NOVELTY COMPUTER ACADEMY

P.O BOX 2917

MARALAL TOWN

CONTACT:0719261122

TITLE: BUSINESS PLAN

PRESENTER: LEKURRAA ELIAS NTAITEU
ADMISSION NO: 2017/05631

COURSE : DIPLOMA IN LAND SURVEY

CENTRE NAME: THE ELDORET NATIONAL POLYTECHNIC

PRESENTED TO: THE KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FUILFILMENT FOR AWARD OF DIPLOMA IN
LAND SURVEY.
SUPERVISOR: MRS. LOICE WAMBUI
EXAM SERIES: JULY 2021
DECLARATION
I hereby declare that this is my original work and has never been summated before to the Kenya

national examination council.

STUDENT

Name: ELIAS LEKURRAA NTAITEU

Signature of candidate: ……………………………..Date…….

SUPERVISOR

Supervisor: MRS LOICE WAMBUI

Signature……………………………. Date …………………………

ACKNOWLEDGEMENT
My sincere wishes and gratitude to my supervisor Mrs. Loice Wambui for her tireless hard

work. Encouragement and suggestion that enable me to come up with this business plan.

I also thank my parents and all my family members for their moral and financial support during

the period of writing this business plan. I do also thank my classmates for the encouragement.
DEDICATION
My dedication goes to my parents and family members for their moral and financial support they

offered to me.

God bless them abundantly.

CONTENTS
DECLARATION...............................................................................................................................................i
ACKNOWLEDGEMENT..................................................................................................................................ii
Dedication...................................................................................................................................................iii
Chapter one................................................................................................................................................vi
1.0 Executive summary...........................................................................................................................vi
1.2 BUSINESS DESCRIPTION....................................................................................................................vi
1.4 ORGANIZATION AND MANAGEMENT...............................................................................................vi
1.5 Operational plan...............................................................................................................................vi
1.6 FINANCIAL PLANS..............................................................................................................................vi
Chapter two.................................................................................................................................................8
2.0 business description..........................................................................................................................8
2.1 business name...................................................................................................................................8
2.2 Location of the business....................................................................................................................8
2.3 form of ownership.............................................................................................................................9
2.4 Type of the business..........................................................................................................................9
2.5 product and service...........................................................................................................................9
2.6 justification of opportunity..............................................................................................................10
2.7 the industry.....................................................................................................................................10
2.8 business goals..................................................................................................................................11
2.9 the entry and growth strategy.........................................................................................................11
CHAPTER Three..........................................................................................................................................13
3.0 MARKETING PLAN............................................................................................................................13
3.1 CUSTOMERS.....................................................................................................................................13
3.2. COMPETITION.................................................................................................................................13
3.3 market share....................................................................................................................................15
3.4 ADVERTISEMENT AND PROMOTION STRATEGY..............................................................................16
3.5 THE PRICING STRATEGY...................................................................................................................17
3.6 SALE TACTICS...................................................................................................................................18
3.7 DISTRIBUTION STRATEGY.................................................................................................................18
CHAPTER four............................................................................................................................................19
 4.0 ORGANISATION AND MANAGEMENT PLAN.....................................................................................19
4.1 BUSINESS MANAGER AND QUALIFICATION.....................................................................................19
4.2 PERSONNEL NUMBER AND DUTIES..................................................................................................19
4.3 RECRUITMENT TRAINING AND PROMOTIONS.................................................................................22
4.4 RENUMERATION AND INCENTIVES..................................................................................................22
4.5 LICENSES, PERMITS AND BY-LAWS..................................................................................................23
4.6 SUPPORT SERVICES..........................................................................................................................23
CHAPTER FIVE............................................................................................................................................25
5.0 OPERATION PLAN............................................................................................................................25
5.1 PRODUCTION FACILITY AND CAPACITY............................................................................................25
5.2 PRODUCTION STRATEGY..................................................................................................................26
5.3 PRODUCTION PROCESS....................................................................................................................27
5.4 REGULATION AFFECTING OPERATION.............................................................................................28
CHAPTER six...............................................................................................................................................29
6.0 FINANCIAL PLAN..............................................................................................................................29
6.1 PRE-OPERATION COST.....................................................................................................................29
6.2 WORKING CAPITAL REQUIREMENT.................................................................................................29
6.3 PROJECTED CASH FLOW STATEMENT FOR YEAR ENDING 31st DECEMBER 2016............................30
6.4 PROFORMA INCOME STATEMENT FOR THE YEAR ENDED 31 st DEC 2014........................................32
6.5 NOVELTY COMPUTER ACADEMY PROFORMA BALANCE SHEET FOR THE YEAR ENDING 2017.........33
6.6 BREAK EVEN POINT..........................................................................................................................34
6.7 PROFITABILITY RATION....................................................................................................................35
6.8 DESIRED FINANCING........................................................................................................................36
6.9 PROPOSED CAPITALIZATION............................................................................................................36
APPENDIX..................................................................................................................................................37
BUSINESS LOCATION.................................................................................................................................37
 CHAPTER ONE

1.0 EXECUTIVE SUMMARY

1.2 BUSINESS DESCRIPTION

In this chapter the business name, its location and address also included its form of ownership
and type of business.
In this chapter there is description in justification of the opportunity, industry in which it belongs
and achievable goals of the business. Also include the entry and growth strategy
1.3 MARKETING PLAN
In this chapter in contain customers and their classification. Its market shares in the region and
competitors also include method of promotion and advertising
In this chapter also it includes the pricing strategy of the product and its sale tactics also
distribution strategy is included.

1.4 ORGANIZATION AND MANAGEMENT

In this chapter reveals the origination and management, structure of number of personnel and
their duties, structure of the origination and qualification of each personnel and their duties also
their salaries are included. Also in this chapter it contains how business recruit the employees
their training and how they get promotion.
Also it includes remuneration and incentive and also licenses, permits and bylaws pertaining the
business and supportive service which help the business by lacking a risk.

1.5 OPERATIONAL PLAN

In this chapter it is production facility and capacity that are used for smooth operation also their
place of repair and maintenance indicated and the proposed layout of the business
Production strategy is also included that is monthly material labour monthly expense and cost of
production required.
It also includes production process these are events of the production and regulation affecting
operation of the business

1.6 FINANCIAL PLANS

The proposed startup capital of the firm will be amounting to Kshs 800000. The capital will be
acquired in the following ways.
Sources Amount Kshs Percentage%
Owner contribution 400000 50%
Family relative and friend 280000 35%
contribution
Loan from banks 120000 15%
total 800000 100%
 CHAPTER TWO

2.0 BUSINESS DESCRIPTION

My business organization offer computer service and modern technology like information

communication technology [ICT] the product and the service mainly use electricity as a source

of energy the business. It will supply the product and the service to the customers in the locally

to enhanced technology in the area. The entrepreneur started his primary education in 2004 at

Nontoto Primary School and cleared in 2012. He completed his secondary school in the year

2016 he later joined The Eldoret National Polytechnic where he is currently pursuing a diploma

in land survey.

2.1 BUSINESS NAME

The name of the business is intend to be Novelty Computer Academy.

The sponsor name is Lekurraa Elias Ntaiteu. I was born in the year 1998 now 21 years old I was

born in Nontoto village, Lorroki division Samburu county in rift valley region.

2.2 LOCATION OF THE BUSINESS

The business will be located in Maralal town it will be strategically located in the town centre

due to availability of good network electricity water and security which are the factors of

production that business will benefit from it

The business will be address as follows

NOVELTY COMPUTER ACADEMY

P.O BOX 720
MARALAL
TEL; 0719261122
Email:noveltycomputeracademy @gmail. Com

2.3 FORM OF OWNERSHIP

Despite the sponsor being a sole proprietor he will benefit from the card of family members

relatives friends and banking institution.

Sources Amount Kshs Percentage %

Owner contribution 400000

50%

Family relatives and friends 280000 35%

contribution

Loan from banks 120000 15%

Total 800000 100%

2.4 TYPE OF THE BUSINESS

The business will be short up business which deals with equipping of computer knowledge to the

customer who is the learners. Product and service related to cheaper price this will enable to

acquire potential learners which in turn they are customers.

2.5 PRODUCT AND SERVICE

The business shall be established with the objective of offering quality service to the customers’

computer packages this service help a lot in the organization such as banks, schools’ workshops

since most of the work done now days is computerized. Other service includes cyber service this

help customer to access to the internet where they can learn a lot such as learning online.
Photocopying, lamination, website, browsing and building are other service offered at affordable

price to avoid overcharging to the customers thus making the business effective.

2.6 JUSTIFICATION OF OPPORTUNITY

There are opportunities for the continuation and expansion of this business the proprietor efforts

towards the running of the business shall be realized as the business grows.

The sole trader knowledge skills and competence toward business services is equal to

opportunity hence bring about.

Meeting local demands due to unsatisfied demand in the area the business will used available

resource to provide service to customers effectively making the business more attractive thus

lead to increase in customers.

Creation of employment. The business will create employment to non-teaching staff and

teaching staff thus making them to earn their salaries.

Net Profit-Availability of demand of service from the business makes it to create profit. This

maximizes the profit of the business.

Good Infrastructure-The infrastructure of the business is pleasant for the business to operate

daily operation of the business due to availability of good transport, electricity, water supply and

enable the business operate easily.

2.7 THE INDUSTRY

The proposed industry falls in the education industry the business will benefit mostly industry

because of its use of the modern technology.

Also with the industry large firms and business of its comfortability. Because of the high number

of customers, the industry has a higher percentage of employees in its firm.

Although the industry does not require much capital for entry it enjoys getting

Profit.

Even though the industry will experience seasonal factors such as student dropouts.

The education industry enjoys having a high percentage growth and long lasting stability with

the industry embracing current technology its firm has enjoyed good developments.

2.8 BUSINESS GOALS

The sponsor started the business with the aim of;

i) Making himself financial stable

ii) Enjoying the right of being own boss of the firm.

iii) Integrate the use of video-conferencing into its mode of teaching.

iv) Creating new campuses in the nearby towns like Kisima and Suguta for expansion of the

firm.

2.9 THE ENTRY AND GROWTH STRATEGY

Even though the completion will be stiff due to presence of other school offering the same

courses or services of similar. Novelty Computer Academy will stand firm.

Service offered is of affordable price and of current technology in order to meet the expectation

of potential customers and even to attract more thus creating more room for expansion of the

business.
Due to availability of all factors of production like capital good management field for expansion

and qualified workers the business is expected to bear fruits and meet its objectives.

The business will be marketing its service through newspapers, radio station, and television and

even through posters along the road.

 CHAPTER THREE

3.0 MARKETING PLAN

Include all the activities, strategic tactics and policies that will be carried out to exploit the

market opportunities

3.1 CUSTOMERS

Customers are the backbone of even and every business since without

The product produce or services rendered will be of no any importance. The proposal business

will target mostly the student the employees and the entire public.

Classification

a) The student targeted is between fifteen years and twenty years of ages the higher

percentage of the student will be the form four leaves with K.S.C.E certificate others will

be from colleges most students targeted are Christians.

b) The business will also target the employees since most of the employees from the region

are computer illiterate. Since the business will be both male and female most of the

employees are of age thirty and fifty years and recurring their income.

c) The entire public will also be potential customers of the business the customer will be

looking for good performance since the business will be aiming at giving out its best

services will have assessed by the customer during school and even holiday.

3.2. COMPETITION

Novelty Computer Academy will have its competitors within the town and even outsides town.

Some of its competitor’s will include;

i) Brook house school of computer studies

ii) African Institute of Technology

iii) Shady Garden School of computer studies

iv) Accra Institute of Computer Studies

Novelty computer Academy is located within Maralal town while African Institute and

Shady Garden are located outside Maralal town.

Although Accra institute is located within Maralal town if will be disadvantages since it is

not located outside along the highway as Novelty Computer Academy.Brookhouse and

Shady Garden are located outside Maralal town thus three service are not easily accessed.

The potential competitors are not of medium size the proposed business will be selected

according to how good they have been to the business the agent will be given department to

head this will be one way of motivating them.

Since the business will aim at being the largest firm it will be disadvantages to the other firm

in terms of rendering service same of the advantages that the business will have over

accessible service fair price in terms of acquisition, good relation with its customer’s large

size.

Brook house school i) Qualified staffs i) Poor location

ii) Financially stable ii) Poor infrastructure

iii) It is well established iii) It charges high pricing

iv) It motivate employee iv) It has no room for

expansion.
 Accra Institute i) Good administration i) Have unqualified

ii) Motivation of workers workers

iii) Sale force ii) Inadequate service

iv) It has many workers iii) Over pricing

African Institute i) It has enough i) No discount is given

equipment in service provided.

ii) Medium size ii) Lack of creativity

iii) It has well sale force iii) No transport service

iv) Financial stable iv) Poor sale force.

Novelty Computer Academy i) Easily accessible i) New in the market.

service ii) It will be less

ii) Fair price in terms of experience of

services acquisition working.

iii) Good relation with its iii) Lack of enough

customers employees.

iv) Financial stable. iv) Lack of enough

facilities to be used.

3.3 MARKET SHARE

Maralal town as the location of the proposed business has a population of approximately one

hundred thousand people the service offered will be distributed to its customer as follows;
 pie chart
30%

40%

students
employees
entire public

30%

3.4 ADVERTISEMENT AND PROMOTION STRATEGY

The business will use advertisement and promotion as a way of popularizing the business.

Advertising

The business intends to use such advertisement method like;

a) Posters

b) Newspapers

c) Radio

i) Posters

The use of posters will be placed at strategic points for example on public notice boards. In the

area chief camps, schools and organizations notice boards. They will inform the customers about

the products and services that will be available where they can get them, when and at what cost.
Posters will also give directions to the location of the business. Posting will cost one thousand

shilling (Kshs 1000)

ii. Radio

The use of radio will be a good way of advertising since large number of people owns radio the

advertisement will be done through SERIAN FM station that is local language radio station in

Maralal region with high number of listeners. Two thousand shilling will be used for only one

week.

iii. Newspapers.

With the many versions of newspapers available the business will benefit much since

Advertisement will be well distributed this will cost three thousand shillings.

iv. Promotion

The business will offer free service for one semester to the best student. It will also provide prize

and awards to teachers.

3.5 THE PRICING STRATEGY.

Cost of production will be based on the experience incurred during a given semester. Some of

the factors that will be considered when setting price will include;

(i)Government price control

The business will at all times abide by the regulation of the price set by the government the price

will also depend on how the business will be taxed.

(ii)Competitors

To avoid overcharging its customers the business will first carry out a survey on how its

competitors charge, this will also enhance good customer relation.

(iii) Selling prices.

Price to be shared will depend on each and every course taken. This is because charging varies

depending on course taken by the person.

3.6 SALE TACTICS.

The customers shall be made aware of the pricing of the goods and service in the enterprise this

shall be done through discount according to the course pursuit.

Personal selling methods shall be applied such as producing posters, indicating sales and

drastically reduce prices of course s offered. These shall be distributed in customer’s potential

areas. Psychological pricing shall be used on other course of diploma should pay a little bit less

than certificate.

3.7 DISTRIBUTION STRATEGY.

Although the customer will be accessing their service directly in their campuses some of them

will also be learning online that is E-learning, the of network within its campuses is expected to

cost the business five thousand shillings weekly (Kshs 5000)

One of the main problems will be expected in E-learning are poor signals to solve this business

will ensure that the responsible build of repeaters to boost the signals.
 CHAPTER FOUR

4.0 ORGANISATION AND MANAGEMENT PLAN

The business under one management will involve the teaching and non-teaching staff. All the

staff members will render different service as their qualification will indicate.

4.1 BUSINESS MANAGER AND QUALIFICATION

The owner of the business will be the one who is managing. I will be responsible in supervising

of the teaching staff and even the non- teaching staff. Also I will be the director of the business.

The manager will draw a salary amounting to Kshs 40000; forty thousand per month.

4.2 PERSONNEL NUMBER AND DUTIES

In order for the business to succeed it will require the presence of the following personnel.

a) Principal

Qualification

i. Must be a Kenyan citizen of age between 30-50 years

ii. Must have a degree in education management

iii. Should be computer literate

iv. Should have experience of two or more years in the same field.

Duties and responsibilities

Supervising the entire staff

Ensuring proper co-ordination among the staff

The principal will be paid Kshs 35000 per month.

b) Deputy Principal

Qualification

i. Kenyan citizen aged between 25-50 years

ii. Degree holder in the field of education
iii. Should be computer literate
iv. Has experience of more than two years

Duties and responsibilities

i) She/he will provide assistance to the principal when required

ii) Attend important meetings in the absence of the principal

Be paid Kshs 30000 per month.

c) Teaching staff

Qualification

1) Kenyan citizen aged between 25-40 years

2) Diploma holder in related field
3) Has experience of at least 2 years in service delivery

Duties and responsibilities

I. Provide training to the student

II. Ensure good co-ordination between student and staff
III. Responsible for the student welfare

The teaching staff will be paid Kshs 20000 per month

d) Accountants

Qualifications

i. Must be a Kenyan citizen aged 25-40 years

ii. Diploma holder in accounting
iii. Should be computer literate
iv. Must have experience

Duties and responsibilities

 1) Keeping books of accounts
2) Preparing business transaction
3) Prepare payment for daily expenses
4) Provide advice on matters concerning finance

The accountant will be paid Kshs 30000 per month.

e) Secretary

Qualification

i. Must be a Kenyan citizen of age 25-35 years

ii. Diploma holder in secretarial course
iii. Should be computer literate
iv. Must have experience of two years or more

Duties and responsibilities

I. Taking minutes during meetings

II. Receiving and ensuring proper communication within and outside the institution
III. Keeping records of the institution

Secretary will be paid Kshs 20000 per month

Other personnel

f) Non-teaching staff

The business will require the non-teaching staff namely

-Five people responsible in the catering units

-Five people responsible in the security provision

Qualification

They must be Kenyan citizen aged 25-40 years

They must provide certificate holder in relevant section

Must have experience of 2 years or more

The non-teaching staff each will draw a salary of 10000 per month.
4.3 RECRUITMENT TRAINING AND PROMOTIONS

a) Recruitment

The business will advertise on the vacancies available through radio, newspapers and small print
out then the firm will interview the applicant and select the most qualified and shortlist to them
there after they will send a letter of appointment to them but those fail will also receive a letter of
regret incase those who qualified fail to turn up they will be called for the same.

b) Training

The business will provide training to workers through

i) Taking workers to the seminars

ii) Taking worker to large existing company for bench marking
iii) By providing sponsorship to employees to advance on their studies

c) Promotion

The business will provide promotion to the employees basing on the following conditions;

I. Possession of job experience

II. Basing on the job standard
III. Level of education and profession
IV. Job specialization

4.4 RENUMERATION AND INCENTIVES

Although the salary paid to the employees will be specific, certain conditions will be considered.
Also such conditions include the seniority of the person, the experience and specialization and
also training qualification. Some of the incentive the business intends to provide

Monetary incentives

Allowance to employees

Bonuses

Advance and loans

Medication facilities

Non-monetary incentives

Tour for staff

Provision of lunch and tea

Games

4.5 LICENSES, PERMITS AND BY-LAWS

a) License

License of the business will be acquired from ministry of local government. Application for the
license will be done through Maralal Town Council.

Acquiring the license will cost Kshs 2000.

b) Insurance

Insurance will be acquired from Amoco Insurance Company. The business will be insured
against fire and theft.

c) Permits

Permit is acquired through ministry of health and sanitation.

Business control of assets contract and agreement succession’s arbitration. When contract are
given out the business will require the agreements written to avoid disagreements.

4.6 SUPPORT SERVICES

These are the services that the entrepreneur of the business require for the efficient running of the
business

a) Banking service

The business will open a current account with Co-operative Bank

EQUITY BANK MARALAL BRANCH

P.O BOX 700,

MARALAL

b) Postal services

NOVELTY COMPUTER ACADEMY

P.O BOX 120,

 MARALAL

c) Insurance company

My business will be insured against any risk that may occur from Amaco Insurance Comp
AMACO INSURANCE COMPANY

P.O BOX 180

NAIROBI.
 CHAPTER FIVE

5.0 OPERATION PLAN

This chapter is mainly concerned about how the products are produced or how the services are
rendered. It also includes the facilities used during the production process.

5.1 PRODUCTION FACILITY AND CAPACITY

To meet customers demand, the firm will require a number of facilities for effective production
i.e. computers, chair, tables, blackboard and stationery, books and pens.

Facility Quantity Unit’s cost Total cost

Computer 10 20000 200000
Chairs 100 100 10000
Tables 50 150 7500
Blackboard 10 200 2000
Stationery
Books 50 200 10000
Pens 50 20 1000
Totals 20670 230500

Repair and maintenance of the equipment

Facilities like chairs, table that will require any repair will be taken to the nearest workshop to be
repaired. Facilities also like the computer will require maintenance and this will be done when
the need arises.
The proposed business layout

COMP. COMP LAB

LAB 1 2

ADMIN
BLOCK GATE

WASHROOM
S

LIABRARY
CLASSROOMS

Other fixed assets

customers to meet their demand, the firm will require some fixed assets like cars. The firm will
hire two cars that can be used for operation and other operations for the firm to work effectively.

5.2 PRODUCTION STRATEGY

Monthly material requirement

The business will incur monthly material requirement as follows;

MATERIAL COST
Photocopy papers 10 @ 500 5000
Printing ink 1000
Stationery 500
Pens 500
Books 1300
Pining material 200
TOTAL 8000

Month labour requirement

EMPLOYEE/PERSONNEL AMOUMT
Manager 25000
Principal 20000
Deputy principal 15000
Teaching staff 5@ 10000 50000
Accountant 13000
Secretary 12000
Security man 10000
TOTAL 145000

Monthly expenses

Expenses Amount per month

Electricity 2000
Water 1000
Advertisement 500
Telephone bill 1000
TOTAL 4500

Cost of production

The production cost of running will cater for;

Particulars Amount
a) monthly material requirement 8000
b) monthly labour requirement 145000
c) Monthly expense requirement 4500

TOTAL 157500

5.3 PRODUCTION PROCESS

Training to students will be offered at scheduled time the staff will come up at time table
indicating the time and when the lesson to be offered or thought at a particular time. The
students’ interests will also be requested to apply for the holiday teaching. This kind of teaching
will be thought when schools have gone for holidays.

To also ensure that the facilities available are utilizes well. The student will be asked to feel free
and get accessed to them each and every time.

Operational process

Application- student will apply for their intended course online or on –paper.
Selection- the selection panel of the school will go through the applications

Admission- student who have qualified will be admitted to college

Training- training to student will commence immediately after admission

Exams- at the end of the course student will have to sit for exams

5.4 REGULATION AFFECTING OPERATION

The proposed business will obtain trading license from Maralal County Council. This will cost
the business Kshs 2000 every month. The presence of the business will legalize the running at
that particular time.

The business will also undergo a number of procedures and documentation to ensure smooth
running at the business. These include obtaining health certificate from Kenya revenue authority.
Another important certificate that the business will apply for is the ministry of education. This
will proof that the business has been accepted in the education industry.
 CHAPTER SIX

6.0 FINANCIAL PLAN

This chapter majorly involves or describes how the business will be financed. It shows how each
and every requirement has been allocated the required capital. Financial plan of the business is
important in the running and management of the business.

6.1 PRE-OPERATION COST

This refers to the expenses incurred prior to the starting of the business. These include;

Items Amount
Vehicle 673250
Electricity installation 2000
Water 1000
Furniture and fittings 25000
Tools and equipment 30000
Business permit 2000
Legal fees 1000
Insurance 5000
Consultancy fee 1000
Telephone expenses 3000
TOTAL 743250

6.2 WORKING CAPITAL REQUIREMENT

These are the estimated capital required by the proposed business.

Items Year 1 Year 2 Year 3

Stock material 100000 180000 260000
Working progress 50000 60000 80000
Debtors 20000 40000 50000
Cash in hand 200000 450000 500000
Cash at hand 250000 300000 600000
Stock of finished goods 400000 350000 400000
TOTAL 1020000 1380000 1890000
 6.3 PROJECTED CASH FLOW STATEMENT FOR YEAR END O YEAR 1

JAN FEB MAR APRIL MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
CASH IN Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs Kshs
FLOW
Cash sales 210000 180000 210000 150000 210000 160000 190000 200000 210000 180000 210000 230000 2340000
Collection 2000 3000 2000 4000 3000 2000 2000 18000
from debtors
Cash at hand 20000 25000 20500 10000 15000 13000 17000 12000 18000 14000 12000 16000 192500
Cash at bank 30000 25000 15000 20000 15800 16000 15000 16200 20000 15000 20000 25000 233000

Total sale 260000 232000 248500 182000 244800 189000 222000 231200 250000 211000 242000 271000 2783500
inflow
Cash outflow
Cash 45000 53000 62000 25000 73400 42000 481100 64400 56400 57500 43800 83400 654000
purchase
Interest on 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 40000
loan
Wage and 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 1200000
salaries
Electricity 1500 1200 1250 1300 1600 1450 1350 1200 1400 1350 1200 1400 16200
Water bill 1200 1100 1250 900 1000 1200 1300 1250 1400 1300 1100 1200 13200
Transport cost 4000 2500 3000 4000 3500 3200 2800 1900 2000 1250 1150 1300 30600
Repair and 4500 3000 5000 2500 3000 4000 2000 2500 3200 2800 3500 3000 39000
maintenance
Telephone 1200 1400 1900 1900 1100 1100 2000 1500 1000 2000 2000 1500 18600
expenses
Insurance 40000 40000
License 4000 4000
3600 2400 2000 3000 11000
Advertisemen
t
Repayment 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 110000
on loan
Total cash 205000 172200 188410 152650 197600 166950 173650 186750 179200 180400 169800 205800 2178610
outflow
Net cash bal 55000 59800 60090 29350 47200 22050 48350 48450 70600 30600 72200 65200 657240
c/f
Less 5% of 2750 2990 3004 1466.5 2360 1102.5 22407.5 2412.5 3530 1530 3610 3250 30400.5
cash bal c/f
Net cash after 52250 56810 57085.5 27882.5 44840 20947.5 45932.5 46027.5 67070 29070 68590 61940 578445.5
tax
Cumulative 52250 109060 166145. 194028 238868 259815. 305748 351775. 418845. 447515. 516505. 578445.5
cash 5 5 5 5 5. 5
6.4 PROFORMA INCOME STATEMENT FOR THE YEAR END YEAR 1

Items Kshs

SALES 2340000

Opening stock 100000

Add purchase 654000

Goods available for sale 754000

Less closing stock 400000

Cost of goods for sale 354000

Gross profit 1986000

Less expense

Interest loan 40000

Wages and salaries 1200000

Electricity 16200

Water 13200

Transport cost 30600

Repair and maintenance 39000

Telephone expenses 18600

Insurance 40000

License 4000

Advertisement 11000

Depreciation 1100 1413700

Net profit before tax 572300

Less 5% tax for the year 286150

Net profit after tax 543685

6.5 NOVELTY COMPUTER ACADEMY PROFORMA BALANCE SHEET FOR THE

END YEAR 2

Fixed assets Kshs Kshs

Vehicle 673250

Less depreciation 2% 13465 659785

Furniture and fittings 25000

Less depreciation 2% 500 24500

Total equipment 30000

Less depreciation 2% 600 29400

713685

Current assets

Stock of finished goods 400000

Stock 100000

Debtor 20000

Cash at bank 250000

Cash at hand 20000 970000

1683685

Liabilities

Loan 120000

Capital 1020000

Add net profit 543685

1683685
6.6 BREAK EVEN POINT

Variable cost

ITEMS AMOUNT

Purchase 654950

Electricity 16210

Water 13250

Advertisement 11000

Transport cost 30600

Telephone expense 18600

Repair and maintenance 39000

TOTAL 783610

a) Total contribution margin = sales – total variable cost

2340000- 783610

=1556390

b) Contribution margin % = contribution margin *100

Sales

1556390 *100

2340000

= 66.5
Break-even point

Fixed cost item Amount

Salaries and wages 1200000

Insurance 40000

Licenses 4000

TOTAL 1244000

Calculate B.E.P (Break-even point)

Total fixed assets * 100

Contribution

=1244000 *100

1556390

=79.93%

6.7 PROFITABILITY RATION

i. Gross profit percentage = gross profit * 100

Sale
= 1986000 * 100
2340000
= 84.87%
ii. Net profit percentage = net profit *100
Sale
= 543685 * 100
2340000
= 23.23%

iii. Return on equity = net profit tax * 100

Owner equity
 = 543685 *100
400000
= 135.92%
iv. Return on investment = net profit after tax * 100
Total invest
= 543685 *100
800000
= 67.96%

6.8 DESIRED FINANCING

ITEMS AMOUNT
Total investment 743250
Working capital 1020000
Fixed assets 728250
TOTAL 2,491,500

6.9 PROPOSED CAPITALIZATION

ITEMS AMOUNT
Total investment 800000
Personal equity 400000
Funds from friends 28000
TOTAL 1228000
APPENDIX
BUSINESS LOCATION

TO SUGUTA

MARALAL COUNTY

OFFICESS
SUNSHINE

SCHOOL

OF COMPUTER
AFRIQUE STUDIES
HOTEL

TO TEN WEEK
HOSPITAL

SAMBURU TEACHERS

TRAINING COLLEGE

TO KISIMA TOWN

TO LOOSUK TOWN