BUSINESS TITLE: KAREMBO COSMETICS

PRESENTED BY: OMOTO MUKOYA SYLVIA

ADM NUMBER: 15407

INDEX NUMBER: 6161030158

COURSE CODE: 2813

PAPER CODE: 307A

COURSE NAME: DIPLOMA IN INFORMATION STUDIES

CENTER NAME: SIGALAGALA NATIONAL POLYTECNIC

EXAM SERIES: JULY/AUGUST SERIES 2021

SUPERVISOR NAME: MR. GABRIEL MALOMO

PRESENTED TO:
KENYA NATIONAL EXAMINATION COUNCIL FOR THE PARTIAL
FULFILMENT OF THE AWARD OF DIPLOMA IN LIBRARY AND
INFORMATION STUDIES
DECLARATION
I declare that this project is my original work and has not been presented to any
university or college for the award of the same
NAME: NYAKANG O’M KEVIN
SIGN ...…………………….
DATE..............
This project report has been submitted to Sigalagala technical by my approval has
the candidate research project supervisor

NAME:
SIGN...........................
DATE...................

i
DEDICATION
My special dedication goes to my husband and my parents for their concern in
assisting me in fulfilling my dreams. I wish them God’s favor in all their
endeavors.

ii
ACKNOWLEDGEMENT
I would like to acknowledge the following people who without their extended
hands and coordination the production of this project would not be a success.
My husband for his great financial assistance and guidance towards the
achievement of my diploma.
My dear parents for their extensive support through prayers and any kind of
support.
My supervisors for their assistance towards the construction and production of this
project.
My friends and the rest of my fellow classmate for their cooperation towards the
production of this plan. My God almighty bless them.

iii
 CHAPTER ONE

EXECUTIVE SUMMARY

BUSINESS DESCRIPTION
This business will operate under the name Karembo cosmetics, under the
ownership of Sylvia Omoto.
It will be entirely be a sole proprietorship form of business with the owner being
the managing director. The business will be a start up business and will commence
from 2022.
MARKERING PLAN
The business will deal with variety of customers including institution, community
members, students from institution around, lectures and teachers from around.
The business will make its efforts to win a reasonable share of the market between
the first two years of its operation.
Techniques and other strategy will be initiated for the business to be able to deal
with its competitors. Creation of awareness will be done through posters, over the
local radio. Pricing products will be such that it will motivate customers to the
business.
ORGANISATION PLAN
The owner will make up the top decision and be the managing director. Other
personnel will be supervisor, clerk, machine operator, cleaner and security guard.
Recruitment of new employees will be conducted after some certain consideration
n some of which include professional qualification, age among others.
Workers will be motivated through incentives like insurance covers.
OPERATION PLAN
The business will ensure quality services and products. A working timetable will
be created to the public to show the time of working. Regulations such as safety
regulations, health regulations and environmental regulations will be taken off.
FINANCIAL PLAN
1
This will show all the calculations relating to finance and business expenditure
incomes for the first three years.
They will include preoperational cost, working capital, cash flow projections,
proforma income statements, balance sheet, break even point and desired finance.
The business source of finance include.
Owner equity 8,546,696
Bank loan 1,800,000
Total 10,346,697

2
 CHAPTER TWO
BUSINESS DESCRIPTION
The business will deal with the selling of the following products skin moistures,
perfumes, lipsticks, fingernails, polishes, eye and facial make up, preparation
shampoo, permanent weaves, hair odours, toothpaste and braids.
2.1 Name of The Business
The business will operate under the name Karembo Cosmetics where the term
Karembo is a Swahili name meaning a “beautiful young girl.” I decided to use the
term karembo because is so familiar and then the products itself refers to my
products after using them they makes your face look young and skinny like a
young girl.
2.2 Location of The Business
The business will be located in kakamega county, Mumias sub county along
Bungoma kakamega road opposite to Mumias polytechnic next to mama watoto
supermarket. The business will be along the main road that joins the Kakamega
and Bungoma road. This will make the business to be nore easily accessible
because the area is having good communication network, good security because of
Mumias police station is fixed next to my business. The plan of the business is as
shown below

My business address will be as shown below

Karembo Cosmetics
P.O.Box 147
Mumias
Tel. 0704238129
email.sylviamukoya16@gmail.com

3
2.3 Form of the business and ownership
The business shall be a sole proprietorship, this type of business is good because
the owner will have the direct control of the business and no external interference
of the business from the person and therefore the owner enjoys all the profits and
decide on the working plan.
2.4 Products and Services
We will offer products oil, artificial hair, cutex, braids, neckless, earing, eye make
ups among others. The business will also offer services like plaiting, blow drying,
selting, treating of hair and hair desired styles. Will also offer pedicure and
manicure of nails.
The business will specialize on quality product and services these will be offered at
competitive prices.
2.5 Industry
The business industry will be a commercial industry. This is an industry which
focuses on a widespread of product and services with the goal of selling the
maximum amount of products possible to customers. The price levels are not fixed
because there is an opportunity granted for bargaining.
2.6 Goals of The Business
Since the potential customers in these area are working this will generate income
for my basic needs.
Due to good market around the town this will help to generate good economic and
communication systems which will help in economic growth of the people around
the market.
Employment of workers will create job opportunities hence develop an income for
the living.
The products will be of high quality and services offered, the customers will be
able to have trust in the products hence satisfying the customers’ needs.

4
 2.7 Justification of Opportunity
Due to an increase in demand of cosmetic products by polytechnic students, there
will be no need to travel from all the way their will be free delivery door to door
where my competitors did not have free delivery offered to customers.
Products will be of high quality and services offered excellently.
Cleanliness of the working environment will be maintained.
Customers will enjoy a certain discount when they goods in bulk hence good
customer relations will be maintained.

2.8 Entry and Growth

Entry strategy
The business will start on January 2022 since the owner of the business will have
acquired the required amount capital to start up the business.

Growth strategy
The business will put up the following measures to ensure its growth;
Provision of quality services at affordable price
Opening of new ranches at butere sub county.
Employ use of modern technology when offering some services.

5
 CHAPTER THREE
MARKET PLAN
INTRODUCTION
The area of the business Mumias town is a busy area, which holds all sorts of
customers some of them includes students from Mumias polytechnic, workers of
mama watoto supermarket, Chege salon where she onl plaits hair, individuals liin
near the business.
These makes the population grow high and which brings a good make up in the
business.
Potential customers
Most of the customers in the area are high class customers due to the good
employment from the Mumias polytechnic and also the supermarket and few of the
staff employed at the Muslim girls. This makes them have a good purchasing
power of the products. Business location will of great help to my business because
the place is centrally located so the accessibility to my customer by any customer
is easy.
Market share
The business will be forced to share its market with other competitors which are
Chege salon and Msamaria cosmetics. However, this will not affect business much
because Chege salon deals only with the plaiting and blowdry which they will also
use to generate income because some of the products they use are like braids and
weaves are distributed by Karembo cosmetics.
The expected market share at the start of the business is approximately 20% and
aiming higher to about 50% of the total market share. From the research and
survey of the market share the following pie chart was obtained from data
collected. Meanwhile the percentage of other competitors are also given; Chege
salon 48%, Msamaria cosmetic 32% of the market share.

6
 Market share

Chege Msamaria Karembo

competitors
My business will have strengthen in marketing compared to its competitors. Since
it will offer quality products and services, used of advance method of payment
where you can pay by lipa na mpesa which is a free service because no transaction
cost. I will offer discounts to customers who will pay products in bulk and daily or
regular once will also enjoy the discount. I will also introduce the door to door
delivery where those who request or order through mobile phones hence promoting
good customer relation. There will be no fixed price for my products, there will be
a room for bargaining which compared to my competitors who have fixed prices
no discount, poor customer relation. Having laid down all these I will be able to
compensate my weakness.
Methods of advertisement
Advertisement
The business will advertise through the use of posters, promotions, roadshows for
instance I will have a roadshow where I will advertise my products like how anti-
dandruf oil conditioner with olive oil can reduce hair lose tendency which results
to hair roots growth. I will come up with a business site where I will keep my
customers a breast of newly arrival products and one can place an order if

7
interested by the products. For regular customers I will have their numbers so as
any arrival can whatsapp them the products.
Promotion
I will offer gifts like T-shirts with the label of my business Karembo Cosmetics to
my regular customers. This will attract more customers to buy in bulk to get a T-
shirt and be a regular customer. I will also come up with discounts to customers
who will purchase products worth ksh3,000. Posters will be located along strategic
places along Kakamega - Bungoma road. This will create current awareness about
my business.
Pricing strategy
The value of the products and services will be calculated based on the cost incurred
and profit targeted while setting up this pricing method while setting up this price I
will consider the following;
I. Taxation of the products
II. Transportation cost
III. Cost of the products and services to be offered
IV. Cost of labour
The price of services will be estimated at minimal, the profit added to sales as
these are developing country the prices are neither too high or too low.
Sale Tactics
The sales tactics in the business will be through advertisement, posters and
promotion. The customers will be free to interact with the employees. The business
will receive enquiries and orders made by customers and satisfy them by delivering
door to door.
Distribution strategy
I will place order for the products from producers.
The producers will deliver the products by means of Van. Distributions will be
channeled through the manager. Customers order will be mate and fulfilled by free
motorbike.

Producers Wholesale Distributor Consumers

8
 CHAPTER FOUR
ORGANISATION AND MANAGEMENT PLAN
Introduction
The organization and development of which includes the management of human
resource will be worked upon by the organization and management plan. This will
help the business to offer goods and services of high quality.
Organization structure
Manager
I will be the manager of the business
Duties and responsibilities
coordinate the overall running of the business
incharge of recruiting and dismissal of staffs
evaluate staff performance
delegation of duties and authority
Assistance of staff for provision and maintenance of organization performance.
Inspire employees towards their efforts at work.
Qualification
Holder of diploma in beauty therapy.
A valid cosmetology licence
Proficient in all Microsoft office applications.
Strong management and leadership skills

9
 IV.1. Other personnel’s number and qualification and
responsibilities
Personnel No Qualification Responsibilities
Supervisor 1 Certificate in beauty therapy To note
3 years working experience attendance of
25 years and above workers
Good public relation Distribution of
work
In charge of
materials and
facilities used
Account clerk 1 Form four leaver Recording all
20 years and above transactions
Good communication skills Payment of
Well disciplined workers
Certificate in computer Prepare and serve
the invoices
Providing funds
for purchasing.
Data entry clerk 1 Holder of certificate in ICT Generating printed
20years and above reports
2 years working experience Handling and
Efficiently with all computer retrieval of
packages information
Able to design and program a Typing and
system receiving all
correspondence
Receiving and
making telephone
calls
Updating of files
Hair specialist 1 Diploma in hair dressing and Braiding and
beauty plaiting
2 years working experience Treating chemical
Good communication skills hair
Blow drying and
setting
Machine operator 1 Technical Maintaining
23years and above broken machine
10
 Good public relation Cleaning beauty
machines
Ensuring all jobs
pertaining to
machine
maintenance are
complete
Cleaner 1 18years and above Clean machines
Be efficient at work Wash protective
Well discipline cloths and towels
Hard working trustworthy used during the
service
Security officer 1 KCSE minimum grade D+ Ensure security
2years working experience measures
From a recognized security firm Note all statistics
Physically strong of all visitors
Able working day
and night
Able to work long
hours
Ensure security of
business property

Recruitment, training and promotion

Recruitment
As far as recruitment of employees is concerned. The business will use the
following criteria in employing staff.
The business will advertise the available through busy newspaper under address.
Karembo cosmetics
P.o. box 147 mumias
Tel. 0704238129
Email. sylviamukoya16@gmail.com

11
Received applications will be shortlisted. The shortlisted applications will be called
for interviews, successful applicants will be informed of their success through
letters and calling them briefing of the duties in the firm.
Training
The business will employ trained personnel for successful running of the business
ie in the offering of quality services and products.
Promotion
Employees will be promoted from time to time on merit. This will include
academic background and experience. The business will also base its promotion on
hard work and commitment to work.
The business promotion will be informing of;
Job titles
Allowance increment
Good opportunity for advancement
Salary increment
Remunerations and incentives
IV.1.1. Remuneration
Personnel 1 Monthly salary Salary p.a
Manager 1 15000 180000
Supervisor 1 5000 60000
Account clerk 1 8000 96000
Data clerk 1 5000 60000
Hair dresser 1 6000 72000
Machine repair 1 4000 48000
Cleaner 1 3500 42000
Security officer 2 5000 72000
Total 52500 630000

12
Incentives
The incentives will include;
I. Training programs to related fields at work will be offered.
II. Insurance cover in case of accident or injury at work
III. Medical advances the business will cater for special ailments

IV.2. License, permit and bylaws

The business will require many license before its operation.
IV.2.1. Trade license
This will be obtained from the ministry of trade and industrialization.
Business registration license; this will be obtained from the attorney general office.
IV.2.2. Permits
This will be required a permit to allow it to operate that business. It will be
obtained its permit from the local authorities and which will be given by kakamega
county government.
IV.2.3. By laws
The business will be attached to the following by laws;
1. Registration of the business name act
2. Trade license act cap 497which allow the business to operate.
3. Income tax act cap 470
This requires the business and its employees to pay tax.
4. Employment act cap 226
This reqires the business to employee under contract and any violation of the
contract of filure to pay an employee wages and benefits is termed as
criminal offence.
5. Workers compensation act 236
The business is required to compensate incase of any misappropriation that
might occur.

13
 6. Workers compensation act 258
This will include the benefits of all employees in areas such as age,
disability or withdrawal benefits. Though its voluntary, the employer is
supposed to register his employees.

III.7. Support service

During operations of the business, the following support services will assist in the
business efficiency.
III.7.1. Banking
The business will require banking services from cooperative bank Mumias branch.
III.7.2. Insurance services
The business will require insurance covers for its assets and workers. This will be
obtained from jubilee insurance company
p.o.box 30364, Nairobi

III.7.3. postal services

The business will require postal services because letters from manufacturer and the
supliers will do business using postal services to make communication easier.

14
 CHAPTER FIVE
5.0. OPERATION PLAN
5.1. PRODUCTION FACILITIES AND CAPACITIES,
EQUIPMENT, TOOLS AND MCHINES.
Tool and equipment Quantity Capacity Supplier Unit Total
Computer 2 6gb Bishman 30000 60000
computers
Filing cabinet 4 3 by 2 Mecol 500 20000
Office table 1 2 by 1 Mecol 2000 2000
Telephone 1 Nakumat 2000 2000
Printer 1 6gb Bish comp 15000 15000
Chair 9 Mecol 500 4500
Motorbike 1 g.motors 75000 75000
Fire extinguisher 1 kenya fire
appliances 10000 10000

5.2. PRODUCTION OR OPERATION FACILITIES AND

CAPACITY
5.2.1. COST OF MATERIALS
Products Monthly (pcs) Unit cost Total cost
Perfumes 20 300 6000
Lipstick 10 50 500
Finernail polisher 20 100 2000
Eye and facial 10 50 500
Make up 30 200 6000
Shampoos 30 200 6000
Permanent weaves 30 1500 75000
Hair colors 40 1000 40000
Toothpaste 50 200 10000
Deodorant 30 150 4500
Massage cream 30 1000 30000
Body lotions 100 300 30000
Earing,bangles, 20 500 10000
Neckless
Total 220,500

15
5.2.2. COST LABOUR
Personnel Number Monthly salary
Manager 1 15000
Supervisor 1 5000
Accounts clerk 1 8000
Data manager 1 5000
Hair dresser 1 6000
Machine technician 1 4000
Cleaner 1 3500
Watchman 2 6000
Total 52500

5.2.3. OVERHEAD COST

Expense Amount
Rent 20000
Electricity 750
Water bill 584
Postage services 1000
Legal document 150000
Equipment 40,750
Advertisement 10000
Promotion 5000
Telephone 1000
Total 83884

5.2.4. TOTAL MONTHLY REQUIREMENT

Items Amount
Labour 43500
Overheads 83884
Cost of maintenance 57900
Total 185284

16
5.2.5. WORKING PLAN
Time/day Mon – Saturday Sunday
7.30-10.30am Woking hours
10.30-11.00am Tea break
11.00-1.pm Working hours Off work
1.00-2.00pm Lunch break
2.00-5.00pm Working hours
5.00-6.00pm Stock taking

5.2.6. BUSINESS PREMISES LAYOUT

watchman Cashier Sticks

lipstick
s

Dinments

Dressing Gels
hair,
Shaving products Manicure

Lotions , Toothpaste
facial,
moisturize
r,

Solutions
Emulsions
Hair dresser
Shampoo, eye
Perfumes,creams
liner
Hand moisturizer

Sunscreen Machine
technician
Manager
office

17
4.4. PRODUCTION PROCESS
The following are the stages that will be followed in the process of production;
It will involve getting into contact with the wholeselers dealing with beauty
products and placing orders for various products.
The business will also offer online services for customers who will not be in a
position to come to person into the business whereby the business will offer free
delivery via the motorbike.
The supervisor will counter check the products and make sure they are good
condition, expiry dates, correct labels before they are arranged in shelves for
display.
After the business deals is concluded, the products will be transported to the
customers. Any customer who will need our services from home or products will
be delivered freely.
Customers will be under freedom either to purchase product in bulk or in small
quantities depending on their capability and demand of the products. They will not
be restricted so as to encourage the unwilling to buy in large quantities will be
given some allowances.
The business will ensure constant supply of these products and services.

4.5. REGULATIONS AFFECTING OPERATION

There several large requirements that will affect the business during its operation
These will include;
Safety regulations the business will be required to poses some safety equipment
within its premises eg.fire extinguisher, first aid kit. Watchman will be in charge of
the night hours.
Health regulations the regulations will force the business if signs of unhealthy
conditions are observed.
Insurance the business will ensure all its kits employees in case of any occurrence
of risk. Also the business will be insured against risk such as fire theft amongst
others.

18
NSSF and NHIF the business will be required to register all its workers in both
firms so that they may be secure in medical and old age assistance.
Trade mark on entering the market the business will be required to acquire
unique trademark.
Environmental regulations the business will be required to keep or maintain
cleanliness around its premises and adjacent surrounding environment.

19
 CHAPETER SIX
FINANCIL PLAN
The financial plan will reflect the business finance on monthly and yearly basis for
the first three years of the business.
It will give the accountability of the business finance. It will deal with statements
like cash flow projection, proforma, income statements, proforma balance sheet
and a draft financial requirements.
PRE OPERATIONAL COST
This will be the cost or expenses I will have incurred before I start business
operation.
Item Amount
Licences 850
Permit 15000
Insurance 2500
Water 584
Electricity 750
Equipment 40750
Machines 100000
Rent 20000
Salaries 52500
Advertisement & promotion 15000
Total 24793

ESTIMATION OF WORKING CAPITAL

Current Assets – current liabilities = working plan
Current assets 1st year 2nd year 3rd year
Account received 2000000 2400000 2600000
Stock 1000000 1200000 1600000
Total current
assets 3000000 3600000 4200000
Liabilities
Loan 1800000 20000
Creditors 10000 10000 10000
Total liabilities 1810000 10000 30000
Working capital 1190000 3590000 4170000

20
PROJECTED CASHFLOWS
PROJECTED CASHFLOW FOR THE FIRST YEAR 2022
Cash flow Jan Feb March April May June July Aug Sept Oct Nov Dec TOTAL
Opening 1,854,31 1,927,98 2,100,64 2,374,31 2,696,98 2,990,64 3,193,31 3,666,47 3,839,14 4,012,31 4,184,97 32,841,10
cash(b\f) 6 2 8 4 0 6 2 8 4 0 6 6
Sales 150,000 150,000 100,000 100,000 300,000 300,000 300,000 400,000 200,000 200,000 150,000 150,000 2,500,000
Loan 1,800,00 1,800,000
0
Acc 200,000 100,000 200,000 300,000 200,000 100,000 100,000 200,000 150,000 100,000 150,000 200,000 2,000,000
received
Total in 2,150,00 2,104,31 2,227,98 2,500,64 2,874,31 3,096,98 3,320,64 3,793,31 4,016,47 4,139,14 4,312,31 4,534,97 39,041,10
flow 0 6 2 8 4 0 6 2 8 4 0 6 6
Cash out
flow
purchases 200,000 100,000 50,000 50,000 100,000 100,000 50,000 50,000 100,000 50,000 50,000 100,000 1,000,000
Salaries 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 630,000
Rent 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Telephon 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12,000
e
Water 584 584 584 584 584 584 584 584 584 584 584 584 7,008
Electricity 750 750 750 750 750 750 750 750 750 750 750 750 9000
Advert& 1000 1000 1000 1000 1500 1000 1500 1500 1500 1500 1500 1000 15,000
promotion
License 850 850
Permit 15,000 15,000
Insurance 2500 2500
Creditors 1500 500 1500 500 1000 500 1000 500 1000 500 1000 500 10,000
Total out 295,684 176,334 127,334 126,334 177,334 176,334 127,334 126,834 177,334 125,834 127,334 176,334 1,941,358
flow
Bal clf 1,853,31 1,927,98 2,100,64 2,373,31 2,696,98 2,920,64 3,193,31 3,666,47 3,839,14 4,012,31 4,184,97 4,358,64 37,129,74
6 2 8 4 0 6 2 8 4 0 6 2 8

21
PROJECTED CASHFLOW FOR THE SECOND YEAR 2023
CASH JAN FEB MARC APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
FLOW H
Bal clf 4,358,64 4,559,39 4,677,19 4,795,99 4,813,89 5,032,99 5,450,89 5,769,59 5,987,79 6,206,79 6,424,89 6,837,89 64,915,15
2 2 2 2 2 2 2 2 2 2 2 2 4
Sales 200,000 100,000 200,000 100,000 200,000 400,000 200,000 300,000 200,000 300,000 400,000 200,000 2,800,000
Alcc 200,000 200,000 100,000 100,000 200,000 200,000 300,000 100,000 200,000 100,000 200,000 500,000 2,400,000
received
Total in 4,758,64 4,859,39 4,977,19 4,995,99 5,213,89 5,632,99 5,950,89 6,169,59 6,387,79 6,606,79 7,024,89 7,537,09 70,115,15
flow 2 2 2 2 2 2 2 2 2 2 2 2 4
Cash out
flow
Purchase 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1,200,000
s
Salaries 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 630,00
Rent 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Telepho 500 500 500 500 500 500 500 500 500 500 500 500 6000
ne
Water 200 400 300 500 200 300 400 200 300 300 100 200 3400
Electricit 200 300 400 100 200 300 400 100 200 100 200 400 2900
y
Advert& 1000 1000 1000 1000 1000 2000 7000
promotio
n
License 850 850
Permit 15,000 15000
Insuranc 2500 2500
e
Loan 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 90,000
interest
Creditors 7000 3000 10,000
Total out 199,250 182,000 181,200 182,900 180,900 182,100 181,300 181,800 181,000 187,900 187,800 186,100 2,207,650
flow
Bal clf 4,559,39 4,679,19 4,795,99 4,813,89 5,032,99 5,450,89 5,769,59 5,987,79 6,206,79 6,424,89 6,837,09 7,350,99 67,907,50
2 2 2 2 2 2 2 2 2 2 2 2 4

22
PROJECTED CASHFLOW FOR THE THIRD YEAR 2024

Cash flow Jan Feb March April May June July Aug Sept Oct Nov Dec TOTAL
Bal blf 7,350,99 7,469,14 7,586,54 7,603,44 8,020,84 8,037,99 8,154,99 8,172,14 8,489,04 8,607,44 8,725,09 9,242,99 97,460,684
2 2 2 2 2 2 2 2 2 2 2 2
Loan 20,000 20,000
Sales 200,000 100,000 100,000 400,000 300,000 100,000 100,000 200,000 500,000 400,000 400,000 200,000 3,000,000
Alcc 200,000 200,000 100,000 300,000 100,000 200,000 100,000 400,000 200,000 300,000 3000,000 200,000 2,600,000
received
Total in 7,770,99 7,769,14 7,786,54 8,303,44 8,420,84 8,337,99 8,354,99 8,772,14 9,189,04 9,007,44 9,425,09 9,642,99 103,080,65
flow 2 2 2 2 2 2 2 2 2 2 2 2 4
Cash out
flow
Purchases 200,000 100,000 100,000 200,000 300,000 100,000 100,000 200,000 500,000 500,000 100,000 100,000 1,600,000
Salaries 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 630,000
Rent 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Telephone 800 400 400 400 400 800 400 400 250 250 250 250 5000
Water 200 200 200 200 200 200 200 200 100 100 100 100 2000
Electricity 500 500 500 500 250 500 250 500 250 500 250 500 5000
Advert 1000 500 1000 500 1000 500 1000 1000 500 1000 1000 1000 10,000
and
promotio
m
License 850 850
Permit 15,000 15,000
Insurance 2500 2500
Loan 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 90,000
interest
Creditors 1000 1000 1000 1000 1000 1000 1000 1000 500 500 500 500 10,000
Total out 301,850 182,600 183,100 282,600 382,850 183,000 182,850 283,100 581,600 582,350 182,100 182,350 3510350
flow
Bal clf 7,469,14 7,586,54 7,603,44 8,042,20 8,037,99 8,154,99 8,172,14 8,489,04 8,607,44 8,725,09 9,242,99 9,460,64 99,570,304
2 2 2 8 2 2 2 2 2 2 2 2

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PROFORMA INCOME STATEMENT
Item 1st year 2nd year 3rd year
Sales 2500000 2800000 3000000
Less purchases 1000000 1200000 1600000
Gross profit 1500000 1600000 1400000
Expenses
Salaries 630000 630000 630000
Rent 240000 240000 240000
Telephone 12000 6000 5000
Water 7008 3400 2000
Electricity 9000 2900 5000
Advert &promo 15000 7000 10000
Licences 850 850 850
Permit 15000 15000 15000
Insurance 2500 2500 2500
Loan interest 90000 90000
Total expenses 931358 997650 1000350
Net profit before
tax 568642 602350 399650
16% VAT tax 90982.72 96376 639444
Net profit after
tax 477659.28 505974 335706

Net profit before tax = gross profit - total expenses

16% VAT of net profit before tax 16% VAT provisional tax

Net profit after tax = net profit before tax - 16% VAT provisional tax

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PROFORMA BALANCE SHEET OF EACH END YEAR
Item 1st year 2nd year 3rd year
Fixed assets
Equipment &
tools 40750 50000 50500
Furniture 6500 6800 7000
Total fixed
assets 47250 56800 57000
Current assets
Account
received 2000000 2400000 2600000
Stock 1000000 1200000 1600000
Total current
assets 3000000 3600000 4200000
Current
liabilities
Tax payable 909982.72 96376 63944
Loan interest 90000 9000
Owners equity 1107017.28 3413624 4026056
Loan 1800000 20000
Total current
liabilities 3000000 3600000 4200000

Owners equity = total assets – total liabilities

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BREAK EVEN POINTS
Item 1st year 2nd year 3rd year
Electricity 9000 2900 5000
Advertisement % pro 15000 7000 10000
Telephone 12000 6000 5000
Water 7008 3400 2000
Tax 90982.78 96376 63944
Total variable cost 133990.78 115676 85944
Salaries 630000 630000 630000
Rent 240000 240000 240000
Insurance 2500 2500 2500
Permit 15000 15000 15000
License 850 850 850
Total fixed cost 888350 888350 888350

CALCULATION OF PROFITABILITY
Gross profit % ratio = gross profit X 100%
Sales
1st year 1500000 X 100
2500000 = 60%
2nd year 1600000 X 100
280000= 57.1%
3rd year 1400000 X 100
3000000 = 46.7%
Net profit = net profit before tax X 100
Sales
1st year 568642 X 100
2500000 =22.7%
2nd year 602350 X 100
280000 = 21.5%

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 3rd year 399650 X 100
3000000 = 13.3%
Return on capital employed = profit before tax X 100%
Proposed capitalization
1st 568642 X 100
2907017. 28
19.6%
Proposed capitalization = owners equity + loan
1107017.28 + 1800000 = 2907017.28

2nd year 602350 X 100

313624 = 17.6%
3rd year 399650 X 100
4046056 = 9.9%
Contribution sales ratios = (sales – variable) X 100
Sales
1st year = (2500000 – 133990.78) X 100
2500000 = 94.6%
Break even points = fixed cost X 100
Contribution sales ratio
888350 X 100
0.9476 = 93905919.7
2nd year (2800000 – 115676) X 100
2800000 = 95.9%

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 Break even points = 888350 X 100
0.959 = 92632950.9
3rd year (3000000- 85944) X 100
3000000 =97.1%
Break even points 888350 X 100
0.971 = 91488156.5

DESIRED FINACE
Item 1st year 2nd 3rd year
Preoperation cost 247930 247930 247930
Working capital 1190000 3590000 4170000
Total 1437000 3837930 4417930

PROPOSED CAPITALIZATION
Item 1st year 2nd year 3rd year
Owners equity 1107017.28 3413624 4026056
Bank loan 1800000 20000
Total 2907017.28 3413622 4046056

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