BUSINESS PLAN

HUSTLERS CONVEYORS INSTALLATION COMPANY

P.O BOX 4700-30100
ELDORET
TEL: +254725243835

BUSINESS NAME: HUSTLERS CONVEYORS INSTALLATION

COMPANY.
PRESENTED BY: BENARD KIPKORIR LANGAT
INDEX NO: 5341019520
CENTRE NAME: RIFT VALLEY TECHNICAL TRAINING
INSTITUTE.
COURSE CODE:2502
COURSE: DIPLOMA IN MECHANICAL ENGINEERING PLANT
OPTION
PRESENTED TO: THE KENYA NATIONAL EXAMINATION
COUNCIL IN PARTIAL FULFILLMENT FOR AWARD IN DIPLOMA
IN MECHANICAL ENGINEERING PLANT OPTION
SUPERVISOR: MRS JOAN KIRWA AND MRS MERCY FIONA
EXAM SERIES: JANUARY 2021
DECLARATION
I solemnly declare that this project is my own work out of my research and hard work
and therefore it reserves all the rights.

STUDENT: BENARD KIPKORIRI LANGAT

SIGN…………….
DATE………….

SUPERVISOR: MRS. MERCY FIONA

SIGN: _____________________
DATE: _____________________

i
DEDICATION
I dedicate this wonderful work to my dear parents for giving me a way forward due to
their financial support they have invested on me throughout my studies.
I also feel obliged to thank my dear classmates for their moral support towards
achieving my obligations.

ii
ACKNOWLEDGEMENT
May I express my most heartfelt appreciation for the part played by my dear parents
for their financial support throughout my project work.
I also feel obliged to acknowledge my supervisor for his tireless efforts and corrective
measures he took during the preparation of my project hence I seek the Almighty God
to reward you abundantly.

iii
DECLARATION ............................................................................................................ i
DEDICATION .......................................................................................................ii
ACKNOWLEDGEMENT ....................................................................................iii
CHAPTER ONE ........................................................................................................ 1
1.0 BUSINESS DESCRIPTION ................................................................................ 1
1 .1 INTRODUCTION .......................................................................................... 1
1.2 BUSINESS NAME .......................................................................................... 1
1.3 MARKET PLAN ............................................................................................. 1
1.4 ORGANIZATIONAL/MANAGEMENT PLAN. ........................................... 1
1.5 PRODUCTION OPERATION ........................................................................ 2
1.6 FINANCIAL PLAN......................................................................................... 2
CHAPTER TWO ........................................................................................................... 3
2.0 BUSINESS DESCRIPTION ................................................................................ 3
2.1 INTRODUCTION ........................................................................................... 3
2.2 BUSINESS VENTURE ................................................................................... 3
2.3 PRODUCTS AND SERVICES ....................................................................... 4
OPPORTUNITY JUSTIFICATION ...................................................................... 4
2.4ENTRY PLAN .................................................................................................. 5
CHAPTER THREE ....................................................................................................... 6
3.0 ORGANIZATION AND MANAGEMENT PLAN ............................................ 6
3.1 Management Team ...................................................................................... 6
3.1.1 Management Personnel ............................................................................ 7
3.2 Key Management Personnel ........................................................................ 8
3.3 Other Personnel................................................................................................ 9
3.4 TRAINING AND PROMOTION OF PERSONNEL...................................... 9
3.5 Remuneration and Incentives ..................................................................... 9
3.5.2 Incentives ................................................................................................ 9
3.6 LEGAL REQUIREMENTS ....................................................................... 10
3.7 PROFESSIONAL ADVISORS AND SUPPORT SERVICES .................... 10
3.7.1 Professional Advisors........................................................................... 10
3.7.2 Support Services................................................................................... 10
CHAPTER FOUR ........................................................................................................ 11
4.0 OPERATIONAL/ PRODUCTION PLAN ................................................... 11
4.1 Production Design ..................................................................................... 11

iv
 4.2 PRODUCTION FACILITIES AND EQUIPMENTS ............................... 12
4.3 PRODUCTION STRATEGY..................................................................... 13
4.4 PRODUCTION PROCESS ............................................................................. 13
4.4.1 External factors likely to affect the production process ................... 13
4.5 REGULATIONS AFFECTING OPERATIONS .......................................... 13
CHAPTER FIVE ......................................................................................................... 15
5.0 FINANCIAL PLAN ...................................................................................... 15
5.1 Introduction ............................................................................................... 15
5.2 Pre-Operational Cost ................................................................................. 15
5.3 Working Capital/Operation Capital............................................................. 15
5.3.1 Working Capital for the 1stMonth of Every year ................................... 15
5.4 Projected Cash Flow Statement Year One ................................................ 17
5.5 Projected Cash Flow Statement Year Two ................................................ 18
5.6 Projected Cash Flow Statement Year Three .............................................. 20
5.7 Proforma Income Statement............................................................................. 21
5.7.1 For Period Ended 31ST DEC 2020 ...................................................... 21

v
 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1 .1 INTRODUCTION
This chapter entails all business description such as business location, form of
ownership, type of business, products, industry, and goals of business and entry
growth strategies of the business.

1.2 BUSINESS NAME

The proposed business endures to describe HUSTLER CONVEYOR BELT as a

business service which offers installation services and final testing of conveyors such
as the lathe conveyors. The business will be located in LONDIANI town along
Kericho highway.
The business shall be a sole proprietorship form of ownership.

1.3 MARKET PLAN

The business intends to offer the services of installation of conveyor and final testing
of the plant of a company that has for example lathe conveyors boilers, milling
conveyor Petroleum conveyors etc. and provide services such as consultation services
among others to its potential customers who will be the companies from the locality,
milk companies tea factory worker among other companies and factories along the
country.
Customers will be reached by or through advertisement through posters and leaflets
that got our access information. The main competitor is located at LONDIANI town
named KAULI machine installer s
Prices for various products directly from manufacturers or large-scale wholesalers.
The business management shall offer trips and tours to the workers to its staff to
acquire knowledge on how to undertake their activities effectively.

1.4 ORGANIZATIONAL/MANAGEMENT PLAN.

Business shall coordinate its efforts towards achieving its goals through a vertical
chain of command whereby the manger will be the overall, assistant manager,
supervisors machine operators and security personnel. Each staff shall be entitled to
his or her duties effectively and through qualification.
The business shall require legal forms such as licenses and permits, electricity, piped
water, telephone and postal services, banking and insurance services for the welfare of
the employees and premises.

1
1.5 PRODUCTION OPERATION
Since the business offers installation and other services for example final test of
conveyors, making foundation of the machine. The business shall require some
facilities, equipment and conveyors such as installation tools, chairs, shelves and
tables foundation materials such as concrete and metals and vehicles, for effective
running of the business. All the services to be dispensed from the business premises,
the customers are tattled to provide a prescription signed from the authorities and the
manager of the business.

1.6 FINANCIAL PLAN

The financial plan provides a strange work on the utilization of funds into the
premises and expenditures measured by the business. This frame work indicates
various sources of
Income and expenditures.
The pre-operational costs are costs incurred before the business set up into operation
for a sum Ksh 3.6million, Working capital is the money required in running the
business obtained from the difference of current assets and current liabilities hence
working capital for year one is Ksh 4.95million, year two Ksh 5.78million and year
three is Ksh 6.54million.
Gross profit for year one is Ksh 900,000 year two Ksh 1.23million and year three Ksh Comment [a1]: 900000
1.98million Net profit after tax for year one is Ksh 297180, year two Ksh 304956 and
year three Ksh 333102.60 respectively.
The break-even point which is the fixed costs divided by the contribution margin and
Percentage is 0.426%.
The gross profit ratio is the ratio of gross over total sales by total percentage hence
gross
Profit for year one is 45, 3%, year two is 44.2% and year three is 44%.
Return on equity is the ratio of net profit after tax over owner’s equity by total
percentage hence return on equity for year one is 49.5%, year two 27.3% and year
three is 21.4%.
Return on amendment capital is 40.5 and year three is 43.7%. The demand capital is
Ksh 449,4407 and proposed capitalization is Ksh 900,000.

2
 CHAPTER TWO

2.0 BUSINESS DESCRIPTION

2.1 INTRODUCTION
This chapter gives all details about all market plan, customers, market shares and
segment, competitors, production and advertising, distribution strategy and sales
tactics of the business in order to make it run smoothly.
2.1.1 DESCRIPTION
HUSTLERS CONVEYOR BELT INSTALLERS COMPANY will be providing our
customers with the best and quality services if installation of conveyors and other
services such as repairing, final test of a machine and foundation of the machine.
Example of conveyors are compressors, funs, lathe conveyors milling conveyors
among others.

2.2 BUSINESS VENTURE

NAME OF BUSINESS: HUSTLERS CONVEYOR BELT
-The reason of the choice of the name hustlers is because hustle resembles
uniqueness and a leading factor.

2.2.1 LOCATION OF BUSINESS

The business will be located along ELDORET-RAVINE HIGHWAY near Kipkorgot
center.

TO NAKURU TO KERICHO

HUSTKERS
COMPANY
POLICE
STATION
COCACOLA
COMPANY

TO FORTENAN TO KISUMU

3
Along the highway there are many towns, good infrastructure, electricity and good
security that will help the machine operators and installers to work effectively.
2.2.2 LEGAL FORMS OF BUSINESS
A trading permit or license has to be applied by the municipal council and the county
government approval.
For the business to run smoothly in Londiani town one should sign the court
agreement that goods or services offered are of quality and cause no harm to human
nearby the company.
2.2.3 PRINCIPAL CUSTOMERS
Main customers of our installation services will be companies or small-scale business
such as milling machine, companies such as SHAURI Conveyors, tendakazi ltd,
among other companies.
Therefore, the products or goods will either directly be purchased from manufacturers
or whole sellers to retailer and then to the customers.

2.3 PRODUCTS AND SERVICES

The installation services that will be offered by HUSTLERS Company will be
required by much company since there is invention of new conveyors in companies.
The company will offer best services.
The business shall offer services such as after sales services to customers, final testing
of conveyors, and foundation of conveyors freely to our customers.
2.3.1 NAME OF THE PRODUCT AND SERVICE
The name of the business is HUSTLERS CONVEYOR BELT.
The company will be offering installation services to its customers.
2.3.2 FEATURES OF PRODUCT AND SERVICES
Main feature in my business is that services at its best quality is prior to all customers
and companies, hospitals and even in institutions which got conveyors such as
compressors, funs, among others for them to be installed bringing positive results on
the produce.

OPPORTUNITY JUSTIFICATION
After conducting a market survey and analysis, I came up with a proposal or an idea
of starting this kind of business to satisfy the need for the local and national demand.
The reason being is that the customers around the area do travel a long distance and
use a lot of money in searching for the installation services of the conveyors and
hence the start of this business could save the long travelling costs and help customers
to save.

4
. GOALS OF THE BUSINESS
The major aim of this business it’s to maximize profits. It intends to increase its
profits generation to 50 % after a period of three years.
The business shall also curb the ever-increasing rate of unemployment by providing
employment opportunity to those who meet the qualifications as stipulated to the
industry.
The business shall provide the community with affordable services of installation and
free final testing and other foundation services.
The business also will add other services, such as machine repairing and selling of
conveyors in duration of three to four years after maximizing profits. On expansion
the business.

2.4ENTRY PLAN
I have already paid a visit on the location of the business to make myself popular to
the environment. I have advertised for job vacancies by March next year through
posters and online for qualified and experience personal for interviews.
2.4.1COMPETING ADVANTAGE OF BUSINESS
The business will first create a good customer relation by offering best quality
services,
The business will also grant free repairs of conveyors, training, final testing of
conveyors.
2.4.3PRICING PLAN
The company will stick on a relative profit margin, which is to be determined by
competitors’ prices, transportation costs and prices of other tools for equipment.

5
 CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

This Chapter deals with; Organization Structure, Management personnel, other
personnel, training, stating, duties, ranking, responsibilities, salaries, recruitment,
promotion of staff, legal requirements, incentives, reputation and professional
advisors and support census.

3.1 Management Team

The business will be run under management team, whose management will be aiming
at planning, organizing and controlling all activities of the business so that to achieve
common goals.
Management team

MANAGER

ASS MANAGER

ACCOUNTANT RECEPTIONIST SALES AND MARKETER

6
3.1.1 Management Personnel
TITLE QUALIFICATION DUTIES &RESPONSIBILITIES
&SKILLS

1. Manager Holder of diploma in Form goals and polices: it will be

Business administration responsibilities of the manager to
formulate polices and come up with
Diploma in land and goals which will lead to the success
of the business
survey.
Recruiting employees: It will be
Computer literate responsibility of the manager to
recruit new employees
Good managerial skills
Plan and implement programs
2. Assistant a. A holder of Diploma a. Assist in drawing plan and
Manager in Business policies of business. Assistant
manager should give assistance
Management or towards coming up with the best
Diploma in land and policies.
survey b. Establish public relations
c. Improve working conditions and
b. Age of 28-35 years
general welfare. It is the
c. Two years working responsibility of the assistant
manager to make sure that the
experience working condition is favourable.

3. Accountant a. Holder of CPA two a. Recording, counting and

from any recognized depositing/ withdrawing money
in bank.
institution
b. Keep records of all transactions
b. Atleast 3 years for day to day and for future
reference.
working experience

c. Age 25 years and

above

7
3.2 Key Management Personnel
TITLE QUALIFICATION DUTIES &RESPONSIBILITIES
&SKILLS

1. Manager Holder of diploma in Form goals and polices: it will be

Business administration responsibilities of the manager to
formulate polices and come up with
Should have diploma in
goals which will lead to the success
land and survey
of the business
Computer literate
Recruiting employees: It will be
Good managerial skills responsibility of the manager to
recruit new employees

Plan and implement programs

2. Assistant a. Holder of Diploma in a. Assist in drawing plan and policies

Manager Business Management of business. Assistant manager
or Diploma land and should give assistance towards
survey coming up with the best policies.

b. Age of 28-35 years b. Establish public relations

c. Two years working c. Improve working conditions and

experience general welfare.

8
 3.3 Other Personnel

3.4 TRAINING AND PROMOTION OF PERSONNEL

Immediately after shortlisting and orientation all the workers will be given special
training pertaining to their respective area of work.

At the end of the year all workers will be given special training pertaining to new
technology. Therefore, this will enable workers to acquire knowledge and be able to
adjust with technology changes in the business.

3.4.2 Promotion
Promotion in the business will be done after every five years of working in the
business. Promotion will be done with regards to one’s commitment, education,
qualifications and working capabilities in the business.

3.5 Remuneration and Incentives

3.5.1 Remuneration
Below is the job title number, salary and allowances for every month as tabulated.

JOB TITLE BASIC ALLOWANCES No. OF TOTAL

SALARY STAFF AMOUNT

Manager 25,000 5,000 1 30,000

Assistant 20,000 4,500 1 24,500

Manager

Accountant 18,500 3,500 1 22,000

receptionist 12,500 2,500 1 15,000

3.5.2 Incentives
Payments will be fair to both employees. Overtime will be paid by end of the week.
During holidays the management will be organizing part of which during the function
the most hardworking employees will be given presents. In addition to that, the
employees will may be rendered salary increment and annual leave which is 21 days
in a year.

9
3.6 LEGAL REQUIREMENTS
The business will be licensed under registration act for legalization which means that
the business been registered as a business dealing with right goods.

The firm will register with National Social Security Fund (NSSF) and National
Hospital insurance Fund (NHIF). The proprietor will make sure that the employment
act is abode by or complied with that whether casuals as permanent will be handled as
per the employment act.

The trade licenses will be obtained in Londiani Municipal Council.

3.7 PROFESSIONAL ADVISORS AND SUPPORT SERVICES

3.7.1 Professional Advisors

The business management will seek people who are professionally advanced in advice
so that they can be held in decision making and this will lead to improvement of
business production, incomes and quality products to the customers and to the
business.

3.7.2 Support Services

These services will be required at certain times to ascertain how well the business is
doing in terms of legally and purpose for which they will be operating.

Legal assistance will be needed in terms of getting trade license permits and other
requirements which will enable the enterprise to operate effectively without any
claims of business being illegal.

This include: Banking services, postal services, insurance and legal services.

3.7.2.1 Banking Services

The firm intends to have their banking services provided by Co-operative Bank
(Bungoma Branch)

3.7.2.2 Insurance Services

The firm will be insured against theft and fire risk by F.B.S Insurance
10
 CHAPTER FOUR

4.0 OPERATIONAL/ PRODUCTION PLAN

This Chapter deals with; production or operational plan, types of facility required,
production strategy, production process, maintenance, methods of labour
requirements, monthly production and regulations affecting operation.

4.1 Production Design

The company will have a closed type of an office layout.

B
A E
A
C

D F

G H I

A – Watchman D – Secretary Office G – Assistant Manager

B – Car parking E – Manager Office H – Shops Office

C – Accountant Office F – Sales Manager Office – (i) Retailing

– (ii) Wholesaling

I – Store Office

11
4.2 PRODUCTION FACILITIES AND EQUIPMENTS
ESTHERS Sugar Packers and Supplies will require some facilities that will enable the
business to run smoothly.

The proprietor will have items before the business starts operation.

The facilities will include the following;

Items Specification Unit Cost of each Total

required (Kshs) (Kshs)

Calculating machine Scientific 3 800 2,400

Weighing machine Weighing 1 3,000 3,000

Sealing machine Sealing 1 2,000 2,000

Chairs Wood 6 3,000 18,000

Tables Wood 5 1,000 5,000

Counter shelves Wood 1 3,000 3,000

Filing cardboard Clips 6 500 3,000

Telephone installation 2 3,500 7,000

Total (25 (16,800 (43,400

NOTE

Business premises is a family property, earlier was operating in product

almost similar to the one is to operate. The premise condition was evaluated
and found to be fine thus no renovation required.

12
4.3 PRODUCTION STRATEGY
The sales and marketing person will take orders from our various customers who will
be short listed the later on attended by our workers. After booking for our service the
agency will inform the customer on the day to attend to the as per the agreement.

4.4 PRODUCTION PROCESS

Step 1

Booking for our services

Step 2,

Agreeing on the terms and conditions of the company.

Step 3

Paying of the deposit to the company account.

Step 4

Attending to the customer as per there request and proposal.

4.4.1 External factors likely to affect the production process

Lack of labour may be the main factor that will be controlled through additional of
skilled labour.

4.5 REGULATIONS AFFECTING OPERATIONS

The business will also ensure that rules governing Kenya Bureau of Standards have
been adhered to i.e. the services offered must be of high quality. The business will
acquire legal requirements i.e. trade license from municipal council. Value added tax
would be paid as required by the government. The business will also pay PAYE (Pay
as you earn) on all employees.

4.6.1 Safety Regulations

The business should be located on a secured place and the employees should be well
secured to i.e. provided with dust coats, gloves etc.

13
4.6.2 Environmental regulations
The location of the business must be located on a good environment and should
maintain the cleanliness of the environment.

14
 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 Introduction
This chapter deals with: pre operational cost, working capital, project cash flow,
proforma income statement of the business, proforma balance sheet, break-even point
analysis and proposed capitalization.

5.2 Pre-Operational Cost

ITEM COST (KSHS)

Office equipment 20,2000

Telephone 3,500

Transport cost 4,000

Stationery 3,000

Advertisement 3,000

Electricity deposit 2,000

Stock 80,000

Insurance 10,000

Total 125,700

5.3 Working Capital/Operation Capital

This will form the financial requirement for day to day operations. They have been
set on assumption that the economic status of this country would have improved by
the year 2021.

Working capital = Current assets – Current liabilities

5.3.1 Working Capital for the 1stMonth of Every year

Finances required for this business operation will consist of personal savings of
237,800 bank savings of Kshs 130,000 KCB, Bungoma saving of branch and
contribution from friends and relatives of Kshs 20,000.

15
Working capital = Current assets – Current liabilities

ITEM 1ST YEAR 2020 2ND YEAR 2021 3RD YEAR 2022

CURRENT

ASSETS

Cash at hand 100,000 150,000 150,000

Debtors 50,000 20,000 50,000

Stock 150,000 170,000 200,000

Cash at bank 12,900 12,900 100,000

Total Current assets 312,900 352,900 500,000

ASSETS

CURRENT
LIABILITIES

Creditors 20,000 20,000 19,000

Long-term loan 130,000 100,000 110,000

Total Current 150,000 120,000 129,000

Liability

Working Capital 162,900 232,900 371,000

16
 5.4 Projected Cash Flow Statement Year One
5.4 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 31 ST DEC 2020
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
BEGINNING 247300 259600 272400 301700 325000 349300 372600 394900 418600 437800 463550 3942750

CASH

SALES 300000 300000 300000 320000 320000 325000 330000 335000 340000 340000 340000 340000 3590000

OWNERS EQUITY 200000 200000

DEBTORS 1000 1000 1000 2000 2500 2000 1500 11000

CO-OP LOAN 50000 50000

TOTAL IN FLOW 550000 547300 559600 593400 621700 651000 679300 707600 736900 7961100 779800 805050 7992827
17
OUTFLOW

PURCHASES 145000 140000 140000 145000 15000 155000 160000 165000 170000 175000 165000 160000 1870000

REPAIRMEN 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 3800 50000
LOAN
LOAN INTEREST 500 500 500 500 500 500 500 500 500 500 500 600 6400

SALARIES 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 1524000

ADVERTISEMENT 3000 3000 2000 3000 11000

TELEPHONE 1000 1500 2000 2000 2000 2000 2000 2500 3000 3000 3000 3000 28000
INSURANCE 10000 10000

POST OFFICE 2000 500 500 500 500 500 500 500 600 600 550 550 7800

TRANSPORT 4000 4000 4000 5000 5000 5000 5500 5500 5500 5500 5500 5000 54000

STATIONER 3000 3000 3000 3500 3500 3500 3500 3500 3500 3500 3500 3500 40500

17
MISCELLANEOUS 1000 1000 1500 1000 1500 1000 2000 2000 1000 2000 1500 1000 16500
EXPENSE

ELECTRICITY 2000 3000 2500 3000 2500 3000 2000 2000 3000 2000 2500 3000 30500

TOTAL OUTFLOW 302700 287700 287200 291700 296700 301700 306700 312700 318300 323300 316250 307750 3652700

NET CASH 247300 259600 272400 301700 325000 349300 372600 394900 418600 437800 463550 497300 4340050

Sales maintains for the first three months of operation period but on the 4 th month of operation high supply demand led to instant
increment of price of goods supplied thus by 6% however as from June sales maintains at 2% until the end of operation period.
18

5.5 Projected Cash Flow Statement Year Two

5.5 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 31ST DEC 2021
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

BEGINNING 247300 259600 272400 301700 325000 349300 372600 394900 418600 437800 463550 3942750

CASH

SALES 300000 300000 300000 320000 320000 325000 330000 335000 340000 340000 340000 340000 3590000

OWNERS EQUITY 200000 200000

DEBTORS 1000 1000 1000 2000 2500 2000 1500 11000

CO-OP LOAN 50000 50000

TOTAL IN FLOW 550000 547300 559600 593400 621700 651000 679300 707600 736900 7961100 779800 805050 7992827

OUTFLOW

PURCHASES 145000 140000 140000 145000 15000 155000 160000 165000 170000 175000 165000 160000 1870000

REPAIRMEN LOAN 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 3800 50000

18
LOAN INTEREST 500 500 500 500 500 500 500 500 500 500 500 600 6400

SALARIES 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 1524000

ADVERTISEMENT 3000 3000 2000 3000 11000

5.3.0 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 31st DEC 2021

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

BEGINNING 497300 540800 595300 655500 723800 798100 893400 1036700 123200 1472300 1763600 2061900 12270700

CASH

SALES 350000 350000 360000 365000 370000 400000 450000 500000 550000 600000 600000 610000 5505000

DEBTORS 3000 3000 2000 1000 2000 2000 2000 3000 2000 20000

TOTAL IN 850300 893800 957300 102050 109480 120010 1343400 1538700 1784000 2075300 2363600 2671900 17793700
0 0 0
FLOW

OUTFLOW 0 19
PURCHASES 160000 160000 165000 160000 170000 170000 170000 175000 175000 175000 165000 165000 1995000

SALARIES 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 1524000

ADVERTISEMENT 3000 3000

TELEPHONE 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000

INSURANCE 10000 10000

POST OFFICE 500 500 300 300 300 300 300 300 300 300 300 300 4000

TRANSPORT 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000

STATIONERY 3000 3000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 26000

ELECTRICITY 2000 1000 500 400 400 400 400 400 400 400 400 400 7100

TOTAL OUT FLOW 309500 298500 301800 296700 296700 306700 306700 306700 306700 311700 301700 304700 3652700

NET CASH 540800 595300 655500 723800 798100 893400 1036700 1232000 1472300 1763600 2061900 2367200 14140600

19 but later increased by 2% as result of increase in

For the first two months of the year the sale maintained in supply
demand. However, towards the end of the year supply rose and maintained maximum.
5.6 Projected Cash Flow Statement Year Three
5.6 PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDING 31 st DEC 2022

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
BEGINNING 2367200 2651900 2989100 3376500 3804400 4281300 4796600 5361900 5947300 6504900 7067400 7650200 56798700

CASH

SALES 610000 610000 700000 750000 800000 850000 900000 920000 900000 900000 900000 900000 9780000

DEBTORS 1000 2000 2000 3000 1500 2000 11500

TOTAL IN 2978200 3303900 3691100 4129500 4605900 5131300 5696600 6281900 6847300 7404900 7967400 8552200 66590200

FLOW
20
OUTFLOW 0

PURCHASES 180000 180000 180000 190000 190000 200000 200000 200000 200000 200000 180000 180000 2280000

SALARIES 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 127000 1524000

ADVERTISEMENT 0

TELEPHONE 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 1800 2000

INSURANCE 10000 10000

POST OFFICE 300 300 100 200 200 300 300 200 200 200 200 250 2750

TRANSPORT 3000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 25000

STATIONERY 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000

MISCELLANEOUS 1000 500 500 400 400 400 400 400 200 300 200 400 5100
EXPENSE

ELECTRICITY 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000

TOTAL OUT FLOW 326300 314800 314600 325100 324600 334700 334700 336400 342400 337500 317200 317650 3924150

NET CASH 2651900 2989100 3376500 3804400 4281300 4796600 5361900 5947300 6504900 7067400 7650200 8234550 62666050

20
5.7 Proforma Income Statement

5.7.1 For Period Ended 31ST DEC 2020

KSHS KSHS KSHS

Sales

Opening stock 80,000

Additional purchases 1,870,000 1,950,000

Less closing stock 340,000

Cost of goods sold 1,610,000

Gross profit 1,980,000

Less expenses

Loan repayment 50,000

Loan interest 6,400

Salaries 1,524,000

Advertisement 11,000

Telephone 28,000

Insurance 10,000

Post office 7,800

Transport 5,400

Electricity 30,500

Miscellaneous expenses 16,500

Stationery 40,500

Total expenses 1,778,700

Net profit before tax 201,300

16% tax 32,208

Net profit after tax 169,092

21
5.7.2 Profoma Income Statement for the period ending 31stDec. 2021
KSHS KSHS KSHS

Sales 5,505,000

Opening stock 1,000,000

Additional purchases 1,995,000 2,095,000

Less closing stock 180,000

Cost of goods sold 1,915,000

Gross profit 3,590,000

Less expenses

Salaries 1,524,000

Loan interest 6,400

Advertisement 3,000

Telephone 36,000

Insurance 10,000

Post office 4,000

Transport 48,000

Stationery 26,000

Electricity 7,100

Total expenses 1,658,100

Net profit before tax 1,931,900

16% tax 309,104

Net profit after tax 1,622,796

22
5.7.3 Profoma Income Statement for the period ending 31stDec. 2022
KSHS KSHS KSHS

Sales 9,780,000

Opening stock 100,000

Additional purchases 2,280,000 2,380,000

Less closing stock 200,000

Cost of goods sold 2,180,000

Gross profit 7,600,000

Less expenses

Salaries 1,541,000

Loan interest 6,400

Advertisement -

Insurance 10,000

Post office 2,650

Stationery 24,000

Miscellaneous Expenses 5,100

Electricity 12,000

Total expenses 1,594,750

Net profit before tax 6,005,250

16% tax 960,840

Net profit after tax 5,044,410

Sales increased by 8% from the beginning of the year due to high demand but later maintain at
10%

Purchases increased though not in a systematic manner.

23
5.7.4 Proforma Balance Sheet as at 31stDec. 2020
ASSETS

FIXED ASSETS KSHS KSHS KSHS

Weighing Machine 3,000

Calculating machine (Scientific) 2,400

Sealing machine 2,000

Chairs 1,800

Tables 5,000

Counter shelves 3,000

Total Fixed Assets 17,200

CURRENT ASSETS

Cash at Bank 161,500

Cash at Hand 21,300

Debtors 11,000

Stock 240,000 433,800

Total (Current & Fixed Assets) 451,000

LIABILITIES

Long Term

Bank Loan 50,000 50,000

Current Liabilities

Owners’ Equity 200,000

Retainance earning profit 201,000 401,000

Total (Long term & Current liabilities) 451,000

24
5.7.5 Proforma Balance Sheet as at 31stDec. 2021
ASSETS

FIXED ASSETS KSHS KSHS KSHS

Weighing Machine 3,000

Calculating machine (Scientific) 2,400

Sealing machine 2,000

Chairs 1,800

Tables 5,000

Counter shelves 3,000

Total Fixed Assets 17,200

CURRENT ASSETS

Cash at Bank 1,305,596

Cash at Hand 100,000

Debtors 20,000

Stock 180,000 1,605,596

Total (Current & Fixed Assets) 1,622,796

LIABILITIES

Long Term

Bank Loan

Current Liabilities

Retainance earning profit 1,622,796

Total (Long term & Current liabilities) 1,622,796

25
5.7.6 Proforma Balance Sheet as at 31stDec. 2022
ASSETS

FIXED ASSETS KSHS KSHS KSHS

Weighing Machine 3,000

Calculating machine (Scientific) 2,400

Sealing machine 2,000

Chairs 1,800

Tables 5,000

Counter shelves 3,000

Total Fixed Assets 17,200

CURRENT ASSETS

Cash at Bank

Cash at Hand 4,682,910

Debtors 11,500

Stock 200,000

Total (Current & Fixed Assets) 4,894,410

LIABILITIES

Current Liabilities

Retainance earning profit 5,044,410 5,044,410

Less drawing 150,000

Total 4,894,410

26
Breakeven point for three years

1st year (2020) = Breakeven point point = Fixed Cost Sales  VariableCost
Sales

 3590000  2057300
1524000
3590000
 3571952 .732

Sales  VariableCost
2nd Year (2021) = Breakeven Point = Fixed Cost
Sales

 5505000  2119100
1534000
5505000
 2494069.52

27
3rd Year (2022) = Breakeven Point = Fixed Cost/ Sales  VariableCost
Sales

 9780000  3878050
46000
9780000
 76225.6

Profitability performance ratio

1st year 2020: return investment = netprofit 100


Sales

netprofit 100

Net profit margin = Sales

28
2nd year 2021: net profit margin = netprofit 100

Sales

3rd year 2022: net profit margin =

netprofit 100

Sales

Desired financing

Item Ksh.

Pre-Operational 155,200

Working capital 373000

Fixed assets 17200

Total 545400

29
Proposal capitalization

KSH.

Owner equity 200000

Co-op loan 50000

TOTAL 250000

Fixed Cost

ITEM 2019 2020 2021

Salaries 1,524,000 1,524,000 10,000

Insurance 10,000 10,000 12,000

Stationery 24,000

Total Fixed Cost 1,534,000 1,534,000 46,000

Variable Cost

ITEM 2019 2020 2021

Advertisement 11,000 3,000 24,300

Telephone 28,000 36,000

Post Office 7,800 4,000 2,650

Transport 54,000 48,000 25,000

30
Stationery 40,500 26,000 1,541,000

Miscellaneous expenses 16,500 5,100

Purchases 1,870,000 1,995,000 2,280,000

Electricity 30,000 7,100

Total Variable Cost 2,058,300 2,119,100 3,878,050

netprofit 100

Sales

31