MIRDAN LIQUOR DISTRIBUTORS

NAME: EMMACULATE NANJALA WANYONYI

INDEX NO:

COURSE CODE:

COURSE: COMMUNITY HEALTH

CENTRE: EAST AFRICA INSTITUTE OF CERTIFIED STUDIES

SUBMITTED TO: JP-UK IN PARTIAL FULFILMENT OF REQUIREMENT FOR

THE AWARD IN CERTIFICATE IN COMMUNITY HEALTH

SERIES: JULY

SUPERVISOR:

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 DECLARATION

The work contained in this booklet is my own work, done out of my own effort. It has never
existed before and never been presented to the JP-UK for theCertificate Award.
Candidate Name:
Emmaculate nanjala wanyonyi

INDEX NO.
Signature ……………
Date ……….
Supervisor
This business plan has been submitted for examination with the approval by the supervisor.
Supervisor’s Name:

Signature…………….
Date………..

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 DEDICATION

I kindly dedicate this business plan to my family for their moral and financial support during
the entire project section. Special dedication East Africa Institute Of Certified Studies for
academic guidance and entrepreneurial skills they imparted in me.

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 ACKNOWLEDGEMENT

My special thanks and gratitude for assistance and preparation and presentation of the business
plan goes to my able lecturers. I wish to extend my appreciation to my supervisor for his
professional guidance and advice on preparation of the business plan

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 TABLE OF CONTENTS
DEDICATION............................................................................................................................iii
ACKNOWLEDGEMENT..........................................................................................................iv
EXECUTIVE SUMMARY..........................................................................................................1
1.1 BUSINESS DESCRIPTION..................................................................................................1
1.2 MARKETING PLAN............................................................................................................1
1.3 ORGANIZATION PLAN......................................................................................................1
1.4 PRODUCTION PLAN..........................................................................................................1
1.5 FINANCIAL PLAN...............................................................................................................1
CHAPTER ONE: BUSINESS DESCRIPTION..........................................................................2
1.1 BUSINESS NAME................................................................................................................2
1.1.1 BUSINESS LOGO..............................................................................................................2
1.1.2 BUSINESS MISSION STATEMENT................................................................................2
1.1.3 INTENTED INVESTMENT CAPITAL............................................................................2
1.2. BUSINESS LOCATION AND ADDRESS.........................................................................2
1.2.1 BUSINESS LOCATION....................................................................................................2
1.2.2 BUSINESS ADDRESS.......................................................................................................3
2.2.3 SKETCH OF THE MAP OF THE BUSINESS LOCATION............................................3
1.3 FORM OF OWNERSHIP......................................................................................................3
1.3.1 SOLE PROPRIETORSHIP KIND OF BUSINESS............................................................3
1.3.2 DESCRIPTION OF THE BUSINESS OWNER................................................................4
1.4 TYPE OF BUSINESS............................................................................................................4
1.4.1 MANUFUCTRING TYPE OF BUSINESS.......................................................................4
1.4.2 BUSINESS BEING UNDERTAKEN................................................................................4
1.5 PRODUCTS...........................................................................................................................5
1.5.1 PRODUCTS BEING OFFERED........................................................................................5
1.6 JUSTIFICATION OF OPPORTUNITY................................................................................5
2.6.1 FACTORS FAVOURING THE INTENDED BUSINESS................................................5
1.7 INDUSTRY...........................................................................................................................6
1.8 GOALS OF THE BUSINESS................................................................................................7
Short Term Goals.........................................................................................................................7
Long Term Goals.........................................................................................................................7
1.9 ENTRY AND GROWTH STRATEGY................................................................................7
1.9.1 ENTRY STRATEGY.........................................................................................................7
1.9.2 GROWTH STRATEGY.....................................................................................................8
CHAPTER TWO: MARKETING PLAN....................................................................................9
2.1 CUSTOMERS........................................................................................................................9
2.1.1 CLASSIFICATION OF CUSTOMERS.............................................................................9
2.1.2 CUSTOMERS CHARACTERISTICS...............................................................................9
2.2 MARKET SHARE.................................................................................................................9
2.2.1 POPULATION SIZE TO BE SERVED.............................................................................9
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2.2.2 A PIE CHART SHOWING MARKET SERVED..............................................................9
2.2.3 TABLE SHOWING POPULATION SIZE......................................................................10
2.3 COMPETITION...................................................................................................................10
2.3.1 NAME OF COMPETITORS............................................................................................10
2.3.2 LOCATION IN RELATION TO THE PROPOSED BUSINESS....................................10
2.3.3 SIZE OF THE COMPETITORS.......................................................................................11
2.3.4 COMPARISON OF THE SERVICES..............................................................................11
2.3.5 PLANS TO CAPITALISE ON THE WEAKNESS.........................................................11
2.4 METHODS OF PROMOTION AND ADVERTISING......................................................11
2.4.1 METHODS OF ADVERTISING.....................................................................................11
2.4.2 PROMOTION.................................................................................................................12
2.5 PRICING STRATEGY........................................................................................................13
COMPETITORS........................................................................................................................13
COST OF MATERIALS ANDTRANSPORT EXPENCESSES..............................................13
2.6 SALES TACTICS................................................................................................................14
2.7 DISTRIBUTION STRATEGY............................................................................................15
2.7.1 THE NATURE OF THE CHANNELS............................................................................15
2.7.2 PROBLEMS ANTICIPATED DURING DISTRIBUTION PROCESS..........................15
CHAPTER THREE: ORGANIZATIONAL / MANAGEMENT PLAN..................................16
3.1 ORGANIZATION STRUCTURE.......................................................................................16
3.2 KEY MANAGEMENT PERSONEL/BUSINESS MANAGERS.......................................16
3.3.1RECRUITMENT, TRAINING AND PROMOTION OF PERSONNEL.........................17
3.3.1.1 RECRUITMENT OF PERSONNEL............................................................................17
3.3.1.2 TRAINING OF PERSONNEL......................................................................................17
3.3.1.3 TYPE OF TRAINING...................................................................................................17
PROMOTION OF PERSONNEL..............................................................................................18
RENUMERATION AND INCENTIVES FOR PERSONNEL.................................................18
LICENCES, PERMITS AND BY-LAWS.................................................................................18
OTHER SUPPORT SERVICES................................................................................................19
CHAPTER FOUR: OPERATION/PRODUCTION PLAN.......................................................20
4.1 PRODUCTION FACILITIES AND MACHINERY...........................................................20
4.1.1 GROUND PLAN OF THE DESIGN................................................................................20
4.2 PRODUCTION STRATEGY..............................................................................................21
4.2.1 MONTHLY MATERIAL REQUIREMENT...................................................................21
4.2.2 MONTHLY LABOUR REQUIREMENT........................................................................21
4.2.3 MONTHLY PRODUCTION REQUIREMENTS/OVERHEADS...................................21
4.3 PRODUCTION PROCESS..................................................................................................22
4.4 REGULATION AFFECT OPERATIONS..........................................................................22
CHAPTER FIVE: FINANCIAL PLAN....................................................................................24
5.1 PRE-OPERATIONAL COSTS............................................................................................24
5.2 WORKING CAPITAL........................................................................................................24
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 5.3 MIRDAN LIQUOR DISTRIBUTORSS BUSINESS PLANED CASHFLOW
STATEMENT............................................................................................................................25
5.3.1 MIRDAN LIQUOR DISTRIBUTORSS BUSINESS PLANED CASHFLOW FOR THE
YEAR 2022................................................................................................................................27
5.3.3 MIRDAN LIQUOR DISTRIBUTORSS BUSINESS PLANED CASHFLOW
STATEMENT FOR THE YEAR 2022.....................................................................................29
5.4.0 PROFORMA INCOME STATEMENT...........................................................................31
5.5 PROFORMA BALANCE SHEET......................................................................................32
5.6 BREAK EVEN POINTS.....................................................................................................33
5.7 PROFITABILITY RATIOS................................................................................................34
5.8 DESIRED FINANCING......................................................................................................35
5.9 PROPOSED CAPITALIZATION.......................................................................................35
APPENDICES...........................................................................................................................35
3.1 ORGANIZATION STRUCTUIRE......................................................................................35

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 EXECUTIVE SUMMARY
BUSINESS DESCRIPTION
Mirdan liquor distributors will carry spirits, beer, and wine to suit all budgets. We will have a
wide selection of premium and standard liquor, craft and domestic beer, and a large assortment
of red wine, white wine, sparkling wine, rose/blush wine, and champagne. Pricing will be on par
with competitors and we will run monthly and weekly specials on select alcohol. Mirdan liquor
distributors will also offer a membership club for frequent visitors to redeem points for
discounted items.
NAME: MIRDAN LIQUOR DISTRIBUTORS
ADDRESS: MIRDAN LIQUOR DISTRIBUTORS,
P.O BOX 115
ELDORET
MARKETING PLAN
The business environment will provide ready market and favorable market share due to high
population of potential customers such as individual, institution; commercial customers and
competitors. Promotion and advertisement of the interior products will be done through media,
exhibitions and educational literature. The business will operate in discounting, market pricing
with a zero channel distribution method and over counting purchasing.

ORGANISATION PLAN
The business will start as a small business initially and therefore Emmaculate will take position of the
manager making him have roles such as hiring, firing, decision making and leading business operations in
the business. The purpose of having employees is to reduce labor and market the business well .The
employees are expected to carry out the duties effectively and incentives and promotions will be given to
the most hardworking ones hence motivating them.

OPERATIONAL PLAN/ PRODUCTION PLAN

The following are the products to be offered by Mirdan liquor distributors Store:

 Red wine (Cabernet Sauvignon, Pinot Noir, Malbec, Merlot, Zinfandel)

 White wine (Moscato, Chardonnay, Sauvignon Blanc, Pinot Grigio, Riesling)
 Champagne
 Sparkling wine
 Rose/Blush wine
 Sake
 Spirits (Bourbon, Gin, Rum, Scotch, Tequila, Vodka)
 Beer (IPA, Lager, Pale Ale, Stout)
The facilities required to run the business will be acquired through buying, making and they will act as
the fixed assets and as security to the business. Records will be maintained for the monthly materials

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requirements of the business. The manager will be required to order any product in case of out of stock or
either the assistant in case the presence of manager missing, but under the consultation of the manager.In
terms of production various stock will be done and then ordered. This will prevent overstocking and
under stocking.

FINANCIAL PLAN
This will show the financial capacity of the business. Capital will be provided through loans and table
banking but as the business will plant itself capital and at the end it will show the projected cash flow
statement for the year, profitability ratio, proposed capitalization and desired financing of the business.
Records on daily basis will be maintained for the monthly materials and products of the business. The
required capital to start the business approximately will be;

Proposed capitalization- (personal contribution) - 200,000

Loan from bank-100,000

Table banking (chamas) -80,000

Friend contributions (gifts) - 50,000

TOTAL 430,000

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CHAPTER ONE:
BUSINESS DESCRIPTION

BUSINESS DESCRIPTION

BUSINESS NAME
Mirdan liquor distributors is a retail store that sells spirits, beer, and wine in Eldoret. It will be
located in a retail strip center in a busy neighborhood home to suburban residents, blue collar and
white collar employees, and college students from different institutions. Mirdan liquor
distributors is owned by Emmaculate and is opening up his first business.

Mirdan liquor distributors Store will carry spirits, beer, and wine to suit all budgets. They will
have a wide selection of premium and standard liquor, craft and domestic beer, and a large
assortment of red wine, white wine, sparkling wine, rose/blush wine, and champagne. Pricing
will be on par with competitors and they will run monthly and weekly specials on select alcohol.
Mirdan liquor distributors Store will also offer a membership club for frequent visitors to redeem
points for discounted items.

BUSINESS LOCATION AND ADDRESS

The business will be located in Eldoret, along Kenyatta Street, British Plaza building ground floor room
A1. The business will be a sole proprietorship type and will be owned by Emmaculate . This is one of the
tallest buildings and an area where most schools (colleges, universities) are located most organization and
governmental offices are located either near or inside. Lots of operation of is situated there but no one
has come up with the idea of setting up a business like mine and hence no serious or stiff competition is
there. It’s a strategic place for business since it’s easily accessible and common for many people. The
following is the business address.

The address of the business

MIRDAN LIQUOR DISTRIBUTORS

P.O. BOX 554-30100

ELDORET.

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 MOI STREET

UHURU STREET

Cloud 9 SAFINA BACLAYS

BRITISH PLAZA
club and PLAZA BANK
restaurant

Kenyatta street

TOM MBOYA STREET

Post
office COUNTY
Standard KVDA
GOVERNME
chartered bank PLAZA
NT OFFICE

The figure below represents the location of

the business

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1.1.2 BUSINESS MISSION STATEMENT
The intended business will ensure that the services provided to its customers are of good quality.
The mission of the business is to ensure that the interest and customers needs and expectations
are well taken care of. Their interests shall be served by providing services to the m on fair
prices.

1.3 FORM OF OWNERSHIP

The business will operate as a sole proprietorship with the owner being the Manager of the
business. He intends to start a shop producing business in order to meet demands of customers in
the locality at large. He decided to start a sole proprietorship because of the following reasons;
 She enjoys all the profits.
 Decision making is quick and timely.
 Easy to start because of few legal requirement.
 Own boss/supervisor.
 Independent and realistic.
 One is secured job security

1.3.2 DESCRIPTION OF THE BUSINESS OWNER

The owner of the proposed business is called Emmaculate nanjala wanyonyi .She is twenty
three years of age. She resides in Kisumu County; he has taken Diploma in Community health.

1.4 TYPE OF BUSINESS

1.4.1 MANUFUCTRING TYPE OF BUSINESS
We will do all that is permitted by the law of the kenya to achieve our aim and ambition of
Liquor stores are establishments engaged in the retail sale of packaged alcoholic beverages,
including ale, beer, wine, and liquor, for consumption off premises. Stores selling prepared
drinks for consumption on premises are classified in SIC 5813: Drinking Places (Alcoholic
Beverages).

The liquor store industry is made up of mom-and pop retail outlets, independently run chains,
and corporate-owned stores. While the vast majority of stores are small, family-run operations,
there are a rapidly growing number are superstores primarily engaged in other kinds of

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businesses.

1.4.2 BUSINESS BEING UNDERTAKEN

The producer will the one dealing with the production of the materials for selling any type of
liquor, then the business will mainly concentrate on converting the materials intoliquor , then
thereafter selling them to the customers.
1.5 PRODUCTS
1.5.1 PRODUCTS BEING OFFERED
The following are the products to be offered by Mirdan liquor distributors Store:

 Red wine (Cabernet Sauvignon, Pinot Noir, Malbec, Merlot, Zinfandel)

 White wine (Moscato, Chardonnay, Sauvignon Blanc, Pinot Grigio, Riesling)
 Champagne
 Sparkling wine
 Rose/Blush wine
 Sake
 Spirits (Bourbon, Gin, Rum, Scotch, Tequila, Vodka)
 Beer (IPA, Lager, Pale Ale, Stout)
Alcohol is the ingredient found in beer, wine, and spirits that causes intoxication. The alcohol
chemical binds with other atoms to create secondary alcohols. The secondary alcohols produced
are methanol, isopropanol, and ethanol. All three types of alcohol are toxic but only ethyl alcohol
is safe for human consumption, while the other two are used for cleaning and manufacturing.
Drinking any amount of isopropanol or methanol is extremely dangerous and can be fatal.

1.6 JUSTIFICATION OF OPPORTUNITY

After conducting a market research, the owner decided to locate her business in the centre due
some factors favoring that location.

JUSIFICATION OF OPPORTUNITY
Liquor store being an upcoming aspect and the world we are living in is mainly based on
tech.The owner identified this business because there are no business offering proper services to
the advancement of good alcohol and according to most clients they are complaining of the
prices and quality of services provided. The business is also aiming to create job opportunities
and learning facilities among the individuals. The business will have large amount of raw
materials provided by trustworthy breweries organizations worldwide hence efficiency in
running the business. The economy of the area will increase because of high sales, improves
standard of living, job opportunities in the business which will in turn reduce the rate of crimes
and good health from products.

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INDUSTRY
The industry’s success over the next five years will likely depend on how it markets high-margin
brands to consumers. Operators may boost in-store marketing activities and hire more well-
versed personnel to better demonstrate the taste and potential health benefits of purchasing high-
quality products.

Growth will be driven further by state deregulation.  Deregulation is expected to permit more
retailers to enter the industry, while longer selling hours will likely enable these operators to
generate added revenue.

Industry operators will likely benefit from a growing share of the population that may consume
alcohol. As a result, industry operators will likely cater to a growing market of new and young
consumers whose tastes are entirely different from consumers in older age groups.

BUSINESS GOALS AND OBJECTIVES

The manager intends to pursue the following goals and objectives of the business;
 To provide high and quality products to the customers in order to satisfy their needs.
 To utilize the resource available and make maximum profits.
 To obtain the biggest share within the shortest time possible.
 To provide goods at affordable prices than the competitors.
 To fulfill the customers’ needs and desires.
 To improve the economy of the country by providing employment.
 To encourage job specialization and teamwork for the welfare of enterprise.
 To sell ten tones every year.

THE LONG TERM GOALS OF MIRDAN LIQUOR DISTRIBUTORS

 To create 20% employment to young people in the area within a period of four years.
 To offer affordable products to customers by reducing the cost of production and
improving on the products.
 To make the highest possible profits by maximizing the cost of production.
 To expand and open up branches in Eldoret town and Nakuru town within a period of
five years and as it grow the manager is planning on taking it nationwide and even
worldwide.

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ENTRY AND GROWTH STRATEGY
Tradition is at the very heart of how beer, wine, and spirits are distributed and marketed. While
most industries are succeeding online to reach broader markets, the alcohol industry is still
attempting to carve out a unique presence. While some alcohol brands have created a successful
online presence on their own, others have found that it helps to create strategic partnerships.

The business is bound to succeed and also expand due to the factors analyzed from the research
carried out. When the legal requirements are made the business will apply various strategies to
help in penetrating the market world. This strategies includes; opening its doors to customers on
weekend and on public holidays to ensure that they serve their customers all the time including
closing late unlike its competitors, plugging back profits to expand the business, opening more
branches when the business is well established, offering free samples in occasions like
agricultural shows and exhibitions, enhancing modes of advertising from word of mouth and
posters to radio and television.
We are also aiming when supplying goods we reach it at the door and create sites where you can
order it online and we reach it directly and the product ordered is the product that will be
reached.

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 CHAPTER TWO: MARKETING PLAN
2.1 CUSTOMERS
1) POTENTIAL CUSTOMERS
The main customers that are targeted by this business are the individual customers, learning
institutions, government offices, organizations, those in need of alcohol.

2) INDIVIDUAL CUSTOMERS
These are customers who will buy the product for their own domestic use. They comprise of
individuals who want to keep their kids busy which they will use them in family consumption.
The business will favors them in that the alcohol sold will be produced at affordable prices and
offers will be provided.

3) GOVERNMENT
The owner also expects the government to be most consumer of his product. The government
usually support small entrepreneurs by creating demand for their products their by promoting
self-employment as a way of creating jobs.
2.2 MARKET SHARE
 The recent economic slowdown, combined with the tragic events reduced consumer confidence,
which led to declining sales in the apparel industry as a whole.  The impact of the economic
slowdown is felt differently by various sub-sectors of the alcohol industry, with some being more
greatly affected than others, In general, the apparel market is positive due to the immensity and
strength of the industry.  However, manufacturers who want to enter the market, will have to be
extra-prudent and prepared to make greater investments in promotions and resources to do
observation visits, conduct preliminary market tests, and increase their visibility by taking part in
trade shows and other activities.  Industry specialists strongly advise using specialized brokers to
increase one’s chances of success.

COMPETITOR ANNALYSIS

When defining a strategy for MIRDAN LIQUOR DISTRIBUTORS, a competitor’s analysis is a

good starting point in terms of identifying niches of untapped value.  In other posts, we
addressed the criteria to segment customers both from a demographic and behavioral
perspective, but we are now taking a different look, by comparing and contrasting firms by
looking at their strategic decisions as well as their organizational structure.In this post, we are
going to discuss what types of criteria can be identified in order to segment the firms operating in

7
the alcohol industry and compare them with each other. These are the main criteria we are going
to address:

 Be located just at the centre of the location so that it can be reached by all customers
 Offer services at least at pocket friendly prices.
 Have good customer management strategies.
 Offer free services.
 Have good marketing skills.
 Offer credit facilities to trusted customers.

2.2.1 PROPOSED BUSINESS POPULATION SIZE TO BE SERVED

Mirdan liquor distributorss firm aims at dominating the entire Eldoret centre and its environment.
From the previous census results, Eldoret centre has a population of approximately 110 KM2.
2.2.2 A PIE CHART SHOWING MARKET SERVED
PARTICIPANTS
Individuals
Parents
Youths
PARTICIPANTS POPULATION PERCENTAGES DEGREES
INDIVIDUALS 224000 40 144
schools 112000 20 72
Organizations 244000 40 144

TOTAL RATIO
INDIVIDUALS: SCHOOLS: ORGAMIZATION
224000 : 112000 : 224000
224 : 112 : 224
2 :1 : 2

Sales

Individuals
40% 40% schools
organizations

20%

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2.2.3 TABLE SHOWING POPULATION SIZE
PARTICIPANTS
POPULATION 224000 112000 224000
PARTICIPANTS FAMILIES INSTITUTION INDIVIDUALS
PERCENTAGES 40 20 40
2.3 COMPETITION
Competition is always a key factor in any business and it can be taken in either positive or
negative effect on any given business. Hence the manager should be at the aim to identify his or
her immediate competitors then develop a way to cope with the competition and face them head
on and try to outdo them fully.
2.3.2 LOCATION IN RELATION TO THE PROPOSED BUSINESS
1. Tamasha wine and spirit
It is situated in the South East Side of the proposed business location about one kilometer from
the business centre. Tamasha has a good manager that is responsible for making the best
decisions in the interest of the corporation and on sound business practice. Agents will be able to
sell beer, wine, spirits, and other alcoholic beverages available at Tamasha corporate stores to
licensees and the general public.

 
2 TMT liquors
It is situated in the North East side of the proposed business location just about a half a kilometer
away. It is situated at the market centre of Eldoret where it can easily be accessed by customers.
However the business runs on the base of outdated liquors thus producing low quality products.
3Joe’s liquors
They have an impressive selection, a large cooler, convenient location, plenty of parking, and
competitive prices to make them the ideal choice for spirits and bar supplies. Joe’s Liquors
mainly serves college students so they specialize in anything you would need for a college-age
party – all the craft beer, wine, and spirits needed for homecoming games, get-togethers, and
celebrations. 
2.3.3 SIZE OF THE COMPETITORS
It can be argued that competition is small because there is no single business or institution
offering services of our level.
2.3.4 COMPARISON OF THE SERVICES
Refreshment is all sourced from the Emmaculate liquors and Industry hence they are of the same
quality. Quantities and varieties are differentiated according to customers taste and preference.

9
Other services are of great quality due to overtime specialization. Our competitors have event
planning service as a subset of their overall service.
2.3.5 PLANS TO CAPITALISE ON THE WEAKNESS
Mirdan liquor distributorss will capitalize and utilize the competitors’ weaknesses by offering
better and high quality products to the customers. Also the firm will have to carry out the
following:
a) Product promotion
b) Offer discounts to our customers.
c) Train workers to acquire good communication.
d) Acquire commodities of high quality.
e) Slightly lower prices of products to attract many customers.
2.4 METHODS OF PROMOTION AND ADVERTISING.

2METHOD OF ADVERTISING AND PROMOTING

The competition in this industry is very high the business will undertake intensive advertising
campaign to ensure it captures the market. Therefore, the business will use the following
advertising campaigns;
 PROMOTION
The manager intends to use promotion methods like advertisements in newspapers, business
cards, posters, and radio and bill boards to create awareness about the existence of the business
thus promoting it. This will also help the business go country wide and nationwide and to those
living in rural areas this will help them get aware and through our services offered even at home
level we will reach there and give them the best of services.
 BUSINESS CARDS
The business will print cards bearing the business name and address. The cards will show the
location of the premises. The cards will be issued to all those who will visit the premises and to
all our esteemed loyal customers we will provide them with the card to give it to people.
 USE OF EMPLOYEES
All employees will be wearing uniforms like T shirts and caps bearing the firm’s name and even
we will offer shirts to most of our customers.
 WORD OF MOUTH

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Those who buy the items will spread the word to their friends. Workers will also ask relatives
and friends to spread word about the business and its products.

PRICING STRATEGY
The products will be priced according to their size and quantity produced. Delivery service
charge will depend on the quantity purchased and the distance to be covered. The demand for the
product will also influence the pricing of the goods. The pricing of the goods will depend on;
 The cost of production.
 Economic status of the country.
The price of the products will vary depending on customer’s income. The price will be charged
in comparison to the prices charged by the competitors, but still keep its product costs low so that
it can be able to capture a bigger share. The trust worthiest customers will be allowed credit on
condition that they write an agreement on when to pay and how they will pay it.
The business will make sure that the quality service is offered at reasonable price compared to
that of our competitors.
A discount of 5% will be allowed to customers who purchase goods worth more than 10,000 ksh.
In order to realize profit one needs to weigh his customers to know whether they are interested
with the particular product or service you intend to offer them. The business will buy products at
a lower price and resell them at a price that is affordable to the customers.
The products will be priced as follows:

SALES APPROXIMATED TACTICS.

The business will employ direct method and personal selling to the esteemed customers. The
employees will be expected to be polite to the customers and welcome them in a good way. Their
service should also be fast and attractive. Cleanness to both premises and workers will also be
put in to consideration .The premises will be cleaned on a daily basis to satisfy customers.
However the business will consider hiring two or three employees for delivering services to the
customers at home, office or at work places and even repair at those places.

DISTRIBUTION STRATEGY
The manager intends to sell directly to the customers and sometimes through wholesalers. It will
enable him to understand the customer’s tastes and preferences and he will be able to serve them

11
as to their choice. The owner will be able to know the needs and credit worthiness of the
customers. For delivery of goods, the firm will be using road as a means of transport, the owner
will buy a pick up to transport the products to the clients when business expands. Cash will be
collected on delivery of products and the buyers will be issued receipts which will enable the
manager to calculate whether the business is making profit.
2.5 PRICING STRATEGY.
The selling price of the products depends on the cost of materials, cost of labour and units
produce by the premise. In other words, what is incurred determines the selling price. The owner
will consider the factors influencing the price strategy which include;
COST OF MATERIALS AND TRANSPORT EXPENCESSES
The owner will have to consider the cost incurred in purchasing the materials and the incurred in
transporting them. The actual selling price of the product offered will be calculated as shown
below.
S.P= % of intended profit x B.P
100 %
Where; % is percentage
B.P is buying price
S.P is selling price
Intended profit -50%
The owner also considered some factors when offering credit facilities.
These factors include;
Frequency of buying by a customer
The owner will offer credit facilities only to the regular customers, this offer will motivate them
to continue coming for the products. Also potential customers will encourage their friends to
come to the same place regularly in order for them to benefit from the credit facilities offered
which include free transport for those who purchase products in large volumes.
2.6 SALES TACTICS
The owner of the proposed business decided to use both direct and indirect selling, whereby
direct selling involves the products being sold to the final users whereas indirect selling is the
one where products are sold for resale.
There are some factors or methods of employing the sale force which the owner opted to use.
They include:

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Personal consultations
This is where the owner uses intermediaries between the firm and applications. The personal
consultations usually guarantee the firm on the performance of the chosen individuals.
Job Seekers
This is whereby the owner of the proposed business give job seekers time to register and the
owner is given access to their information, whereby she is able to select the qualified individuals
according their requirements and carry out screening at their own expenses.
The owner will use distributors to distribute products to various business premises or individuals
who purchase in large quantities. The owner also will utilize the existing sales force and
distributors by paying them well and on time.
Ways of motivating existing sales force or distributors.
The owner of the proposed business will provide free training for the unskilled labour which will
make them improve their service.
The owner also suggests that hardworking employees will be given promotion. By promising this
the employees are able to improve on their production knowing that they are being watched
upon.
The geographical area to be covered estimated to be a radius of 5km within Eldoret centre
2.7.2 PROBLEMS ANTICIPATED DURING DISTRIBUTION PROCESS
Poor infrastructure
The existence of bad roads and communication network will be a problem in transporting
products to various institutions mainly during rainy season. Many roads in Eldoret market
especially the road to Lelmokwo are in pathetic conditions. However, the government has
promised that it will be constructed soon thus this gives hope to the owner of the proposed
business.
Lack of enough equipment and materials
Sometimes the owner do not obtain the required quality of materials in Eldoret due to
insufficiency of the materials hence prompting her to take another step of sourcing the materials
from Nairobi incurring more expenses. Also, the equipment sometimes is not available and the
owner also will have to source the equipment from the same company in Nairobi e.g. serving
machines

13
CHAPTER THREE:
ORGANIZATIONAL / MANAGEMENT PLAN

3.1 ORGANIZATION STRUCTURE

This shows the diagrammatical form of the business organizational chart. It mainly deals with
the flow of authority from top management down to the subordinates. The owner of the business
opted for line organization structure. It is shown below:

MANAGER

ASSISTANT MANAGER

SALESPERSON Sales person DRIVER

3.2 KEY MANAGEMENT PERSONEL/BUSINESS MANAGERS

These are people who are concerned with the management of the business progress. They
include the manager and the assistant manager. The owner of the business acts as the manager
and hence she oversees all the activities concerning the progress of the business.
MANAGER
Duties and responsibilities of the manager
i) She is the top executive who is responsible for the management of the business and
ensures that human resources are allocated evenly.
ii) Responsible in obtaining required manpower for the business.
iii) Train and develop his employees.
iv) Responsible for planning both long and short term goals of the business.
Qualification of a manager
 She should be a Diploma holder in Community health and computer literate .
 She should have an experience of two years in the field of management.
 She should be above 22 years of age.

Assistant Manager
Duties and responsibilities
Assists the manger to supervise other staffs

14
 1. Prepares books of account and hand them to the manager.
2. Is responsible for planning remuneration scheme of other employees.
3. Works together with the manager in financial planning of the organization.
Qualifications of the assistant manager
1. Should be at least a Diploma holder in human resource management and a CPA II holder.
2. Should be a computer literate and have at least one year experience in the same field.
OTHER BUSINESS PERSONNEL
Sales person
This is the person responsible for selling goods to the customers. He should be having good
communication skills. He should also be having at least a Diploma in Sales and Marketing.
Drivers
He should be having a driving license. He should be determined in his work and should also be
able to work under stressful conditions.
3.3.1RECRUITMENT, TRAINING AND PROMOTION OF PERSONNEL
3.3.1.1 RECRUITMENT OF PERSONNEL
The owner of the business proposed to use external source as away of sourcing new personnel.
This will as well create good reputation of the business towards the business. Also he chooses to
use internal sources in recruiting senior staffs. These include promotion which will encourage the
employees to be hardworking in different fields. The methods used include:
Present employees
This occurs where there is a vacancy in a given field; the employees of the Design will be
requested to comment a person who will be able to fill up the post among them. This method will
help employees build their morale feeling that they are part of the organization.
Personnel consultant
The owner of the business proposed to use personnel consultants in recruiting and salespersons.
This consultant only carries out selection and passes the candidates to the organization that picks
them.
3.3.1.2 TRAINING OF PERSONNEL
The employees of the business will be given training so as to improve their knowledge and skills
in performing their day to day duties in their respective job positions.
3.3.1.3 TYPE OF TRAINING
The owner of the business prefers to use job training because it is economical. It also includes:

15
Orientation – it is whereby new employees are helped to adapt to the special job requirements.
New employees are able to know the flow of authority in the organization.
Refresher training – it will also be used to remind the employees of the skills that they had
acquired before but they have forgotten them.
PROMOTION OF PERSONNEL
Promotion of the personnel in the premise will be based on the merit ratings whereby competent
employees will be given a greater responsibility. This process is able to reward competence and
enable the firm to retain competent employees thus improving firm productivity.
RENUMERATION AND INCENTIVES FOR PERSONNEL
The owner of the business decides the compensation scheme as follows:
JOB TITTLE NUMBER MONTHLY ALLOWANCE TOTAL YEAR 1
BASIC
SALARY
MANAGER 1 10,000 1,000 11,000 132,000
ASSISTANT 1 5,000 1,000 6,000 72,000
MANAGER
SALES 2 4,000 1,000 15,000 180,000
PERSON
DRIVER 1 2,000 1,000 3,000 36,000
SALESPERSON 2 3,000 500 7,000 84,000

For employees to improve their output, they should be given incentives. The owner of the
business has suggested giving the following incentives to the employees:
After every financial year, the employees are given two weeks off-duty, providing house
allowance to the employees and motivating them to join the NHIF and NSSF schemes so that
they benefit from the schemes currently and in future.
LICENSE PERMITS AND BY-LAWS.
For any business to operate the law stipulates that it should have fulfilled the legal requirements.
The business will ensure that the legal requirements are abided by before its operation starts. It
will acquire the following requirements from the departments concerned in the issuing legal
documents.

16
BUSINESS REGISTRATION.
The business has to be registered with the registrar of companies and societies after the name has
been approved at a fee of Ksh 2,000.The manager will seek legal documents before the
commencement of the operation in relevant authorities below:
Public Health Act cap 222.
Local government Act cap 725.

SUPPORT SERVICES.
The manager will need support services from outside to enable run smoothly. They include:
BANKING SERVICES.
The business will use banking services offered by Equity Bank Eldoret Branch which is just a
few meters from the premises. The bank will be giving services to the business as it will be
saving its money in the bank and also withdrawing its money when necessary. The bank will also
be accountable to the employees of the company.

INSURANCE.
An insurance policy will be applied so that it look at our various assets to avoid lose in case of
fire or theft and it will cover both the business and the employees. The employees will be
covered against accident at the place of work while the business will be covered against theft and
fire.

TRADING LICENCE
The business will obtain trade license from the local authority’s office Uasin Gishu county
council at a fee of ksh 1,125.

WORKMAN’S COMPENSATION.
The owner of the business is aware of regulations of wages and conditions employment act cap
129, training levies to take care of the employees of the following authorities.
 -save as you earn.
 -pay as you earn
 -national social security fund.
o National hospital insurance fund.
This will depend on the salaries earned by each employee.

17
HEALTH SERVICES
Health license will be obtained from the local authority and also the local county council.
Enough sanitary facilities will be provided and cleaned daily to ensure that the business complies
with the health regulations.

BY-LAWS
For the operation to run smoothly the farm will ensure that it abides by the laws of the farm.
Employment act 212
Licensing trading act cap 429.

ELECTRICITY SUPPLY
The business will have supply of electricity from the Kenya power and lighting. This will enable
the business to run smoothly by provision of light inside and outside the premises and also for
security purposes at night

WATER SUPPLY
.The business will get water supply from the ministry of water through its branch as water is
essential for the business, supplied by Eldoret Water And Sanitation Company

18
 CHAPTER FOUR: OPERATION/PRODUCTION PLAN
4.1 PRODUCTION FACILITIES AND MACHINERY
The main tools and machinery that are required for production purpose in the premise
includeThe owner will obtain materials by making a purchase order in time to ensure consistency
in supply. She considered some factors while making a choice of the supplier. These include:
i) The quality of the materials offered by the supplier
ii) Credit facilities
iii) Transport for regular customers
iv) Maintenance and repairs of machinery and equipments- will be ensured for
effectiveness and efficient production. To ensure that, these materials will be checked
every week by technician who may repair the machines incase of fault in some parts.

4.1.1 GROUND PLAN OF THE DESIGN

The ground plan of the proposed Design is as shown below;

PRODUCTION
MANAGEMENT
DEPARTMEN
DEPARTMENT
T
STORING
SALESMAN
DEPARTMEN
DEPARTMENT

ENTR
Y

The owner who is a well manager of the premise has plans for future expansion. She has a target
to expand the size of the premise so that space may be enough for performing all the production
activities efficiently. Also she has a desire to purchase more machines and equipments which
will ensure faster production thus enabling the production of larger quantities.
Below is a list of fixed assets that will be required in future for the business;
i) More space for building
ii) Vehicle
iii) Plant and machinery

19
4.2 PRODUCTION STRATEGY
4.2.1 MONTHLY MATERIAL REQUIREMENT
Below is a list showing monthly material requirement:
ITEM COST SOURCE
KEG PUMP 25000 Nairobi
SPEAKERS AND 1000 Eldoret General stores
ELECTRONIC DEVICES
Furnitures 25000 Uganda
Decorations 3000 Eldoret General stores
4.2.2 MONTHLY LABOUR REQUIREMENT
Below is a description pertaining labour requirement:
PERSONNEL BASIC SALARY AND ALLOWANCE
Manager 11,000
Assistant Manager 6,000
Cleaner 1,500
Salesperson 7,000
Driver 3,000
TOTAL 43,500
4.2.3 MONTHLY PRODUCTION REQUIREMENTS/OVERHEADS
Monthly production costs are as shown below:
PRODUCTION COST INVOLVED
Electricity 3,000
Water 1,000
Rent 5,000
Postage 500

PRODUCTION STRATEGY
The manager will focus on using materials provided as per the budget and materials provided
above which are available throughout the year and things may change according to how we
continue growing. All the workers in the business will be qualified in their work. Through the
principle of division of labor and specialization, the worker output goes high. The business will
be offering high services in order to satisfy its customers well. The choice of division of labor

20
and specialization is adopted because each worker is given a task in one area of specialization
thus promoting the production process.

PRODUCTION PROCESS
For the production to be complete, the manpower, equipment, control function and service
activities are needed to be coordinated properly. Controlled activities ensure that the production
process is implemented. For the business to do well, the cost of production must always be less
than the sales for profit making. Good attractive wages and motivation of employees, security
and conducive vary depending on customers income. The price will be charged in comparison to
the prices environment is essential to the products. Coordination and communication will be
emphasized between the workers in order to make the business a success. If the above qualities
are observed the business will be able to meet the needs of the client at the shortest time possible.
Every business has external and internal factors which include

Internal factors
 Power blackout
 Non-productive workforce
 Breakdown of machines
 Lack of communication and co-ordination between workers leading to quarrels between
them

Solutions to these factors

Repair and maintenance should be done regularly to ensure efficiency of the business.
Power backup should be installed to prevent the unnecessary inconvenience

REGULATIONS AFFECTING OPERATIONS

MIRDAN LIQUOR DISTRIBUTORS will ensure that the business observes all the regulations
stipulated by the government in the business act. They include;

TRADE LICENSE
According to the trade license Act 491 section 7.It states that every business must have a trade
license to operate. Trade license will therefore be required from the local Authority offices in
Eldoret town at a cost of 2500ksh.
BUSINESS REGISTRATION.
It will be obtained from registrar of company’s office in Eldoret town at a fee of cash 1000.

21
The business is aware of this requirement and has put in every effort to enable it to trade in
agricultural industry.

SERVICE CHARGE
Service charge certificate will be obtained from the local authority office in Eldoret town
monthly. Local taxes of ksh 200 will be submitted to the county council as required by the
authority.

REGULATIONS AFFECTING OPERATIONS

a. Government regulations.
As the law states all businesses should be licensed hence it is an offence to run a business without a
license. The business will be licensed under cap 479 of the Kenyan laws. A trading license should be
obtained before trading begins and should be renewed on time. Renewals shall be done yearly. The
business should also obtain occupational license yearly and should be governed by office of the registered
companies in the registration of companies act cap under the Kenyan law.

b. Health and safety

Safety rules and precautions governing health should be taken into account to avoid accidents and in case
of fire breakouts, fire extinguishers will be readily available to put off fires.

c. Labour laws
The business will run from Monday to Saturday as from 8 am to 5pm. The business will not operate on
public holidays. Lunch breaks for employees will for one hour from 1pm to 2pm.

d. Environment
It is the requirement by law of the country to keep the environment clean. Any form of pollution from the
premise should be avoided. Use of plastic bags will restricted in the premise, instead we will result to use
decomposing materials in packaging. The importance of keeping the environment clean will be
communicated to all employees in advance through internal memos.

22
 CHAPTER FIVE: FINANCIAL PLAN

5.1BUSINESS OPERATIONS AND FINANCE

Financial projections are based upon sales volume at the levels detailed in the sales forecast and
represent, to the best of management’s knowledge and belief, the company’s expected assets,
liabilities, capital, revenues, and expenses.  Furthermore, these projections reflect management’s
judgment of the expected conditions and the company’s expected course of action, given
the financial assumptions.

5.1.2FINANCIAL HISTORY

The proposed business will start with a total capital of Ksh. 430000 The family and the sole
proprietor will contribute a total capital will be borrowed from a lending institution Kenya
Commercial Bank. The proposed business is expected to grow within the specified period of five
years. The earning are also expected to grow at higher heights which will assist in creation the
business branches in other regions and thus will create job opportunities to the un employed
people.

5.1.3FINANCIAL PLAN

The propose business will start with a substantial capital. Operating incomes are expected to pay
back the start up loan that will be borrowed from a Kenya lending institution that is the KENYA
COMMERCIAL BANK over a period of one and a half a year. After the loan payments shall
have been made, profits that will e obtained from the proposed business moa auto spares will be
retained back to cover cash operating needs as well as future expansion of the proposed business
Moa auto spares.

5.1.4BREAK EVEN ANNALYSIS

The company’s break-even analysis is based on the first year of operation, from 1st july 2022

The business estimated fixed costs include, but are not limited to, the following items:

 Salaries
 Rent
 Utilities
 Insurance (Vehicle and Business)
 Depreciation on Equipment
 Meetings/Dues
 Advertising/Business Promotion

23
  Office Supplies
 Miscellaneous Repairs
 Taxes
 Legal/Professional Fees

Average percent variable cost takes into consideration variable costs of inventory that will
fluctuate with the products provided to the customer.

5.1.5 PRE-OPERATIONAL COSTS

MIRDAN LIQUOR DISTRIBUTORSS PRE-OPERATIONAL COSTS
ITEM AMOUNT IN KSH
Rent deposit 10,000
Renovations 4,000
Installation costs 5,000
Water deposit 2,000
Electricity deposit 2,000
Licenses 2,000
Permits `2,000
TOTAL 27,000

5.2 WORKING CAPITAL

ITEM YEAR 1 YEAR 2 YEAR 3
AMOUNT IN KSH AMOUNT IN KSH AMOUNT IN KSH
Stock of raw materials -
Stock of materials in -
progress
Stock of finished
goods
Debtors - 450,00
Cash at hand and in 250,000 300,000
bank

24
Creditors -
TOTAL 450,000 450,000 450,000
It therefore means that the way to come up with the working capital is by adding the cost of
assets then subtracting the creditors paid.

25
5.3 MIRDAN LIQUOR DISTRIBUTORS BUSINESS PLANED CASHFLOW STATEMENT
ITEM/ JAN FEB MAR APRI MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
MONTH
Balance b/f - 50750 45375 40025 76670 71570 63685 62000 518750 883350 83755 77280 7113150
0 0 0 0 0 0 0 0 0
CASH INFLOW
Cash Sales 13000 14000 14200 75000 13600 14200 14200 14000 68000 144000 13000 15000 1539000
0 0 0 0 0 0 0 0 0
Loan 20000 - - - - - - - - - - - 200000
0
Debtors - 8000 16000 15000 16000 10000 12000 8000 14000 9000 12000 12000 132000
0 0
Friends 40000 - - - - - - - - - - - 400000
Contribution 0
Personal - - - 50000 - - - - 500000 - - - 1000000
Contribution 0
TOTAL 73000 65550 61375 99025 91870 86770 79085 76800 110075 103635 77955 94380 1039520
RECEIVED 0 0 0 0 0 0 0 0 0 0 0 0 0
CASH OUTFLOW
Cash 1000 90000 10000 11000 80000 12000 70000 13000 100000 90000 10500 10000 2555000
Purchases 00 0 0 0 0 0 0
Creditors Paid - 20000 5000 5000 9000 11000 8000 12000 9000 10000 11000 10000 420000
Wages + 4350 43500 43500 43500 43500 43500 43500 43500 43500 43500 43500 43500 522000
26
Salaries 0
Rent 1000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 65000
0
Telephone 3000 4000 1500 4500 1000 3000 5000 4000 2000 3000 3500 2500 36000
License 2000 - - - - - - - - - - - 2000
Permits 1000 - - - - - - - - - - - 1000
Water 3000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 14000
Electricity 5000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 38000
Stationary 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 6000
Transport and 3000 10000 20000 25000 35000 10000 10000 25000 20000 15000 10000 30000 240000
Advertisement 0
Postage 750 250 200 800 800 200 200 750 200 300 500 1500 6000
Repair - - 9000 - - 9000 - - 9000 - - 9000 36000
Insurance 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Discount 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 96000
Tax (15%) 9750 10500 10800 11250 10200 10650 10650 10500 10200 10800 9750 11250 126000
Interest (8%) 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
TOTAL 2225 20175 21350 22355 20300 23085 17085 24925 217400 198800 20675 23125 3935000
PAYMENTS 00 0 0 0 0 0 0 0 0 0
NET CASH 5075 45375 40025 76670 71570 63685 62000 51875 883350 837550 77280 70355 7816200
FLOW C/F 00 0 0 0 0 0 0 0 0 0

27
5.3.1 MIRDAN LIQUOR DISTRIBUTORSS BUSINESS PLANED CASHFLOW FOR THE YEAR 2022
IITEM/ JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTA
MONTH L
Balance b/f 70355 64675 60195 56140 51675 47160 43645 40085 38230 38870 41150 389110 591095
0 0 0 0 0 0 0 0 0 0 0 0 0

CASHINFLOW
Cash Sales 10500 12000 11200 11500 10900 11500 12100 11100 15000 15800 10200 125000 135200
0 0 0 0 0 0 0 0 0 0 0 0
Loan - - - - - - - - - - - - -
Debtors 40000 48000 56000 55000 56000 51000 50000 52000 48000 54000 59000 52000 621000
Received
TOTAL 84855 81475 76995 73140 68075 63760 60745 56385 59035 60070 57250 616100 803395
RECEIVED 0 0 0 0 0 0 0 0 0 0 0 0
CASH OUTFLOW
Cash 90000 80000 85000 82000 92000 70000 83000 60000 88000 58000 60000 73500 911500
Purchases
Creditors Paid - 32000 27000 28000 16000 35000 31000 25000 13000 32000 25000 23500 277500
Wages + 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 540000
Salaries
Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Telephone 2000 3000 1000 2500 1000 1000 1500 3000 2000 1000 1500 1700 21200

28
License 2000 - - - - - - - - - - - 2000
Permit 1000 - - - - - - - - - - - 1000

Water 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Electricity 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Stationary 1600 1600 1600 1600 1600 1600 1600 1600 1600 1600 1600 1600 19200
Transport and 20000 10000 12000 15000 20000 7000 8000 7000 13000 12000 10000 8000 142000
Advertisement
Postage 500 200 150 300 350 300 200 250 150 400 500 100 3400
Repair 1000 - - - - 1000 - - - - - - 2000
Insurance 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Discount 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Tax (15%) 15750 18000 1680 17250 10200 17250 12300 16650 16500 16200 16800 17250 202800
Interest (8%) 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
TOTAL 20185 21280 20855 21465 20915 20115 20660 18150 20165 18920 18340 196650 257335
PAYMENTS 0 0 0 0 0 0 0 0 0 0 0 0
NET 64675 60195 56140 51675 47160 43645 40085 38235 38870 41150 38910 422450 562985
CASHFLOW 0 0 0 0 0 0 0 0 0 0 0 0
C/F
5.3.3 MIRDAN LIQUOR DISTRIBUTORSS BUSINESS PLANED CASHFLOW STATEMENT FOR THE YEAR 2022
IITEM/ JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTA
MONTH L
Balance b/f 42245 12412 13299 13412 13317 13813 13933 13787 13729 14001 14554 14885 155367

29
 0 00 00 00 00 00 50 00 00 00 00 50 50
CASHINFLOW
Cash Sales 22700 18500 16800 15000 19500 14800 13000 12400 18200 17200 14600 19000 133500
0 0 0 0 0 0 0 0 0 0 0 0 0
Loan 80000 - - - - - - - - - - - 800000
0
Debtors 45000 50000 58000 55000 57000 54000 52000 53000 49000 56000 60000 10000 599000
receipts
TOTAL 14944 14762 15559 15462 15837 15830 15753 15557 16039 16281 16614 16885 111523
RECEIVED 50 00 50 00 00 00 50 00 00 00 00 50 00
CASH OUTFLOW
Cash 11000 90000 85000 86000 85000 75000 75000 63000 90000 60000 62000 10000 100100
Purchases 0 0
Creditors 20000 30000 32000 29000 18000 20000 32000 25000 15000 18000 17000 24000 290000
Paid
Wages + 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 540000
Salaries
Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
Telephone 1500 2000 800 2000 800 900 1200 1800 1350 1100 1300 1400 16150
License 2000 - - - - - - - - - - - 2000
Permit 1000 - - - - - - - - - - - 1000
Water 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000

30
Electricity 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Stationary 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 15600
Transport and 15000 8000 10000 12000 16000 8000 6000 7500 11000 9000 8000 9000 119500
Advertisemen
t
Postage 400 200 150 200 300 250 150 200 150 300 250 150 2700
Repair - - 500 - - 1500 - - - 500 - - 2500
Insurance 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Discount 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Tax (15%) 34050 27750 17000 16000 13000 15000 13000 16000 17000 14500 15000 13500 211800
Interest 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 96000
TOTAL 25325 14625 21475 21450 20240 18995 19665 18280 20380 17270 17285 21735 230750
PAYMENTS 0 0 0 0 0 0 0 0 0 0 0 0 0
NET 12412 13299 13412 13317 13813 13933 13787 13729 14001 14554 14885 13812 990895
CASHFLOW 00 50 00 00 00 50 00 00 00 00 50 00 0
C/F

31
5.4.0 PROFORMA INCOME STATEMENT
MIRDAN LIQUOR DISTRIBUTORSS PROFORMA INCOME STATEMENT FOR THE
YEAR ENDING 2022
ITEM 31/12/2018 31/12/2019 31/12/2020
Sales 1671000 1973000 1934000
Cost of goods sold 1114000 1315333 1289333
Gross profit 557000 657667 644667
EXPENSES
Insurance 36000 36000 36000
Wages+Salaries 52200 540000 540000
Rent 65000 60000 60000
License 24000 24000 24000
Permits 12000 12000 12000
Transport and Advertisement 240000 142000 119500
Telephone 36000 21200 16150
Water 14000 12000 12000
Electricity 38000 36000 36000
Discount 96000 60000 36000
Postage 6000 3400 2700
Repairs 36000 2000 2500
Interest 24000 72000 96000
Depreciation (2%) 27200 27048 26507
Professional services 46600 45000 60000
TOTAL EXPENSES 746000 1123248 1079357
Profit before tax 925000 849752 854643
Tax provision (15%) 138750 127463 128196
NET PROFIT AFTER TAX 786250 722289 726447

32
5.5 PROFORMA BALANCE SHEET
MIRDAN LIQUOR DISTRIBUTORSS PROFORMA BALANCE SHEET AS AT DEC
2022
ITEM OPENING DATE END OF YEAR 1 END OF YEAR 2
01/01/2018 31/12/2019 31/12/2020

ASSETS
Current assets
Cash at hand+ bank 220000 703550 422450
Debtors - 132000 621000
Stock of finished - 261000 1000000
goods
Stock of materials in - 400000 25000
progress
Stock of raw - 900000 32467
materials
TOTAL CURRENT 220000 2396550 2100917
ASSETS
FIXED ASSETS
Machinery and 1360000 1360000 1332800
equipments
Accumulated - 27200 26656
depreciation (2%)
Furniture and 20000 20000 19600
fittings
Accumulated - 400 392
depreciation (2%)
TOTAL FIXED 1380000 1352400 1325352
ASSETS
TOTAL ASSETS 1600000 3748950 3426269
LIABILITIES

33
 Current liabilities
Creditors - 420000 277500
Expenses 27000 942700 1092648
TOTAL CURRENT 27000 1362700 1370148
LIABILITIES
Long term liabilities
Bank loan 200000 200000 1200000
Capital 1373000 1400000 107822
employed(Equity)
Profit - 786250 748299
TOTAL LONG 1573000 2386250 2232121
TERM
LIABILITIES
TOTAL 1600000 3748950 3426269
LIABILITIES
5.6 BREAK EVEN POINTS
It is the number of units or sales you can sell in a given period without making profit or loss.
You will be able to meet your variable and fixed costs.
VARIABLE COSTS AMOUNT IN KSH. FIXED COSTS AMOUNT IN KSH.
Telephone 36000 Salaries and wages 522000
Repair 36000 Rent 65000
Transport and 240000 License and Permits 36000
Advertisement
Water 14000 Insurance 36000
Electricity 38000 Discounts 96000
Postage 6000 Depreciation 27200
Professional Services 46600 Interest 24000
TOTAL 416600 TOTAL 806200

 Contribution margin= Total sales- Variable costs

1671000-416000

34
 =1255000

 Contribution margin percentage= Contribution margin * 100

Total Sales
1255000*100
1671000
=75.10%
 Total fixed costs (Expenses for year 1) = Ksh. 746000.
 Break even point (In sales) =Fixed costs
Contribution margin cost & percentage
806200/75.10
=Ksh.10750.
5.7 PROFITABILITY RATIOS
RATIO WORKING YEAR: 2022 YEAR:2022 YEAR:2023
TYPE FORMULA
Gross profit Gross 557000*100 657667*100 644667*100
ratio profit*100 1671000 1973000 1934000
Total Sales =33.33% =33.33% =33.33%
Return on Net profit 786250*100 894326*100 726447*100
equity after tax*100 800000 800000 800000
Owner’s =98.28% =111.79% =90.81
equity
Return on Net profit 786250+24000*100 748299+24000*100 726447+24000*100
investment after tax+ 1600000 1600000 1600000
interest*100 =786251.5 =748300.5 =726448.5
Total
investment

5.8 DESIRED FINANCING

This indicates the total amount of money required to start off the business.
ITEM AMOUNT

35
Pre-operational costs 27000
Working capital 193000
Machinery, equipment and furniture 1380000
TOTAL FINANCIAL REQUIREMENTS 1600000

5.9 PROPOSED CAPITALIZATION

ITEM AMOUNT
Owner’s contribution 800000
Total borrowed (friends + relatives) 600000
Loan from bank 200000
TOTAL INVESTMENT 1600000

NB: Desired financing = Proposed capitalization

APPENDICES
3.1 ORGANIZATION STRUCTUIRE

MANAGER

ASSISTANT MANAGER

SALESPERSON Sales person DRIVER

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