CHAPTER ONE: BUSINESS DESCRIPTION

1.1 BACKGROUND OF THE BUSINESS OWNER

The name of the proposed business owner is Lina Ng’ang’a a Kenyan citizen aged
20years and she is single. She went to Precious Angels School where she attained 340
marks in her K.C.P.E. Later she joined Imara Bora Girls’ High School in which she
attained a mean grade of D+.Currently she is a student at NIBS Technical College
undertaking a Certificate in Information Communication Technology. She later plans to
further her education to a Diploma in Information Communication Technology in the
same institution. The proposed owner does not have any experience in business that she
will involve a consultant who will guide her throughout the process of familirializing with
the business.
The owner of the business intends to invest a capital of 1,000,000kshs of which
250,000kshs is owner’s equity, 500,000kshs is bank loan while 250,000kshs is
contribution from family and friends.

INVESTMENT AMOUNT
Owner’s Equity 250,000
Bank Loan 500,000
Family & Friends contribution 250,000

1.2 BUSINESS NAME AND LOCATION

1.2.1 Business Name

The name of the proposed business will be Alpha Software Computer Solutions and out
of the name, it was selected because the name is unique, its attractive, its easily
pronounced, it comes from my name and also the name has never been used before by
any other person or any enterprise.
1.2.2 Business Location and Address

The business proposed will be located in Nakuru County along Njuri Ncheke Avenue on
Biashara Plaza Building, third floor Room Number 310.
Njuri Ncheke Avenue
Hospital

School

Church
Mkt
Industry Mosque

My business address is 014094 with my email being linanjeri5@gmail.com with my

contact 0746998616.

1.3 FORM OF BUSINESS OWNERSHIP

The business proposed will be in form of Sole Proprietorship business because the owner
decides to start the business all alone with a little help from the family, relatives or
friends. The owner of the proposed business decided to choose the ownership for the
following advantages;
There is quick decision making for she is the boss, One enjoys the profits alone
for she owns the business, Capital required is small in that she is helped by family or
friends to start and maintain the business, Easy to form because few legal requirements
are required by the few employees employed and it is also flexible in that the proprietor
can choose to change the business at his/her own will. Despite the business having the
above advantages, it also have the negative disadvantages that may include; Decision
made be poor since there are no consultations from the employees since the business is
sole proprietorship, The owner may suffer loses alone since she is the owner of the
business and also death of the owner may lead to closure of the business.

1.4 PRODUCTS AND SERVICES

1.4.1 Products
The owner of the business will deal with the following products; phones, chargers,
computers, laptops, speakers, radios and many more accessories.
1.4.2 Services

Apart from the products mentioned above, the proposed business will also offer services
eg.repairing the phones, selling chargers, selling phones, laptops and also repairing the
radios or speakers for the customers.
These services will benefit the customers a lot in that the repaired products will last for
long. They will be happy for the services offered.

1.5 JUSTIFICATION OF THE BUSINESS OPPORTUNITY

The owner of the business decides to start this kind of business due to the following
reasons;
This will help and improve the technology in the country by enhancing the progress of the
business and the surrounding community in one way or another. Also it helps the country
to potentially develop market for newly developed software and also promotes creativity
among the customers

1.6 THE INDUSTRY

1.6.1 Industry size

The proposed business lies in the Kenya Computer Software Company. The business also
has managed to join and work in four firms within the proposed firms. The firms are to
w3ork jointly with the business to promote technology. The proposed business has
employed 80 workers within the industry.
1.6.2 Industry Characteristics

The proposed business will use advanced equipment for repairing accessories and
software to benefit its customers. It will enable the business to operate effectively within
the industry where the capital requirement will be 750,000kshs with the highly advanced
technology. The business will invest its capital from its personal savings to start and
maintain the business. Also the business will require labour requirements of how the work
in the business will be carried out by the labourers employed in the business.
 1.6.3 Industry Trend
For the last five years, the industry has experienced continuous growth in terms of sales
and profits as shown in the bar graph below;

A SIMPLE BAR GRAPH SHOWING THE GROWTH OF THE INDUSTRY IN

TERMS OF SALES AND PROFITS FOR THE LAST FIVE YEARS
90
80
70
60
50
40
30
20
10
0
2017 2018 2019 2020 2021

1.6.4 Industry Future

The above bar graph showing the industry trend shows that business has a bright future.

1.7GOALS OF THE BUSINES

1.7.1 Short-Term Goals

The proposed business business wants to achieve the following objectives in the next four
months; to attract more customers in the next four months, to increase discounts and also
to stock the business with all the requirements required by the 8th month.

1.7.2 Long-term Goals

The proposed wants to achieve the following objectives in the next two years; To open up

more branches in the next years, To attract more investors to the business in the next three

years and also to increase the productivity of the business.

1.8ENTRY AND GROWTH STRATEGY

1.8.1. Entry Strategy

When the proposed business will start its operation in the 23rd January 2022, the entry
strategy will include the following; creating effective communication with the customers
handling customers questions effectively related with the products and services offered.

1.8.2 Growth Strategy

The owner of the proposed business will decide to expand the business by offering after
sales services, developing different types of products of different varieties, advertisement,
personal selling, and promotion and also improved technology must also be developed.

1.8.3 SWOT Analysis

The owner of the business will experience the swot analysis including the strengths,
weaknesses, opportunities and threats as shown below;

STRENGTHS: Skilled personnel

Wide variety of products
Unique products that differs from other businesses
Experienced personnel

WEAKNESSES: Inadequate resources

The business faces stiff competition from the other businesses
In-experience and unskilled personnel
High capital investment

OPPORTUNITIES: Advanced technology

 Increase in customer demand
Subsidies offered by the government
Increase in population

THREATS: Increase in competition [Competitors]

Political instability
Low prices from other competitors
High banking rates charged on loans.
CHAPTER TWO: MARKETING PLAN

2.1: POTENTIAL CUSTOMERS

The proposed business will have the following potential customers;

2.1.1 Households

The proposed business will be targeting the delivering of products to its customers within a
particular locality to their homes such as their repaired phones, speakers ,radios, the required
charges and computers that will save the customers’ time and transport cost.

2.1.2 Schools

The proposed business will also be in position to deliver their accessories to the learning
institutions such as charges, computers and laptops for the easy learning of the students hence
to produce a conducive learning environment for the students within the institution.

2.1.3 Passers-by

The proposed business will also sell their products to the passers-by for the easy accessibility
of the advanced technology.

The proposed business will also have retailers who will pay a visit to business and buy the
products because they deal with already manufactured and refined products from other
businesses that they later sell them to their customers.

2.2 MARKET SHARE

The proposed business will be expecting a total of 500,000 customers of which Swahiba’s
Computer Solutions has 200,000 customers; Salit’s Computer Solutions has 150,000
customers while Malim’s Computer Solutions has 100,000 customers. The Netty Computer
Solutions has 50,000 customers.

The market share will be calculated as follows;

Swahiba’s Computer Solutions: 200000/1000000*100=20%

 Salit’s Computer Solutions: 150000/1000000*100=15%

Malim’s Computer Solutions: 100000/1000000*100=10%

Netty’s Computer Solutions: 50000/1000000*100=5%

Sales

Swahiba
Salit
Malim
Netty

2.3 COMPETITION

The proposed business will have the following competitors; Swahiba, Salit, Malim.

The competotors’swot analysis is as shown below;

COMPETITORS STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
Swahiba’s  Adequat  Advanced  Increase
Computer e technology in
Solutions resource  Increase in competit
s customers ion
 Brand demand
loyalty  High
 Adequat employment
e raw
material
s
Salit’s Computer  Experie  Inadequat  Increase in
Solutions nced e customer
personn resources demand
el
 Room
for
expansi
on
Malim’s Computer  Strategi  Inexperie  Increase
Solutions c nced in
location personnel competit
ion

2.4 PROMOTION AND ADVERTISING STRATEGY

2.4.1 Promotion (Promoting Products)

Promotion is the publicizing of a product so as to increase sales or public relations. The

proposed business will adopt the following promotion strategies eg.personal selling and
exhibitions. The business decided on personal selling strategy because it creates awareness
among the owner and the customer creates communication opportunity. It also decides on
exhibitions strategy because it displays its products to the customers and also improves its
public image to the society. The proposed business adopted the following promotional
method because it creates awareness and communication among the sellers and the buyers.

2.4.2 Advertising

Advertising is the marketing communication that employs an openly sponsored to promote or

sell a product. The business will advertise its products using posters and social media. The
proposed business adopted the above advertising strategies because using posters they are
visible and are also widely displayed and one can recall what he/she saw and by using social
media it is easy to access for, it will reach a large target of audience and there will be
connection among customers.

The higher the exposure of the products, the higher the recognition of brands.

2.5 PRICING STRATEGY

Prising is the state of determining the amount required as payment for something offered for
sales. The proposed business use competitive pricing method and value based method to sell
their products. They use this method since there are low prices to their customers and also it
regulates competition. The business will also use this method since it promotes customers’
loyalty and also helps to develop higher products.

2.6 SALES TACTICS

The proposed business will adopt the direct selling method to its customers and indirect
selling through sales people. The advantages of using direct selling method is that; it is more
flexible than other methods, it gives the customers an opportunity to negotiate the terms of
purchase while the advantage of using indirect tactic is that: it grants more time for the
customers to focus on their products.

2.7 DISTRIBUTION STRATEGY

The proposed business will reach its customers in either direct or indirect distribution
strategies.

Netty Computer Solutions Customers

 Netty Computer Solutions Shika Stores Customers

The products will be transported through road transport and it will cost 1,000kshs at each
transportation. The direct and indirect methods have challenges whereby; the disadvantages
of the direct channel is that the sizeable costs that come with direct distribution and also
reduces distribution channel options while that of indirect channel is that it leads to lack of
attention from the customers and skills requirements.
CHAPTER THREE: ORGANIZATION AND MANAGEMENT

PLAN

3.1 MANAGEMENT TEAM

The proposed business will be a sole proprietorship owned by Lina Ng’ang’a who will be
will the director. It will also have a manager who should have attained a degree in the
Information Communication Technology that will enable him to run the business in a well
effective manner. The manger will also be assisted by some employees like Assistant
manage, supervisor, accountant, a sales person and a security guard to ensure the set rules and
regulations have been followed.

3.2 FUNCTIONS AND ROLES OF THE MANAGERS

3.2,1 Functions of the Managers

The functions of the managers in the proposed business will be planning for the business to
run smoothly, organizing the protocol to be followed by the employees, directing the
employees for easy running of the business and can also control the activities done in the
business during its working hours.

3.2.2 Roles of the Managers

The roles of the managers in the proposed business will include the interpersonal roles that
he/she will plan for the business the duties of the day to day operations. Decisional roles that
he/she should decide what employees are expected to do. He/she will also have informational
roles that he/she will make sure that the employees have an effective communication flow.

3.3DUTIES AND RESPONSIBILITIES

TITLE/POST DUTIES RESPONSIBILITIES ACADEMIC

QUALIFICATION
AND EXPERIENCE
MANAGER  Controls the  Must be fluent
time in English and
management Swahili
  Monitors the  Must have a
progress of degree in I.C.T
work and a working
 Organizes experience of
roles of the 3-4 years
employees  Should be of
age between
25-35 years
ASS.MANAGER  Ensures  Must have a
customers degree in I.C.T
satisfaction  Should have a
 Motivates the working
employees experience of
2-3 years
ACCOUNTANT  Plans for the  Must have a
budget of the degree/diplom
business a in
 Manages Accounting
financial  Must have a
status working
experience of
3 years
 Must be fluent
in English and
Swahili

SUPERVISOR  Monitors the  Must be well

quality and trained
quantity of  Must have a
the goods, diploma in
products and his/her
services qualification
 Must be fluent
in English and
Swahili
SALES PERSON  Ensures the  Should have a
products are diploma in
of the his/her
required qualification
quality and  Must have a
quantity for working
the experience of
customers’ 3-4 years
satisfactions  Must be well
trained
SECURITY  Maintains  Must be well
GUARD security in the trained
business  Must have a
  Keeps records certificate of
of what is good conduct
entering into  Should have a
the business diploma/certifi
cate in his/her
qualification
 Must have a
working
experience of
3-4 years

3.4 ORGANIZATIONAL CHART

Managers

Assistant Manager

Accountant

Supervisor Sales person Security guard

3.5 RECRUITMENT, TRAINING AND PROMOTIONS

 3.5.1 Recruitment

Recruitment is the process of actively seeking out, finding and hiring candidates for a specific
position. The business will have one manager and a minimum of twenty (20) employees that
will be recruited through an interview that will be conducted by experienced personnel in
Information Communication Technology.

3.5.2 Training

Training is the action of informing and instructing your employees on a certain task in order
to help them to improve their performance. The proposed business will adopt the seminars
and job training as the training method. Through seminars, the employees will be taught new
ideas and improve the working skills and through the job training, they will role play the
films and videos in the business.

3.5.3 Promotions

Promotion is a type of marketing communication used to inform target audience of the

relative merits of a product, service, brand or issue. This set-up is for encouraging the
employees who have performed well in the area of work and a better payment. Allowances
will be awarded to the promoted employees.

3.6 REMUNERATION AND INCENTIVES

3.6.1 Remuneration

Remuneration is the payment of work done in terms of salaries and wages to motivate and
retain in the business. It will be as follows;

POST/TITLE JOB GROUP MONTHLY ALLOWANCES TOTAL

SALARY AND GROSS
 BENEFITS PROFIT
Manager 12 Net profit 10000 10000
Ass. Manager 8 25000 5000 30000
Accountant 6 20000 4000 24000
Supervisor 4 20000 3500 23500
Sales Person 3 10000 3000 13000
Security Guard 2 5000 1000 6000

3.6.2 Incentives

The proposed business will ensure that the employees who will work on extra time after the
working time will be awarded an extra bonus often monetary to work harder. They will be
given insurance to cater for their needs in case of accidents and other damages that will
occur.

3.7 LICENSES, PERMITS ANDBY-LAWS

3.7.1 Licenses

The proposed business will ensure that the business will meet the right legal requirements
from the government authority for a smooth running of the business .The license is
worthyksh.10, 000 that is authorized for a trading license of any kind of the business.

3.7.2 Permits

The permission to carry on the activities in the business will be authorized by the Information
Communication Technology Board and also by Kenya Computer Solutions Company. Also a
certificate of approval for the business to carried out by the business will be issued.

3.7.3 By-Laws

These are rules and regulations set by the government to be followed by an operating
business. The laws will enable the business to expand due to demand from customers.

3.8 SUPPORT SERVICES

These will be services that will enable the business to run smoothly and to stabilize the
financial status of the business. These support services will include;

3.8.1 Banking Services

The firm will use banking services for easy money transactions. It will have to rely with the
Equity, KCB and Co-operative Banks since they are easily available and easy to access.

The account numbers will be;

Equity Bank Account No: 10246312111

KCB Bank Account No: 54732409816

Co-operative Bank Account No: 64813219161

3.8.2 Insurance Services

The firm that will ensure the proposed business will be Kenya Computer Solutions Company
and for information, you can contact 0712436789.The proposed business will be insured
against theft, fire, accidents and also natural calamities like floods.

3.8.3 Consulting Services

The proposed business is legally required to consult from various business customers and
also firms about more information on their products, trading methods and the pricing type.
Hence, they will also get more information through our website and our contacts.

The website been www.alphacomputersolutions.co.ke or contact us through 0746998616.

3.8.4 Legal Services

These are services that the proposed business will be required when drafting legal letters and
also in terms of writing contracts to the employees. Also she will be able to interpret the labor
laws about the business. The lawyer of the business will be Professor Austin Kipkorir who
will be taking and playing a major role in the business in Alpha Computer Solutions on how
to stabilize with the business. The registered office will be located in Nakuru County along
Njuri Ncheke Avenue on Biashara Plaza Building on third floor room number 310.

CHAPTER FOUR: OPERATIONAL PLAN

4.1 PRODUCTION, FACILITIES AND CAPACITY

The owner of the proposed business will be required to have the production facilities that will
enable the business to operate smoothly and effectively .Also the owner of the business will
be required to ensure the business is successful and therefore, it will include the production
facilities that will be machines like CCTV cameras, computers, cables for connection, sockets
and other tools and equipment that the owner will use for easy operation of the business.

4.1.1 Machines, Tools and Equipment

The required machines, tools and equipment that will increase the effectiveness of the
business will be supported as illustrated as in the table below;

ITEMS QUANTITY COST CAPACITY

CCTV cameras 25 300000 4 each per office
block
Computers 10 250000 10 persons
Cables 12 100000 3 offices
Sockets 8 95000
Offices 8 Rooms 6000 2 offices personnel
Store 2 Rooms 10000 2 tons of tools
Pick- 6 250000 C.C 230F
up(Transportation)

4.1.2 Firm Layout

EXIT
SECURITY WAITING BAY
OFFICER
 RECEPTION
ENTRANCE CASHIER

MAIN OFFICES
STORE
PRODUCTION AREA

WATER TANK SUPERVISOR’S OFFICE

MANAGER’S
TOILET
OFFICE
ASSISTANT
ACCOUNTANT’S
TOILET MANAGER’S
OFFICE
OFFICE

4.2 PRODUCTION STRATEGY

The proposed business will use direct production method to its customers that it will be
offering products, goods and services of high quality .This will enhance and improve
technology while using the advanced technology worldwide .It will also be in a position to
improve technology in the country by improving and producing products with high quality
and quantity. It will also educate its customers on the benefits and importance’s of the
products produced in the business. The skills will involve decisions that will shape the long
term capabilities of producing business .It enables a business to make decisions so that the
output of the production system meet’s the customers’ requirements in the best way
possible .Also, product pricing will be determined by the type of the product to be developed,
produced and the price. The cost of goods, Products, and services that will be needed monthly
will be high of about ksh. 35,000.

4.3 PRODUCTION PROCESS

The proposed business will use economic input or resources like labor, capital requirement or
land to provide and produce goods and services of high standards to fulfill the customers
demand. The demands will be adhered to the type of the products they will be looking
forward to get. The production material will be made for the features and products to be
developed in the business for the better production, utilization and better quality of goods,
services and products in the production state.

4.4 REGULATIONS AFFECTING OPERATION

Before any start of the business, one is required to have a license and permit for the success
operation of the business. These licenses, permits and some by-laws will be issued by the
government. Some approvals and appliances of the business will also be put into
consideration for the effective running of the business from the respective offices of the
government. The business will also be enhanced for the required taxes to the government
according to the profits and sales done by the business after every marketing. These
approvals and compliances should be followed and adhered to by the business with
immediate effect.

4.4.1 Health Regulations

The owner of the business will put into consideration the health regulations for its successful
operation of the business. The regulations will be adhered to in handling all the business
products and the employees working in the business. These will include the sanitary
observations within the venture more over drinking water that is supposed to be treated
frequently or even be boiled before consuming. This will help to main good health standard
and also proper hygiene will be observed in matters pertaining cleanliness of the business. It
will also put into consideration on matters pertaining toilets that should always be kept clean
from time to time and should be cleaned on daily basis.

4.4.2 Safety Regulations

The owner of the proposed business will ensure that the safety measures are considered by
employees in the business. The business should have the necessary measures to be followed
to guard its operations against physical injuries. This safety equipment will include the first
aid kits, fire extinguishers and good ventilation. This will enhance the production of the
business. It will also bear out preventive measures to the employees like siting out smoking
areas for the smokers among the business premises. Due to COVID-19 pandemic, the owner
of the business is required to put into consideration the preventive measures for the safety of
the employees by equipping the business with enough face masks, sanitizers and ensure there
is social distance among the employees for ‘Prevention is better than cure.’

4.4.3 Environmental Regulations

Environmental concern is emerging on the issue that the business will have to address to the
employees by acquiring the legal necessities. The owner of the business should adhere to the
environmental measures for the proper operating of the business. The owner is advised to
encourage and educate the employees the importance’s of proper disposal of litters in the
right dumping sites that is supposed to be well labeled for easy visibility. The disposal of the
waste will help the business to avoid air, water and soil pollution in the surrounding. These
measures and regulations that should also be adhered to like clearing the bushes in and in the
surrounding, planting more trees, trimming the fence around the business and a certificate of
incorporation from the government or from Kenya Revenue Authority will be implemented
on how to declare as set as rates of taxes for the business. The government is also supposed to
provide the operating businesses with dustbins or sites for dumping wastes worldwide.

CHAPTER FIVE: FINANCIAL PLAN

5.1 PREOPERATIONAL COSTS

The owner of the proposed business will have the following expenses before the start of her
business;
ITEMS COST
Electricity 2000
Water bill 2000
Rent deposit 1000
Advertisement 1000
Licenses and Permits 60000
Insurance 10000
Transportation 30000
Tools and Equipment 50000
Designing and Installation 5000
TOTAL 161000

Cash Balance=Capital –Preoperational Cost

1000000 -161000 =839000

5.2 WORKING CAPITAL

ITEMS COST
CURRENT ASSETS
Stock 250000
Cash at hand 50000
Cash at bank 100000
Debtors 40000
Total current Assets 440000
LESS CURRENT LIABILITIES
Creditors 20000
Bank overdraft 90000
Accruals 5000
Total current liabilities 115000
 WORKING CAPITAL 325000

5.3 CASH-FLOW PROJECTION

5.3.1 Cash-flow projection for the Year 2022

APRIL

OCT
FEB
ITEMS

JAN

MARCH

MAY

JULY

AUG

SEP

NOV
JUNE

B al c/d - 47800 46700 38050 35500 33300 34200 31500 33300 27100 2250 234
0 0 0 0 0 0 0 0 0 00 0
Cash
Inflows
Bank 50000 - - - - - - - - - - -
Loan 0
Sales 15000 20000 10000 15050 15000 20000 20000 20000 20000 15000 2000 200
0 0 0 0 0 0 0 0 0 0 00 0
Debtors 20000 10000 5000 15000 10000 10000 10000 10000 20000 25000 2000 500
 0
Disc 2000 3000 2500 3000 2000 3000 2000 2000 2000 3000 3000 300
received
Total 67200 69100 57450 54900 51700 54600 55400 52700 55500 44900 4480 442
Inflows 0 0 0 0 0 0 0 0 0 0 00 0
Cash
Out
flows
Purchase 11000 15000 90000 10000 10000 10000 15000 10000 15000 10000 1000 150
s 0 0 0 0 0 0 0 0 0 00 0
Salaries 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 6000 600
& 0

Wages
Creditor 20000 10000 40000 30000 20000 40000 25000 30000 20000 20000 2000 150
s 0
Electrici 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 200
ty
Water 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 200
bill
Loan - - - - - - - - 50000 40000 3000 100
payment 0
Total 19400 22400 19400 19400 18400 20400 23900 19400 28400 22400 2140 239
Outflow 0 0 0 0 0 0 0 0 0 0 00 0
s
Cash 47800 46700 38050 35500 33300 34200 31500 33300 27100 22500 2340 203
flow 0 0 0 0 0 0 0 0 0 0 00 0

5.3.2 Cash flow projection for the Year 2023

APRIL
FEB

DEC
ITEMS

JAN

MARCH

MAY

AUG

SEP

NOV
JUNE

OCT
JULY

Bal c/d 2030 2920 2570 2160 1800 1500 1150 3000 3400 7300 1520 1060
00 00 00 00 00 00 00 0 0 0 00 00
Cash
Inflow
s
Bank - - - - - - - - - - - -
Loan
Sales 2500 2000 2000 1500 2000 2500 2500 2500 2500 2500 1000 2500
00 00 00 00 00 00 00 00 00 00 00 00
Debtor 5000 1000 2000 3000 2000 1000 2000 2000 3000 1000 2000 1000
s 0 0 0 0 0 0 0 0 0 0 0 0
Disc 3000 3000 2000 2000 3000 3000 3000 2000 3000 3000 3000 3000
receive
d
Total 5060 5050 4790 3980 4030 4130 3880 3020 3170 3360 2750 3690
Inflow 00 00 00 00 00 00 00 00 00 00 00 00
s
Cash
Out
flows
Purcha 1000 1000 1500 1000 1000 1500 2000 1000 1500 1000 8000 1000
ses 00 00 00 00 00 00 00 00 00 00 0 00
Salarie 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000
s& 0 0 0 0 0 0 0 0 0 0 0 0
Wages
Credit 1000 1000 1500 2000 1500 1000 2000 3000 3000 2000 2500 1000
ors 0 0 0 0 0 0 0 0 0 0 0 0
Electri 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
city
Water 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
bill
Loan 4000 7400 3400 3400 7400 7400 7400 7400 - - - -
payme 0 0 0 0 0 0 0 0
nt
Total 2140 2480 2630 2180 2530 2980 3580 2680 2440 1840 1690 1740
Outflo 00 00 00 00 00 00 00 00 00 00 00 00
ws
Cash 2920 2570 2160 1800 1500 1150 3000 3400 7300 1520 1060 1950
flow 00 00 00 00 00 00 0 0 0 00 00 00
 5.3.3 Cash flow projection for the Year 2024

JULY
APRIL

JUNE
FEB

DEC
ITEMS

JAN

MARCH

MAY

AUG

SEP

NOV
OCT
Bal c/d 1950 1830 2570 2450 2030 1800 1680 1960 1730 2610 2380 2350
00 00 00 00 00 00 00 00 00 00 00 00
Cash
Inflow
Bank - - - - - - - - - - - -
Loan
Sales 2000 2500 1500 1000 1500 2000 2500 2000 2500 2000 2500 2000
00 00 00 00 00 00 00 00 00 00 00 00
Debtor 2000 1000 2000 2000 1000 1000 2000 2000 2000 1000 1000 1000
s 0 0 0 0 0 0 0 0 0 0 0 0
Disc. 2000 3000 2000 2000 1000 2000 2000 1000 2000 1000 1000 1000
Receiv
ed
Total 4170 4460 4290 3670 3640 3920 4400 4170 4450 4720 4990 4460
inflow 00 00 00 00 00 00 00 00 00 00 00 00
s
Cash
Out
flows
Purcha 1500 1000 1000 8000 1000 1500 1500 1500 1000 1500 1700 1800
ses 00 00 00 0 00 00 00 00 00 00 00 00
Salarie 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000
s& 0 0 0 0 0 0 0 0 0 0 0 0
Wages
Credit 2000 2500 2000 2000 2000 1000 3000 3000 2000 2000 3000 2000
ors 0 0 0 0 0 0 0 0 0 0 0 0
Electri 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
city
Water 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
bill
Loan - - - - - - - - - - - -
payme
nt
Total 2340 1890 1840 1640 1840 2240 2440 2440 1840 2340 2640 2640
outflo 00 00 00 00 00 00 00 00 00 00 00 00
ws
Cash 1830 2570 2450 2030 1800 1680 1960 1730 2610 2380 2350 1820
flow 00 00 00 00 00 00 00 00 00 00 00 00

5.4 PROFORMA INCOME STATEMENT

ITEMS 2022 2023 2024

Sales 2100500 2600000 2400000
Cost of sales 1197000 1438000 1593000
Gross profit 903500 1162000 807000
Expenses
Salaries &Wages 720000 720000 720000
Electricity 24000 24000 24000
Water bill 24000 24000 24000
Advertisement 45000 45000 5000
Licenses and Permits 60000 60000 20000
TOTAL EXPENSES 873000 873000 793000
Net Profit before tax 30500 289000 14000
Net Profit provision 3050 28900 1400
for tax (10%)
Net Profit after tax 27450 260100 12600

5.5 STATEMENT OF FINANCIAL POSITION

Statement of financial position at 31st Dec 2022

ITEMS COST
Assets
Current Assets
Cash at hand 50000
Stock 250000
Debtors 40000
Cash at bank 100000
TOTAL CURRENT ASSETS 440000
Fixed Assets
Buildings 100000
Machinery 7450
Land 40000
Tools& Equipment 50000
Motor vehicle 250000
TOTAL FIXED ASSETS 447450
Total Assets 887450
Liabilities
Current Liabilities
Creditors 20000
Bank overdraft 90000
TOTAL CURRENT LIABILITIES 110000
Long-term liabilities
Bank loan 500000
Owner’s Equity 250000
Net profit 27450
TOTAL LONG-TERM LIABILITIES 777450
TOTAL LIABILITY AND EQUITY 887450

5.6 BREAK EVEN ANALYSIS

PARTICULARS AMOUNT
Fixed Costs
Rent 50000
Salaries & Wages 720000
Insurance 10000
Licenses 60000
Loan Payment 50000
TOTAL FIXED ASSETS 890000
Variable Costs
Advertisement 12000
Transport 30000
Telephone 30000
Electricity 24000
Water 24000
TOTAL VARIABLE COSTS 120000

5.6.1 Total Contributions

Sales - Variable costs

2100500 – 120000 =1980500

5.6.2 Contribution Margin Percentage

Total contribution/Sales*100%

1980500/2100500*100 =94.29%

5.6.3 Total Fixed Costs

=890000

5.6.4 Break Even Analysis

Fixed Costs/Contribution Margin

890000/94.29 =9438.96

5.7 PROFITABILITY COSTS

a) Gross Profit Ratio

=Gross Profit/Sales*100

903500/2100500*100 =43.01%

b) Net Profit Ratio

=Net Profit/Sales*100
 27450/2100500*100 =1.31%

c) Return on Equity

=Net Profit/Owner’s Equity*100

27450/250000*100 =10.98%

d) Asset turns over

=Total sales/Assets (current + fixed)

7100000/887450 =2.113

e) Quick Ratio

= Current Assets – Stock/Current Liabilities

(440000-250000)/110000=1.73

f) Liquidity Ratio

440000/110000 = 4

5.8 DESIRED FINANCING

ITEMS AMOUNT
Pre-operational Costs 161000
Working Capital 325000
Fixed Assets 447450
933450

5.9 CAPITALIZATION
ITEMS AMOUNT
Owner’s Contribution 250000
Borrowed Funds 500000
Family and friend’s contribution 250000
Total Investment 1000000