TITLE: BUSINESS PLAN

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PRESENTED BY:

INDEX NO

CENTER:COURSE:

SUPERVISOREXAM SERIES:

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CONTENTS

Declaration. .................................................i

DEDICATION.................................................ii

ACKNOWLEDGEMENT..................................iii

CHAPTER ONE.............................................. 1

1.0 EXECUTIVE SUMMARY............................1

1.1 Business description...............................1

1.2 Marketing plan…....................................1

1.3 Organizational plan….............................1

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1.4 Operational plan…..................................2

1.5 Financial plan….......................................2

1.6 Potential Risks…......................................2

CHAPTER TWO….........................................3

2.0 BUSINESS DESCRIPTION…...................3

2.1 Background of the owner…....................3

2.2 Products of services...............................4

2.4 Entry strategy…......................................4

2.5 Growth strategy…............................... 5

CHAPTER THREE

3.0 THE MARKETING PLAN….....................6

3.1 potential customers….........................6

3.2 competition…......................................7

3.3 sales static…........................................8

3.4 Advertising and promotional strategy.9

3.5 Distribution strategy….......................10

CHAPTER FOUR….....................................10
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4.0 ORGANIZATION PLAN…......................11

4.1 Organizational structure…..................11

4.2 Key management personnel…............12

4.3 Other personnel…...............................15

4.4 Supporting advisors and services….....16

CHAPTER FIVE

5.0 OPERATIONAL PLAN…........................18

5.1 Production facilities and capacity…....18

5.2 Production strategy............................21

5.3 Production process…..........................21

5.4 Regulation affecting operation….......23

CHAPTER SIX…..........................................25

6.0 Financial plan…...................................27

6.1 PRE-Operationally COST…...................27

6.2 WORKING CAPITAL REQUIREMENT…..27

6.3PRO- FORMA INCOME STATEMENT…..28

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6.4 PRO-FORM Balance SHEET…...............29

6.5 PROJECTED CASH FLOW STATEMENT..30

6.6 BREAK -EVEN LEVEL…...........................31

6.8 PROPOSED CAPITALIZATION…..............33

6.9 EXPECTED PROBABILITY RATION….......33

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CHAPTER 1
1.0 EXECUTIVE SUMMARY.

The executive summary is a brief of the chapter entailed in business it summarize the marketing, organization, operational plan financial plan of this proposed
enterprise.

1.1 Business description.

My name is Jenipher okumu age 21 years old.I was born in Nairobi county. I attended primary education and also joined High school.currently am taking my studies
at Machakos Technical institute for the blind.

The prosed business will be JUST BUILD IT.It will be located Mamboleo market near Kisumu town.It will be a sole proprietorship form of business.The major activity
in the business is supply building materials to the construction area The business intends to gain enough and reliable experience in running business enterprise .The
owner wants to be creative and accountable to her own action.At jUST BUILD IT fabricators ltd health and safety will not be compromised.

The company will sell it's services client in the area commercial construction.

1.2 Marketing plan.

JUST BUILD IT Enterprise intends to have potential customers from Mamboleo sub-county and the entire Kisumu county in the most of these hardware the Kisumu
municipality.

They have special in formwork for these customers construction site.

The potential customers will be construction site activities are intense they will be hiring the products and other purchasing age group of customers will range
between twenty five to forty years for head of the institution.

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Competition threats come from other and scaffolding enterprise and companies in the scaffolding enterprise and companies in the areas that supplies and for hire
service within Kisumu city.

Due to the increasing construction and development project around the city we want to take advantage of the demand as well as population to ensure they are able
to get the service that we offer.

1.3 Organization plan.

The business is categories according to organizational structure,key management personnel and supporting.

The business will be managed by manager.This being the top position in the organization structure, I will be the manager my duties and responsibilities as owner
manager are as managing safety of transport of formwork suppliers.

The recruitment of staff will be based on their personal experiences skills and competency and how they related with clients.The business will need support services,
banking services electricity services and security etc

1.4 Operational plan

Operational plan will guide on how the enterprise will be operating on duty base general objective being achieve of the set goals of the business .

Repair and maintenance of the machinery will be done either in advance of failure this will involve regular servicing of equipment, route check.

We will be getting the materials from the various supplies within the location of the business.

The business will seek government approval of the business.They include license permits, local tax payable and insurance.

1.5 Financing plan.

All the Financial plan requirements will be determined in this chapter by showing all transparency on how funds are used.This will help the owner to reali the
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strength and weakness in the business.

The total investment for the business is KSHS (10000000) the amount of which the owner will raise it from the personal saving volume at the level to the best of
management judgement of the expected conditions.

Revenue will be delivered from sales of supply of the hiring services of Formwork and Scaffolding JUST BUILD IT Enterprise ltd plan to bid and receive contractors for
commerical contractor projects at all level throat and services directly into the business.

1.6 Potential Risks.

Like any other business JUST BUILD IT anticipated moderate risk which could be as a result of the technology, economy, industry, location of the business,
management and security.The business intends to introduce methods of countering them in order to allow for the smooth running of its Operational activities.

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CHAPTER 2
2.0BUSINESS DESCRIPTION.

. BACKGROUND OF THE OWNER (SPONSOR)

Am Jenipher Okumu am 21 years old.Am the last born in a family of six.

I was born in Nairobi county.i attended primary education and also joined High School.

Currently am talking my studies at Machakos Technical Institute for the Blind.

. NATURE OF THE BUSINESS.

The store will sell hardware of all kinds quality tools,paint and housewares.The business will make revenue and a profit by service it's customers satisfaction.

. PRODUCTS OR SERVICES

These products include electrical, supplies, automotive, hardware store, garden building supplies paint, plumbing tools and rental.

. ENTRY STRATEGY

Direct exporting will be done so that customers may acquire my products easily.

. GROWTH STRATEGY
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It will offer additional services to growth the building and hardware business.lnvest in your staff you need to have the knowledge your business inside out and also
invest in your people.

2.1 BACKGROUND OF THE OWNER SPONSOR.

My name is Jenipher Okumu.Iam 21 years old and am single.Am resident from Gongo village Gem Constituency, Siaya County.I enrolled in Salama Primary School in
the year 2007 to 2015 and acquired a certificate of primary education and later I joined Migingo Girls High School from the year 2016 to 2019.Currently am at
Machakos Technical Institute for the Blind pursuing certificate in Building Technology.

During holidays l have been working in Hardware and I have gained some skills how to handle the hardware.iwill require one hundred thousand Kenya shillings
(100000) to start and run the business ventures smoothly.

Amount to be borrowed will be sixty thousand Kenya shilling(60000) from the bank and also help from family members so to reach the target set to start and run the
business.

2.2 NATURE OF THE BUSINESS.

BUSINESS LOCATION AND ADDRESS.

The address is 247305-00, Kisumu and telephone number is 0112186565.The business is located in Kisumu near mamboleo.mamboleo is located west of central
business district and is know for it's business prowess.its email Is okumujenipher17@gmail.com.

.FORMS OF OWNERSHIP.

The nature of the business is sole proprietorship.This is due to the fact the business does not require large amount of capital and it's not necessary to obtain a
special permission form the government to run business.The business only require a normal working license from Kisumu municipal council.The owner will be the
overall owner of the business with an aim of being a full beneficiary of the profits made from the business.The decides to run this business as a sole proprietorship
because of the following reasons.

1 The business intends to gain enough and reliable experience in running business enterprise.

2The owner looks forward to being the sole beneficiary of the profit generated from the business.

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3 The owner wants to be independent in her decision making concerning all activities of business.

4 The owner wants to be creative and accountable to her own actions.

. ADVANTAGES .

. Affordable and simple

.The owner has freedom and flexibility.

. Simple income tax.

.It require less paperwork.

. DISADVANTAGES .

. Financing and business credit is harder to procure.

. Unlimited liability.

. Raising capital can be challenging.

. TYPE OF OWNERSHIP.

It is a star type of business and the service to be provide are supply an hire service of formwork , supplies paint plumbing tools and scaffolds.it's start up business
due to the following justification.

. Require minimal requirements.

. Little capital for starting the business .

. Freedom to choose strategic location of the business.

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The company's experts staff will have capability to design and manufacture any accessory items that may be require to complete the formwork package.

Owner developers construction managers general contractors and concrete subcontractor have realized substantial saving in labour and materials costs by using
structural.

Contour construction methods, systems and equipment.Application includes.

. Commerical and residential structures.

. Education project.

. Reaction project.

. Civil project.

. Tunnel utility project.

Formwork will offer major advance,compled adaptability,and high strength to weigh ratio and all at cost effective prices.Assembly will be quick and easy.During form
use maintenance will be minimal.The company will recommend as a safety precaution, occasional inspection for bolts and nut that may have loosened from
handling.

The require formwork drawing that the company will furnish to the construction eliminate all guess work.The company will specify the order of assembly and
erection including the location of the strong backs and joist.the location and actual loading of the forties, location of all accessories and advice clients of the
maximum allowable rate of concrete placement.

Accident prevention is the cornerstone Just Build It safety commitment.the company will strive to eliminate foreseeable hazards which could result in personal injury
or illness.

At Just Build It fabricators ltd, health and safety will not be compromised.The company will sell it's services clients in the area commercial construction.

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2.4 ENTRY STRATEGY.

We will be able to work with our consultants to helps us map our publicity and advertising strategies that will help us walk our way into the heart of our target
market.first and foremost we want our brand to be visible, which is why our publicity start has been well crafted to help us achieve our aim and business objectives.

All our publicity materials and jingles will be done by some of the best hands in the industry.

Below are the plat forms we intend to leverage on to promote and advertise our form work business.

.place adverts on both print and electronic media platforms.

.place our flex banners with our company's logo and contacts in every property put up for sale.

. sponsor relevant Tv show so as to be able to communicate our brand and what we do.

. maximum our company's website to promote our business.

.install our billboards on strategies location all around the country.

. ENTRY PLAN.

After carrying our a comprehensive research this type of business the owner has all reasons to believe that the will succeed.most people living in Mamboleo where
the business is strategies located will be in a position to easily located the business are located.

To make Just Build It Enterprise ltd know to the customers,the owner will embark on serious, intensive, marketing and promotion campaign.The owner will use
poster that will be strategically placed to attract the eye of people about the business and it's services.

The owner also intend to provide customers with high quality products that will fully sat high quality products that will fully sat their needs attracts them to come
again.

2.5 GROWTH STRATEGY.

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.Trends which signal business growth.

JUST BUILD IT Enterprise ltd will be expected to stabilize after five months of introducing it's products to the market.

. Opportunities arising from the trends.

The project realized during the period will be used to enhance products.After a period of three years there will be a consideration of operating new braches in
various parts of the country.

.plan to take advantage of the opportunities The owner hops to counteract competitive by offering products at a reasonable and attract price to attract customers.

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CHAPTER 3
3.0 MARKETING PLAN.

JUST BUILD IT Enterprise intends to have potential customers from Mamboleo sub-county and the entire Kisumu county.in the most of these hardware the Kisumu
municipality they have specialized in formwork for these customers to be reached the business intends lay down the following marketing strategies.

.Appoint construction site who are dealers with formwork.

. Developing an advertising campaign strategy and increasing the advertising budget over year by 8%.

. Attaining a profit margin.

3.1 POTENTIAL CUSTOMERS.

The following will be potential customers JUST BUILD IT Enterprise ltd are.

They are the main customers target in the industry and are many within Mamboleo area and Kisumu at large construction activities are intense .they will be hiring
the products and others purchasing.

They are also among the customers who will purchase and hire the products for construction activities within their premise and within Kisumu area for example
private parasites and private hospitals.

These are the people who purchases the plots within the city they will require to develop the land hence requiring our service and products mostly for hire.
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The government carry out intensive infrastructure development i.e road and housing hence our service important for example affordable housing road construction
etc.

Foreign investment who are interested in owing properties in the country and many others customers.

Age of group of the customers will range between twenty five to forty years for the head of the institution companies and construction to enable the contractors to
easily access them.i will also offer services to people aged between eighteen years to forty eight years who will be working in industries are institution so that may
be able to use internet to build trust with their.

Therefore the income will tend to be high as we will formwork and scaffold work are attractive to many engineers.

Our penitential customers will be both with penitential customers will be both with professional job occupation and Non -professional job occupation are Engineers,
manager and former.

The potential customers will have beliefs and values they cherish towards our business.they will have a belief in being a good stewards of resources in exercising
frugality. They will have values such as loyal, trust reliable and respectful.

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Purchasing pattern of our customers is anticipated to high as business and institution are growing daily and owner to gain popularity.

There more clients will frequently need our formwork more scaffold service to successfully and easily run their and construction site.

The approximate number of our customers is one hundred per day.Also customers in the range between one hundred and two hundred per day Wii need our
formwork in the construction work.

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3.2 COMPETITION

Competitive threats come from other formwork and scaffolding enterprise and companies in the areas that supplies and for hire services within Kisumu city.

.AFIX and CCB SCAFFOLD.

The company will be located in Kisumu town at enterprise road opposite morning star supermarket as companies industries and construction site.

Business people around the location will also need our services.

The size of the competitors will not be much bigger we will be analysing any failure by our competition.

I will evaluate the competitors strategies and determine their strength and weakness.

. strength.

They have at least 15 years experience in the market.They offer credit facilities to their customers.They have a good public image.They have transport facilities.

. weakness.

They don't offer credit facilities to them customers. They rarely advertise and promote their products.They provide hire and supply service for formwork alone
without scaffold.

Plan to capitalize on the weakness of the competitors.

The company plan to rapidly develop marketing alliance with industry leaders and pursue new sales it's services to residential and commercial building.The market
strategy is to capitalize on JUST BUILD IT Enterprise by security city and government contracts.

The company's overall strategy is based on a continuous improvement process of setting objective measuring results and providing feed back to facilities further
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growth an of progress.

From the customers point of view this strategies translates into these benefits.

Increase site safety.

Project cost reduction.

Quality construction practices

3.3 PRICING STRATEGY

Although our price may not be out lower than what is obtained in the industry, but we are hopeful that whatever price bill our customers will be amongst the lower
they can get in the industry.

The fact that we are going to be billing in the industry does not in any way affect the affect the quality of our project.

Credit are offered for regular customers and discount will be issued to regular customers over 50000 of 2% of the total cash in the product.the company will also
provide free transport within Kisumu area after purchase of good.

Also discounts will be offered for our product by T.shirts hat,and calenders bearing our names being distributed.

3.5.SALES TACTICS.
The business will employ two channel,namely.

Direct there is where the customers comes to the business premises and by and hire their products directly.

Indirect channel the customers will place their order through calls,sms and order on our internet platform and the contact and goods will be delivery on time.

To ensure that sales force is retained good and healthy relationship between the customers and the workers will be require.

Recruitment will be done on an ongoing basis I will ensure that I have enough time to carefully review application.

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I will also select a distributor who has work in a sales position before and able to distribute knowledge resource I will motivate them by giving them a challenging but
realistic target and rewarding them for it listening to their need and arming them with the right sales materials.

The geographic area intent to service is Kisumu county.This is suitable because it contains many because individual construction site who are likely to purchase our
products and services.

3.5 ADVERTISING AND PROMOTIONAL STRATEGIES.

I will make my services and products well know through advertising I will use various media such as Instagram, Facebook,and WhatsApp.iwill be sharing my complete
and current works through them. I will also ask my family members friends and employees to also share in their social media pages.

The image I will portray about our products and services is a photo.we will use the photos to demonstrate the formwork and scaffolding.

A logo will be used as a key element of the company and it's symbol representation.

The business will be advertised weekly.if people will be linking and engaging with the post the company will begin to more often.

The cost of advertising on google Ads will be one thousand shillings for click on search network.in YouTube Ads it will be ten thousand per click.in
facebook.instagram and WhatsApp the average cost will be five thousand shillings.

We will assess how an campaign affect sales effect test.This will help us in measuring the fifteen thousand shillings.

3.6 DISTRIBUTOR STRATEGY.

The channel to be used for distribution are, direct and indirect selling .in direct channel we will sell our products and services directly to the customers while in
indirect will involve multiple intermediates before the services and products end up the hands of the client.

To deliver our services and we will use various means these are road transport,rail transport.

The transport cost per month will be between fifty thousand shillings and sixty thousand shillings.This is because our service and product may be needed by clients
outside our country.

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The anticipated distribution problems are customer expectations , customers may expect everything faster, cheaper and better.In this case,the solution is to meet
their expectations with e-commerce website solutions that may simplify both browsing and purchase.

Employee retention speaking of personnel.finding and keeping qualified state is the most challenging task.This problem will be overcome by being user friendly and
allowing the staff to work on the go.changing relationship between the suppliers and the clients is also expected.

We intend to distribute our service and products in time and safe so as we can overcome the problem and get new customers ,retain current customers and manage
our reputation.

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CHAPTER 4
4.0 ORGANIZATION PLAN.
The organization plan of the business bis categories according to organizational structure,key management personnel,and other personnel and supporting.

4.1 Organizational structure.

The business will be managed by manager.This being the top most position in the organization structure,I will be the manager, accountants, marketing, customers
care and human resources. We plan to have a board of directors which consists of professional draw from various field related to the industry.

My duties and responsibilities as owner manager are as follows.

Managing safety of transportation of formwork supplies.

Implementing a strategy to increase the growth of formwork in industry.

Manage troubleshooting issue.

Responsibility.
Monitoring market and competitors new activities to ensure opportunity for new customers acquisition.

To ensure that organization objective and customers need are met

Addressing staff welfare issues including motivating a and counseling of staff.

MANAGING DIRECTOR

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 ASSISTANT DIRECTOR

HUMAN RESOURCE

MANAGER

ACCOUNTANT SECRETARY

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4.2 key management personnel.
Name of members in the proposed management team are as follows.

1. JENIPHER Okumu.

2. PHELIX Omondi.

3. BRIDGIT CLAUDIA.

4. PETER CHEGE.

5. WENDY MICHAEL.

The following table indicates the positions, duties, responsibilities and proposed salaries of each member of the management team.

PERSONNEL POSITION Salary DUTIES RESPONSIBILIT

Y

JENIPHER Okumu Manager 65000 Managing factory Ensure the business

is running smoothly.

PHELIX Omondi Assistant director 35000 Assistance the Carrying out all the
manager in some manager duties in
area absence of the
manager

BRIGDIT CLAUDIA Human resource 55000 Management Responsible for

manager hardworking and arrange travel
reliable meeting and
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 appointment.
PETER CHEGE Accountant 40000 Manage the Responsibility
budget preparing financial
report budgets and
financial.
WENDY MICHAEL Secretary 50000 Represent
company in legal
proceedings

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The members in the management team will be provided with various incentives so as to keep them highly motivated to perform well and meet certain company
goals.

The employers will be recognized and rewarded in their works.this will make the employees think about the actions that got them the rewarded whenever they sees
it.i will also ensure

profit sharing where employees would receive a direct share of profit, typically one per year.we will also provide fun gifts to employees as an incentive.

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Chapter 5
5.0 OPERATIONS PLAN.
Operational plan will the guide on how the enterprise will be be operating on duty bases general objective being achievement of the set goals of the business and
more so to satisfy customers needs. For these procedure to succeed various types of machinery and equipment will be required.

5.0 Production facilities and capacity.

These are necessary tools required in production of products and services to enable the business to run smoothly. For effective operations the business will have to
purchase the following facilities.

ITEMS Quantity Unit cost Total cost

(Ksh)

Timber 20 30000 60000

Plywood 10 5000 20000

Steel 20 8000 15000

Copper 25 4000 10000

Total 47000 105000

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The machinery and the equipment listed above will be acquired through purchasing and others will be hired.

For machines and equipment to be hired there will be lease agreement between the owner and us as a company.

Repair and maintenance of the machinery will be done either in advance of failure.this will involve regular servicing of equipment.route check repair work and
placement of worn or no functional part.it will ensure steady and proper supply of products and services.

We will ensure that we have important spares in our company to be used to replace the machine and equipment when they wear out.The availability of spare parts
will save cost of importing

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 Manager Accountant

Office

Formwork Sales and

Factory Marketing office

I will have plans for future expansion on workshop factory space.They include selling more products and services to our existing customers, expand into new
territories and adding new products and services.

5.2 PRODUCTION STRATEGY.

Monthly material requirement.

Material QUANTITY UNITCOST TOTAL

Steel 130 45 5850
Timber 100 50 15000
Bituminous 65 3000 195000
Copper 70 50 3500
wood 15 500 7500
Fibrous 20 200 4000
Total 38455 230850
The machinery and the equipment listed above will be acquired through purchasing and others will be hired.

For machines and equipment to be hired there will be lease agreement between the owner and us as a company.

Repair and maintenance of the machinery will be done either in advance of failure.this will involve regular servicing of equipment.route check repair work and
placement of worn or no functional part.it will ensure steady and proper supply of products and services.
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We will ensure that we have important spares in our company to be used to replace the machine and equipment when they wear out.The availability of spare parts
will save cost of importing .

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We will be getting the materials from the various suppliers within the location of the business. This will enable us to ensure and us to en

sure, and provide constant supply and products and services to our customers. We will ensure good relationship with our potential so that they may supply high
quality products.

Transportation.

The supplier will manage all suppliers related matters regarding negotiations and supplier

Quality. They will provide the transportation of those materials. The suppliers will provide a company with the services it uses in providing goods and services to our
customers. I will also provide transportation when the need arises.

Various direct and indirect production workers will be required to ensure success in the business. The direct worker will be involved in the hands-on production of
goods and services. The estimated number of the direct workers is 15 people. Indirect workers t will be involved in any labor which is default. The indirect workers
will also be 15 people.

The workers should have high level of skills which are on how to maintain formwork and artistic.

The total production cost per month includes the cost of the of buying the products the salary payable to the workers the cost of buying the production machine and
equipment.

The cost of buying material/equipment=800000/=

The cost payable to the worker per month=500000/=

The cost of the monthly overhead=250000/=

The original cost of buying machines and equipment=150000/=

The total of production pre month id ksh. 1700000

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5.3 Production Process

Sorting the raw

material

Feeding through the

Milling machine

Milling and delivery

To the milling machine

Extraction

Step1 Customers and of stock.

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In this step the company analyzes what the customer want at that particular period and makes some orders from the main supplier to do some deliveries on time.

Step2.purchase and sorting

Here the company does arranging of the products categorically for easy tracing and accessing them.

Step3 pay bill and recording.

ff

Step4 Distribution.
This is final step of production after ordering, sorting, recording the company will do the delivery to their respective customers as per their orders.

EXTERNAL FACTORS LIKELY TO ATTRACT THE PRODUTION PROCESS

External factors
Poor infrastructure it delays the arrival of raw materials thus delay the production and minimize production volume.

Ways to minimize.
The transporters will choose the road with good infrastructure.

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Raw materials will be transported prior the day of production

Breakdown of machines this will stop process.

Ways to minimize.

To maintain all machines in good state

In case of repair it will be done in time

Iwill make sure there are reliable engineers for repairing machines as always available when needed even in emergency.

5.4 REGULATION AFFECTING OPERATION.

These are government regulations that govern the business operations .The business will seek government approvals of the businesses.They include

Licenses and permits.

The company will ensure that the business is registered in the relevant authority to be given the permission to run and operate the business. Through registration
the company will acquire document that are needed by the municipal council for the company to run.The company will have to pay certain amount of money as a
fee in order to have the documents. The company needs to pay Fifty Thousand Kenya Shilling [Kshs 50,00] as a fee for permits and license per year.

Local taxes payable

The company will be paying taxes to the county government. The amount required to be paid will depend with the returns from the sales the business will be making
per month. The more the returns to the business the more tax it will be paying.

Approvals and compliance required.

These are minor documents required before the start of the company. The company has to register the business in order to be given compliance certificate for the
commerce of the business. The company need to pay thousand Kenya shilling [kshs 30,000] for the company to get this document.
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Insurance
The company has to insure the business with an insurance company against some risks that may arise in the business like insurance against fire, theft and others
risks. The company also should insure all the employees in the business against the risks that are likely to face the workers in the business like them against
accidents,deaths that might be caused by machine in the business.

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CHAPTER SIX.
6.0 FINANCIAL PLAN.
This chapter describes the finances that will be used in the proposed business. It include preoperational costs, working capital requirement, pro-form income
statement pro-form balance sheet, projected cash flow statement,break-even level desired financing proposed capitalization and expected profitability ratios.

6.1 PRE-OPERATIONAL COSTS.

They are cost or expenses the business will incur before it start to operate.

ITEMS COST IN[KSH]

Timber 5000

plywood 5000

Steel 5000

Aluminum 30000

Plastics 10000

Magnesium 150000

Fabric 25000

TOTAL 23OOOO

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6.2 WORKING CAPITAL REQUIREMENTS.
These are current assent or resoures required by business on daily basis in order to run.

ITMES 1STMONTH 2NDMONTH 3RDMONTH

Debtors 1000000 1500000 2000000
Work progress 2000000 3000000 2000000
Cash at bank 3500000 2500000 5000000I
TOTAL 6500000 7000000 9000000

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6.3 PRO-FORMA INCOME STATEMENT.
This is a statement used by the business to calculate the profit or loss in a given period of a year.

ITMES 1STYEAR[KSHS] 2NDYEAR[KSHS] 3RDYEAR[KSH]

Sales 31000000 33,000,000 35,000,000
Cost of services 9953250 10,953,250 11,0000000
GROSS PROFIT 21,046750 22,046,750 24,000,000
EXPENSES
Salaries and wages 8,796,000 8,796000 8796,000
Water 5000 5,500 5500
Telephone and postage 250,000 4,000 5,000
Electricity 250,000 5500 6000
Advertisement 30,000 250,000 250000
Transport 5000 350000 40000
Depreciation
Interest 3500 4000 4500
Repair and 10,000 15000 20,000
maintenance
Total expenses 9102,500 9115000 9127000

Net profit before tax 11,944,250 12,931,750 12,931,750

Provision for tax 10 1,194,425 1,293,175 1,293,175
Net profit after tax 10,749,825 11,638,575 11,638,575

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6.4 PRO-FORMA BALANCE SHEET.
It is a statement used to calculate the total value of the business.

ITEMS 1st YEAR 2ND YEAR 3RD YEAR

ASSETS
Current assets
Cash 6300,000 9,350,000 10,450,000
Debtors 83,00,000 7,300,000 11,400,000
Total Current assets 14,600,000 16,650,000 21,850,000
Fixed assets
Machinery and 300,000 450,000 500,000
equipment
Accumulated - 9,000 15000
depreciation
Vehicles 60,000 70,000 75,000
Accumulated 2,000 2,500 3,000
depreciation
Total fixed assets 362,000 531,500 593,000
Total assets 1,052,000 1,301,500 1,643,000
LIABILITIES
Current liabilities
creditor 400,000 450,000 560,000
Interest on loan 3,500 4,000 4500
Tax 14,050 18,000 27,700
Total current liabilities 417,550 472,000 592,200

Long term liability

Bank loan 300,000 400,000 500,000
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Owner’s equity 50,000 100,000 150,000

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6.5 PROJECTED CASHFLOW STATEMENT.
This statement is used to show the cash flow in the business on a monthly basis for the first three month of operation.

ITMES JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Cash/flow
Cash sales 45,00 4,000, 500, 6,000, 7,500, 8,000, 9,500, 10,000, 11,000 1,2500 13,000 10,000
,000 000 000 000 000 000 000 000 ,000 ,000 ,000 ,000
Collection 2000, 3,000, 4,00 5,000, 6,000, 7,000, 8,000, 9,000,0 10,000 11,000 12,000 15,000
from debtors 000 000 0,00 000 000 000 000 00 ,000 ,000 ,000 ,000
0
Total cash 6500, 7,000, 9,00 11,000 13,500 15,000 17,500 19,000, 21,000 23,500 25,000 25,000
inflow 000 000 0,00 ,000 ,000 ,000 ,000 000 ,000 ,000 ,000 ,000
0
Cash out
flows
Cash 100,0 130,00 140, 180,00 200,00 250,00 300,00 330,000 370,00 410,00 450,00 500,00
purchase 00 0 000 0 0 0 0 0 0 0
Payment to 50,00 60,000 75,0 45,000 70,000 100,00 90,000 140,000 120,00 160,00 130,00 180,00
creditors 0 00 0 0 0 0 0
Wages/salari 8,796 8,796, 8,79 8,796, 8,796, 8,796, 8,796, 8,796,0 8,796, 8796,0 8,796, 8,796,
es ,000 000 6,00 000 000 000 000 00 000 00 000 000
0
Telephone 1,500 2000 2,50 1,800 1,500 1,800 1,400 1,900 1,700 2100 1,850 2,200
0
Electricity 4,000 4500 5,00 4,550 4300 4,700 4,600 4,800 4,900 4200 4,500 4800
0
Taxes 14,05 18,000 27,7 30,000 20,000 22000 25,000 24,500 30,000 25,500 24,000 19,000
0 00

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Total cash 1,240 1,285, 1,32 1,332, 1,366, 1,449, 1,492, 1,572,2 1,597, 1672,8 1,681, 1,777,
outflow ,550 500 1,20 350 800 500 000 00 600 00 350 000
0
Net cash for 5,259 5,714, 7678 9667,6 12,133 13,550 16,008 17,427, 19,402 21,827 23,318 23,223
month ,450 500 ,800 50 ,200 ,500 ,000 800 ,400 ,200 ,650 ,000
Accumulatio 175,21
n 1,150

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6.6 Break-even level.

Step 1
Total contribution on margin.

Total contribution=sales_variable.

1st year sales=700,000

Less viable cost=200,000

Contribution 700,000-200,000=500,000

2nd year sales=800,000

Less variable cost=250,000

Contribution cost=800,000-250,000=550,000

3rd year sales=950,000

Less variable cost=300,000

Contribution 950,000-300,000=650,000

Step2
Contribution margin percentage. 2nd year 550,000*100/800,00

Contribution margin*100/sales

1st year 500,00*100=71.4%. 3rd year 65000/950,00*100

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Step3
Total fixed costs that are operating expenses

Items. Amount (KSHS)

Salaries and wages. 1011,000

Rent. 60,000

Water. 5,000

Telephone. 1,500

Electricity. 5,000

Advertisement. 43,000

Transport. 20,000

Total. 1145,500

Step 4
Break _even level of sale

Break-even level (KSHS)= fixed costs /contribution margin %

1st month 1,145500=1604,341.74

71.4%
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2nd month=1,14500=16,64971

68.8%

3rd month=1,145,500=1674,708

68.4%

6.7 DESIRED FINANCING.

It is used to indicate the total amount of money required to start off a business.

ITEMS. AMOUNT (KSHS)

Pre-operating. 463,300

Working capital. 6500,000

Fixed assets. 362000

Total desired financing. 7326,300

6.8. PROPOSED CAPITALIZATION

It is used to show brief describes the business proposed capitalization.

ITEMS. AMOUNT (KSHS)

Total investment. 2500,000

Owner,s equity. 1500,000

Bank loan. 6000,000

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Total amount. 10000,000

6.9 EXPECTED PROBABILITY RATIOS

1 Gross profit Gross profit ×100/100/sales

1st year 21,046750×100=67.9%

31000000

2nd year 22,046,750×100=66.8%

33000,000

3rd year 24,000,000×100=68.5%

35,0000,000

2. Return on equity
Net profits/Owners equity ×100

1st year 9,198,225× 100=18,396,35%

50,000
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2nd year 10073475×100=10.073%

100,000

3rd 11816,550×100=7.877%

130000

3 Return of investments.
Net profit after tax+ investment × 100

Total investment

1st year 91,98,225+3500×100=92.4%/9953250

2nd year 10073,475+40000×100=92%/1095325

3rd year 11816,550+4500×100=107.5%/11000,000

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