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Nancie Business PLAN

Bachelor of commerce (Technical University of Kenya)

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BUSINESS NAME : DIWALE ENTERPRISES

BUSINESS ADDRESS : P.O. BOX 651-0012

KIKIMA – KENYA

EMAIL : info@diwalent.com

WEBSITE : www.diwaleenterprises.co.ke

DOCUMENT NAME : BUSINESS PLAN

PRESENTED BY : NANCY NANJALA SIMIYU

ADMISSION NUMBER : 27017

SUPERVISOR NAME : MR MESHACK

INSTITUTION NAME : EAST AFRICA INSTITUTE

OF CERTIFIED STUDIES

COURSE : CERTIFICATE IN ACCOUNTANCY

EXAM SERIES : JULY, 2021

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DECLARATION

I declare that this is my original business plan which am sure it has never been put in writing or
presented to any exam bodies for examination purposes.

Name : NANCY NANJALA SIMIYU

presenters signature: .........................
Date : 20/02/2021

This project has been submitted by my approval as the college supervisor at East Africa Institute
of Certified Studies

Supervisor’s Name : MR MESHACK

Date : 20/02/2021

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TABLE OF CONTENT
Declaration …………………………………………………………………… i
Table of Content ……………………………………………………………… ii
Dedication ……………………………………………………………………. iv
Acknowledgement …………………………………………………………… v
Executive Summary …………………………………………………………. vi

CHAPTER 1
1.0 Business Description ……………………………………………….. 1
1.1 Owners background …………………………………………………. 1
1.2 Business Name ……………………………………………………… 1
1.3 Business location & address ………………………………………… 1
1.4 Form of ownership ………………………………………………….. 1
1.5 Type of ownership….……………………………………………….. 2
1.6 Product service ……………………………………………………… 2
1.7 Justification of opportunity …………………………………………. 2
1.8 Industry ……………………………………………………………… 2
1.9 Goals of Business …………………………………………………… 3
1.10 Entry and Growth …………………………………………………… 4
CHAPTER 2
2.0 Marketing Plan …………………………………………………….. 5
2.1 Customers ………………………………………………………….. 5
2.2 Market shares ………………………………………………………. 5
2.3 Competition ………………………………………………………… 6
2.4 Advertisement and promotion ……………………………………… 7
2.5 Pricing strategy …………………………………………………….. 7
2.6 Sales Tactics ……………………………………………………….. 8
2.7 Distribution strategy ……………………………………………….. 8

CHAPTER 3
3.0 Organizational and managerial plan ………………………..……….. 9

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3.1 Management team ……………………………………………..…….. 9

3.2 Other personnel’s ……………………………………………..……… 9
3.3 Recruitment training and Promotion…………………………..………. 11
3.4 Remuneration and incentive ………………………………….………. 11
3.5 Licences, permits and by-law legal services …………………………. 12
3.6 Support services ………………………………………………………. 12
CHAPTER 4
4.0 Operational and production Plan ……………………………………… 13
4.1 Production development and design …………………………………... 13
4.2 Production of facilities and capacity …………………………………… 13
4.3 Plans for Maintaining and Repairing Machinery and Equipment ………. 13
4.4 The proposed business layout …………………………………………… 14
4.5 Other required equipments for the business …………………………….. 14
4.6 Production strategy ……………………………………………………… 15
4.7 Preliminary production expenses ………………………………………… 15
4.8 The cost of the production ……………………………………………… 15
4.9 The production process ……………………………………………..…. 16
4.10 Government Relations …………………………………………..…… 16
CHAPTER 5
5.0 Finance plan …………………………………………………………. 17
5.1 Pre-operational cost ………………………………………………….. 17
5.2 Estimate of the working capital ……………………………………. 17
5.3 Cash flow projection statement for the year ending 31/12/2017 ……… 18
5.4 Pro-forma profit and loss account ……………………………………… 19
5.5 Pro-forma balance sheet ……………………………………………… 20
5.6 Break even point ……………………………………………………… 20
5.7 Proposed capitalization ……………………………………………… 21
5.8 Expected profitability ratios ………………………………………… 21
Appendix I …………………………………………………… 22
Appendix ii ……………………………………………………. 23
Appendix iii …………………………………………………… 24

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DEDICATION

I dedicate this project to my dear parents for their thin and thick support that made me prosper in
my studies

May the Almighty God Bless your general life’s and earn more to support my upcoming brothers
and sisters

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ACKNOWLEDGEMENT

I sincerely thank the Almighty Lord for his gift of life, peace, love and Unity that has enabled me
to be of East Africa Institute of certified studies for this precious Goal.

My vote of thanks goes to my project supervisor MR Meshack for his dedication,

acknowledgement and consistent guidance in putting this business plan into writing.

I can't fail to close my eyes to thank nick Mwenda and Kamau Theuri who supported me
financially and materially.

May Almighty’s powers and favors fall in your hearts now and forever more.

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EXECUTIVE SUMMARY

BUSINESS DESCRIPTION

The name of the business will be DIWALE ENTERPRISES.

Hotpoint electronic is a locally owned business which will be aimed to answer to an increasing
demand for better and original electronic materials for home use and institution user.

In the present time, it's very hard to differentiate one electronic from another due to several
emerging electronic but Hotpoint electronic will be a model metropolis for the new economic
boom in Kenya.

Our main plan is to suit one outlet in Kikima Town preferably near kindu supermarket later on
due to our effort with the stakeholders we will develop other electronic outlet in and outside
Kikima town so as to meet our customer’s needs.

- To make everyone enjoy our products and services.

- To create more of our outlets in a period of two to three years.
- To be the most successful electronic dealers in Makueni county and earn a market share
in Kenya’s electronic industry.

Our mission is to be the best out of all the electronic dealers in Kenya and provide our customers
with high quality electronic products at a good price.

To succeed in the business I must:-

i) Provide a innovative, good price our products which will make a difference from us
and the other existing competitors
ii) Vary the cost of all products to a reasonable price and be on the right position to meet
different customers.
iii) Sell/hire products of the highest quality to our customers and keep the environment
clean.
iv) Employ qualified, skilled workers who can serve the customers with good will.

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v) Promote good relationship with customers and create good image of the business.

Most of our customers for the proposed business are going to be individual households,
churches, schools, Hotels and club/bar. The owner of the business wishes/plans to meet them via
Notice, advertisements, internet and posters. The pricing of our products will favor both poor
and rich people since they are all around and considered.

Since the enterprise is a sole proprietor, I will operate it as a directing manager.

Other trained and skilled personnel’s will be employed to take care of the daily tasks for example
secretary, cashier and accountants.

Recruitment of workers will be conducted annually according to academic qualifications. The

monthly salary depends on the position of every individual in work. The commission will
consider the person’s effort.

The business intends to use the modern technology to serve the customers. It will require
computers which will help speed up the rate of serving our customers. Apart from the
electronics we will also provide an M-pesa around to help customers purchase the products and
pay via Mpesa.

Other external factors like competition, political unreliable supplies and Government policies
may look like affecting our business but will be dealt with accordingly to avoid hindering our
operations.

A total of Kshs 50,000.00 is going to be availed in starting and developing the business. The
amount is to be spent to acquire electronic gadgets and equipment, premises and other pre-
operational costs. I will contribute/fund Kshs 400,000 from my own capital, my family and
friends to lend Kshs 200,000.00 and a bank loan of Kshs. 250,000.00. The loan will be paid
within one and half a year.

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CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 OWNERS BACKGROUND

The owner of the business will be Nancy Nanjala a Kenyan citizen by birth, currently
pursuing certificate in accountancy at east Africa institute of certified studies. I have an
experience to this business through my uncle who operated one of this kind. I was
enrolled as one of his workers and get used to it.

1.2 BUSINESS NAME

The proposed name of my business is DIWALE ENTERPRISES it is aimed of answering
the customer needs for musical instrument and other electronic products. The name is
suitable in the sense that it’s easy to load and recall.

1.3 LOCATION AND ADDRESS

The business will be located at Kikima town near kindu supermarket along mbooni road
opposite Naivas supermarket. The reason for choosing this place is that its close to
schools, restaurants, Supermarkets and other clients.

The business address will be:-

DIWALE ENTERPRISES
P.O. BOX 651-0012
KIKIMA– KENYA
TEL: 0759349953
EMAIL: info@diwalent.com

1.4 FORM OF OWNERSHIP

The form of business will be sole proprietorship. The reason as to why I prefer being a
proprietorship is mainly because I like innovating and being independent in making
decisions, plan and designing how the business would run and consume profit with none.

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Making sure all duties are attended as required and have commitments to maximize the
market opportunities like means and ways of reaching the business to expansion stage.
1.5 TYPE OF OWNERSHIP
The enterprise will be a new initiative. It will be encountered in all kinds of electrical
gadgets like Home theatres, hoofers, loud speakers, mobile phones, laptops, computers
and many others. It will involve both large scale and small scale selling.

1.6 PRODUCT SERVICE

The business will be dealing with electronic and electrical gadgets as our products.

The product will include Home theatres, hoofers, loud speakers, mobile phones, laptops,
computers, Radios, electrical cables, bulb, televisions, Solar panels’ and digital cameras. The
products will be aimed to be sold and supplied to schools, churches, individual household, bars
and clubs, hospitals and to other business owners.

1.7 JUSTIFICATION OF OPPORTUNITIES

The reason of choosing this kind of business include: -
(i) Good infrastructure and good transport networks
(ii) Profession qualities having pursued diploma in supply chain management I feel
am okey to emerge to business as a supply’s manager.
(iii) Availability of water and power around that area.
(iv) Also, the security is very tight in the area
(v) Good communication network which will enable me communicate to my
customers smoothly
(vi) Availability of market for our products and services.

1.8 INDUSTRY
The business belongs to a factory manufacturing electrical and electronic products

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There are three operating firms which I feel are my biggest competitors ground that area.
The business seems to grow very faster since other firm products and goods exhaust in
time and also their management and the way of handing customers is pathetic.
The proposed required capital is Kshs 850,000 and will be broken in the following ways;

Item Amount (Kshs)

Prepaid 30,000
Salaries 30,000
Equipment 400,000
Standing cash 390,000
Total 850,000

The business will depend on following sources for its capital.

Sauces Amount (Kshs)
Owners equity 400,000
Friends 200.00
Bank loan 250,000
Total 850,000

The business will also require the following workers to take parts in various position of
location
 A manager
 Accountant
 A secretary
 Two waiters / cashiers
 Two delivery persons

1.9 GOALS OF BUSINESS

The enterprise wishes to be an example to other electronics and even to the other existing
business due to its good and organized management.
short term goals
The business intends to have its own lawyer and also open a bank for financial
undertaking. I will advertise the products via radios, TVs, trade shows ie. Road shows.

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Long term goals

The business will own two lorries, one for delivering the enquired products and another
one for road shows. Also intends to open its outlets/branches to the nearest counties like
Kirinyaga, Machakos, Nyeri and Meru. This will help the business to grow fast and earn
more from the customers by satisfying their needs

1.10 ENTRY PLAN AND GROWTH STRATEGY

I will do a research on the actual market prices

Entry plan
After I know the competitors prices, I will lower the price of my products to a reasonable
price.
Also the management will focus on high quality products.
Competitors Hotpoint Electronic
1. Poor customer relation Develop and relationship and
consider them as part of the business
2. Low products of quality Will focus on original and high
quality
3. Don’t offer warrant for Will offer warrant for every product
their products sold, to our customers
4. Only give fixed prices to The prices will be bargainable to a
their goods reasonable price

Growth Plan
To make sure the growth of the business runs smoothly all the profits gained will be used
to add new products to meet different customers.

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CHAPTER 2

2.0 MARKETING PLAN

2.1 CUSTOMERS
The valued customers to the business will include retailers, household, schools, churches,
hospitals, bar and Hotels.

The population size of this county totals to a minimum of about 6000 people. About 905
of the people living within are public servants, business owners and others from private
sectors.

Verbal communication will be highly valued in advertising our products though there will
be other channels means.

Our customers will be classified as indicated below

(a) Individual customers

These are customers who purchase small quantity of products on daily basis
The prices are moderated in their consideration since they really support the business in
thin and thick.

(b) Institutional Customers

These are customers who purchase large quantity of products once in a while. They
include; schools, churches, hospitals, hotels, Bars etc. Transport will always be offered to
them.

(c) Commercial customers

These include small scale dealers who purchase large quantities of product and break
them into small quantities for sale. Discount will be allowed to them so as to make their
own profits from our products.

2.2 MARKET SHARE

The business will have a target of twenty-four thousand customers quarterly as the market
share. The following is the project market shares before full penetration.

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Proposed market Share (%)

Boom 100 welectronic; 20%; 20.00%

Boom 100 welectronic
hotpoint Electronic; 45%; 45.00% hollywood Electronic
Willington electronic
In order tohollywood
attractElectronic;
customers 20%;the enterprise
20.00% will fully participate in business promotion
hotpoint Electronic
through road shows, workshops, seminars and advertising.
Willington electronic; 15%; 15.00%

PROMOTION EXPENSES
METHODS COSTS (KSHS)
Road Shows 3,000
Workshops 10,000
Seminars 4,000
Advertising 7,000
Total 24,000

2.3 Competition
The business will be located at Makueni County with other firms dealing with similar
products.
About two competitive firms are located near Hotpoint electronic while other is a few
meters away but opposite side.

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The competitors are, exotic electronics, Boosters extension electronic, cool electronics,
Riziki Ngema electronic among others.

Hotpoint Electronic will take advantage and master their weakness and work smart to
improve on them.

2.4 ADVERTISMENT AND PROMOTION

The business will advertise its products via local media that is radio Jambo Fm which is
highly tuned around the location and outside the location.
It will have a signboard and posters along mbooni boys road reading,

Hotpoint Electronic will also promote their sales by the following methods;
(i) Discount
This will only be offered to customers who purchase goods in large quantities.
(ii) Credit Purchase
To those customers who purchase products regularly from our enterprises
(iii) Transport
For customers who purchase bulky goods, transport will be offered to them.

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2.5 PRICING STRATEGY

The business pricing strategy will be aimed towards realizing the direct cost related to the
sales promotion and also cover general and administration overheads. The government
policies will also be adhered to.
The following factors will determine the price of the products and services
(i) Competitors price - Hotpoint electronic will slightly lower it's price
From that of competitor
(ii) Cost of products - the pricing should cover all the labour spend .
plus the profit expected.

(iii) Profit expected - The profit should be put in consideration when

pricing.
The following is the price list of Hotpoint products and services

Product Price (kshs)

Flat screens 12,000 (12”)
Home theatre 24,500
Hoofer 5,000
Smart phone 10,000 (tablet)
Sony radio 2,500 (battery use)
Digital camera 12,900
Cable wires 100 (per meter)
DVD 3,500
Electric iron 4,000
Micro wave 15,000

2.6 SALES TACTICS

The sales will be directly to the customers. The workers will be required to create legal
relationship with the customers and be enlighten on how to handle customers because the
customers views will be highly valued.

2.7 DISTRIBUTION STRATEGY

Means of transport will be offered to customers who purchase large quantities of products
within a distance of not more than 30km. Any extra distance the customer will be
required to stand for it.
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CHAPTER THREE

3.0 ORGANIZATIONAL AND MANAGEMENT PLAN

3.1 MANAGEMENT TEAM
The manager should atleast have 4 years experience in the field, should be a holder of
bachelor of commerce first class honors.

Also should be a computer literate having done Ms-word, Ms-Ecxell and quick books.
Should have done Diploma in supply chain management he/she should make payment
done in time
He/she should make sure purchases are done in time to avoid stock out.

3.2 OTHER PERSONELS

There will be an accountant who will be involved in book keeping and preparing the
financial statement of the business.
Should be aged at 30 years old and above. Have three years of experience in the same
position
He/she should also be a computer literate and completed stage two of CPA.
The other personnel is the secretary; should be 25 years old and above.
He/she should be a computer literate plus certificate in secretarial work. Should have one
year experience.
The business will also have two cashiers who should hold diploma in sales and
marketing, should also be 20-30 years and have two years work experience.

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THE ORGANIZATIONAL CHARTS IS SUMMARIZED BELOW:-

A MANAGER

ACCOUNTA A CASHIER DELIVERY A SECRETARY

NT PERSON

WAITERS

TABLE OF KEY PERSONAL QUALIFICATION

TITLE MEMBER QUALIFICATION DUTIES

Accountant 1 i) Diploma in accountant i) Book keeping
ii) Aged at 30 years and above ii) Payments
iii) CPA II + computer literate iii) Preparing the budgets
iv) 3 years experience
Secretary 1 i) Certificate in secretarial - Making and receiving
ii) Computer literate calls
iii) Aged at 25 years old - Recording
iv) 1 year experience information in the
diaries
Cashier 2 - Diploma in sales and - Receiving cash from
marketing customers
- Aged at 20-30 years - Issuing receipts to
- 2 years work experience customers

The number of workers will be 7; working hours will be from 8:00am to 5:00pm as required by
law.

3.3 RECRUITMENT, TRAINING AND PROMOTION

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a) Recruitments
The employees will be recruited through advertisement and the applicants will be
interviewed and also undergo final section.
b) Training
The balance will be holding seminars on monthly basis to train its workers. This will
enable them to work and attend their duties fairly.
c) Promotion
Employees will be given promotion in order to increase their working interest. Awards to
the workers will depend on individual efforts towards his/her department

3.4 RENUMERATION AND INCENTIVES

Employees will be paid according to the level of job description. The employees will be
paid not later than 30th of every month according to the enterprise policy.
The salary layout will be as shown below:-

N JOB TITLE BASIC ALLOWANCES Total (kshs) Total

O SALARY (Kshs) annually
(KSHS) (Kshs)
1 Manager 17,000 2,500 19,500 234,000
2 Secretary 5,000 1,000 6,000 72,000
3 Accountant 14,000 1,500 15,500 186,000
4 Cashier 7,000 1,000 8,000 96,000
5 Waiters 6,100 1,200 7,300 87,600
6 Delivery person 8,000 1,500 9,500 114,000
TOTAL (KSHS) 57,100 8,700 65,800 789,600

INCENTIVES
Incentives given to the employees will be;
i) Insuring employees against within the premises
ii) Providing tea and lunch
iii) Award and gifts at the end of every years
3.5 LEGAL SERVICES, PERMIT AND BY-LAWS
a) Licences

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The firm will obtain business licence from the ministry of trade and Industry through
county council of kikima at Kshs 10,000/= per year. It will be renewable annually

b) PERMIT
There will be obtained from the municipal council of Kikima. This is a single business
permits at Kshs 5,000 and will be renewable annually.

c) By Laws
The environment conservation will be highly adhered to by the Hotpoint enterprise. High
level of hygiene will be observed.

3.6 SUPPORT SERVICES

The support services by the business will be:-
 Banking
 Garbage
 Postal
 Insurance
i) Banking will be provided by Kenyan Commercial Bank and co-operative Bank.
ii) The waste will be collected by JB Garbage collectors.
iii) Postal services will be provided at Post office of Kenya Kikima branch.
iv) Insurance services will be provided by Jubilee Insurance company and will deal
with. fire, theft and accidents.

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CHAPTER 4

4.0 OPERATIONAL AND PRODUCTION PLAN

4.1 PRODUCT DEVELOPMENT AND DESIGN

Product design is the physical market of the product which makes it appear good before
the eyes of consumers/buyers. Hotpoint electronics will be designing its products such a
way that it will attract most of customers eyes from far distance.

4.2 PRODUCTION FACILITIES AND CAPACITY

These are the equipment needed to enable the business commence its product. It will
acquire some of the falling items for its productions.

EQUIPMENT DATE NEEDED ESTIMATED COST TOTAL (KSHS)

(KSHS)
Display case December 2017 30,000 30,000
Shelves December 2017 35,000 35,000
Furniture December 2017 55,000 55,000
Working benches December 2017 19,500 19,500

4.3 Plans for maintaining and repairing machinery and equipment JUMBO MACHINE
OPERATORS AND REPAIRS

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4.4 THE PROPOSED BUSINESS LAYOUT

6 5 4

2
3

MAIN ENTRANCE

KEY
1. M-pesa
2. Sales area
3. Store a for designed product
4. Secretary office

4.5 OTHER EQUIPMENTS REQUIRED FOR THE BUSINESS

For the firm to run frequently, its going to acquire some of the following equipments.
Items Date Quantit Cost per units Total (Kshs)
y (Kshs)
Office calculator December 2 1,100 2,200
2017
Stamping machine December 2 500 1,000
2017
Computer December 3 25,000 75,000
2017
Paper punch December 2 200 400

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2017
Total 78,600
4.6 PRODUCT STRATEGY

TYPE OF FREQUENC SOURCE QUANTITY UNIT Total

MATERIAL Y COST cost
(Kshs) (kshs)
Home theatre Monthly Kensam Mal 15 25,000 375,000
Woofers Monthly Kensam Mal 20 5,000 100,000
Laptops Monthly Killimal 30 35,000 250,000
Smart phones Monthly Kensam Mal 45 6,500 292,500
Radios Monthly Kensam Mal 35 5,000 7,500
Television Monthly Kensam Mal 10 9,000 90,000
Computers Monthly Killimal 5 25,000 125,000
Loud speakers Monthly Kensam Mal 10 10,000 100,000
1,340,000

This will be after the firm has started gaining its profit just after few months of
operation.

Since the materials are readly available, the proprietor of the firm is going to purchase
more materials during harvesting and keep them in the store.

4.7 PRELIMINARY PRODUCTION EXPENSES

The preliminary production expenses to be incurred by the proposed business are as
follows;

Expenses Amount (Kshs)

Electricity 2,500
Telephone 500
Selling distribution expenses 10,000
Depreciation 1,000
Total 14,000

4.8 THE COST OF PRODUCTION

The proposed firm expects to sell
- 12 home theatre @ 27,000 per month totaling to Kshs 324,000,

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- 5 hoofers per week @6,500 totaling to ksh 32,500,

- 40 Smartphones @ 7,500 per month totaling to ksh300,000
- 5 laptops @30,000 per monthly ksh 150,000
- 10 radios @650 per month totaling to ksh 6,500
- 5 televisions @10,500 per month totaling to ksh 63,000
- 7computer @27,000 per week totaling to ksh 149,000
- 6 loud speaker @ 11,500 per month totaling to ksh 69,000.

4.9 THE PRODUCTION PROCESS

The production steps that are going to be involved in producing the expected product
include of goods and they will be designed before packed for selling to our customers.
Then the product will be packed and sticker with their prices.

4.10 GOVERNMENT RELATIONS.

Below are the price / licenses that are required that are required by the proposed firm:

Permit /licenses Source Cost

Business Ministry of culture 1,500
Trading License Ministry of Trade ,industry 5,000
Fire license Ministry of Trade and industry . 5,00
Total 11,500

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CHAPTER 5
5.0 FINANCIAL PLAN
This chapter of finance plan deals with the financial issue of a firm. Aimed at allocating
limited financial resource through proper financial management.

5.1 PRE- OPERATIONAL COST

This includes all the costs involved before a business commences. These costs include:

Items Amount(Ksh)
Machines tools and equipment. 400,000
Installations 10,000
Furniture 55,000
Office stationery 3,600
Computer 75,000
Insurance 20,000
Shelves/dollies 35,000
Working benches 5,000
Total costs 603,600

5.2 ESTIMATE OF THE WORKING CAPITAL

The working capitals for the first three years of the proposed business operations are as
follow:-
Item Year1: YEAR 2: 2022 YEARS 3: 2023
(KSHS) (KSHS)
Stock of products 935,000 980,000 1,040,000
Stock of progress 70,000 80,000 90,000
Debtors 90,000 100,000 110,000
Total 1,095,000 1,160,000 1,240,000

The assumption made in arriving of the stock product of Kshs 935,000 is that the total products
requirement is:-

Working capital = current assets - current liabilities

= Kshs (1,005,000 – 159,000)
= Kshs 936,000

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5.3 CASH FLOW PROJECTION STATEMENT FOR THE YEAR ENDING 31ST DECEMBER 2022

ITEM JAN FEB MAR APR MAY JUN JUL AUG SEPT. OCT NOV DEC TOTAL
Cash flow
Opening stock 30000 35000 33000 40000 34500 30000 32000 34000 360000 37000 35000 38000 4145000
0 0 0 0 0 0 0 0 0 0 0
Cash sales 25000 31000 30000 35000 30000 25000 30000 29000 340000 31000 33000 35000 3680000
0 0 0 0 0 0 0 0 0 0 0
Debtors - 30000 - - 15000 - - - - - 12000 - 165000
0
Total inflow 55000 69000 63000 75000 66000 55000 62000 63000 700000 68000 80000 73000 7990000
0 0 0 0 0 0 0 0 0 0
Cash outflow
Purchases 70500 80000 80500 91000 70000 75000 80000 85000 90000 90500 80000 85000 977500
Salaries 65800 65800 65800 65800 65800 65800 65800 65800 65800 65800 65800 65800 789600
Creditors - 40000 30000 35000 49000 55000 45000 50000 65000 45000 40000 46000 500000
Loan 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
Advertisement 6000 - - 4000 - - - 4500 - 3000 - - 17500
Insurance - - - - - - - - - - - 20000 20000
Tax (income) 4100 4100 4100 4100 4100 4100 4100 4100 4100 4100 4100 4100 49200
License/permit - - - - - - - - - - - 15000 15000
Stationery 3000 - - 3000 - - 3000 - - 3000 - - 12000
Electricity 1100 1200 1300 1200 1500 1200 1100 900 800 950 1200 1300 13550
Postage 1000 1100 1200 900 900 800 700 1000 1200 1100 900 1000 80200
Telephone 500 1000 1500 1200 900 800 700 600 700 850 900 1000 10600
Incentives 10500 11000 12000 10000 10800 10700 10600 10100 12000 14000 12500 14000 138200
Utilities 2000 1800 2000 4000 2500 3000 3500 15001 1600 1700 1800 1900 27300
Maintenance - - - 2000 - - - 2000 - - - 2000 6000
Total cash out 19250 21600 20840 23120 21450 22640 22450 23550 251200 24000 21720 26710 2776700
flow 0 0 0 0 0 0 0 0 0 0 0

Net cash 35750 47400 42160 51880 44550 32360 39550 39450 448800 44000 58280 46290 5213300
0 0 0 0 0 0 0 0 0 0 0

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5.4 PRO-FORMA PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST
DECEMBER, 2022

Sales 3,680,000

Direct cost Kshs

Purchase 977,500
Stock 380,000
1,357,500
Gross profit 2,322,500

Loss expenses
Salaries 789,600
Insurance 20,000
Telephone 10,650
Advertisement 17,500
Stationery 12,000
Electricity 13,550
Incentives 138,200
Maintenance 6,000
Postage 80,200
Licences & permits 15,000
Utilities 27,200 1,129,900
Net profit 1,192,600

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5.5 PRO-FORMA BALANCE SHEET AS AT 31ST DECEMBER 2022

Fixed assets
Display case 30,000
Shelves 35,000
Furniture 55,000
Working benches 19,500 139,500

Current Assets Kshs

Stock of products 380,000
Debtors 165,000
Bank 250,000
Cash 400,000
Total 1,195,000
Current liabilities
Trade creditors 500,000
Bank loan 250,000
Working capital 750,000
Financial by:
Owners capital 400,000
Add net profit 5,213,300
Less drawings 4,863,300
Non-current liabilities 750,000
750,000

5.6 BREAK EVEN POINT

The sales and total direct costs are going to be as follows:-
Break even point (Kshs) = Annual sales x annual fixed cost
Annual sales – annual variables

3,680,000 x 1,302,000
3,680,000 – 1,090,800

Kshs 1,850,517

Break even point (Percentage)= annual fixed cost x 100

Annual sales – annual variables

= 1,302,000 x 100
3,680 – 1,090,800

= 50.29%

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5.7 PROPOSED CAPITALISATION

Total investment 850,000

Financed by
Owners equity 400,000
Bank loans 250,000
friends 200,000
Total 850,000

The owner of the firm intends to borrow Kshs 450,000 from the bank and friends as
stipulated in the table above.

5.8 EXPECTED PROFITABILITY RATIOS

The gross profit margin of the proposed business for the 3 years is going to be as
follows:-

Gross margin ratio = gross profit

Net sales

= 2,322,500
3,680,000
= 0.6311

The return on investment for the first three years is going to be:-

Return on investment = net profit before tax

Net worthy

Year 1 = 1192600
850000
= 1.403

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APPENDIX I

POSTERS

HE
DIWALE ENTERPRISES
Weekly operation 6:30am to 8:00PM
High quality products
Visit us and purchase products of your choice
BILLBOARD

DIWALE
DE DE
ENTERPRISES
P.O. BOX 651-0012
KIKIMA– KENYA
VISIT US AT KIKIMA TOWN NEAR KINDU SUPERMARKET
OFF MBOONI BOYSROAD
“FOR ALL YOUR BEST QUALITY PRODUCTS AND SERVICES”

BUSINESS CARD

HOTPOINT ELECTRONICS
NEAR: KINDU SUPERMARKET
MBOONI BOYS ROAD
Cell: 0759349953
Email: info@diwalent.com

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APPENDIX II

NANCY NANJALA
MANAGING DIRECTOR
HOTPOINT ELECTRONICS
P.O. BOX 651-0012
KIKIMA - KENYA
Cell:0759349953
Email: info@diwalent.com

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APPENDIX III

The following are Hotpoint Electronics:-

i) Home theater

ii) Woofers

iii) Flat screen TV

iv) Smart phones

v) Radios

vi) Solar panels

vii) DVD

viii) Electric Iron

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