain them.
 CHAPTER TWO

MARKET PLAN

2.1 CUSTOMERS
YVONNE'S STATIONERY STORE shall sell his products to the customers who live around
Mogori center especially from the rural area and might find it very difficult to purchase the
products from Homa-Bay town yet there is YVONNE'S STATIONERY STORE along the way.
The domestic customers to YVONNE'S STATIONERY shall include family members and people
around Migori center. Customers will be; students around migori.The customers shall obtain
goods in large quantities YVONNE'S STATIONERY at retail price for the purpose of
maximizing profit
The third group shall be institutional customers who also buy relatively large quantities, this shall
include; Kanga high school, Migori boys.

2.2 MARKET SHARE

The potential competitors of Migori centre comprises; umoja stationery, keumbo stationery &
Yvonne stationery following proportion;
Umoja stationery 15,000 30%
keumbo stationery 15,000 30%
Yvonne stationery 20,000 40%

Market share

COMPETITOR 1st year 2nd year 3rd year 4th year 5th year

Yvonne stationery 14,000 14,000 14,000 14,574 7000

Keumbo stationery 11,000 11,000 11,000 9108 6500

Keumbo stationery 8,000 8,000 8,000 6073 5761

2.3 COMPETITION
The research carried out by the owner of the business between May to December 2022 showed
that there are four competitors namely;
COMPETITOR’S SWOT ANALYSIS
COMPETITORS STRENGTH WEEAKNESSES OPPORTUNITIES THREATS
YVONNE -Has good number -Lack skilled -Adequate -More competitors
STATIONERY of customers personnel customers. -Large scale supply
P.O.BOX 131 -Offer after sale -Lack enough -Maximize profit
MIGORI services. resources
-Large volume of
goods
UMOJA -Well trained -Poor time of -Large stock -Low turnover of
STATIONERY personnel. operation -Adequate customers.
P.O.BOX 29 -Large volume of -Lack customer’s customers
MIGORI goods language
KEUMBO -Room is well -Poor operating -Good number of -Low pricing of
STATIONERY equipped time customers goods
P.O.BOX 441 -Adequate sales -Lack adequate -Adequate personnel
MIGORI agents resources

2.4 METHODS OF ADVERTISEMENT AND PROMOTION

The designer intends to create awareness of the enterprise to the customers by; advertising
through making a list of existing good and services, their prices quality and quantity which are
well packed and pin them on poles along the roads through print posters and distributes them
manually. The proprietor also plans to use audio e.g. radio to create awareness to the general
public to make the business well known within the country. The advertisement is to persuade the
customers to consume goods and services offered in large quantity and maximize profit.

2.4.1 PROMOTION METHODS

The owner of the business intends to increase the image of the business by erection of some
public utilities like bus stage shade, social responsibilities e.g. participating in fund raising within
the community and attend funerals

2.5 PRICING STRATEGY

YVONNE STATIONERY STORE prices will vary according to the competitor’s price for
example when the competitor price for a Novel at 1,500/= then the price for the same product in
YVONNE STATIONERY STORE shall be 1,200/=.
The proprietor shall also use the government price guidelines. This is where the owner finds that
the price for a commodity has been fixed by the manufacturer. The business owner shall also use
cut throat pricing strategy where competitor price minus five shillings to give selling price and as
the demand increases the prices will also respond to increase in demand

2.6 SALES TACTICS

Since the proprietor is professional, he knows how to maximize sales levels. Besides that, the
proprietor shall also employ sales agents to supply the products in different places so as to reach
large number of buyers hence benefits are high in large production.
Secondly the proprietor shall also employ qualified and competent personnel who will give out
advice description to the customers thus help in running the business smoothly. They will also
decide to supply goods of high quality and more attractive thus more customers.
The proprietor intends to offer after sales services and these are additional benefits given to
customers after buying e.g. transportation and packaging.

2.7 DISTRIBUTION STRATEGY

The proprietor decided to use different methods to distribute the products to reach the people; the
major means of transport used is by use of roads. The main vessel of distribution will be
motorbike, carts, Lorries and bicycles. The main reason why the proprietor decided to use these
is that they are easily accessible and easy to maintain. The goods are obtained from producers to
customers and this is direct distribution but the owner operates under indirect where products are
obtained farm producers to suppliers and consumers.
 CHAPTER THREE

ORGANIZATION PLAN

3.1 ORGANIZATIONAL STRUCTURE

3.1.1 DUTIES AND RESPONSIBILITY OF THE MANAGEMENT

PERSONNEL QUALIFICATIONS NO. RECRUITMENT DUTIES RE

Manager - Diploma in 1 Allocating funds for - Beari

Informational science purchases - Imple
Depositing funds
Paying of employees
Looking for contracts
ASSISTANT - Certificate in 1 - Representing the manager - Organ
 MANAGER Information science in meetings - Deleg
- Supervision of staff
members.
SECRETARY - Certificate in Interview - Recei
Secretarial studies other b

SALES 1 Interview - Selling products - Ferry

AGENTS - Create awareness about the
products and report on
customer behavior and tastes
CLEANERS - Minimum grade of 2 Interview - General cleaning of the
D- or 250 marks business premises

SECURITY -Minimum grade of 2 Interview - In charge of the building’s - Raise

D+ security theft
- Ushering the customers to
the premises
- Guarding the customers and
their property when in the
premises

3.1.2 RECRUITMENT, SELECTION, TRAINING AND PROMOTION

3.1.3 REMUNERATION
These are reward for labour; the owner manager intends to give his employees better payment
depending on their working rate to motivate them. Remuneration will be based on the piece rate
i.e. according to work done. The will also give remuneration basing on the time rate i.e. for how
many hours that one works and the dates for the increment of salary will be at the end of the
financial year.

3.2. SELECTION
Selection shall be done following the max scored by each of the applicants during the interview.
The most suitable shall be selected to occupy the vacant position

3.2.1 TRAINING
the management shall provide in house seminars and workshop to its employees to enhance
quality service delivery in the business. This shall involve having various experts in the
respective disciplines related to the business.
3.3 PROMOTION
The plans to elevate employees to high ranks based on their attitude towards duties, time
consciousness, loyalty and period of service

3.4 INCENTIVES
These are additional benefits offered to the employees in order to boost their moral towards
work. The owner manager will also aim at improving terms and conditions of services to
motivate the workers; this will include giving those monetary benefits e.g. house allowance,
transport allowance and medical allowance. In addition to that, they will be given non-monetary
allowance e.g. protective clothing, field execution, free tea, lunch, and transport, end of year
party, prizes, housing and complements.

The proposed salary structure of MAICHA’S HARDWARE

Position No. Basic House Medical Computer Gross Gross

Salary Allowance Allowance Monthly
Allowance Annual

Manager 1 19,000 2,000 1,300 600 22,900 274,800

Assistant 1 11,000 1,700 800 300 13,800 165,600

Manager

Cashier 1 9,600 1,600 800 200 12,200 146,400

Sales Lady 1 10,000 1,500 750 300 12,550 150,600

Sweeper 1 4,900 1,400 700 200 7,200 86,400

Security 1 3,500 800 600 100 5,000 60,000

officer

Driver 1 5,000 1,600 900 100 7,600 91,200

Total 1 81,250 975,000

3.5 LEGAL REQUIREMENTS OF PEOPLE’S PLAN
The owner of the business has identified the legislation that affects human resources in an
organization. These include relevant acts of the parliament that protect human rights on the
places of. They include;
I) THE FACTORY ACT CAP 51, NO 61 OF 1944
It states that “the qualification and experience on the person’s employees in such institution and
facilities there in regard to the conduct of such texts examination and inspecting more than one
person or institution can be recognized as a competent person in relation to a factory” therefore
the proprietor will recognize the qualification of every worker and pay the accordingly.
II) EMPLOYMENT ACT CAP 227
This ac states that employment shall be within two months after the beginning of the
employment provide the worker with written statement of the particularly on employer, form of
duration, date of commencement of employment, job description of employment, place of work,
house of work and remuneration rate and lastly methods of calculation and detail of any benefits.
The proprietor is to prepare these documents to all business employees within a period of two
weeks after interview and commencement of the work by the employee.
III) NATIONAL HOSPITAL INSURANCEFUND ACT 255 SECTION 09
It states that employee and employer in the public section are obliged to register themselves to be
able to access quality and affordable health services. It requires that all eligible members from
formal sector to be registered. For those in the formal section, it is compulsory to be a member
and voluntary and therefore proprietor is planning to register all her employees to ensure that
they get affordable and high quality services.
IV) WORKMEN COMPENSATION ACT CAP 8 OF 1899
This law enacts that insured worker has the right to save the employer and put the burden out
proof of the employee” the employer that works in any organization is allowed and protected by
the law to save her or his employees in case of injury or accident at the place of work. Therefore,
the proprietor is also intending to protect her employees from accident and injury by indicating
some danger points and also set aside some amount of money to be used in the treatment of any
employee who falls in the same.
V) WORK INJURY BENEFIT ACT OF 2007
The act state that all employees to obtain and maintain insurance policy cover them against any
liable to pay compensation to an employee injured while at work about pay compensation to
employees by the proprietor.

V) NATIONAL SOCIAL SECRITY FUND ACT CA 258

It states that all employees obliged to register with new pension fund. It is therefore spells that
the membership in the pension fund is mandatory for all employed persons between the ages of
18years to 60years. The proprietor is therefore planning to abide by this Act by registering all
permanent workers to this pension fund.

3.6 SUPPORT SERVICES

INSURANCE
The business shall be insured in care of any risk in order to compensate for any loss. This will be
obtained from Omata Insurance Company P.O BOX 160, Mogori.

BANKING SERVICES
Banking services is very important to the business since it serves the purpose of getting loans and
saving business money. This shall be obtained from Co-operative Bank of Kenya
Co-operative Bank of Kenya
P.O.BOX 731
Migori.

CHAPTER FOUR
PRODUCTION/ OPERATION
4.1 PRODUCTION CAPACITY
As per the research done by the proprietor of GYVONNE STATIONERY STORE the business
requires these physical facilitates to run effectively.
SUMMARY OF PROPOSED PRODUCTION CAPACITY
Item Quantity Unit cost Total cost When Ownership Source Main
required required
Premises
Land 1 126,000 126,000 Start up Owned Madiany Inter
Building 1 240, 000 240, 000 Start up Owned Madiany Inter
Sub total 366,000 366,000
Plant & machinery
Power saw 1 35, 000 350, 000 Start up Owned Kisii exter
Calculator 2 1,200 2400 Start up Owned Kisii Inter
Computer 2 35,000 70, 000 Kisii exter
Sub total 107,400
Fixtures & fittings
Shelves 8 1200 9600 Start up Owned Kisii Exte
Tables 4 1000 4000 Start up Owned Kisii Exte
Shelves 1 6300 4, 000 Start up Owned Kisii Exte
Counter 1 4300 4300 Start up Owned Madiany Exte
Sub total 24,200
Tools & equipment
Water Tank 2 15000 3000 Start up Kisii Exte
Dust coats 1 1000 2000 Start up Owned Kisii Exte
Rubber stamp 3 300 600 Start up Owned Kisii Exte
Fire extinguisher 1 3000 3000 Start up Owned Kisii Exte
Subtotal 36,300
Automobile
Motorbike 1 95, 000 95, 000 Start up Owned Kisii Exte
Sub total 95, 000
Grand total 955, 600

4.2 PRODUCTION / OPERATION STRATEGY

These are the plans to make the plans and operations of the firm efficient and effective.
The business management shall make sure that business affairs are carried out efficiently in order
to meet the market demands. This shall be done by making sure that ideal machines are put in
use to avoid using less efficient machines.
The firm shall also make sure that the labor is utilized to full capacity to make sure that the
objectives of the firm are met. This shall be done by making sure that every employee does his
work to perfection. The firm shall motivate the best performers by offering gifts and presents to
them where necessary.
The firm shall only recruit the right personnel are employed and for the right job and shall avoid
giving a job to someone who is not qualified or suited for it. There shall be no over employment.
The number of personnel shall be equivalent to the kind of work to be done to avoid wasting
labor.
Raw materials shall also be used efficiently and are cost effective to avoid wastage. Raw
materials shall be acquired according to their demand to avoid over stocking and under stocking.
4.4 REGUALTIONS AFFECTING PRODUCTION

4.4.1 BUSINESS ACT REGULATION

Under chapter 5 of the business Act one should only carryout the type of business that has been
registered. Therefore, the business shall be duly registered to comply with this Act.

4.4.2 ENVIRONMENT REGULATIONS

Under chapter 5 section bill right section 63 and subsection3 of the environment Act requires that
the business be kept in a tidy manner in order to comply with the act and to maintain the
environment.

4.4.3 THE SALE OF GOODS ACT CHAPTER 31 SECTION 28

“It is the duty of the buyer to accept and pay for them in accordance with the terms of the
contract of the sale”.
This has been compiled by the proprietor by distributing and receipting after the payment has
been made.

4.4.4 LABOUR REGULATIONS

Under chapter 5 of the constitution, under the bill of rights part and 1 and 2 states that everyone
has a right to fair labor protection, fair remuneration, reasonable working conditions and
participate in the activity and programmes of trade unions.
The employee should be given his rights and not overworked by the managers and given good
working conditions.
 CHAPTER FIVE

FINANCIAL PLAN
5.1 FINANCIAL REQUIREMENTS
5.1.1 PRESTART SEED CAPITAL

ITEMS COST
Premises 366, 000
Plant and Machinery 107, 400
Tools and Equipment 36, 300
Furniture 24, 200
Automobile 95, 000
TOTAL 628, 900
Preliminary expenses
Recruitment expenses 4, 500
Initial research 2,500
Electricity installation 35, 500
Initial stock volume 109, 000
Water tank installation 14, 000
Initial insurance 12000
Initial advertisement 2,100
Contingencies 26, 000
Trade license 8, 500
Total 208, 300

5.1.2 OPERATIONAL EXPENSES

Particulars Amount Total Cost Per Year

Salaries and wages 52, 000 624, 000
 Electricity 1,000 120,000
Communication 3, 000 36, 000
Travelling 1,600 19, 200
Advertisement 230 2,760
Water 950 11, 400
General Expenses 1,200 14, 400
License 8, 500
Insurance 1, 200
Repair and maintenance 400 4, 800
Stationery 1050 12, 600
Medical 500 6, 000
Total 752, 860
Table 6

5.1.3 GROWTH AND EXPANSION

PARTICULARS AMOUNT
Large premises 200, 000
Additional labour 110, 000
Further research 105, 000
High stock level 420, 000
Additional machinery 800, 000
Total 1, 435, 000
Table 7

5.2 TABLE OF ANTICIPATED FUNDINGS

STAGE TOTAL EQUITY LOAN SALES PROFIT

Prestart 832, 200 520, 000 550, 000 - -

Operational expenses 752, 869 - - 400, 000 -
Growth and expansion 1,435, 000 205, 000 65, 000 - 307, 000
Total 3,020, 060 725, 000 1, 200, 000
Table 8
5.3 PROFOMA CASH FLOW PROJECTION FOR 12 MONTHS
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

Inflow BB/F 130, 250 80, 510 144250 112,730 162, 404 151,427 143,454 586,504 153, 084

Sales 152,000 155,000 160, 000 190,000 175, 000 172, 000 180, 000 190, 000 183, 000 180,000

Debtors 6000 6000 2000

Total inflow 152,000 155,500 160,000 190, 000 175, 000 238, 000 180, 000 696, 000 183, 000 182, 000

Purchase 7, 000 16, 500 40, 000 60,000 80, 000 85, 000 70, 000 360, 000 10, 000 -

Salaries &
wages
Electricity 950 850 900 1, 000 850 750 1000 100, 000 950 950

Water 950 850 750 3, 000 500 500 200 300 250 750

Insurance 12,000 - - - - - - - - -

Advertisement - - - 1, 500 - - 630 - -

Travelling 3, 500 - - 4, 800 - - 5, 500 - - 5, 400

Telephone 450 250 750 500 500 750 500 250 500 5, 000

Stationery 4, 700 - - 1500 - - 500 - - 2000

Repair & mnt. - 1, 000 1, 000 - 1, 000 1, 000 1, 000 1, 000 1, 000 1, 000

General office 1200 500 500 500 500 500 500 500 500 500

License - - - - - - - - - -

Loan - - - - - 19, 166 19, 166 19, 166 19, 166 19, 166
repayment
Credit 39, 600 39, 600

Investment 60, 000 50, 000 40-,000 70, 000 10, 000

Total 21750 74, 490 157, 50 77, 270 23, 573 75, 596 36, 546 109, 496 29916 56, 899
outflow(B)
A/C (A-B) 130, 80, 510 144, 250 112, 730 151, 427 162, 404 143,454 586, 504 153, 084 125, 101
250
Table 9
5.4 PROFORMA INCOME STATEMENT PROJECTION FOR THE FIRST THREE
YEARS
PARTICULARS 1ST YEAR 2ND YEAR
Sales 2,133,334 116500
Less cost of sales 161200
Opening stock 109,000 277700
Add purchases 124,000 23142 254558
Goods available 233, 000 3509917
Less closing stock 116,500 15045083
Gross profit 116, 500 2518776
Sundry revenue 2,016,834 126000
Total gross profit 8700
Less expenses 624,000 2,016,834 2160
Salaries and wages 36, 000 3000
Rent 12, 000 10000
Electricity 11, 400 9600
Water 12000 3600
Insurance 2760 24480
Stationery 19,200 9600
Communication 20400 2500
Travelling 11, 000 6000
Medical 14,400 3333 22990
License 19166 23450
general expenses 3333 3329 3329
Interest on loan - 90.75 8239
Depreciation 3329 4200 4200
Premises 8115 9900 76894 9900
Plant and machinery 90.75 76894 946128
Fixtures & fittings 96.8 76440 81857 1572648 764440
Tools and equipment 1900 81857
Furniture 76440 81857
Automobile
Fictitious assets
Net profit 1572648
444, 186

5.5 PROFORMA BALANCE SHEET PROJECTION FOR THREE YEARS

 YEAR ONE YEAR TWO
PARTICULARS COST DEPR BK COST DEPR BK COST
VALUE VALUE
Premises 366, 000 732 3365268 365,268 1464 364536 366,000
Plant and machinery 107,400 3329 104071 107400 6658 100,742 107400
Fixtures and fittings 24, 200 96.8 100085 108200 16230 91970 108200
Tools and equipment 36300 90.75 96761 107000 16478 90522 107000
Furniture 107,000 4200 51800 56000 8400 47600 56000
Automobile 95,000 1900 290100 300000 19800 280200 300000
Investment 230,000 - 15688200 21963480 - 21963480 3074887
Fictitious assets 229, 320 76440 152880 229320 152,880 76440 229320
TOTALS 1,002,720 82589 969,422 1,002,720 165177 594, 963 1,002,72
Current assets
Closing stock 116500 151450 467938
Outstanding debtors 9334 12134 499800
Prepayment 23,000 29900 12500
Bank 6368 8278 200000
Cash 2368 157570 3078 202070 99262
Less current
liabilities 5,000 5,000 6500 180000 216,000
Creditors 152570 195570
Working capital 1121992 790533
Capital employed
Financed by capital 725,000 725,000 725,000
Equity 1572648 2297648 234737
Net profit 16602338 400,000 1897648
Less drawings
Net capital 385004 404, 170
Long term liabilities
Loan

Net worth 444,186 1121992

5.6 CACULATION OF BREAK EVEN POINT

BEP = Fixed Cost X100

Contribution
= 1,766,000 – 915, 000
851, 000
Contribution = sales – variable cost X 100%
Sales
851,000 x 100
1766000
= 46%
BEP = 273000 X 100
46
= 593478.26

5.6.1 CALCULATION OF RATIOS

a) Liquidity ratio
Current ratio = current assets
Current liabilities =933, 000 =1:4
250, 000
b) Acid test ratio = current assets – stock = 933, 58499 = 1: 39
Current liabilities 250, 000 = 1:4

c) Gross profit margin = gross profit X 100 = 919, 500 X 100

Sales 1766000 =52%

5.6.2 GROSS PROFIT MARK UP

Gross profit mark-up = 3,852, 184 X 100
593478.26 = 649

Net profit mark-up = net profit X 100 234737 X 100

Cost of sales 360533 = 6.

5.8 DESIRED FINANCING

Source Facility Amount Rate Of Repayment Repayment Grace Collatera Any Other
Interest Period Pattern Period l Conditions
Required
KCB Long term 600, 000 15% 2years Monthly 2 months Log book Proven
loan installments credit
worthiness
Equity Overdraft 100, 000 10 years Monthly 2 months Title Active
bank installments deed account
KWF Short 300, 000 7% 1 years Monthly 2 months Group Registered
T term loan installments guarantee member
5.9 PROPOSED CAPITALIZATION
CAPITAL STRUCTURE

Source
EQUITY
Personal savings 200, 000 820, 000
Sales of property 517, 629

LONG TERM LIABILITY

Loans
KCB
Equity bank
1, 525, 000 2, 130, 000