BUSINESS PLAN

BEVVY HARDWARE

NAME : BEVLYNE CHEPNGETICH

INDEX NUMBER : 295411010322

CENTRE CODE : 541101

COURSE CODE :1908

PAPER NO: 107B

DEPARTMENT : BUS
INESS

CENTRE NAME : OL’LESSOS TECHNICAL TRAINING INSTITUTE

SUPERVISORS NAME : MR. AMOS RUTO

PRESENTED TO : THE KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILLMENT FOR THE AWARD OF
CERTIFICATE IN HUMAN RESOURCE MANAGEMENT .

EXAM SERIES : NOVEMBER 2018

DEDICATION
I dedicate this project to my parents and my friends for their support they rendered to me both
financially and morally to see me through the success of this business plan.

ii
 DECLARATION
I, hereby declare that this is my original work and no part of this work has been presented for an
award of certificate, Certificate or a degree in any institution of higher learning.

STUDENT

NAME: BEVLYNE CHEPNGETICH

SIGN : ……………………………

DATE : ……………………………

SUPERVISOR

NAME : MR. AMOS RUTO

SIGN : …………………………..

DATE : ………………………….

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ACKNOWLEDGEMEMT
Time when working on the business plan. Also I recommend the school for the support they
have May I thank Almighty God for the precious time that he has rendered to me throughout the
given to me. I would like to pass my thanks to my friends who have given me the guidance they
have given me to the success of the business plan. In a special way I would like to thank my
lecturers for the guidance they have shown to me.

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Table of Contents
DEDICATION............................................................................................................................................ii
DECLARATION........................................................................................................................................iii
ACKNOWLEDGEMEMT.........................................................................................................................iv
CHAPTER ONE..........................................................................................................................................1
1.0 EXECUTIVE SUMMARY.............................................................................................................1
1.1 BUSINESS DESCRIPTION..................................................................................................................2
1.2 MARKETING PLAN............................................................................................................................2
1.2.1 Objectives...........................................................................................................................................2
1.2.2 MISSION...........................................................................................................................................2
1.3 ORGANISATION AND MANAGEMENT PLAN...............................................................................3
1.4 PRODUCTION AND OPERATION PLAN.........................................................................................3
1.5 FINANCIAL PLAN..............................................................................................................................3
CHAPTER TWO.........................................................................................................................................5
2.0: BUSINESS NAME..............................................................................................................................5
2.1: BUSINESS ADDRESS........................................................................................................................5
2.2: BUSINESS LOCATION......................................................................................................................5
2.3: TYPES OF BUSINESS........................................................................................................................6
2.4: TYPES OF VENTURES......................................................................................................................6

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2.5: TYPES OF INDUSTRY.......................................................................................................................7
2.6: TYPES OF PRODUCTS......................................................................................................................7
2.7: JUSTIFICATION OF OPPORTUNITY...............................................................................................7
2.8: BUSINESS GOALS AND OBJECTIVES...........................................................................................7
2.9: ENTRY AND GROWTH STRATEGIES............................................................................................8
CHAPTER THREE.....................................................................................................................................9
3.0 MARKETING PLAN............................................................................................................................9
3.1 POTENTIAL CUSTOMERS................................................................................................................9
3.2 MARKETING SEGMENTATION.......................................................................................................9
3.3 MARKET SHARE..............................................................................................................................10
COMPETITORS.......................................................................................................................................11
SWOT ANALYSIS...................................................................................................................................12
3.5 METHODS OF ADVERTISING AND PROMOTION......................................................................13
3.6 PRICE STRATEGY............................................................................................................................13
3.7 SALE TACTICS.................................................................................................................................13
3.8 DISTRIBUTION STRATEGY............................................................................................................13
3.9 MARKETING STRATEGY................................................................................................................13
3.10 SALES STRATEGY.........................................................................................................................14
CHAPTER FOUR.....................................................................................................................................15
4.0 ORGANIZATIONAL AND MANAGEMENT PLAN.......................................................................15
4.2 KEY MANAGEMENT PERSONNEL................................................................................................16
OTHER MANAGEMENT PERSONNEL................................................................................................17
4.2.7 Secretary...........................................................................................................................................17
4.2.8 Sales person......................................................................................................................................18
4.2.9 Driver...............................................................................................................................................18
4.3.0 Security officer.................................................................................................................................18
4.3.1 Laborers............................................................................................................................................19
4.3 RECRUITMENT, TRAINING PROMOTION OF PERSONENEL...................................................19
4.3.2 Training............................................................................................................................................20
4.3.3 Promotion.........................................................................................................................................20
4.4 REMENERATION AND INCENTIVES......................................................................................20
4.5 LICENCE AND PERMITS...........................................................................................................21

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4.6 Operational plan............................................................................................................................21
4.6.2 Furniture, equipment and machines.........................................................................................22
4.7 CONSUMABLES....................................................................................................................................22
4.8 Operational process strategies......................................................................................................22
4.9 suppliers........................................................................................................................................22
4.10Regulation affecting operation...........................................................................................................22
CHAPTER FIVE............................................................................................................................................24
5.0 FINANCIAL PLAN........................................................................................................................24
5.1 OBJECTIVES..................................................................................................................................24
5.2 PRE OPERATION COST...............................................................................................................24
5.3 OPERATION EXPENSES..............................................................................................................25
5.4 PERSONAL EXPENSES................................................................................................................25
5.5CASH FLOW STATEMENT...........................................................................................................26
5.5.1 CASH FLOW PROJECTION FOR YEAR 2019.........................................................................27
5.5.2 CASH FLOW PROJECTION FOR YEAR2020..........................................................................28
5.5.2 CASH FLOW PROJECTION FOR YEAR2021..........................................................................29
5.6 PROFOMA INCOME STATEMENT.............................................................................................30
5.7 PROFOMA BALANCE SHEET.....................................................................................................31
5.8 BREAK EVEN POINT (B.E.P) ANALYSIS..................................................................................32
5.9 PROFITABILITY /PERFORMANCE RATIO.........................................................................................35
5.10 CAPITALIAZATION INVESTIMENT........................................................................................36
5.11 DESIRE FINANCING..................................................................................................................36

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viii
CHAPTER ONE

1.0 EXECUTIVE SUMMARY

BEVVY HARDWARE will be a sole proprietorship owned by BEVLYNE CHEPNEGTICH .

The company is a start-up as BEVVY HARDWARE will purchase the rights to the existing
location for Kshs 600,000. Upon purchase of rights, the company will demolish existing
structure and build a new state of the art hardware store. BEVVY HARDWARE will be standard
general hardware store that offers the parts, material, and advice to tackle any home repair, as we
as lawn care. The primary focus will be to satisfy the seasonal needs of the area’s customers. The
company will service the hardware and repair needs of the Baringo county residents. The
company would like to increase sales in all market segment above with a concentration of
growth in sales to homeowners who do their own repairs .The focus of this business plan is to
put forth objectives to launch operations work efficiently and effectively, and expand external
operations giving the company the opportunity to grow with sales growth in the surrounding
county areas. BEVVY HARDWARE is ready to elevate to the next step. The company is
seeking grant funding in the amount of Kshs1,200,000.The grant funding will be used to launch
operations including purchasing the existing land and business, construction of a new building
and purchasing equipment and displays for the store. Additionally, the company will purchase
the opening inventors, develop a website and launch an advertising campaign.

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1.1 BUSINESS DESCRIPTION
The proposed business is to be registered under the name BEVVY HARDWARE. The hardware
will be a sole proprietorship own by. BEVLYNE .J .CHEPNGETICH. The company is a start-
up as Bevvy hardware will purchase the rights of existing location for Kshs 600,000. Upon
purchase of the rights, the company will demolish the existing structure and build a new
hardware store. The business is going to operate in a sole proprietorship basis. The business size
is average; it requires employees on contract and some on permanent basis as the business
progresses.The owner will advertise massively and concentrate on offering the best service with
good customer relation on sale to acquire and retain more customers in the market.

1.2 MARKETING PLAN

1.2.1 Objectives
.Obtain grants funding to purchase the existing hardware and rebuild the retail space.

. Customer services-Give our customer the higher quality products and services at a competitive
price

.To provide jobs within the community

.To successfully manage the hardware

1.2.2 MISSION
BEVVY HARDWARE will provide the best quality hardware, home wares and building
materials from all over the country. Bevvy hardware is committed to providing customers and
trades people with value through everyday low prices, product, quality, expert service
community engagement and environmental responsibility.

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1.3 ORGANISATION AND MANAGEMENT PLAN
The business will employ competent staff that observes disciplined and hard work to see through
which will see better management. This will also entail the obtaining of the legal permit that
allows the business to run in Kenya.

1.4 PRODUCTION AND OPERATION PLAN

The business plan will lay strategies that will see through organization of the products and
making sure that the operations is going well without any problem. It will come up with a
production process and what the premise needs to start its business without interference.

1.5 FINANCIAL PLAN

The current financial plan for BEVVY HARDWARE is to obtain grant funding in the amount of
600,000. The grant will be used to launch operations including purchasing the existing land and
business , construction of a new building and purchasing equipment and displays for the store.
Additionally, the Company will purchase the opening inventory, develop a website and launch
an advertising campaign.

The following sections of this plan will serve to plan BEVVY HARDWARE financial plan in
more details:

 Pre-operational cost
 Break even Analysis
 Profoma income statement
 Cash Flow
 Balance sheet
 Ratios

This is the calculations of the expenses that are used and the money that the business will be
making in order to see the business is not running at any loss and that its flow of currency is

3
good. In case of any loss attained the business will see a way forward for it to salvage the
business.

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CHAPTER TWO

2.0: BUSINESS NAME

The name of the business is BEVVY HARDWARE. The name of the business is derived from
the owners name and the products to be sold to give a combination of the name BEVVY
HARDWARE.

2.1: BUSINESS ADDRESS

The business will operate under this address

BEVVY HARWARE

P.O BOX 249

E/RAVINE

EMAIL: bevlyne@gmail.com

MOBILE NO: 0703430510

2.2: BUSINESS LOCATION

BEVVY HARDWARE will be assuming ownership of an existing hardware store. The company
plans to demolish the existing building and build a new state of the Art Hardware store. We will
have an existing base of customers.

The business located in Mwachon Centre along Eldoret-E/Ravine highway which is more
strategic.

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MAP SHOWING LOCATION OF BEVVY HARDWARE.

TO ELDORET KITALE – HIGHWAY

MATUNDA CENTRE

BEVVY HARDWARE

Colleges and schools

Bus stop

2.3: TYPES OF BUSINESS

The business is a sole proprietorship because it is owned by BEVLYNE J CHEPNEGTICH ,
who is the overall manager of the business. She is also the decision maker and supervisor of the
business. She started the business with is capital and is subjected to unlimited liabilities.

2.4: TYPES OF VENTURES.

The proposed business will be a start-up. It will be expected to start its normal operations this
year.

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2.5: TYPES OF INDUSTRY
The business deals with serving and so it is a serving industry offering services to people. We
buy and sell goods.

2.6: TYPES OF PRODUCTS

Bevvy hardware supplies products in the following categories to general and trade customers;

 Timber
 Hardware
 Tools
 Paint
 House wares
 Cement

BEVVY HARWARE will be a standard general hardware store that offers the parts, materials,
and advice to tackle any home repairs, as well as lawn care. The primary focus will be to satisfy
the seasonal needs of the area’s customers. The available products are all kinds of buildings
materials starting from cement, shovels, wheelbarrow’s and water tanks.

2.7: JUSTIFICATION OF OPPORTUNITY

There is ready market due to the fast growth on population thus the need for this type of business
venture for the building and construction. The uniqueness and quality products will provide
ready market and demand.

2.8: BUSINESS GOALS AND OBJECTIVES

2.8.1: Long term goals

Within five years BEVVY HARDWARE will lead the hardware and home-improvement in
Baringo County.

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2.8.2: Short term Goals

 Maintain superior products and quality standards

 Maintain or increase market share
 Control direct and indirect operational costs
 Increase sales revenue and gross profits

2.9: ENTRY AND GROWTH STRATEGIES

2.9.1: Entry strategy

BEVVY HARDWARE will deploy targeted advertising in business magazines, journals and
online advertisement like websites and Facebook. It will undertake investigations on
competitor’s wages and seek to match or better. BEVVY Hardware will conduct monthly
environmental audit and review. BEVVY Hardware will also seek community engagements and
feedback through media channels such as website and Facebook.

2.9.2: Growth and Strategy

BEVVY HARDWARE sees opportunity for growth through capture of market share and
increasing revenue through targeted marketing to desire segments. According to real estate
market research, if current trends continue, then revenue in the areas of hardware and home
improvement is expected to grow by 40% over the next five years. Even if the current market
share is maintained, Bevvy hardware expects to capitalize on the general growth of the market
with the opening 2-3 warehouses over the coming three years of operation.

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CHAPTER THREE

3.0 MARKETING PLAN

3.0.1 Marketing objectives

 To increase sales by 30% in the second year.

 Providing quality product to the customers.
 Meet customer’s needs, wants and demands.

3.1 POTENTIAL CUSTOMERS

The customers will be individual, institutions, business premises and county government.

3.2 MARKETING SEGMENTATION

The market will be segmented based on the demographic variables that the customers pose. This
will do in terms of the occupation and activities that are done by the customers. The market will
be segmented into two major groups, which is the employed and unemployed. The area has a
total estimate population of about 50,000 people and 65% are potential customers while 35% are
non-potential customers, since some of them are temporary resident of this area. The competitors
of the enterprise include Eagles and Highway hardware’s. Due to inadequate product of the
competitors in area the business is expected to have a large market share.

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 Bevvy Eagles Highway

Individual customers 9500 7000 7500

Cooperate customers 5000 3500 3750

Institutional customers 2000 1000 1250

TOTAL 16500 11500 12500

16500
My percentage market ×100 =33%
16500+ 11500+12500+9500

3.3 MARKET SHARE

The market share of the firm is predicted to be about 15% -20% at the start of the business
venture since it is market and because of the customer’s loyalty to the established hardware in
town.

Market share at the start

Name Percentage
Bevvy Hardware 15%
Eagles Hardware 35%
Highway Hardware 50%

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Bar Graph Representative at the start

PERCENTAGE

15%

50%

35%

COMPETITORS
HIGHWARE HARDWARE

This Hardware has expanded in size but its weakness is that it does not provided transportation
service to its customers and its hardware are expensive and of poor quality.

HARDWARE HARDWARE

The hardware is not well recognized by the customers and therefore its product does not have a
large market share.

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SWOT ANALYSIS
Strength

i. Excellent staff, highly skilled at sales, product demonstration and explaining product
features.
ii. Great locations.
iii. Products offering that meet or exceed competitors offering in quality and innovations.
iv. Consistent brand recognition.

Weakness

i. High cost of sales associated with environmental socially responsible choice.

ii. Low customer loyalty to brands.

Opportunities

i. Strong market market potential; a significant percentage of the target market still not
visiting Bevvy hardware on daily basis.
ii. New parternership with suppliers of innovative suppliers.
Extension of business hours.
iii. Opportunity to bulk buys and reduce price through economies of scale.
iv. The opportunity to market and differentiate Bevvy Hardware on the basis of training,
product range, product innovation.

Threats

i. Competition from new event entrants into market, especially ecommerce.

ii. Potential lack of prime locations for large warehouses.
iii. Uncertainty of countrywide economic change affecting expenditure.

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3.5 METHODS OF ADVERTISING AND PROMOTION

3.5.1 Advertisement

Advertisement will be done on all local media channels like Fm Radio stations, Facebooks,
newspapers, websites, fliers and Televisions.

3.5.2 Promotion

Promotion will be done through road shows and delivering a good to customers to their
doorsteps and sites.

3.6 PRICE STRATEGY

Our customers will find the highest quality product at a fair price.

3.7 SALE TACTICS

The major sale tactics to be used will be personal selling’s. We will give personal service to
every customer catering our services to customer needs.

3.8 DISTRIBUTION STRATEGY

We offer transportation services to our esteemed customers at a lower price.

3.9 MARKETING STRATEGY

Bevvy hardware marketing strategy will be to introduce the hardware store throughout the
county. We will launch an aggressive campaign utilizing the following;

Local newspaper advertising and press releases

Website, face book and social marketing

Promotion for the store grand opening.

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3.10 SALES STRATEGY

The sale strategy for Bevvy hardware is simple

First, create a shopping environment that will create confidence in the customer that he or she
will get the needed material, part, or instruction to get job done right the first time.

Second, make the store easy to navigate so that the customer in and out as quickly as possible.

Third, know your customers seasonal hardware needs and offer it at competitive prices.

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 CHAPTER FOUR

4.0 ORGANIZATIONAL AND MANAGEMENT PLAN.

4.1 ORGANISATIONAL STRUCTURE.

Manager

Assistant manager

Marketing director

Secretary

Sales person

Other personnel

drivers←→watchman

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4.2 KEY MANAGEMENT PERSONNEL
4.2.1 Manager

Qualifications

i. Must be a Certificate holder in business management

ii. Must have CPA section 2 certificate and human resource certificate
iii. At least 3 years of working experience in management
iv. Be aged between 22-28 years
v. A well disciplined and honest person.

Duties and responsibilities

i. Records all business transactions expressed in monitoring form in a systematic way.

ii. Entailed to collection, manipulation and storage of all business information.
iii. Market critical and analytical decision which should stimulate smooth running of
business.
iv. Employ other staffs that are below him.
v. Decide on the salary of the staff as the way of the business.
vi. Thrive in making of the profits.

4.2.2Assistant Manager

Qualification

i. Certificate holder in business management

ii. Must have a CPA section 2 certificate holder
iii. At least one of working experience in the management field
iv. Age between 21-29 years
v. A computer literate person
vi. Well-discipline and honest

Duties and Responsibilities

i. Work as a manager in the absence of the manager.

16
 ii. Update the manager on how the staff is running with its work
iii. Makes sure that the co-ordination of the lower staff run smoothly
iv. Makes sure all the staff sign everyday in the job

OTHER MANAGEMENT PERSONNEL

4.2.3 Marketing director

Qualification

i. Must be a Certificate holder in business marketing

ii. Aged between 21-25 years
iii. A computer literate person
iv. Must be a good conduct and a honest person

Duties and responsibilities

i. Manage all advertising in the business to see it run smoothly

ii. Enhance the production of the business report magazine and posters at times of offer and
price fluctuation.

4.2.7 Secretary
Qualifications

i. A certificate holder in secretarial course

ii. A computer literate person
iii. Must be a lady aged between 20-25 years
iv. Smart and good communication skills
v. Honest and discipline

Duties and responsibilities

i. Typing of all written report that need to be used in the business

ii. Report to the assistant manager all the people that have submitted their business

17
 iii. Responsibilities for change of the business web page product management
iv. Minute writing during business meeting

4.2.8 Sales person

Qualification

i. At least must have a form four certificate of minimum grade of C plain

ii. Well-disciplined and has good communication skills.

Duties and Responsibilies

i. Writing of receipt to the buyers

ii. Calculation of all dairy sold product

4.2.9 Driver
Qualification

i. Has a legal driving license

ii. Aged between 24-35 years
iii. At least a five year experienced driver

Duties and Responsibilities

i. Transportation of goods from and to the business premises

ii. Make sure that the vehicle is in a good condition

4.3.0 Security officer

Qualifications

i. A graduate from any of the security training firm

ii. Honest and discipline
iii. Muscular and health

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Duties and Responsibilities

i. Make sure that there is no breaking and stealing of business product and theft of good
from the premises

4.3.1 Laborers
Qualification

i. Muscular honest and disciplined person

Duties and Responsibilities

 Packing and offloading of the materials which are imported or exported

4.3 RECRUITMENT, TRAINING PROMOTION OF PERSONENEL

4.3.1 Recruitment

1) Job analysis- The business analyses the vacant position or the area not properly
and determine the detailed work.
2) Job description- The business determined the duties and responsibilities of the
identified job to be performed.
3) Person specification-This meant to be the person needed in the job identified.
4) Job advertisement- Is to post a job vacancy through media, magazines and
notices and starting the minimum qualifications of the job.
5) Application-Forms are distributed to the business organization and the applicants
have to attach their entire requirement to suit their application.
6) Short listing –The suitable applicant is done and they are called to be
interviewed.
7) Selection of applicants-It is done and they are called to be interviewed.
8) The selected are notified through the addresses and phone numbers on how to
report and when.

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4.3.2 Training
The business intends to send the most sewed people for future studies in universities, Also it is
will be organization seminars in to equip the workers with skills to enhance success in business.

4.3.3 Promotion
Promotion will base on academic qualification and work experience in the business. The
hardworking staff will be awarded a salary increment every year.

4.4 REMENERATION AND INCENTIVES

Remuneration

The business will pay its workers reasonable salary and wages to motivate them and also
depending on the country’s economic growth.

PERSONENEL POST SALARY/MONTH SALARY/YEA TOTAL (SHS)

(SHS) R (SHS)
MANAGER 1 35200 422400 422400
ASSISTANT 1 27650 331800 331800
MANAGER
MARKETING 1 21150 253800 253800
DIRECTOR
SECRETARY 1 16200 194400 194400
SALES 2 15000 180000 180000
PERSON
DRIVER 1 14300 171600 171600
LABOURERS 4 5620 67440 67440
WATCHMAN 2 8200 98400 98400
TOTAL 13 143320 1719840 1719840

Incentive

The business shall be issuing extra services to them to be boost in work.

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  Tea break
 Lunch
 Annual party and trips
 Uniforms to the staff

4.5 LICENCE AND PERMITS

Licence

The business will acquire legal licence from the county government officer in Eldama Ravine
Municipal council. This will proof the business in legal to operate in the county.

4.6 Operational plan

Premises

The business will operate on personal building which was brought at a cost of kshs.
600000.

4.6.1 layout of the premise

Parking area Main hardware shop

Front face and entrance

Loading and offloading
area

Parking area

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4.6.2 Furniture, equipment and machines
The following table shows the furniture and fittings of Bevvy hardware.

4.7 CONSUMABLES
The following consumables will be used in the business:-

 Tables
 Receipt books
 Carbon papers
 Printing papers
 Ledger books

4.8 Operational process strategies

The following strategies shall be implemented

1. Cost control to minimize operation cost

2. Inventory management i.e having stock at the right time
3. Stock control to avoid stock outs and overstocking.
4. Purchasing control
5. Budgetary control

4.9 suppliers
The business will rely on imports from china , Dubai depending with the
availability and local demand.

4.10Regulation affecting operation

i) Safety regulation
Because accidents are unpredictable the business will provide the following safety
regulation
a) Individuals those who have skills shall only operate the machines
b) Alarms shall be installed so that in case of any fire people will be alerted
c) Fire extinguishers
d) Every worker must wear shoes, goggles in order to prevent injuries that might occur
form sharp objects.

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ii) Health regulation
The business will ensure that employees will be in good health and for the care of
sickness medical assistance will be provided through establishment of the health center
and clinics.
First and kit will be provide to deal with first aid regulation
Smoking is out of bounce
Ventilation lighting and sanitation will be catered for this ensure for the good working
environment for the staff and the workers.
iii) Government regulation
Before the operation of the business the management is required to have a trading license
obtained from the county council

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CHAPTER FIVE
5.0 FINANCIAL PLAN

5.1 OBJECTIVES
i) This is the plan that will assist to guide on the use of finance. The main objective of this
enterprise is growing faster for various expansions
ii) To ensure that the starting capital is successful hence the business meet the target and ensure
that the is proper management of the project
iii) To ensure that the enterprise make sale and maximizes profit
Iv) To help show the preoperational cost and expenses of the business
The above table shows the amount of capital required for the start of the business

5.2 PRE OPERATION COST

Items Cost
Insurance 16000
License and permits 75000
Electricity installation 12000
Water bills 10000
Telephone and postage 10500
Advertisement 8500
Machines and equipment 6500
Miscellaneous 20000
Transport 100000

Totals 566200

Also the cash flow shows expenses incurred

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5.3 OPERATION EXPENSES
This is show in the table below for the first month of the operation
Items Cost ksh
License 30000
Interest and loan 6000
Electricity 4000
Telephone 11000
Internet service provide 30000
Insurance 5000
Water 3000
Promotion and advertisement 2000
totals 64000

Therefore the total production cost per month will be overhead plus labour cost plus material
cost
Total production ksh=64000+2000+4000
=124000

5.4 PERSONAL EXPENSES

The working capital will be ksh 1400000 required to converted for fixed and valuable cost of the
business and start up capital will be ksh 2100,000
The project capital which the owner manager intend to invest is as follows

5.6.1 Production cost

Total cost will be rated at ksh. 90000. This will be used to pay employees

5.6.2 Material cost stock

The total cost to purchase material for the first month will be ksh80000

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5.5CASH FLOW STATEMENT
The flows on the future movement of the cash into and out of the business thoroughly receipt and
progress. In the causes of the business operation there is the income revenue received from
sales collected from the debtors or other sources.
They constitutes to cash flow is projected yearly or quarterly basis. Cash flow projection for
workshop for the year (2019 year 1).

26
 5.5.1 CASH FLOW PROJECTION FOR YEAR 2019

PARTICULARS JAN FEB MAR APP MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
Cash flow
Balance b/f 212400 18200 177000 183500 184000 18370 184100 187000 19000 195000 194300 500000
0 0 0
Bank loan 50000 500000
Cash invested 600000 600000
Sales 280000 28500 293400 291100 288075 29642 299495 302515 30683 307375 307375 3272855
0 5 5
Debtors 101225 116175 13002 131000 131900 132900 13320 134100 135000 13530 136200 1417025
5 0 0
Total cash flow 967600 593625 58317 602425 605600 603025 61303 616795 623615 63183 636975 635835 7732480
5 5 5
Cash out flow
Purchase 100000 110000 10500 120000 121000 12000 11900 129000 132000 13500 140000 145000 1476000
0 0 0
Insurance 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 120000 144000
Machinery 422200 4222000
&equipments
Salary &wages 210900 210900 21090 210900 210900 210900 21090 210900 210900 21090 210900 210900 2530800
0 0 0
Electricity 10000 5700 5500 5550 6100 6200 5900 5950 5700 5700 5700 6000 74000
Tele postage 1000 6080 6200 6250 6225 6300 6350 6450 6000 6200 6300 6310 56920
Water 8000 4000 4100 4200 4350 4500 4400 4220 4600 4900 4450 5000 214150
Transport 7500 5000 3000 2000 2400 2100 2200 2200 3000 17800 38150
Stationary 171875
Loan replacement 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625
Advertisement 30000
Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000
License/permit 6500 6500
Furniture/fittings 40000 40000
Creditors 10000 15000 15500 15900 15800 15750 1600 16100 16500 16500 1700 17500 185500

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Miscellaneous 3000 2900 2950 3000 3200 3100 2800 2700 27900 2750 3000 3000 348900
Total cash output 887600 411625 40417 418925 421600 420275 42892 429795 428925 44197 448635 558468
5 5 5 0
Ending cash flow 212400 182000 17960 183500 184000 183700 18410 18700 19000 19430 195000 205200 2147800
0 0 0

5.5.2 CASH FLOW PROJECTION FOR YEAR2020

CASH FLOW STATEMENT FOR THE 2020 (YEAR TWO)
PARTICULARS JAN FEB MAR APP MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
Cash flow
Balance b/f 205200 206500 208100 211000 212500 212500 214200 21900 21900 221300 222500 223400 2569900
Bank loan
Cash invested 500000 500000
Sales 330100 331300 332700 334000 335200 335200 337100 340200 340500 34800 342100 3444300 4041600
Debtors 149750 139125 140875 141255 142475 1424775 143475 147325 144125 144275 143850 145725 1722855
Total cash flow 485 677525 687675 686255 690175 690175 694775 703825 703625 705575 708450 713425 8834385
Cash out flow
Purchase 140000 155000 157000 160200 1622500 162500 162800 160000 165100 166400 167300 170700 1925300
Insurance 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 240000
vehicles
Salary &wages 210900 210900 210900 210900 210900 210900 210900 210800 210900 210900 210900 210900 210900
Electricity 6000 6200 5900 6300 6350 6350 6250 6100 6000 6100 5900 6100 73900
Tele postage 6300 6450 6300 6500 6400 6400 6250 6100 6000 6100 6175 6250 75125
Water 5000 5100 5150 5300 5450 5450 5500 5000 5650 5000 5350 5400 63450
Transport 21000 21200 2200 19500 29000 20000 20500 21000 22300 2000 23500 2400 257900
Stationary 3000 3100 2900 3250 3200 3200 3300 3050 3300 3050 3000 3150 37650
Loan replacement 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 187500
Advertisement
Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000
License/permit 1000 1000
Furniture/fittings
Creditors 16000 16200 16300 16800 16800 17500 17500 17450 17500 17600 17500 17700 203750

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Miscellaneous 3200 3150 2850 2910 17000 1700 17450 17450 17500 17600 17500 17700 203750
Total cash output 478525 469425 4721025 473785 475975 475915 484475 484825 184325 484075 485050 46325 624585
Ending cash flow 206500 208100 21100 212500 214200 214200 219000 21900 221300 222500 223400 124100 2458800

5.5.2 CASH FLOW PROJECTION FOR YEAR2021

CASH FLOW STATEMENT FOR THE 2021 (YEAR THREE)
PARTICULARS JAN FEB MAR APP MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
Cash flow
Bala b/f 224100 33010 228400 232700 234300 23620 237900 239200 24360 241200 24727 245000 2840475
0 0 0 5
Bank loan
Cash invested 800000 - - - - - - - - - - - -
Sales 384000 38720 363100 388400 381300 38010 372200 376900 37530 373900 37270 3711200 454300
0 0 0 0
Debtors 138025 13040 129960 131435 130925 13219 126635 126895 12553 124125 16532 126635 1584670
5 5 5 5
Total cash flow 725225 15606 729585 734895 737835 73961 750195 751425 75542 756660 75990 772500 9773445
5 0 5 5
Cash out flow
Purchase 210300 20150 200200 186600 185400 17500 179100 177300 17590 174000 17230 170000 2207600
0 0 0
Insurance 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 264000
Vehicle 800000 800000
Salary &wages 210900 21090 210900 210900 210900 21090 210900 210900 21090 210900 21090 210900 2530800
0 0 0 0
Electricity 6800 6750 6300 6400 6400 6650 6775 6950 6800 6200 6500 6700 79275
Telephone/ 6800 6750 6300 6400 6550 6650 6670 6310 6500 6520 6410 6350 79275
postage
Water 6700 5670 5550 5450 5800 5810 5770 5650 5800 5750 5700 5500 68150
Transport 2100 21200 22000 19500 19500 20000 20500 21000 22300 2000 23500 24000 257900
Stationary 3000 3100 2900 3250 3250 3200 3300 3050 3300 3050 3000 3150 337650
Loan replacement 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 15625 187500
Advertisement - - - -- - - - 1000 - - - - 1000
Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000

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License/permit 1000 - - - - - - - - - - - 1000
Furniture/fittings - - - - - - - - - - - -- -
Creditors 16000 16200 16300 16800 16800 17500 17500 17450 17500 17600 17500 17700 203750
Miscellaneous 38,000 3200 3150 2850 2950 2910 17000 17450 17500 17600 17600 17500 2037500
Total cash output 4955125 47852 469425 472102 473785 47378 475975 484475 48482 184325 48407 48325 624585
5 5 5 5 5
Ending cash flow 206500 20810 211000 212500 212500 21450 21900 21900 22130 222500 22350 224100 2588800
0 0 0 0

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5.6 PROFOMA INCOME STATEMENT
The statement below will shown the project of the business sales cost products and expenses that
the business will incur before obtaining the net projection

ITEMS 1ST YEAR 2ND YEAR 3RD YEAR

Income sales 4041600 3272855 141705
Debtors 4545300 1584670 1722885
Total 85866900 4857520 1864590
Expenses
Salary/wage 2530800 1925300 3000
Purchases 147600 2530800 42750
Electricity 74000 75125 77275
Telephone/postage 79000 73900 3530800
Water 56000 37650 79275
Stationeries 38000 63450 2207600
Advertisement 30000 25000 68150
Totals 4285455 4721225 5035795
Net profit before 405455 10332360 1094175
tax 20% 81091 266475 218835
profit after 324364 1065888 875340

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5.7 PROFOMA BALANCE SHEET
This section of the financial plan who the financial of the business by the relationship between
assets liabilities and owners equity contribution into the business at a particular period. The
equity and liabilities are used to finance the acquisitions of the business assets
Balance sheet as at 31st January 2018, 2019 and 2020

Items Year 2019 Year 2020 Year 2021

Fixed assets
Machinery/equipment 462200 10000
Vehicle 500000
Land 810000
Total fixed assets 6000000 500000 800000
Current asset
Cash at hand 462200 1722885 1584670
Debtors 1417025 500000 800000
Cash sale 1476000 1925300 2207600
Purchases 4545300 4471600 4545300
Totals 8,187,785 913757
Assets 869785 238950
Total assets
Liabilities 994750
Creditors 187550 203750
Bank loans 1500000 79275
Owners equity 500000 2000000 2200950
Electricity bill payable 56000 73000 68150
Capital 74000 5130925 800000
liabilities 5432495 63450 5988060
tax payable 429560 517760 573135
500000 700000 573135
Total liabilities 8680525 8689785 994757

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5.8 BREAK EVEN POINT (B.E.P) ANALYSIS.
This is the point at which the expenses of the owners much the sales ie when income equals the
expenditure.

ITEMS YEAR 1 YEAR2 YEAR3

Variable cost
Electricity 79585 73900 77220
Telephone/postage 7400 75125 79275
Water 56920 63450 68150
Transport 34890 37650 285550
Stationary 214150 257900 30750
Advertisement 38150 36910 42750
Miscellaneous 30000 25000 30000
Total variable cost 527095 369935 625795
Fixed cost
Insurance 171875 187500 264000
Rent 78875 240000 78000
Loan 144000 78000 140625
Salary/ wages 2530800 2530800 253080
Total fixed cost 2924675 3030300 3073425

1st year
Contribution margin =total cost
3,272,885-527,095=2,745,760
%contribution margin =contribution margin x100
Sales
=2745760x100
3272855

Break even point- fixed cost

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(sales-variable cost)
Sales

=2,924675

=3272855-5272095
3272855
2 year

Contribution =sales – total cost

=4041600-569735
=3471665

% contribution= contribution margin x100

Sales
=341665x100
4041600
=85.9%
Break even point = fix cost
=sales – variable cost
Sales
=3036300
4041600-56935
3036300
=3534774

3 year
%contribution margin = contribution margin x100

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 sales
= 3919505x100
= 4545300
86.2%
Break even point =fix cost

Sales-variable cost
sale
= 3013425
=4545300-625955
4545300
=3494555

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5.9 PROFITABILITY /PERFORMANCE RATIO

ITEMS 1ST YEAR 2ND YEAR 3RD YEAR

Gross profit ratio 404425x100 10033260x100 1094175x100
=gross profit x100 3272855 4041600 4545300
Sales
=12.4% =25.% =24.1%

Net profit after tax

x100 323540x100 826608x100 875340x100
Sales 3272855 4041600 800000
=9.90% =20.4% =109%

Return profit ratio 323540x100 826600x100 875340x100

=net profit after tax 800000 404600 2500000
x100 40.4% 25.4% 35%
Owner equity

323546x100 826608x100 875340x100

2500000 500000 2500000

Return on investment 12.9% 33.1% 35%

=net profit after tax

x100
Total investment

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5.10 CAPITALIAZATION INVESTIMENT

PROPOSED CAPITALIZATION

Source Amount
Bank loan 800,000
Family/friends 100,000
Owner equity 500,000
Contributions 200,000
Total investment 2500,000

5.11 DESIRE FINANCING

Items Amount
Working capital cost 260000
Pre operation 100000
Fixed assets 57000
Total desired finance 417000

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