Tel: 0714371383

PAPER NAME: BUSINESS PLAN

PRESENTED BY: MWANGI IAN NDUNGU
COURSE: CRAFT IN LIBRARY AND INFORMATION
STUDIES
INDEX NUMBER: 27511101/

COURSE NAME: CRAFT IN LIBRARY AND INFORMATION

STUDIES
PAPER NUMBER:

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL

(KNEC) IN PARTIAL FULFILMENT FOR THE
AWARD OF CRAFT IN LIBRARY AND
INFORMATION STUDIES

SUPERVISOR: MR. JOEL KIENO

EXAM SERIES: NOVEMBER/2013

DECLARATION

I hereby declare that this business plan is my original work, through research and findings and

has been presented to any examination board for the award of certificate, diploma or degree.

Name of presenter:

Signature ………………………………… Date …………………………2013

Name of supervisor…………………………………………………………….

Signature ………………………………… Date …………………………2013

i
DEDICATION

This business plan is dedicated to my beloved parents, brothers, sisters for their encouragement

and financial support they have been giving me. Similar special dedication goes to my brothers,

sisters, classmates who encouraged and guided me throughout the entire time.

ii
ACKNOWLEDGEMENT

I acknowledge my parents for supporting me financially and through the work or encouragement
while preparing this business plan.
Secondly, I acknowledge my supervisor for his guidance and encouragement, not forgetting my
fellow students. Above all I acknowledge the Almighty God for giving me health throughout the
course.

iii
EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

This chapter contains the name of the business, the owner of the business, where the business

will be operated, type of the business, capital to be invested in business the product. It will offer

justification of the business opportunity, business goals and objectives and also entry and growth

strategy of the business.

2.0 MARKETING PLAN

This chapter contains the potential customers of the business, the competitors, market share and

size which Is expected to be 31% of the market share, methods of advertisements and promotion,

pricing strategy by looking reasonable price, distribution channel which will directly access from

the premises, problems the business will encounter and its solutions.

3.0 ORGNIZATION AND MANAGEMENT PLANS

This chapter will show organization structure chart. Duties and responsibilities of the manager

and the rest of the employees in the business and their qualifications.

It will also contain the way employees are recruited, training and promotion, remuneration and

incentives by using salaries, overtime payments, leave etc legal requirement try the government

and support services to the business.

4.0 PRODUCTION AND OPERATION PLAN

This chapter contains production facilities and capacity, production facilities and capacity,

production strategy by ensuring the business goals and objectives are achieved, production

process and also factors to affect the business operating and production.

iv
5.0 PRE- OPERATION COSTS

This chapter, contains the working capital of the business, projected cash flow statements, pro-

forma balance sheet, break-even level of the business, expected profitability also proposed

capitalization by the owner of the business.

v
CHAPTER ONE

1.1 OWNERS BACKGROUND

I am Ian Ndung’u, am 18 years old and reside in Thika, Landless. I would like to have my own

business of selling tyres and batteries. The business will be named Boss Enterprise

1.2 BUSINESS NAME

The name of the proposed business will be ‘Boss enterprise. The name is suitable because it will

attract customers and make them memorize. My business will be located in Ruiru town on your

way to Nairobi. I intend that I have the knowledge that is required to start my own business when

through with my education so that I can have the knowledge that is required to start the business

and also manage it.

I choose the name in order to differentiate the business with computers and it will be dealing

with computers, stationery, and computer maintenance and repair all less than one roof, thus it

qualifies to be called a center.

1
1.3 BUSINESS LOCATION

Boss Enterprise will be located next to the main stage opposite in urban centre .The place was

preferred to allow ease for the workers who are returning to their homes after their days work

and those who are coming to the town.

The business will also benefit from its location because its located in the most central part of the

town and high profitability will be realized because potential customers will coming across the

enterprise on a daily basis while on shopping in the building. There is also high security and

good transport system.

The business will operate under the following address;

BOSS ENTERPRISE

P.O.BOX 3600

NAIROBI

TELEPHONE NO 0713327746

EMAIL ADRESS: boss [email protected]

2
 BUSINESS LAYOUT

Managers office Secretary’s office

Meeting room

Hall
gate

Reception

Parking area

Swimming pool

3
1.4 FORM OF OWNERSHIP

The business enterprise will be a sole proprietorship. This calls for the management of the

business. The estimated capital of the business will be five hundred thousand, of this

estimation ,the owners capital contribution shall be sourced from owners savings and selling of

the personal property which caters for 50%(250,000) and the remaining amount(250,000) will be

obtained from the following sources;

Source amount

Owners contribution 800000

Friends and friends 800000

Bank loan 70000

total 2300000

4
1.5 TYPE OF BUSINESS

The business is a sole proprietorship which operates as a wholesale in the area. The business is in

the trade and commerce industry with the of making profit for the purpose of growth. The

business is also aimed at sealing the vacuum in the market by providing quality goods. The

manager of the BOSS Enterprise has a total responsibility in the business operation. He will

takes all the managerial functions; coordinating, supervising financing and also carry out the

recruitment of the personnel to assist in the operation of the business. The enterprise will offer

products of various quantities which are of high quality in the market. The employees of the

organization must be qualified to enhance efficiency. The business will advertise its products

through posters, makes advertisement in the radio, television and the billboards. The business

will charge its customers fairly and also provide trade discounts.

5
1.6 PRODUCTS AND SERVICES

The enterprise will mainly deal with goods like tires, batteries motor vehicle spare parts and

many other types of goods. The business will provide large parking services for motor vehicles

and bicycles for its customers. The business will provide transport services to the packing place

and also provide transport for individuals who buy large quantity up to a distance of 5

kilometers. And provision of discounts for those who large in small quantities. The products will

be of varying size so as to suit the needs of the different customers. The products will be

acquired from qualified manufacturers at a competitive price, good quantity and quality, so as it

will be able to satisfy its customers need and encourage them to come again in the enterprise.

The product will be uniquely differentiating itself from other competitors because it will have a

brand name which will make them be identified by customers. The enterprise will acquire goods

which have been accepted by Kenya bureau of standard and make sure it meets its qualification.

6
1.7 JUSTIFICATION OF THE OPPORTUNITY

The business will help those whose vehicles tires and batteries are not functioning well. The

business will satisfy the demand of community in which it will provide limited services at

affordable costs. This business will enhance positive public relations by enabling interactions

among all socio-economic classes of people.

The business will create self Create self employment the proprietor, the business will also be

Raising living standards which are achieved by creation employment hence able to earn salary,

The enterprise will be located in an area where there is low competition and adequate Security.

The area has good security which is favorable for the functioning of the business. Because the

area is located near a police post and it will employ security guards to check on security matters.

Creation of employment to qualified peoples who will be of help to the business organization of

available resources. Such as power to provide lighting and operation of machines.

7
1.8 THE INDUSTRY

The business belongs to transport industry. It is a medium firm which will provide large area of

packing space for both motor vehicles and bicycles. The business has large warehouse for

storage of goods. The capital of the business is 500,000. Technology applied is capital intensive

and man power will have a variety of responsibilities which depends with availability of work as

the business progress. The average number of employee requirement in the enterprise will

decrease due to technology applied. The business has many potential customers hence demand

will be high demanded for goods. As the business grows it will change with change in

technology so as to achieve objective of the organization.

1.9 BUSINESS GOAL

The business goals will be;

i) Provision of employment within and therefore raise their living standard.

ii) Produce and provide attachment to students, for that improves education.

iii) Expand business services.

iv) To maximize the profits of the business to almost 100% by the sixth year.

v) Attracting and retaining customers by offering reliable and satisfactory produces and services.

vi) Open other branches outside Nairobi town.

8
1.10 THE ENTRY AND GROWTH STRATEGY

The business will be able to penetrate and gain market acceptance and preference by offering

products at affair prices to the customers, offering offer sale services and ensuring products are

proved by Kenya Bureau of standards so as to provide customers with goods of high quality,

quantity and should be available at the right time. The management will be carried out by the

owner of the business so as to ensure that the business is going well and working towards

achieving business objectives. The business will acquire funds from personal savings, Bank

loans, and borrowing from Family and Friends. So as to be able to attract more customers the

business will advertise its products in media hence leading to incensement of profit so as to

enhance the business it will open Branches all over the country especially to major towns when it

gains its stability and perform well.

9
CHAPTER TWO

MARKETING PLAN

2.1 CUSTOMERS

The potential customers are the residence of Nakuru and the surrounding areas within Nakuru

town. They will be buying products for their domestic for their domestic and commercial use.

These customers buy products in average quantity and have no specific ways and by so doing,

the business will provide youth with ideas which can earn them the living. The business will also

improve gender equality in the society. It will supply products to customers according to their

orders and these include the following;

a) Institutional customers

My customers will majorly target institutional entities because they buy in bulk, hence

improving. My business to expand its premises and to pay its debts promptly for easy entrance

into the business ledgers. The institution will send their purchase orders according to the require

for the business to meet their needs and to make their adjustments in the products stored my

business will mainly supply them with cement metallic rods used during construction purposes.

b) Domestic customers

They buy for personal consumption and I provide them in lower price which is affordable by all

class of life without transport expenses to their homestead provided it within the bracket of 2 km

and below and the products of high quality.

10
c) Commercial customers

There are customers who buy my products for resale in their enterprise for a profit. They buy

depending on their

Number of people they sell to also to their level of need for the products in the area.

2.2 MARKET SHARE

The potential customers within the area of operation are about five thousand customers of which

competitors will lead or serve 69% while the remaining 31% will be served by Boss Enterprise.

However this percentage is expected to rise since the proprietor intends to capitalize on the

weakness of competitors so as to be offered will be the best quality and affordable price in the

market. I believe that I will capture the 31% market share within the first six months of the

establishment while the rest will be captured gradually. I also target to win the market shares of

45% by the end of two years and this will be facilitated by increasing branches in the area every

time after recording an increase of customers

Boss Enterprise
= 1520x 100
5000
= 31%
Oasis Enterprise
= 1805 X 100
5000
= 26%

Solid Enterprise
= 1667x 100
5000
= 33%

11
 Sales

Moonlight
Oasis
Solid

2.3 COMPETITION

The proposed business will experience competition from the already well established business

mainly: oasis computer enterprises and solid computer centre within in the market. They are

located 100 metres and 800 metres respectively

The location of my business will be advantageous due high accessibility and also the location is

away where the two competitors are situated.

The size of the competitors compared to the proposed business is that they are of medium size

hence offer small competition. Agents will be the main distributors of products and to motivate

customers. The proposed business will be rewarding good behavior and high sales, delegating

authority and responsibility to workers. Also business will show concern to them i.e. listening to

their problems and also raising salary after period set by management.

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Name Strengths Weakness
Boss Enterprise Working regular hours Poor public relations
Have sufficient capital. High unfair prices
Already established and well Expensive products
organized Poor location i.e. interior place

Solid Enterprise Attractive premise Poor management

Good location Poor quality products and
Have sufficient capital services
Cover a wide market area Doesn’t observe punctuality
Limited customers
Inconvenience
No discounts

Boss Enterprise Spacious premises Unpopular as it is new

enterprise High quality products and services Lack of enough employees
Good management Inadequate employees
Good location readable by Inadequate equipment and
customers facilities
Sufficient capital Inadequate suppliers
Good security No established hence no
Skilled and experienced employees experience
Attractive premises
Fair prices
Wide range of products
Regular opening and closing hours
Reliable source of raw materials

13
2.4 ADVERTISEMENT AND PROMOTION STRATEGY

Promotion and advertising creates a great deal of publicity and awareness to the customers. They

include:

i. Posters

Boss Enterprise will employ or use posters and will be placed at strategic points for example on

public notice boards. In the area chief camps, schools and organizations notice boards. They will

inform the customers about the products and services that will be available where they can get

them, when and at what cost. Posters will also give directions to the location of the business.

This will cost 2-5/= each respectively since I will produce the using my own computers.

ii. Calendars

Calendars which will be used for advertisement will be released annually. They will be given

free of charge to both customers and the public after purchase of the products or services from

the business.

Calendars will also show services that will be offered including address and physical location so

that they can easily get access to the premises without any difficulties. It will cost 2-5/+ each

respectively since I will produce them using my own computers

iii. Television

The business shall advertise through television. This will be done by giving direction on the

physical location of the business the service offered the kind of staff one will meet and

demonstrate on how to search online resources and it significance to customers who are

researchers and diverse discipline

14
 iv. Posters

Very attractive posters will be made and place at strategic places. This will be on good quality

papers and will carry information about the name of the business, location, services offered and

the physical address.

v. News papers

Newspapers too will be used to advertise the business. This will be done by having illustration of

services on the newspapers, location, physical address, name of items and services with their

respective charges and item prices.

vi. Business cards

The business cards will be issued to every customer who will come to the premise and other

people around the premise. They will have the following details, telephone number, e-mail

address of the business and other details that the owner will find necessary to include there in.

Means of advertising Number Cost (Kshs)

Posters 2000x 3 6000

Calendars 2500 x3 7500

billboards 300 x 5 4000

15
2.5 PRICING STRATEGY DEPENDS ON THE SEVERAL FACTORS

i. Competitors price

The price of the product should range of that of the competitors. It should be either or relatively

low compared to those of the competitors to enhance capturing market share.

ii. Demand

The demand enables the business to know the quality that is likely to be considered therefore

when the demand is high the price goes high also

iii. Cost of production

The higher the production productions cost the bigger the price of the products and the lower the

production cost as well as lower the price.

iv. Government price

If the restrictions are levied by the government on the movement of goods the policy such as

taxation increase the cost of goods used in the production

16
2.6 SALES TACTICS

Methods the business will use to sell the product is a s follows

Boss Enterprise intends to sell selling direct to customers; this is a method whereby the business

will sell the product and service directly without agents. The business will arrange for the

product to be distributed to the market places during special days i.e. before and during valentine

days, where ceremonies are being done example wedding places. In order to meet large sales of

the product since customers will be buying them.

The business will also use selling indirect to customers; the business will arrange and market the

product through agents or wholesalers through the chain of distribution. Improving the sales

force will be done through. The business may sell the product to customers through the creation

of selling places where customers can buy the product and get advertisement of services from

personal appointed sellers: The customers will be educated and shown the use of the product

and service in order to enable the efficiency, after services will be granted to customers free of

charge credit facilities are given to the customers who are frequently customers, improving the

methods of advertisement, changing fair prices of the product

17
2.7 DISTRIBUTION STRATEGY

The business will use both direct and indirect methods of distribution in making our

products/services reach customers using. The business will be offering services directly access

from the premises. The customer’s access will be directly from the counters. The owner has

employed staff members who will assist clients to access services in case any problem arises i.e.

helping in printing document, connection of cables and answering verbal inquiries from the

customers.

Boss Enterprise intends to be collecting the gods directly from manufacturers and sell them

directly to customers this will minimize the price increase due to avoidance of long chain of

distribution and other expenses between the channels.

Producer Retailers Consumers

Customers who required the services from their area of work or residence are expected to cater

for transport cost. However, the anticipated problems that may hinder the distribution of service

many include: insecurity, climatically change, rough, and inaccessible roads since most of the

roads outside the town are under construction any repayment the major treat is the change in the

market structure and the living standards of the people to purchase their own computers

18
CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT

Each and every employees will have his /her duty and their duties will be distributed

equally .thus this will make my business run smoothly .also in my business the employees will

be monitored to ensure all employees do their work well.

3.1 KEY MANAGEMENT PERSONALLY AND DUTIES

THE MANEGER

Qualification

i. Have pursued any Diploma course in the field of business management.

ii. Computer literate with a certificate in computer packages

iii. Experience of more than one year.

iv. Gained relevant knowledge and skills from the study of entrepreneurship education

Duties and responsibilities

i. Supervise the of products

ii. Responsible for recruiting employers’ and organizes the training of the staff

iii. Carry out research towards the expansion and improvement of the business

iv. Division of labour among personnel

v. Engage in motivation, recruiting and promotion of personnel. Being the manager of the

business, I am going to earn a basic salary of kshs 20,000 monthly.

19
Other personnel

a. Cashier

Qualification

i. Must have K.A.T.C stage II

ii. Must be the age of 25 – 35 years

iii. Must have an experience of one year and above in the same field

Duties and responsibilities

i. Keeping records of the sale of the day

ii. Receiving payment of the business transaction

iii. Keeping charge of supervising the entire bank keeping transaction

b. Drivers

Qualification

i. Should be of 22 – 40 years

ii. Should have a driving license

iii. Should have 2 – 4 years of experience

iv. Should at least have D+ in K.C.S.E

Duties and responsibilities

i. To transport product from business premises to customers

ii. To transport product from supplier to the business premises

iii. To transport the employees to and fro to the business premises

Basic salary of kshs 9,000 monthly

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3.3 RECRUITMENT, TRAINING AND PROMOTION

a) Recruitment

The management will advertise the vacancy by pinning up the posters advert on the public

notice boards and three others daily newspapers i.e Daily Nation , Taifa Leo a month before the

start of the recruitment .The management will choose best aspirate they have applied for the

vacancy ,followed by interviewing those who have the qualification for the job required but who

did not qualify will be also notified through sending a regret letter so as create a good impression

to the public and those who had qualified will be notified a reporting date for the interview

b) Training

The employee of the business will be sponsored by the management of the business to adverse

for technical training to improve on skills and knowledge .They will be also sponsored to attend

trade fair dealings with relevant service to the customers so as enhance efficiency in operation of

the business

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c) Promotion

Promotion is the act of motivating employees in various fields through salary increment and it

will be done through

a) Efficiency of work

I will be promoting hardworking workers who work effectively with the aim of increasing

productivity to the enterprise.

b) Academic qualification

Employees will promote according to their high level of education. It is done in terms of their

experience, necessary skills and certificates one possess at that moment.

c) Performance appraisal

They are going to be promoted according to their length of time they work. One who has worked

for longer duration is termed to be of good character and therefore promotion is awarded.

3.4 LICENSING PRESENT BY –LAWS

My business will have license from the municipal council and Thika thus this enable to run my

business smoothly

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CHAPTER FOUR

4.0 OPERATION AND PRODUCTION PLAN

The boss enterprise will mainly offer tyres, rim and batteries

4.1 PRODUCTION AND PRODUCTION AND DEVELOPMENT

The business will sell all its manufactured products to its customers .the goods will be in bulk

depending on the customers need .it will ensure that there are all product required so as to satisfy

the customers need at any given time of the day .

4.2 PRODUCTION FACILITIES AND CAPACITY

The enterprise will require a large number of machinery and equipment to enable it to have the

requirement of and demands of the customers ,there will be enhancement of the effectiveness of

the performance of the business .The machines include ,

a. Lorries

For transporting goods,

b. fire extinguisher,

Is needed during emergency cases and should be placed in the most accessible place.

c. Computers

Will also be needed to record the data of the business and for calculations.

Repair and maintenance are involved in monthly budget, this is to ensure that smooth flow of

funds is incurred in the business. This will ensure that the machines are in good order.

The central enterprise is constructed in such a way that it design is very unique along the entire

business which is occupying area of 50x100 plot piece of land.

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4.2 PRODUCTION STRATEGY

a. monthly material strategy

Requirements Costs(ksh)

Tyre 20,000

Rims 2,000

Batteries 53,000

Acid 15,000

Total 85,000

b. monthly material requirement

Labour requirement

Manager 20,000

Cashier 15,000

Sales and marketing 13,000

Security personnel 8,000

Drivers 18,000

Total 74,000

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c) Monthly production expenses

Production expenses Costs (kshs)

Electricity 2,000

Water bills 1,000

Transport 2,000

Insurance 5,000

Rent 15,000

Advertising 7,000

Total 32,000

Cost of production=labour cost + material cost + expenses cost

74,000+30,000+32,000=136,000

25
4.4 OPERATION OR PRODUCTION PROCESS

In order to generate products that will satisfy the customers there is need for a specific

production process of production .this will start from purchasing raw materials ,manufacturing

and delivering products and the services .

The following shows the whole process

Purchasing of raw materials

Inspection of purchased raw material by the manager

Manufacturing of raw material

Storage of manufactured good samples are displayed

Selling the goods and services to suit the customers need

Provision of after sale service

26
4.5 GOVERNMENT REGULATION AFFECTING OPERATION

i) LICENCES

The business will obtain a trading license from local authority to show that it has been legally

allowed to continue with its operation without interference.

ii) PUBLIC HEALTH ACT

The business will be approved by the health so that the business will not be an environmental

hazard to members of the community.

iii) WORKMAN’S COMPENSATION

The employee should be involved so that in case of accident they will be fully compensated to

avoid conflict between the employee and the employer.

iv) ENVIRONMENTAL REGULATIONS

The firm will ensure that its environment is well cleared. This is made easier through setting

aside of dustbins at every corner needed recycling will also be carried out to ensure neat

environments and attract more customers.

v) SELLING OF GOODS

Goods will be readily available in the shelf having price tags for easy customer service.

27
CHAPTER FIVE

5.0 FINANCIAL PLAN

These shows the financial status of the proposed business .it includes requirement, expenditure

/pre-operational cost incurred etc.

It will assist in running the business and evaluating the cost available with an aim of making

profit .

This will come from personal savings, friends and family and loan from the bank shown below .

Name ,Amount Percentage

Personal savings 800,000 34.8%

34.8%
Friend and family 800,000
30.4%
Loan from bank 700,000

Total 2,300,000 100%

28
5.1 PRE –OPERATIONAL COST

They are business incurred by the business before initial starting.

The following are pre-operation cost of boss enterprise.

Items Amount

Land 1,000,000

Building 500,000

Lorry 180,000

Computer 20,000

Fire extinguisher 10,000

Workers uniform 15,000

1,625,000

29
5.2 WORKING CAPITAL

This is the capital used in running activities of the business .it will help my business pay off the

current liability of debts on short period and purchase goods whose prices are fair working

capital is current asserts minus current liabilities .

Item year 2014 Year 2015 Year 2016

Current assets

Stock 50,000 55,000 60,000

Debtors 5,000 6,000 8,000

Cash at bank 50,000 70,000 75,000

Cash at hand 100,000 15,000 160,000

Current liabilities

Credits 6000 5,000 5,000

Assumptions

Stock in the business is expected to increase due to increased number of the customers coming to

my business debtors are expected to increase due to increase in cash at hand

30
5.3 PROJECTED CASH FLOW

YEAR 1 (MONTHLY)
ITEM JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC
Opening 600000 2127460 2481960 2882580 3234180 35340920 3440920 3267470 3120610 2916760 260660 234310
balance
Cash sales 650000 450000 500000 480000 490000 200000 150000 22000 230000 20000 200000 220340
Debtors 15000 20000 22000 20000 15000 5000 4000 10000 20000 20000
Loan 100000
Total cash 250000 252460 3001960 3340580 3744180 3719870 3500920 3491470 3350610 3106760 2809960 2585650
inflow
Purchases 150000 40000 50000 35000 40000 55000 40000 50000 60000 70000 80000 90000
Creditors 100000 150000 200000 250000 300000 350000 300000
Salaries 64,000 64,000 64,000 64,000 64,000 64,000 64,000 64,000 64,000 64,000 64,000 64,000
&wages
License 4000
Water bill 450 400 430 400 460 450 400 410 400 400 400 420
Transport 1000
Electricity 2000 3400 2000 4000 2000 3500 3550 2000 4000 4000 4000 2000
&fuel
Telephone & 1000 700 800 1000 850 1000 1500 1000 1000 2000 950 850
postage
Advertisement 7600
Insurance 5000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Interest on
loan
Loan 1,200 1,200 1,200 1,200 1,200 1,200
repayment
Maintenance 150 250 2000
Tax
Total cash 122540 110500 119380 106,400 209310 278950 323450 370860 433850 497100 17220
outflow
Net cash flow 2127460 2481960 2882580 3234180 3534870 34440900 3267470 3120610 2916760 2609660 2346310 2413430

31
5.4 PRO-FORMA INCOME STATEMENT FOR YEAR ENDING 2014
KSH KSH

Sales

Less cost of sales

Opening stock 200,000 599000

Add purchases 3,600,000

3,800,000

Less closing stock 300,000 3500000

2440000
Gross profit

Less expenses

Salaries and wages 1800,000

Loan repayment

Advertisement 20,000
water 20,000
6,000
Postage

Repair and maintenance 5000

Telephone

Transport 187000

Stationeries

Loan payment

TOTAL EXPENSES

Net profit before tax

Less provision for tax 5%

448,500
Net profit after tax

32
5.5 PROFORMA BALANCE SHEET

ITEM As at 1st Jan 2014 As at 31st Dec 2014

Fixed assets

Premises 1,364,250 1,364,250 1,364,250

Furniture & fittings 343,465 343,465 343,465

Machinery & 2,542,500 2,542,500 2,542,500

equipment 4,250,215 4250,215 4,250,215

Total fixed assets 8,500,430 85,00,430 8,500,430

Current assets

Stock 1,250,215 205,215 502,235

Debtors 104,250 455,592 244,000

Cash at hand 25,500 292,000 100,925

Cash at book 570,235 902,550

Total current assets 1,950,200 410,000

6,200,415 9,453,237 10250140

Capital 4,580,250 35,00,204 985,493

Net profit _ 5,376,088 8,502,212

Loan 1,340,250 _

Personal equity 270,900 _

Long term liabilities

Unpaid expenses 9,015 576945 762,435

6,200,415 9,453,237 10,250,140

33
5.6 BREAK – EVEN LEVEL

In Kshs amount

Sales = 5990000

5990000

Total variable cost items amount

Salaries 1800000

Purchase 3600000

Water and electricity 24000

Transport 48000

5296000

Total contribution margin 496000

Total contribution margin 496000 x 100

579000

=8.1%

Total fixed cost=5600000

Break even cost 5600000

8.1%

682927

34
5.7 EXPECTED PROFITABILITY RATIO

Gross profit = 570/5990000 x 100

=9.52%

Return on owners equity= net profit tax/owners equity x 100

=540000 x 100/1700000

=31.8%

Return on investment= net profit after tax x 100/total investment

540000/ 23000 x 100

= 23.5%

35
5.8 DESIRED FINANCING

item Amount

Per-operational cost 200000

Working capital 400000

Fixed assets 500000

Land 1000000

Building 500000

Furniture 300000

Motor vehicle 80000

total 2300000

36
5.9. PROPOSED CAPITALIZATION

Source amount

Owners contribution 800000

Friends and friends 800000

Bank loan 70000

total 2300000

37
APPENDIX 1: BUSINESS LOCATION

Thika super highway

To Muranga
To Meru

Boss
To thika

Tuskys Thika arcade

enterprises supermarket

Leens Bidco
supermarket

38
 APPENDIX 2: BUSINESS LAYOUT

Managers office Secretary’s office

Meeting room

Hall
gate

Reception

Parking area

Swimming pool

39