Table of Contents

CHAPTER ONE..............................................................................................................................7
1.0 EXECUTIVE SUMMARY...................................................................................................7
BUSINESS DESCRIPTION.......................................................................................................7
MARKETING PLAN..................................................................................................................8
ORGANIZATIONS AND PRODUCTION PLAN.....................................................................8
OPERATION AND PRODUCTION PLAN...............................................................................8
1.5 FINANCIAL PLAN.............................................................................................................9
CHAPTER TWO.............................................................................................................................9
BUSINESS NAME......................................................................................................................9
BUSINESS LOCATION AND ADDRESS................................................................................9
FORM OF OWNERSHIP..........................................................................................................10
TYPE OF BUSINESS...............................................................................................................11
2.5 PRODUCTS AND SERVICES...........................................................................................11
INDUSTRY...............................................................................................................................11
2.6 BUSINESS GOALS............................................................................................................11
2.7 ENTRY AND GROWTH STRATEGY..............................................................................12
CHAPTER THREE.......................................................................................................................13
3:2 OTHER PERSONNEL 3:2:1 other personnel needed....................................................15
3:3 SUPPORTING STAFF AND SERVICE...........................................................................16
CHAPTER FOUR.........................................................................................................................16
4.0. OPERATIONAL PLAN.....................................................................................................16
4:1 Product Design and Development.......................................................................................16
4:2 PRODUCT FACILITIES AND CAPACITY......................................................................17
4:3 PRODUCTION STRATEGIES..........................................................................................18
4:4 GOVERNMENT REGULATIONS....................................................................................19
CHAPTER FIVE...........................................................................................................................21
5.0 FINANCIAL PLAN........................................................................................................21
5.1 PRE-OPERATIONAL COST.........................................................................................22
5.2 PROJECTION OF WORKING CAPITAL....................................................................22
5.3.2 CASH FLOW FOR PHLO ELECRTONICST FOR YEAR 2010..............................27
5.3.3 CASH FLOW FOR PHLO ELECRTONICST FOR YEAR 2012.............................30
5.4 PROJECTED INCOME STATEMENT FOR RONN ELECRTONICS FOR.......32
YEAR ENDING 2010, 2011 AND 2012.................................................................................32
5.5 PROJECTED BALANCE SHEET FOR PHLO ELECRTONICS...............................35
BALANCE SHEET AS AT 31ST DEC 2009..........................................................................35
5.5.2 PROJECTED BALANCE SHEET FOR PHLO ELECRTONICST..................35
BALANCE SHEET AS AT 31ST DEC 2010..........................................................................35
5.6 BREAK EVEN POINT...................................................................................................36
CHAPTER SIX..............................................................................................................................38
6.1 WORKING CAPITAL........................................................................................................39
6.3.0 CASH FLOW FOR NYANAM RESORT FOR THE YEAR 2012...............................41
6.3 INCOME STATEMENT.....................................................................................................44
6.4 BALANCE SHEET.............................................................................................................45
DECLARATION
I hereby declare that this business plan is purely the true copy of my original research work and that no

part of it has been copied from elsewhere. This work is presented to the Kenya national examination as

part of the requirements for the award of diploma in library and information science

SIGNATURE……………………………….....Date……………………

NAME: …………………………………………………………………….

The business plan has been submitted to the Kenya examination council (KNEC) with my approval as

the supervisor

SIGNATURE……………………………DATE……………………………

NAME: …………………………………………………………………..……
DEDICATION
I would like to dedicate this project to my loving and caring Mum and Dad who gave me financial as

well as moral support throughout my course.

Special thanks to my brothers, sisters, classmates and my friends for their support. May God bless you

in every good work?

ACKNOWLEDGEMENT

First and foremost, my sincere thanks go to Mr. WESONGA my supervisor for his guidance, support

and encouragement throughout the span of carrying out my project work. I am equally indebted to my

lecturers for their dedication to ensuring that I get quality education.

Once again, I am greatly indebted to my parents for their financial support, encouragement and prayers
that have brought me this far. I would also like to thank all my colleagues, friends and relatives, for
their encouragement and practical support during my entire certificate program.
I wish also to thank the Nehema Library for their support in form of reference textbooks, which
greatly contributed to the success of this entrepreneurship project.
CHAPTER ONE
1.0 EXECUTIVE SUMMARY

BUSINESS DESCRIPTION

The name of the project will be RONN LONG ROCK ELECTRONICS. It will be located
within Nairobi district at Kileleshwa next to Hippo point sited between Nairobi Yatch . The
business will commence on 1.1. 2016. It will be a sole proprietorship type of business
offering a wide variety of delicious phones to the community

The business will be easily identified using the following address;

RONN LONG ROCK ELECTRONICS
P. O. Box 510288
40100
Nairobi
 The business will be owned and managed by Phylemon kiplagat

MARKETING PLAN

RONN long rock electronics will ensure that its market plan is designed to suit customers in
Nairobi both local and foreign customers. The business will ensure that the pricing of the
commodities is equivalent and affordable to the customers. This will be more facilitated by
the good quality of the products.
The business will ensure that the products are advertised. Products will be produced
according to change in technology. The business will work harder so as to meet the needs of
the potential customers.

ORGANIZATIONS AND PRODUCTION PLAN

The business is to have its organizational plan simple and drawn according to the like of
professional services ranging from top management to the lower management. The proprietor
of the business will be the manager. Under the manager the business will employ a
supervisor followed by head electricians.
RONN Long Rock Electronics will hire security services from a well-known established
security firm under this address;
SECURITY KENYA LIMITED
BOX 451100
OPERATION AND PRODUCTION PLAN

The entrepreneur will be engaged in the production of a wide variety of electronics as well as
offering high quality services.
Modern equipment and facilities will be acquired by the business for better services and
quality products. The business shall produce 60% of the volume per period based on the
facilities; the production process will involve converting raw materials into final or finished
products.
1.5 FINANCIAL PLAN

This will indicate the source of finance i.e the capital required for the operation of the
business. RONN Long Rock Electronics will have its profits and losses calculated for each
year. The break-even point for each year will also be determined.
The source of finance to start the business will be from.
SOURCE AMOUNT (KSHS)
Personal contribution 100,000
Bank loan from Kenya Commercial Bank 200,000
Friends and Relatives contribution 60,000
Total 360,000

The loan will be payable within a period of 2.5 years (30 months) at an interest rate of 15%
per annum.
RONN electronics is expected to break even for the first year at Ksh.639, 644

CHAPTER TWO
BUSINESS NAME

The proposed business name will be RONN electronics. The business will be set at a
strategic place where it will take maximum advantage of the RONN electronics from the
regions. The palm trees and splash of regions water against the shores of the regions at the
location make the environment quite ideal for relaxation and refreshment.

BUSINESS LOCATION AND ADDRESS

The proposed business will be located within Nairobi District at Kileleshwa. It will rest be
next to Hippo Point which is sited between Nairobi Yatch and Sunset Beach. The location is
deemed to be suitable for the business because of its geographical location which is along
the regions and next to Hippo Point which will make the business to attract as many
customers as possible, who will be coming to enjoy the climate at the regions and the
beautiful scenery that include hippos and watching the sun as it sets. In addition to that,
 there is availability of electricity and clean water as well as telephone/mobile coverage,
which will make transport and communication easier.
The location is also suitable since it will be getting some of the raw materials from the
regions and nearby farms. RONN electronics will offer modern for both local and
international guests in addition to the normal menu.
The business will operate under the following address for convenience.
RONN long rock electronics
P. O. Box 510288
40100
NAIROBI.

FORM OF OWNERSHIP

The business will be a sole proprietorship. It will be owned and managed by Phylemon
Kiplagat. He is a mature man of 22 years of age and of form four level of education.
Philimon is currently undertaking a diploma course in Business Administration of which he
is at the final stage of completion. He has had firsthand experience in the Administration
industry by doing his industrial attachment at the popular Nairobi electronics. This is a
customer’s popular along the. The exposure she obtained gives her the confidence to start
her own place.
In addition, Phylemon is a hardworking lady by nature, quite ambitious and burbling with
energy. She is easy to get along with and quite welcoming, a quality that she will bank on in
her venture. She is relatively fluent in both Germany and French. This will be of great
value as many customers visiting Nairobi come from Europe and especially Britain, France
and Germany.
To be able to turn the idea into reality, the proprietor will be required to have capital, which is
estimated to be Ksh.1, 000,000. Of this amount, Kshs. 300,000/= will be from personal savings
and ksh.500, 000 will be borrowed from Kenya Commercial Bank. The loan from the bank will
be repaid over a period of two years at an interest of 20% per annum. The legal normality will
be required which is intended to be land title deed number 01/3001/1 (600 acres) of land in
Kileleshwa farms. This will be obtained from the owner’s parents. The balance ksh.200,000
will be obtained from friends and relatives which will be non refundable.
TYPE OF BUSINESS

RONN electronics will be a electronics type of business offering electronics services to its
customers.
2.5 PRODUCTS AND SERVICES

The proprietor of RONN electronics resides in Nairobi city. Over a long period he has
researched and discovered that most of the electronics and s in the area specialize in offering
modern phones and services. They totally have ignored the modern Phones However; one of
the major attractions for customers is to sample out a lot of Phones oriented electronics and
entertainment. Indigenous Phones also admires their culture. This creates a good market for
modern and environment.
The proprietor of RONN electronics intends to capture this opportunity and provide the
modern electronics in and Phones perspective and environment.
The business also intends to create employment opportunity to the community.
INDUSTRY

RONN Long Rock Electronics falls under electronics industry. Industry usually offers
phones, phones repairs. RONN electronics more or less falls under elecrtonics industry
since it will be situated along the regions, which is mostly visited by customers.
The industry is widely spread nationwide offering services and products to potential
customers for their satisfaction.
2.6 BUSINESS GOALS

RONN electronics will set goals which will enable it make an assessment of its progress.
The goals set will be classified into two categories.
i) Short-term goals - These are goals to be achieved after a period of six months.
- Number of customers served to increase by 20% a day.
- Relaxation huts to increase by three in number after 8 months.
 - An introduction of new modern phones to be realized after 7 months.
ii) Long Term goals - Are mainly realized after a period of five or more years.
They will include;
- Loan obtained from Kenya Commercial Bank to be repaid at its sixth year of
operation.
- Expansion of the business by increasing service and products volume at its eighth
year of operation. This will lead to increase of staffs and their salaries to be
increased by 20%.

- At the end of its tenth year of operation the business will have opened other
branches at Mbita, and Rusinga Island in Migori District Nyanza Province.

2.7 ENTRY AND GROWTH STRATEGY

RONN electronics is a new business venture expected to start in January 20016. In

preparation to the operation, the proprietor will be required to meet certain requirements
which include: knowledge of the business, engage the staff required, get the right personnel
used in the business and ensure that the capital both financially and materially is available.
Above all, trading license, health license will have been obtained.
For the business to obtain many clients on opening date it will need some form of
advertisements which are to be done through the media, that is the popular station and Kiss
FM, word of mouth will also be used as a means that is road show to be done two
consecutive days prior to opening date.
On the actual opening day of the business, the proprietor of RONN electronics intends to
invite some of the prominent Kenyans who include, Raphael Tuju, Nairobi Town Mayor and
Martin Oduor Otieno. Kenyan popular musician Susanne Owiyo who is a favourite of many
people will provide entertainment.
At all time, RONN electronics will need to grow and maintain its customers. Suggestion boxes
will be available for the staff and customers to air their views on the service and products
offered. The atmosphere will be conducive both to staff and customers. This will eventually lead
to business growth.

CHAPTER THREE
ORGANIZATIONAL PLAN
3.1 Organization
3:1:1 proposed organization of the business.
The business is to be managed by the owner himself who is Philimon
Duties and Responsibilities of the manager .
 Setting up of firm’s objectives, determining strategy and operating policy.
 Determining the firm’s mission and Vision
 Overall direction of the firm
 Appointment of management team
 Developing operational policies and procedures
The manager of the firm is to draw a monthly pay of twenty thousand shillings
per month.
The compensation for the overall management team inclusive of the owner is to
be a total of sixty two thousand shillings.
3.1.2 The organization chart for RONN accessories limited

MANAGER

CHIEF MARKETING MOBILE

OFFICER PHONE
ACCOUNTANT
TECHNICIAN

SALES FORCE

3:13 DUTIES AND RESPONSIBILITIES OF KEY MEMBERS

a) Duties and responsibilities of marketing officer
 Implementing strategies and policies set by the manager
 Responsible for appointing of staff
 Coordination of work of the staff
 Overseeing the work of operating staff
 Provide direction and training, represent workers grievances and manage staff problems.
The marketing officer is entitled to a remuneration of fifteen thousand shillings each month, and
should posses at least a Diploma in sales and marketing.
b) Duties and responsibilities of chief accountant
 Establishing and monitoring budgets
 Organizing for pay slips of employees
 Reporting to the manager on cash outflows and inflows
 Maintain the cash and account records books.
The chief accountant should be a holder at least C PA II or above with a two year experience as
an accountant.
c) Duties and responsibilities of the mobile phone technician
 Advise on particular mobile parts (Accessories) to be bought (stocked)
 Responsible for repair services
 Ensuring all activities of the firm are computerized and that there is immediate repair for
breakdown of mobile phones.
 Responsible for offering after sales service of mobile phones and related devices for the
customers.
 The mobile phone is to receive a monthly pay of sixteen thousand shillings. He should be
a holder of Diploma in information technology.

3:2 OTHER PERSONNEL

3:2:1 other personnel needed

Apart from the employees feature on the organization chart, the firm will require other two
employees namely a security lady and driver. The main duty of the driver will be to be in charge
of firm’s van while the security lady’s duty will be to ensure that the firm and its property is well
protected at all times and he will also act as a receptionist to some extent. The driver should be in
possession of a valid driving license with a good track record while the security lady will just
have to provide justifiable record without misconduct as a security lady.

3:2:2 Evaluation, Development and Remuneration of employees

The performance of employees is to be evaluated through performance appraisal.
Through the process of performance appraisal the area in which the
employee’s skill is not up to mark will be identified and on the job training is to be adopted
towards improvement of the skill of the employee in the particular area.
Apart from the key management of RONN, the sales representatives (sales force) will each be
entitled to a monthly pay of k.sh 7000 while driver and security lady will each receive ksh 5000
a month. The employees will be provided with some money to spend during public holidays and
will also receive allowances during the firm’s annual ball games competitions dedicated to the
public.
3:3 SUPPORTING STAFF AND SERVICE
The firm is to carry out its banking needs with any of the stable and recognized banks in the
country. The business advisers are mostly to be friends to the owner who are well established in
the business.
The firm is to have its own post office box number from which it can access postal services. The
firm is also to be in need of the services of a lawyer in case of cases in court of which it’s to
consider hiring of a lawyer to act on its behalf than employing a permanent one so as to reduce
on cos

CHAPTER FOUR
4.0. OPERATIONAL PLAN

4:1 Product Design and Development

The firm is to engage in the business of selling computers and accessories and offering of
computer solution services. The firm itself is not to manufacture the mobile phones and
accessories, and & instead it’s to order them from the manufacturers, hence the firm is to design
strategize it’s services/activities in such a way that, once the customers arrive at the centre, they
will be moved around by the sales representatives for them to have a look at the items on display
to select their preferred ones.
After the customer has chosen a particular type, he/she will then be directed to the chief
accountant who acts as the cashier or the point of purchase, and who is also to insert the figures
into the various books of accounts. In case of after sales services the customer is to link up with
the marketing officer who is the person in charge of the same.
4:2 PRODUCT FACILITIES AND CAPACITY
4:2:1 Production machinery and equipment
The firm is to use a computer and a laser printer as the only machines necessary for carrying out
its daily transactions i.e. E-commerce.
ITEM COST
Monitor (s) 15000
C.P.U. (s) 20000
Laser printer 7.000
TOTAL 42,000

The computers and printers are to be repaired and maintained by the hired local professional
computer Engineer.

4:2:2 Features of proposed workshop

The workshop is to be equipped by cameras as a security measures for surveillance of all
activities that take place inside the workshop. There are also shelves to be installed where mobile
phones and accessories on display are to be contained. There also to be proper lighting systems
and ventilation mechanisms i.e. air conditioners so as to regulate the temperatures inside the
workshop.

4:2:3 other fixed assets.

The firm may require a vehicle apart from the above mentioned fixed assets which will be
necessary for distribution and also some of the after sales services.
4:3 PRODUCTION STRATEGIES
4:3:1 Monthly material requirements
Abel accessories limited is to be in need of printing papers and printing ink as some of
materials that will be required monthly. The firm is also to require cash receipt books for sales
transactions.
COST
ITEM

Printing papers 700

Printing ink 900
Receipt books 600
TOTAL 2200

4:3:2 Labour requirements (monthly)

The firm is to have a general manager, marketing officer, mobile technician, chief accountant,
sale representatives (4), a driver and security officer whose costs are as below.
ITEM COST
manager 25,000
Chief Accountant 15,000
Marketing officer 14,000
mobile technician 15,000
Sales representatives (4) 28,000
Driver 6000
Security officer 5000
TOTAL 100,000
4:3:3 Production expenses (monthly)
The firm is to incur a sum of two thousand shillings on electricity approximately.

4:3:4 Total cost of production

The table below reflects the total cost of production.
ITEM COST
Labour 100,000
Material 2,000
1,000 (approximate)
Electricity

TOTAL 103,000

4:4 GOVERNMENT REGULATIONS

Employment act
Sets out contracts and services and provisions on such matters as summary dismissals, notice to
termination of services and keeping employees records.

Registration of business name Act

The name of the business is to be registered with the register’s office to avoid existence of firms
with same name.
Public health Act
Ensure the firm offers a healthy environment to its staff and also the community in its
surrounding.
Trading license Act
Provides the licensing of the firm for it to carry out its operation legally.
WORK SHOP/OFFICE LAYOUT
STORE

MANAGER

SHELV
ES
CHIEF MOBILE PHONE
ACCOUNTANT TECHNICIAN

SALES MARKETING
REPRESENTATIVES OFFICER

ENTRANCE
CHAPTER FIVE
5.0 FINANCIAL PLAN

The ultimate objectives intended is to be accomplished by the financial plan in relation to

efficient management of the business finance will be:-
- To be able to determine the financial position of the proposed business at any particular
time
- To show the projected amount of money that Phlo electronics will require and how it will
be raised and utilized.
- To ensure keeping of accurate and up to date records of business transactions.
- Investor will invest prudently to ensure growth of the business.
5.1 PRE-OPERATIONAL COST

These are all the expenses incurred from the time of the development of the idea to the time
when it commences. They will include:

Expenses Amount (ksh)

Advertisement and promotion 1000
Post office box 800
Recruitment 500
License and permit 1000
Planning and organizing 700
Stock 20000
Installation of equipment, water and 15000
electricity
Furniture and fittings 900
Insurance 2000
Miscellaneous 1000
Total 42900

5.2 PROJECTION OF WORKING CAPITAL

Capital is the amount invested to assist in productivity of the business. Current assets – current
liabilities.
Item 2010 2011 2012
Current assets Ksh. Ksh. Ksh.
Stock 68000 70000 0
Cash in hand 31200 20000 10000
Cash in bank 35000 800000 170000
Debtors 5000 35000 35550
Total 70010 72011 2012
Creditors 95000 120500 200000
Working capital 44200 804500 15550
Particul Jan Feb Ma Apr Ma June July Au Sep Oct No Dec Tot
ars r il y g t v al
Cash Ksh Ksh Ks Ksh Ks Ksh. Ksh Ks Ksh Ksh Ks Ksh Ksh
inflow . . h. . h. . h. . . h. . .
Bal b/f 200 532 49 548 68 9352 115 11 155 182 21 281 158
000 10 03 90 72 0 053 44 693 793 62 793 543
0 0 43 93 8
Sales 870 900 10 121 13 1500 156 16 171 180 20 220 178
00 00 65 500 50 00 000 50 000 000 00 000 200
00 00 00 00 0
Debtors 0 0 0 418 0 0 0 0 0 0 0 0 418
0 0
Total 287 143 15 180 20 2435 271 27 326 362 41 501 337
cash 000 210 55 570 37 20 053 94 693 793 62 793 161
inflow 30 20 43 93 8
Cash
outflow
Pre- 136 0 0 0 0 0 0 0 0 0 0 0 136
operatio 790 790
nal
Purchas 290 300 35 405 35 5000 520 55 570 600 65 690 578
es 00 00 50 00 00 0 00 00 00 00 00 00 000
0 0 0 0
Salaries 540 540 54 540 54 5400 540 54 540 540 54 540 648
& 00 00 00 00 00 0 00 00 00 00 00 00 000
wages 0 0 0 0
Insuran 200 200 20 200 20 2500 250 25 250 250 25 250 275
ce 0 0 00 0 00 0 00 0 0 00 0 00
Credito 0 0 0 0 0 1220 321 0 162 141 0 200 946
rs 7 10 00 00 00 17
License 0 0 0 0 0 0 0 0 0 0 0 600 600
+permit 0 0
Statione 180 980 94 100 10 500 700 20 400 120 10 150 130
ry + 0 0 0 00 00 0 00 0 20
postage
Adverti 200 0 0 600 0 0 550 0 400 400 0 400 255
sement 0 0 0 0 0 0 00
Water 100 500 50 650 50 500 600 60 650 700 75 800 775
5.3 CASH FLOW PROJECTION
5.3.1 CASH FLOW FOR PHLO ELECRTONICST YEAR 2010
5.3.2 CASH FLOW FOR PHLO ELECRTONICST FOR YEAR 2010

Parti Jan Fe Ma Apr Ma Jun Jul Aug Sept Oct Nov Dec Total
cular b r il y e y
s
Cash Ks Ks Ks Ksh Ksh Ksh Ks Ksh. Ksh. Ksh. Ksh. Ksh. Ksh.
inflo h. h. h. . . . h.
w
Bal 33 36 38 402 420 409 51 5554 6100 6724 7221 7713 62231
b/f 12 16 70 233 583 683 91 38 88 71 71 21 50
43 93 43 83
Sale 27 27 27 280 280 288 30 3120 3200 3400 3520 3600 36560
s 20 60 60 000 000 000 00 00 00 00 00 00 00
00 00 00 00
Debt 0 0 0 0 0 0 0 0 3335 0 0 0 33533
ors 3
Tota 60 63 66 682 750 757 81 8674 9636 1012 1074 1133 99126
l 32 76 30 233 583 683 91 38 21 471 171 121 83
cash 43 93 43 83
inflo
w
Cash
outfl
ow
Purc 68 69 69 700 700 720 75 7800 8000 8500 8800 9000 91400
hase 00 00 00 00 00 00 00 0 0 0 0 0 0
s 0 0 0 0
Salar 14 14 14 140 140 140 14 1400 1400 1400 1400 1400
ies 00 00 00 000 000 000 00 00 00 00 00 00
&
wag 00 00 00 00
es
Cred 0 21 30 295 0 0 16 0 1925 0 0 0 11850
itors 90 91 00 94 2 5
0 0 5
Insur 30 30 30 300 300 350 35 3500 3500 3500 3500 4000 40000
ance 00 00 00 0 0 0 00
Lice 0 0 0 0 0 0 0 0 0 0 0 1000 10000
nse 0
+per
mit
Stati 18 20 18 210 800 900 70 2500 1200 1300 2500 2000 19650
oner 00 00 50 0 0
y +
post
age
Adv 15 0 0 0 0 500 0 6000 0 7300 0 0 33300
ertis 00 0
eme 0
nt
Wat 10 10 10 800 850 950 90 950 1000 1000 1000 1000 11450
er 00 00 00 0
Elect 25 25 25 250 250 250 20 200 200 200 250 300 2850
ricit 0 0 0 0
y
Tele 60 60 68 700 700 690 75 7250 7000 7500 7800 8000 84700
phon 00 00 00 0 0 0 00
e
Secu 35 35 35 400 400 400 40 4000 4000 4000 4000 4000 46500
rity 00 00 00 0 0 0 00
Misc 30 40 45 500 500 500 50 5000 5000 5000 5000 6000 58800
ellan 00 00 00 0 0 0 00
eous
Tota 24 25 26 261 220 238 26 2593 2911 2903 3028 3153 32047
l 15 06 08 650 900 500 37 50 50 00 50 00 5
cash 50 50 10 45
outfl
ow
Net 36 38 40 420 469 519 55 6100 6724 7224 7713 8160 67092
cash 16 10 25 583 683 183 54 88 71 71 21 21 8
93 43 83 38
 5.3.3 CASH FLOW FOR PHLO ELECRTONICST FOR YEAR 2012

Particula Jan Feb Mar Ap Ma Ju Jul Aug Sep Oct Nov Dec Total
rs ril y ne y t
Cash Ksh. Ksh. Ksh. Ks Ksh Ks Ks Ksh Ksh Ksh Ksh. Ksh. Ksh.
inflow h. . h. h. . . .
Bal b/f 8160 8532 9142 97 105 11 11 125 132 142 1523 160134 1405003
21 21 04 24 611 19 77 728 948 894 692 2 3
04 31 51 7 9 2
1 1
Sales 3400 3560 3600 36 368 38 39 404 420 420 4320 48000 4712000
00 00 00 00 000 00 20 000 000 00 00
00 00 00
Debtors 0 6283 0 26 0 0 0 0 0 0 0 0 32790
50
7
Total 1156 1215 1274 13 142 14 15 166 174 184 1955 208134 1879482
cash 021 500 204 58 461 99 09 128 948 894 692 2 3
inflow 91 1 31 51 7 7 2
1 1 1
Cash
outflow
Purchas 8500 8900 9000 90 920 95 98 101 105 105 1080 110000 1168000
es 0 0 0 00 00 00 00 000 00 00 0
0 0 0
Salaries 1850 1850 1850 18 185 18 18 185 185 190 1950 200000 2250000
& wages 00 00 00 50 000 50 50 000 000 000 00
00 00 00
Creditor 0 0 0 0 0 0 0 0 0 0 2000 0 20000
s 0
Insuranc 6000 6000 6000 60 600 60 60 650 650 650 6500 0 74500
e 00 0 00 00 0 0 0
License 0 0 0 0 0 0 0 0 0 0 0 20000 20000
+permit
Statione 1500 2000 2500 30 350 30 39 400 324 290 3500 4014 37083
ry + 00 0 00 24 0 5 0
postage
Advertis 7000 1000 0 0 0 14 0 150 0 0 0 20000 57000
ement 00 00
0
Water 1000 1000 1000 10 100 10 15 150 150 150 1500 1500 15000
00 0 00 00 0 0 0
Electrici 300 300 300 30 300 30 30 300 300 350 350 400 3800
ty 0 0 0
Telepho 7000 700 700 70 750 75 75 750 800 800 8500 8500 91000
ne 0 0 00 00 0 0 0
Security 4000 4000 4000 40 400 40 40 450 450 450 4500 4500 50500
00 0 00 00 0 0 0
Miscella 6000 6000 6000 60 600 60 60 650 650 650 6500 6500 74500
neous 00 0 00 00 0 0 0
Total 3028 3013 3018 30 305 32 31 331 320 325 3543 381914 3861383
cash 00 00 00 23 300 18 22 800 545 250 50
outflow 00 00 24
Net cash 8532 9142 9724 10 111 11 12 132 142 152 1601 169942 1493344
21 04 04 56 931 77 57 948 894 369 342 8 0
61 1 51 28 7 2 2
1 1 7
5.4 PROJECTED INCOME STATEMENT FOR RONN ELECRTONICS FOR

YEAR ENDING 2010, 2011 AND 2012

YEAR 2009 KSH KSH

Sales 1782000
Add debtors 4180
1786180
Less purchases 588000
Gross profit 1198180
Less expenses
Salaries and wages 648000
Insurance 27500
License and permit 6000
Stationery and postages 13020
Advertisement 25500
Water 7750
Electricity 2400
Telephone 37300
Security 40000
Miscellaneous 28000
Total expenses 835470
Net profit 362710
10/100x362710(provision 36271
for tax)
Net profit after tax 326439
YEAR 2010 KSH KSH
Sales 3656000
Add debtors 33533
3689533
Less purchases 914000
Gross profit 275533
Less expenses
Salaries and wages 1865000
Insurance 40000
License and permit 10000
Stationery and postages 19650
Advertisement 33300
Water 11450
Electricity 2850
Telephone 84700
Security 46500
Miscellaneous 58800
Total expenses 2172250
Net profit 603283
10/100x362710(provision for tax) 60328
Net profit after tax 542955
YEAR 2011 KSH KSH
Sales 4712000
Add debtors 32790
4744790
Less purchases 1168000
Gross profit 3576970
LESS
EXPENSES
Salaries and 2250000
wages
Insurance 74500
License and 20000
permit
Stationery and 37083
postages
Advertisement 57000
Water 15000
Electricity 3800
Telephone 91000
Security 50500
Miscellaneous 74500
Total expenses 2673383
Net profit 903407
10/100x903407 90341
(provision for
tax)
Net profit after 813066
tax
 5.5 PROJECTED BALANCE SHEET FOR PHLO ELECRTONICS
BALANCE SHEET AS AT 31ST DEC 2009

FIXED ASSETS Ksh Ksh LIABILITIES Ksh

Tools & equipment 33590 Capital + 1875
Furniture 1200 Net profit 326439
Total 34790 Gross profit 328314
CURRENT ASSETS LIABILITIES
Debtors 4180 388201 Creditors 94677
Cash in hand 16021
Cash at bank 300000 Total Liabilities 422991
Stock 68000
Total
Total assets 422991 422991

5.5.2 PROJECTED BALANCE SHEET FOR PHLO ELECRTONICST

BALANCE SHEET AS AT 31ST DEC 2010

FIXED Ksh Ksh LIABILITIES Ksh Ksh

ASSETS
Tools & 60550 Capital + 336604
equipment 18000 Net profit 542955
Furniture 78550 Gross capital 879559
Total
CURRENT LIABILITIES
ASSETS
Debtors 33533 Creditors 118505
Cash in hand 16021
Cash at bank 800000
Stock 70000
Total 919554
Total assets 919554 Total Liabilities 998104
5.5.3 PROJECTED BALANCE SHEET FOR PHLO ELECRTONICS
BALANCE SHEET AS AT 31ST DEC 2011
FIXED Ksh Ksh LIABILITIES Ksh Ksh
ASSETS
Tools & 480000 Capital + 1409152
equipment 30000 Net profit 813066
Furniture 510000 Gross capital 222228
Total
CURRENT LIABILITIES
ASSETS
Total fixed 32790 Creditors 20000
assets 9428 Total Liabilities 20000
Debtors 169000
Cash in 0
hand 173221 2242218 _______
Cash at 8 2242218 Total 2242225
bank
Total
current
assets
Total
Total
assets

5.6 BREAK EVEN POINT

At this point the business operates neither a profit or loss since sales covers all fixed and
variable cost of the business.
BEP = Fixed costs + variable cost + profit.
 FIXED COST Ksh
Rent 30000
Insurance 50000
License 15000
Loan payment 115000
Salaries 2500250
Total 2710250
VARIABLE COST
Advertisement 10000
Water 7000
Electricity 8000
Maintenance 5000
Telephone 6000
Total 36000
BEP = Fixed cost + variable cost + profit
BEP= 2,710,250+36000=2,7462510S
 CHAPTER SIX
1.0 PRE-OPERATIONAL COST ESTIMATES

EXPENSES AMOUNT

2 Registration 10000

Telephone 10000

Post box 3000

Advertising / promotion 10000

Research 3000

Recruitment 21000

Equipment / facilities 400000

Installation – electricity 8000

- Renovation / painting 50000

- Stock 30000

Miscellaneous 2000

Total 547000
 6.1 WORKING CAPITAL

Working capital for cool breeze will be:

Kshs 800,000 – 547,000

= 253,000

6.1 LOAN REPAYMENT SCHEDULE

Month Principal amount Monthly installment Interest paid per month Balance
1 300000 10000 3750 290000
2 290000 10000 3625 280000
3 280000 10000 3500 270000
4 270000 10000 33350 260000
5 260000 10000 3250 250000
6 250000 10000 3125 240000
7 240000 10000 3000 230000
8 230000 10000 2875 220000
9 220000 10000 2750 210000
10 210000 10000 2625 200000
11 200000 10000 2500 190000
12 190000 10000 2375 180000
13 180000 10000 2250 170000
14 170000 10000 2125 160000
15 160000 10000 2000 1500000
16 150000 10000 1875 140000
17 140000 10000 1750 130000
18 1300000 10000 1625 120000
19 120000 10000 1500 110000
20 110000 10000 1375 100000
21 100000 10000 1250 90000
22 90000 10000 1125 80000
23 80000 10000 1000 70000
24 70000 10000 875 60000
25 60000 10000 750 50000
26 50000 10000 625 40000
27 40000 10000 500 30000
28 30000 10000 375 2000
29 20000 10000 250 10000
30 10000 10000 125 0

48
6.3.0 CASH FLOW FOR NYANAM RESORT FOR THE YEAR 2012

Particular JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
Cash Flow
Beginning Cash 500000 28095 35595 40595 43595 45795 45895 47895 51895 56995 59495 69159 1025009
Sales 205000 230000 240000 241000 245000 25000 255000 260000 265000 270000 280000 30000 3036000
0 0
Total Cash inflow 705000 258095 275595 281595 288595 29579 300895 309895 316815 326995 339495 36915 4061009
5 9
Pre – Operational 398405 - - - - - - - - - - - 398405
Purchases 70000 75000 50000 80000 81000 81000 82000 83000 84000 85000 98000 89000 979000
Staff meal 8500 6000 6000 6000 - 6000 6000 6000 6000 7000 8000 5000 70500
Salaries and Wages 132000 132000 132000 132000 132000 13200 132000 132000 132000 132000 132000 13200 1584000
0 0
Transport 6000 - 1000 500 - 1000 500 600 700 2000 2000 - 14300
Insurance - - - - - - - - - - - 40000 40000
Drawings - - - 1000 - - 1000 - 2000 3000 1000 - 8000
Telephone 6000 1500 1000 1000 500 1000 500 1000 700 1000 1000 400 20000
Stationery 6000 - 500 - 300 - 200 500 600 - 500 - 8600
Licence/permit/rates - - - - - - - - - - - 6520 6520
Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
Discount allowed - - - 500 - 600 - 500 400 500 - - 2500
Repairs/ 10000 - 500 400 - - 300 500 600 - 1000 - 13300
maintenance
Advertisement 5000 - - 1000 - - 1000 - 700 1000 - - 8700
Fuel 6000 500 - 1000 1000 1000 - 1000 1000 2000 2000 3000 15800
Staff development - - 1000 - 500 - 500 1000 - 1000 - - 4000
Creditors - - - 1000 - - 1000 - 2000 - 3000 - 7000
Water 8000 1000 500 500 - 500 500 1000 1000 1000 2000 - 16000
Interest on loan - - - - 5000 4800 4600 4400 4200 4000 3800 3600 34400
Loan repayment - - - - 16000 16000 16000 16000 16000 16000 16000 16000 128000
Miscellaneous 8000 - 500 500 - - 300 500 - 300 1000 - 11100
TOTAL CASH 676905 222500 235000 238000 242800 24990 253000 256000 259900 267500 270300 29882 3463625
OUTFLOW 0
NET CASH 28095 35595 40595 43595 45795 45895 47895 51815 56995 59495 69159 70375 595384
6.3.1 CASH FLOW FOR NYANAM RESORT THE YEAR 2012
Particular JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
Cash Flow
Beginning Cash 70395 70775 71375 74675 76675 80375 80775 85375 86675 88675 90375 94775 970900
Sales 305000 310000 315000 320000 325000 33000 335000 340000 345000 350000 355000 36000 3990000
0 0
Total Cash inflow 373373 380775 386375 394675 401675 41037 45775 425375 431675 431675 438675 44537 4960900
5 5
Purchases 90000 95000 95000 96000 96000 97000 97000 98000 98000 99000 99000 10000 1160000
0
Staff meal 8000 8000 10000 11000 11500 12000 13000 13500 13500 14000 14500 10000 139000
Salaries and Wages 145200 145200 145200 145200 145200 14520 145200 145200 145200 145200 145200 14520 1742400
0 0
Transport 4000 4000 3000 4000 5000 5000 6000 6000 6000 6000 7000 2000 58000
Insurance - - - - - - - - - - - 40000 40000
Drawings 3000 - 3000 - 4000 4000 5000 6000 6000 7000 6000 - 44000
Telephone 5000 4000 2000 3000 5000 5000 3000 5000 5000 6000 6000 2000 51000
Electricity 8000 2000 5000 5000 5000 5000 4000 4000 5000 5000 6000 1000 55000
Stationery 2000 2000 3000 4000 3000 4000 4000 4500 4500 4000 5000 4000 43500
Licece/permit/rates - - - - - - - - - - - 6520 6520
Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
Discount allowed - 3000 2000 3000 2000 3000 4000 3000 4000 4500 5000 2000 35500
Repairs/ 2000 - 1000 3000 1000 3000 3500 4000 4000 4500 5000 3000 34000
maintenance
Advertisement - 3000 1500 32000 2000 3000 3500 4000 4000 4500 5000 3000 36500
Fuel 3000 3000 2000 4000 4000 4000 3000 5000 500 5000 6000 4000 48000
Staff development 2000 2000 5000 2000 5000 4000 3500 5000 5000 4000 4000 2000 43500
Creditors - 3000 2000 3000 2000 3000 2500 3500 4000 4000 4500 1000 32500
Water 5000 3000 3000 4000 3000 4000 4000 5000 6000 4000 6000 1000 48000
Interest on loan 3400 3200 3000 2800 2600 2400 2200 2000 1800 1600 1400 1200 27600
Loan repayment 16000 16000 16000 16000 16000 16000 16000 16000 16000 16000 16000 16000 192000
Miscellaneous 2000 3000 4000 3000 3000 4000 5000 3000 4000 3000 3000 1000 38000
TOTAL CASH 304600 309400 311700 318000 321300 32960 330400 338700 343000 348300 350600 35092 3947020
OUTFLOW 0 0
NET CASH 70779 71375 74675 76875 80375 80775 85375 86675 88675 90395 94775 10385 1013880
5

6.3.2 CASH FLOW FOR NYANAM RESORT FOR THE YEAR 2013
JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
Particular
Cash Flow
Beginning Cash 10385 148955 225255 300755 393355 502255 628000 744100 876700 1023800 1181400 134550 7473930
5 0
Sales 36750 385000 402500 420000 437500 455000 472500 490000 507500 525000 542500 577500 5582500
0
Total Cash inflow 47135 533955 627755 720755 830855 937255 1100500 1234100 1384200 1548800 1723900 192300 13056430
5 0
Cash outflow
Purchases 10500 110000 115000 120000 125000 130000 135000 140000 145000 150000 155000 165000 1595000
0
Staff meal 5000 5000 - 11000 11500 12000 13000 13500 13500 14000 14500 10000 139000
Salaries and Wages 15840 158400 158400 158400 158400 158400 158400 158400 158400 158400 158400 158400 1900800
0
Transport 2000 2000 1000 2000 2000 2000 4000 5000 5000 5000 5000 3000 38000
Insurance - - - - - - - - - - - 40000 40000
Drawings 5000 - - - - 5000 5000 6000 6000 7000 7000 - 41000
Telephone 3000 2000 1000 2000 2000 2000 2000 3000 4000 4000 5000 1000 31000
Electricity 1000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 23000
Stationery 3000 - 2000 - - 1000 3000 3000 3000 3000 4000 - 22000
licence/permit/rates - - - - - - - - - - - 6520 6520
Rent 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 84000
Discount allowed - 500 - - - 5000 5000 5000 4000 5000 2000 - 26500
Repairs/ 5000 - - - 6000 - - 5000 - - - - 16000
maintenance
Advertisement - - 20000 - - - - - - - 10000 - 30000
Fuel 3000 2000 1000 1000 - 2000 3000 2000 3000 3000 2000 - 22000
Staff development - - - - - - 20000 - - - - - 20000
Creditors - - - 5000 - 5000 - 5000 6000 6000 4000 - 31000
Water 4000 3000 3000 3000 3000 3000 3000 4000 4000 3000 5000 2000 37000
Interest on loan 1000 800 600 400 200 - - - - - - - 3000
Loan repayment 16000 16000 16000 16000 16000 - - - - - - - 80000
TOTAL CASH 32240 308700 327000 327400 328600 329400 356400 357400 360400 367400 378400 392920 4149820
OUTFLOW 0
NET CASH 14895 225255 300755 393355 502255 628000 744100 876700 1023800 1181400 1345500 153008 8906610
5 0
6.3 INCOME STATEMENT

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 2012

ITEM YEAR 2010 YEAR 2011 YEAR 2012

KSHS KSHS KSHS
Sales 3067000 4240200 6398700
Less purchase 875200 1441800 3513050
Gross profit 2191800 2798400 2885650
Less expenses
Salaries & wages 1999200 1999200 1999200
Rent 60000 60000 60000
Interest on loan 36725 18750 2625
Postage 350 3700 6450
Telephone 11900 23400 20650
Repair 1000 4500 10300
Transport 9950 1800 2300
Stationary 1700 1400 1500
Advertisement 2000 5000 1050
Electricity 18100 26600 30100
Water 12000 18450 16250
Insurance 4000 4000 4000
License & permit 4000 4000 4000
Miscellaneous 3600 20200 30750
Total 2164525 2137000 2197175
Net profit before tax 27275 661400 688475
Provision for tax 2727.5 66140 68847.5
Net profit after tax 24547.5 595260 619627.5
 6.4 BALANCE SHEET

BALANCE SHEET AS AT 31ST DEC 2010, 2011AND 2012

ITEMS 2006 (KSHS) 2007 (KSHS) 2008 (KSHS)

Fixed assets
Furniture & fittings 120000 178650 190250
Equipment 400000 670550 750500
Motor vehicle 65000 65000 65000
Total 585000 914200 1005750

Current assets
Debtors 18000 3200 6050
Stock 857200 945650 1065080
Cash in hand 23025 117575 173000
Cash at bank 100000 400000 600650
Total 899225 1466425 1844750
Total assets 1484225 2380625 2850500
Capital 1242952 1676615 2110922
Add net profit 24547 595260 6196628

Long term liability

Bank loan 180000 60000 60000
Interest on loan 36725 18750 2625

Short term liabilities

Creditors - 30000 57300
Total liabilities 1484225 2380625 2850500
6.6 CALCULATION OF BREAK –EVEN POINT FOR COOL BREEZE RESTAURANT

B.E.P for COOL BREEZE RESTAURANT for the first year of operation will be:

Fixed costs = 2103925

1– Variable costs 1 - 991050

Sales 3067000

FIXED COSTS VARIABLE

COSTS

Rent 60000 Purchases 875200

Salaries 1999200 Postage 350

Interest 36725 Telephone 15900

Insurance 4000 Repairs 1000

License 4000 Transport 12900

Total 2103925 Stationery 17000

Advertisement 2000

Electricity 18100

Water 19000

Miscellaneous 29600

Total 991050

= 2103925 = 2103925
 1 - 0.323 0.677

= 3107717

6.8 PROFITABILITY RATIOS IN %

GROSS PROFIT MARGIN

= Gross profit x 100%

Sales

2010 = 2191300 x 100%

306700

= 7.15%

2011 = 2798400 x 100%

4240200

= 1.18%

2012 = 2885650 x 100%

6398700

= 45.1%
6.72 NET PROFIT MARGIN

= Net profit before tax x 100%

Sales

2010= 27275 x 100%

3067000

2012 = 661400 x 100%

4240200

= 15.6%

2013 = 688475 x 100%

6398700

= 20.7%

6.7.3 RETURN ON INVESTMENTS

= NET PROFIT AFTER TAX X 100%

SALES

Year 2006 = = 24547.5 x 100%

3067000

= 80.22%

Year 2007 = 595260 x 100%

4240200
 = 14.04%

Year 2008 = 619627.5 x 100%

6393700

= 9.68%