BUSINESS PLAN

PRESENTED BY : BRIAN NDERITU KAHIGA

INDEX NO. : 2071014269

COURSE NAME : DIPLOMA IN AUTOMOTIVE

ENGINEERING

COURSE CODE : 2503

BUSINESS NAME : B.N CAR CLINIC LIMITED

SUPERVISED BY : MR. GEORGE

INSTITUTE NAME : THIKA TECHNICAL TRAINING ISTITUTE

PRESENTED TO : KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILLMENT

FOR THE AWARD OF DIPLOMA IN

AUTOMOTIVE ENGINEERING

EXAM SERIES : JULY 2023

1
 DECLARATION

I declare that this is my original work under taken after carrying out my own research and have
been submitted on a confidential basis sales for the profit or my career and is not for use by any
other person .

PRESENTED BY: BRIAN NDERITU KAHIGA

DATE : __________________ SIGN _ ____________________________________

NAME OF SUPERVISOR: MR.GEORGE

DATE :

SIGN :

i
 ACKNOWLEDGEMENT

I acknowledge and wish to recognize those who offered their support and time throughout the
production of this book. Special thanks to go to my supervisor for guidance and secondly I
would like to thank my caring and loving dad, mum and my sisters and relations for their
financial support, moral support and encouragement. May God bless you all .

ii
 DEDICATION

My dedication goes to Almighty God for His protection, secondly dedication to my parents Mr
and Mrs Kahiga, loving sisters for their prayers and relations for providing their support
throughout my course.

iii
 TABLE OF CONTENTS
DECLARATION ........................................................................................................................1

ACKNOWLEDGEMENT .......................................................................................................... ii

DEDICATION .......................................................................................................................... iii

CHAPTER ONE .........................................................................................................................1

EXECUTIVE SUMMARY .........................................................................................................1

1.0 BUSINESS DESCRIPTION..................................................................................................1

1.2 MARKETING PLAN ............................................................................................................1

1.3 ORGANISATION AND MANAGEMENT PLAN ................................................................1

1.4 OPERATION AND PRODUCTION PLAN ..........................................................................2

1.5 FINANCIAL PLAN ..............................................................................................................2

CHAPTER TWO ........................................................................................................................3

2.0 BUSINESS DESCRIPTION..................................................................................................3

2:1 BUSINESS NAME ...............................................................................................................3

2:2 BUSINESS LOCATION .......................................................................................................3

2:3 OWNERS PROFILE/BACKGROUN ...................................................................................4

2:4 FORM OF BUSINESS OWNERSHIP ..................................................................................4

2:5 BUSINESS TYPE .................................................................................................................4

2:6 PRODUCTS OF NEW LIFE GARAGE ................................................................................5

2:7 INDUSTRIAL ANALYSIS...................................................................................................5

2:8 JUSTIFICATION OF THE BUSINESS ................................................................................5

2:9 ENTRY AND GROWTH STRATEGY .................................................................................6

CHAPTER THREE.....................................................................................................................7

3.0 MARKETING PLAN ............................................................................................................7

3.1 CUSTOMERS.......................................................................................................................7

iv
3.2MARKET SHARE .................................................................................................................8

3.3 COMPETITION....................................................................................................................8

3.4 METHOD OF PROMOTION AND ADVERTISEMENT .....................................................9

3.5 SALES TACTICS ............................................................................................................... 10

3.6 DISTRIBUTION STRATEGY ............................................................................................ 10

CHAPTER FOUR ..................................................................................................................... 12

4.1 ORGANISATION STRUCTURE ....................................................................................... 12

4.2 KEY MANAGEMENT PERSONNEL ................................................................................ 12

4.3 RECRUITMENT, TRAINING AND PROMOTION OF PERSONNEL .............................. 15

4.4 REMUNERATION AND INCENTIVE OF PERSONNEL ................................................. 16

4.5 LICENSE PERMITS AND BY-LAWS ............................................................................... 16

4.6 OTHER SUPPORT SERVICES .......................................................................................... 17

CHAPTER FIVE ...................................................................................................................... 18

5.0 PRODUCTION PLAN ........................................................................................................ 18

5.1 PRODUCTION FACILITIES AND EQUIPMENT ............................................................. 18

5.2 PRODUCTION / SERVICE STRATEGY ........................................................................... 21

5.3 PRODUCTION/ SERVICE PROCESS ............................................................................... 23

5.4 REGULATION AFFECTING OPERATION ...................................................................... 24

5.4.1 Health regulation .............................................................................................................. 24

5.4.2 Trade license act ............................................................................................................... 24

5.4.3 Trade mark ....................................................................................................................... 24

5.4.4 Environment regulation .................................................................................................... 24

5.4.5 Safety regulation .............................................................................................................. 24

5.4.6 Government regulation ..................................................................................................... 24

CHAPTER 6 ............................................................................................................................. 25

v
6.0 FINANCIAL PLAN ............................................................................................................ 25

6.1 PRE-OPERATIONAL COST .............................................................................................. 25

6.3PROJECTED CASH FLOW STATEMENT ........................................................................ 27

6.2 ESTIMATION OF WORKING CAPITAL.......................................................................... 28

6.4 PRE-FORMA INCOME STATEMENT .............................................................................. 29

6.5.1 PRE-FORMA BALANCE SHEET ................................................................................... 30

6.5.2 PRE-FORMA BALANCE SHEET ................................................................................... 31

6.5.3 PRE-FORMA BALANCE SHEET ................................................................................... 32

6.5.4 PRE-OPERATIONAL
COST.................................................................................................................................................
........................................................................................................................32

6.6.2BREAKEVEN POINT FOR THE YEAR 2023 ................................................................. 34

6.6.3BREAK EVEN POINT FOR YEAR 2024 ......................................................................... 35

6.6.4 BREAK EVEN ANALYSIS FOR YEAR 2025 ...........................................37

6.7.1 EXPECTED PROFITABILITY RATIO FOR 2023 .......................................................... 38

6.7.2 EXPECTED PROFITABILITY RATIO FOR YEAR 2024 ............................................ 39

6.8 DESIRED FINANCE ........................................................................................................ 40

6.9 PROPOSED CAPITALIZATION ....................................................................................... 40

vi
vii
 CHAPTER ONE

EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

B.N Car CLINIC LIMITED is a privately owned business set to provide vehicle services and
selling of spare parts to residents of Karatina town. It is sole proprietorship form of business
located in Nyeri ,Karatina town. In future the business is intending to expand its product. It aims
at creating employment and offering affordable products. The business will aim at eradicating
literacy and will go by the name:

B.N CAR CLINIC LIMITED

P O BOX 10101

NYERI.

TEL 0799 230 265

EMAIL – BNderitu655 @gmail.com

1.2 MARKETING PLAN

The key customers will be individual customers from the surrounding area. The competitors will
include Blesssed Auto garage and Mwangaza Auto garage . Cost price, pricing strategies will be
used which will be determined by factors such as competitors charge, seasons. Advertising will
be done through electronic media like radio, television on demand dictates. The business will use
direct type of sales since there will be contact interaction between the customers and the
administration.

1.3 ORGANISATION AND MANAGEMENT PLAN

List of the officers will be highlighted with their title, background experience and a chart will be
used for easy identification. Recruitment training and promotion for employees will be shown

1
together with remuneration and incentives. Essential licenses, permits by laws will laid down and
the amount of each will be shown. Supportive services such as bank, audit services legal services
and business advisory will be stated.

1.4 OPERATION AND PRODUCTION PLAN

Production facilities, capacity, quantity, quantity and value of all the equipment will be highlighted
down, production strategy to show movement of the material will be included and a layout plan of
the business will be sketched systematically. The possible factors affecting the operations such as
health, licensing, environmental regulations will be stated down.

1.5 FINANCIAL PLAN

Pre-operational cost of items, which will be required by the business before the first production,
will be highlighted for both assets and liabilities. A projected cash flow for three consecutive
months followed by a profoma balance sheet for three years will be analyzed. Break-even analysis
and break – even revenue will be calculated which will help to determine the sales for each year
fixed expenses, variable expenses contribution margin. Different methods of acquiring the capital
will be shown and desired financing and gross profit will be calculated.

2
 CHAPTER TWO

2.0 BUSINESS DESCRIPTION

2:1 BUSINESS NAME

The business name is B.N CAR CLINIC LIMITED. The proprietor came up with this research
that business ideal research study that revealed. The business in this garage will start
immediately after the proprietor acquired the start up to be allowed to capital necessary product
to purchase the essential material, tool and equipment which are usable in running the business.

2:2 BUSINESS LOCATION

The business will be located within Karatina road just near 1000 meters away from Nyeri town
opposite Total Petrol Station, in a family inherited plot No.17 along industrial area.

The purpose for me to choose this place is because in that route there is good infrastructure, good
tarmac road where no vehicles pass nearby electricity supply when aim in work using the power,
improved telecommunication in order to communicate with my customers and more availability
of water and good security for securing the vehicles in the garage for service and other purposes.

The business address is:

B.N CAR CLINIC LIMITED

P.O BOX 10101 ,

Nyeri.

TEL:

MOBILE: 0799 230 265

EMAIL:@gmail.com

3
 Nairobi – Nyeri

To
KARA B.N car clinic
TINA limited
TOW
N

2:3 OWNERS PROFILE/BACKGROUN

The owner of the business is BRIAN NDERITU KAHIGA .A Kenyan citizen, 23 years old, born
in Nyeri county, Karatina Town.

I joined Kirigu Primary School, Nyeri County at the age of 7years and sat for KCPE 8years later
.Afterwards; I joined Kiarithaini boys high school and attained a mean grade of C- (Minus) in
my KCSE.

Six months later I managed to join THIKA TECHNICAL AND TRAINING INSTITUTE where
I undertook AUTOMOTIVE ENGINEERING TECHNOLOGY

2:4 FORM OF BUSINESS OWNERSHIP

The business is a sole proprietorship owned by one person, Brian Nderitu Kahiga and employees
who are experienced in the job of regular repairing and servicing of vehicles.

2:5 BUSINESS TYPE

B.N car clinic limited will be available with selling local and country wide to both wholesaler
and retailer.

4
The business deal with the production of all parts of vehicles e.g. TOYOTA, NISSAN, ISUZU
and the cost is minimized.

2:6 PRODUCTS OF B.N CAR CLINIC LIMITED

The business is more advanced in both automatic and manual vehicles specifications.

We offer the following products and services:

 Breakdown services
 Free car wash
 Wheel balancing
 Diagnostic machine
 Genuine spare parts and second hand spares
 And all general services

Our firm offers the best high quality services to any customer who comes to our workshop.

2:7 INDUSTRIAL ANALYSIS

B.N car clinic limited firm range from the large depending on the location, capital invested and
product. Due to good spares the business has been profitable, this is because the government
has carried out intensive campaign both locally and abroad Kenya products.

To enter into this business, the capital invested depends on the size of the firm to be established.

Challenges faced by B.N car clinic limited are financial constrains due to hard economy time that
face the business competition from already established firms.

2:8 JUSTIFICATION OF THE BUSINESS

There has been continuous growth in national product and this give rise to the town.

These are the justification for the business opportunity:

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  The customer will purchase the auto product at affordable prices
 The business will make its products available at every time.
 The business will favor the community by creating opportunities in the
community
 The business will favor the customers by servicing the vehicle

In good way.

2:9 ENTRY AND GROWTH STRATEGY

The business grows into large enterprise opening up other businesses in other areas.

The future prospects of the business are encouraging due to existing laws which make it easier to
run any legal business in area.

New branches will be opened in areas like:

 Nyeri Town branch

 Thika branch
 Naivasha branch

The sales of spares parts have been increased due to modern technology and qualified work.

There is a plan to venture out in other counties, auto garage e.g. Mombasa.

There will be also direct purchase for the spares of other spare parts from other procedures instead
of wholesalers to reduce on retail.

6
 CHAPTER THREE

3.0 MARKETING PLAN

The business is located along Karatina road.

The area for the business is well served with infrastructure such as tarmac and railway line which
help the transportation of goods and services for the people in urban areas.

The customer and trader are also able to travel without any difficult in roads.

Therefore they have high buying power and potential for the people to buy. It’s due to this reason
that my business is targeting this population whereby it will ramify to other parts of the country.

3.1 CUSTOMERS

The customers were identified through market research and analysis and therefore the following
are major targets.
Domestic customers, commercial customers and institution customers.

Domestic customers are people who buy goods and services to satisfy their needs and they are
customers of almost all ages.

Commercial customers: they buy goods and service with high price than the way he or she buys
from the market.

7
Institution customers are people who live near the private and government area.

The success of any business depends on the way he or she handling the customer with potential.

3.2MARKET SHARE

The business shall have 40,000 potential customers out of whole population.

B.N car clinic limited shall have 45% of the population.

Blessed Auto Garage being the second with 30%. And lastly Mwangaza Auto Garage with 25%.
This data is represented in the pie chart below;

POPULATION

Blessed Auto Garage

Mwangaza Auto Garage

B.N car clinic limited will only take a year to stand on its own because all this time the customer
shall be aware of the business and its products.

3.3 COMPETITION

Competition is desirable even for a new venture. It enables a firm to produce high quality products
and unmatchable service. This makes the business to stand a high chance to attract customer and
win competition.

The enterprise has two main competitors these are;

8
BLESSED AUTO GARAGE

P.O Box

1111

NYERI

MWANGAZA AUTO GARAGE

P.O Box 1234

NYERI.

The owners intend to improve advertisement through sign board and media. Unlike its competitors,
the enterprise packs its approach different weight to cater for all customers’ i.e. low earners and
high earners. The enterprise plans to offer low prices to draw more customers unlike its
competitors.

Since the business is not too large there is close contact between the business and its customers
which perpetuate its existence.

3.4 METHOD OF PROMOTION AND ADVERTISEMENT

By promotion and advertisement, the business creates awareness of its existence to the potential
customer, its products and service.

This in turn increases the chances of survival and beating competitors. The business therefore
undertake the following as sales advertisement promotion, exhibition and show inform of road
shows, offer of raffle tickets and some on stage competition like dancing in an open area market.

The winners are always rewarded with an item branded B.N car clinic limited as a way of creating
awareness to the customers.

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Advertising the business product and service shall be done by use of poster media such as
television and radio to translate to customer language. The budget for advertisement and promotion
will cost 50,000 to ensure the targeted population has positive impact on the business.

3.5 SALES TACTICS

The business environment shall be well constructed and all kind of decoration used to enhance
the coming of customers. Also the products shall be well arranged in the shelves. Promotion such
as free sample and offering of discount shall be used to reach the clients.

There are two methods of sale:

 Indirect method – this will be done by use of sale mean who will be given commission
according to the number of products and service he or she has helped to sell.
 Direct method – this is selling of goods and service in the business in counter. The goods
are displayed and the customer comes to order from the seller

3.6 DISTRIBUTION STRATEGY

Distribution of products and service shall be done by use of the business vehicle once every week.
The product shall be distributed to the customers that shall be buying in bulk.

For the product to be transported Ksh. 5,000 shall be needed to fuel the vehicle the product reach
the customer in time.

Problem such as entry of new products and service, completion shall be dealt with by the business
inducing such programs as offering after sale service and good packaging for the product.

Distribution is the process of reducing the gap between the product and the service and the firm
user.

10
The business name are mobile shop inform of truck which can ferry goods and service on rough
terrain

B.N Car Clinic Final

Limited customer

Commercial
Customer

11
 CHAPTER FOUR

4.1 ORGANISATION STRUCTURE

MANAGER

ASSISTANT MANAGER

SALES MAN MECHANIC WATCHMAN

4.2 KEY MANAGEMENT PERSONNEL

MANAGER

The business is managed by the owner who is the general manager. All the operations and
control are carried out by the manager and other personnel are answerable to him.

Duties and responsibilities

- To ensure the business is managed smoothly.

- Responsibilities for employing employees.

12
 - Ensure the work is done satisfactory.
- Setting plans for the business.
- Setting goals for the business.
- Manager is responsible for withdrawal of money from the bank.
- Supervising the entire organization and management structure of the business.

THE ASSISTANT MANAGER

One assistant manager will be employed in the business. He must be holding a certificate of
automotive engineering from a recognized institution and have a three years working experience
from a busy factory.

Qualifications

- Must be twenty five years and above

- Be a Kenyan citizen
- Have good qualities of leadership.
- Must have a certificate in automotive engineering.

Duties of an assistant manager

- Purchase the materials

- Controls the business when the manager is not present
- Be responsible for the materials in and out of the company

SALESMAN

The business will employ two salesmen who will be delivering parts or vehicles to the
customers. He or she must be a holder of sales and marketing company from a recognized
institution and relevant experience in similar business venture.

Duties

- He will be responsible for delivery of spare parts to our customers.

13
MECHANIC

Qualifications

- Must be a Kenyan citizen.

- Aged above 24
- Have certificate in automotive engineering
- Have a working experience of at least two years in a busy garage
- Have knowledge of new technology in motor vehicle
- Be punctual to his duties

Watchman

Qualifications

- Have at least a K.C.P.E certificate

- Be honest
- Must be strong
- Must be able to communicate
- Be punctual to his duties

Duties and responsibilities

- Be in-charge of the gate

- Inspect workers as they move out of the garage
- Record the vehicles entering and leaving the gate

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4.3 RECRUITMENT, TRAINING AND PROMOTION OF PERSONNEL

Recruitment

The business will recruit it staff through advertising vacancies in daily newspapers and radio.
After recruits have submitted all relevant qualification certificate related to vacancy they will be
called for an interview. The manager and assistant manager will interview the applicants.
Selection process will then follow and the best applicants would be selected for the job.

Training

The selected employees will be oriented by the manager on job training for two weeks and will
then follow before they are permanently employed.

Promotion

Promotions of the employees will be determined by the following factors;

- Order of merit
- Intellectual status, the manager hopes that employees promotions and duties will be
determined by employees intellectual status of which they have attained academically

Job output

The manager also hopes that he will recognize hard working employees trustworthy and long
serving during job promotion

Title No. of Total salary Medical House Total per

employees per individual allowance allowance month

Manager 1 8000 15% 25% 11,200

Assistant 1 6000 13% 22% 8,100

manager

15
 Salesman 2 4500 12% 18% 9,800

Labourers 2 3000 10% 15% 16,200

Watchman 2 1800 10% 15% 5,700

total 23300 45,000

4.4 REMUNERATION AND INCENTIVE OF PERSONNEL

Incentives to be provided to the employees

- Providing tea with eggs two days a week

- Giving over time allowances
- Salary increment when the business secure large profits
- Offering medical and housing allowance
- Attending employees functions e.g wedding
- Provide protective clothing

4.5 LICENSE PERMITS AND BY-LAWS

In accordance to the local authority act, the business will have to acquire a trading license in
order to operate legally. This will be gotten from a town city council. A permit will also be
obtained from the ministry of health. Another permit will be obtained from the area chief to
allow transport spare parts into the business and outside the business. The business will need to
comply with the following by-laws made by the county council:

i. License must be renewed in time to avoid inconvenience

ii. No illegal goods shall be sold within the business premises and therefore receipts must be
produced after every sale

16
 iii. The health officers must visit the place regularly to inspect the quality of the product and
cleanliness of the whole place

4.6 OTHER SUPPORT SERVICES

This includes;

Banking services at equity,

PO Box 10101

Karatina in Nyeri.

The business has hired a lawyer and an advocate from existing legal services to represent the
business legal matters.

The business is assured by APA insurance.

APA insurance company

PO Box 1456,

Nyeri.

The materials and equipments are supplied by;

JONTY AUTO PARTS

PO Box 1568

17
 Nyeri.

CHAPTER FIVE

5.0 PRODUCTION PLAN

The business will need the following in order to fulfill its operation: computers for keeping
records and apparatus for making the environment tidy. Fire extinguishers will also be of utmost
requirement

5.1 PRODUCTION FACILITIES AND EQUIPMENT

B.N car clinic limited carries repairs and maintenance. The main apartment of the operation
includes regulation affecting operation production process, production facilities and capacities
and [production strategies.

B.N car clinic limited has a computer that is used to install and process various transactions. Also
used for ordering materials and issuing receipts of the cash through the computer system as well
as communicating emails in the reception.

B.N car clinic limited uses the following process to satisfy the customer

 Main power used

 Time taken in the operation
 Quality of work produced

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Equipment, toll and machines used in the process. Spare auto parts in repairing various parts.
The operation of new life auto garage meets by the use of the following machines, tools and
equipment.

Tools, equipment and Number of units Cost (ksh)

machine
Tool box 2 30000
compressor 1 20000
Hydraulic jack 3 5000
Alignment gauge 1 10000
Welding machine 2 30000
Valve grinder 3 25000
Wheel balancing machine 1 25000
Vices 3 40000
Battery charger 1 17000
Drilling machine 1 8000
Hydraulic lift 1 70000
Stand axe 3 6000
Cutting machine 1 11000
Gearing machine 1 10000
Head beam check 1 4500
Timing torch 1 1000
Computer 1 3700
Fire extinguisher 4 24000
Spraying machine 1 4600

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Plant location

This gives the location of the machine and facilities for the garage. it is located to the function of
the machine

Engineering Tools and machine Wheel balancing arc Main store Sanitary room
Room store

Painting
room

Reception

Security Parking area

office

Reception

Manager’s
office

Accounts office

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5.2 PRODUCTION / SERVICE STRATEGY

The business will be having the monthly as the stock requirement.

Uses of machines

 Computer for keeping records of our customers and the business

 Alignment gauge for lining machine
 Fire extinguisher used to fight any fire outbreak
 Battery charging used for charging
 Compressor and spraying gun used to spray vehicles and also for inflating tires

The business pays attention on:

Material machinery used during production of the business which deals with tools and equipment
used in B.N car clinic limited.

Labour planning

Document cost incurred received from

Business permits 15000 Nyeri counties

Business insurance 40000 CFC insurance

Trade license 25000 ministry of commerce

B.N car clinic limited has enough numbers of workers. In order to work well and give the best
service. The workers employed are skilled and experienced for some time. All the workers are
punctual to their status they are supervised and inspected.

Costing

B.N car clinic limited incurs the following cost facilities in all production.

21
 Telephone bill 20000

Electricity 6500

Water bill 4000

Transport 10000

Office furniture 96000

Monthly labuor requirement

PERSONEL NO. OF PERSONEL SALARY PER MONTH

MANAGER 1 20,000

ASSISTANCE MANAGER 1 18,000

SALES MAN 3 15,000

MECHANIC 4 30,000

WATCHMAN I 9000

Product cost 25% 50% charge No. of total

overhead
profit client

Training 2000 2500 5000 500 100 10,000

22
 Share part 6000 10,000 20,000 500 100 40,000
selling

Total numbers of client per day = 100

Expected money per day = 4,000

Expected money per week = 28,000

Expected money per month = 112,000

Expected money per year = 1,344,000

5.3 PRODUCTION/ SERVICE PROCESS

6.00 AM - opening the business

6.20 AM - cleaning

7.00AM - 1.00 PM - Operating hours

1.00 PM – 2.00 PM - lunch time

2.00 PM – 5.00 PM - operating hours

5.00 PM – 6.00 PM - Stock checking and closing the business

23
5.4 REGULATION AFFECTING OPERATION

5.4.1 Health regulation

Any workers in B.N car clinic limited are provided with the hospital card for any injury or falls
and while sick in business hours

5.4.2 Trade license act

B.N car clinic limited is licensed by the local government act which allows the business to run
without any disturbance of the city council.

5.4.3 Trade mark

B.N car clinic limited outlines all its symbols involved receipts, posters and job cards. The
symbols are unique and no other business to use the same.

5.4.4 Environment regulation

B.N car clinic limited has dumping drum for the used oil and components to avoid them in any
injury in the garage.

5.4.5 Safety regulation

Shapes tools and any dangerous component which are put aside on safety side.

Fire extinguisher which is appropriately placed within the garage in case of fire.

5.4.6 Government regulation

The business shall make sure that it has an official document from the government under the
ministry of health which issues permission for the business operation.

The business shall also be honest to follow all government regulation of not selling parts as
products beyond the permission given.

24
 CHAPTER 6

6.0 FINANCIAL PLAN

This shows the use and source of the financial in a business. The instrument of the business is
kshs2, 100,000.This money is from donation from parent, loan saving and relatives.

6.1 PRE-OPERATIONAL COST

These are the expanses to be incurred by the business before the start its operation and they are
as follow.

PRE-OPERATIONAL COST KSH

Rent 80,000
Insurance 10,000
Transport 20,000
License 100,000
Material 50,000
Equipment/machinery 450,000
Salary/wage 135,000
Advertisement 30,000
Water 1,500
Electricity 100,000
Maintenance 25,000

25
Furniture and fitting 20,000
Site and destruction 50,000
TATOL 1,521,500

26
CASH INFLOW
RECEIPTS JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
cash sales 172,258 172,458 172,458 172,458 172,458 172,458 172,458 172,458 172,458 172,459 172,459 172,459
Credit sales 11,723 11,724 11,723 11,724 11,723 11,723 11,723 11,723 11,723 11,723 11,724 11,724 140,679
capital 600,894
introduced
Total receipt 184,181 184,182 184,181 184,181 195,181 15,181 190,181 184,181 184,181 184,182 184,183 184,183 2,248,578
Payment
Cash 54,672 54,672 55,001 55,000 54,871 53,418 54,791 52,799 52,992 51,141 52,627 53,147 6,976,241
purchase
Credit 1,000 2,000 1,500 1,100 3,000 2,200 1,100 1,100 12,800
purchase
Salaries/wages 60,200 60,200 60,200 60,200 60,200 60,200 60,200 60,200 60,200 60.200 60,200 60,200 60,200
Water 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Electricity 1,112 1,112 1,112 1,112 1,112 1,112 1,112 1,112 1,112 1,112 1,112 1,112 13,344
Repair 251 251 251 251 251 251 270 270 280 281 172 314 2,993
&maintenance
Telephone 704 671 802 917 818 701 706 891 518 671 223 880 8,502
Postage 78 64 101 56 76 58 1,500 48 67 76 69 114 876
Insurance 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Advertisement 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 25,920
Rent 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 108,000
Bank charges 525 725 425 525 425 725 525 625 725 625 525 525 6,475
Stationeries 564 898 122 821 574 671 718
Net cash out 143,650 128,350 14,750 12,700 550 58,475 27,050 21,400 25,535 28,400 77,240 98,170 436,270

6.3PROJECTED CASH FLOW STATEMENT

27
6.2 ESTIMATION OF WORKING CAPITAL

ITEMS YEAR 2023 YEAR 2024 YEAR 2025

Current assets

Debtors 480,000 369,500 205,690

Cash in hand 800,000 200,000 300,000

Cash in bank 90,000 450,000 190,500

Stock 200,000 189,000 390,860

TATOL 1,570,000 1,208,500 1,132,050

Liability

Salary and wage 135,000 135,000 135,000

Creditors 350,000 280,000 300,000

TATOL 485,000 415,000 134,000

Working capital 108,000 793,500 697,050

Working capital is calculated by currents assets less current liabilities.

Working capital = 7,570,000-485,000

= Ksh 1,085,000

28
Working capital = 1,208,500-415,000

= Ksh 793,500

Working capital = 1,132,050-435,000

= Ksh 697,050

6.4 PRE-FORMA INCOME STATEMENT

ITEM YEAR 2023 YEAR 2024 YEAR 2025
Sales 150,000 210,000 300,200
Cost of goods 45,000 60,000 120,000
Gross profit 70,000 135,000 210,000
Expense
Repair 20,000 25,000 30,000
Electricity 10,000 10,000 10,000
Water 1,500 1,500 1,500
Transport 20,000 20,000 20,000
Advertisement 30,000 15,000 20,000
License 100,000 10,000 100,000
Salaries and wages 125,000 135,000 135,000
Stationary 1,200 1,600 2,000
Telephone 20,000 2,000 2,000
Total expense 389,700 391,000 400,500
Net profit before tax 63,940 256,000 190,500
20% tax 255,760 51,200 30,100
Net profit after tax 255,760 204,800 152,400

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6.5.1 PRE-FORMA BALANCE SHEET

B.N CAR CLINIC LIMITED PRE-FORMA BALANCE SHEET FOR YEAR ENDED 31ST
DECEMBER 2023

ASSETS AMOUNT LIABILITIES AMOUNT

Fixed assets Long term liabilities

Machine and 450,000 Loan 950,000

equipment

Premises 60,000 Owners equity 260,000

Current assets Current liabilities

Debtors 480,000 Creditors 350,000

Cash in hand 800,000 Tax payable 140,000

Cash in bank 900,000 Capital 180,000

Total assets 1,880,000 Total liabilities 1,880,000

30
6.5.2 PRE-FORMA BALANCE SHEET

B.N CAR CLINIC LIMITED PRE-FORMA BALANCE SHEET FOR THE YEAR
ENDED 31ST DECEMBER 2024

Assets Amount Liabilities

Fixed assets Long term liabilities

Machine ant 450,000 Loan 260,000

equipment

Premises 660,000 Owners equity 550,000

Current assets Current liabilities

Debtors 320,000 Creditors 90,000

Cash in hand 270,000 Tax payable 150,000

Cash in bank 90,000 Capital 50,000

Total assets 1,100,000 Total liabilities 1,100,000

31
6.5.3 PRE-FORMA BALANCE SHEET

B.N CAR CLINIC LIMITED PRE-FORMA BALANCE SHEET FOR THE YEAR
ENDED 31ST DECEMBER 2025

Assets Amount Liabilities Amount

Fixed assets Long term liabilities

Machine and 450,000 Loan 120,000

equipment

Premises 60,000 Owners equity 350,000

Current assets Current liabilities

Debtors 250,000 Creditors 12,000

Cash in hand 500,000 Tax payable 70,000

Cash in bank 50,000 Capital 650,000

Total assets 1,310,000 Total liabilities 1,310,000

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6.6.1 BREAK EVEN POINTS FOR YEAR 2023

PARTICULARS AMOUNT

Variable cost

Advertising 34,500

Postage 3,460

Telephone 14,100

Transport 47,000

Repair and maintenance 40,500

Electricity 11,100

Water 10,900

Stationeries 116,500

Total variables 278,060

Fixed cost

Salaries and wages 1,620,000

Rent 9,600

License 5,000

Other fixed cost 200,000

Total fixed cost 1,924,500

Sales 3,300,000

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Total contribution margin = sales- total variables

= 3,300,000- 2,278,060

= 1,021,940

6.6.2BREAKEVEN POINT FOR THE YEAR 2023

PARTICULARS AMOUNT
Variable cost 3,000
Advertising 1,500
Postage 12,500
Telephone 75,000
Transport 1,590
Repair and maintenance 11,100
Electricity 1,560
Water 2,650
Stationery 108,900
Total variable
Fixed cost 1,620,000
Salaries and wages 96,000
Rent 8,500
License
Other fixed cost 150,000
Total fixed cost 1,874,500
Sales 3,500,000

Total contribution margin = sales- total variables

=3,500,000-108,900

=3,391,100

34
Contribution margin =contribution x100

Sales

=1,021,490 x100

3,300,000

=91.57%

6.6.3BREAK EVEN POINT FOR YEAR 2024

PARTICULARS AMOUNT
Variable cost 3,000
Advertising 1,500
Postage 12,500
Telephone 75,000
Transport 1,590
Repair and maintenance 11,100
Electricity 1,560
Water 2,650
Stationeries 108,900
Total variable
Fixed cost 1,620,000
Salaries and wages 96,000
Rent 8,500
License
Other fixed cost 150,000
Total fixed cost 1,874,500
Sales 3,500,000

35
Breakeven level of services = fixed cost x100

Contribution margin

= 1,924,500x100

3,021,940

= 63.68%

= 3,391,100x100 = 3,500,000

= 96.9%

Breakeven level of service = fixed cost X 100

Contribution margin

= 1,874,500X100 = 3,391,100

= 55.3%

36
6.6.4 Break even analysis for year 2025
PARTICULARS AMOUNT

Variable cost

Advertising 300

Postage 1,360

Telephone 15,000

Transport 57,500

Repair and maintenance 3,250

Electricity 23,800

Water 2,700

Total variable 109,360

Fixed cost

Salaries and wages 720,000

Rent 84,000

License 20,000

Other fixed cost 400,000

Total fixed cost 1,224,000

Sales 4,500,000

37
Total contribution margin = sales – total variables

= 4,500,000 – 109,360

= 4,390,640

Contribution margin = contribution sales X 100

= 4,390,640 X 100

4,500,000

= 97.57%

Breakeven level of services = fixed cost X 100

Contribution margin

= 1,224,000 x 100

4,390,640

= 97.57%

= Ksh. 1,225,127.153s

6.7.1 EXPECTED PROFITABILITY RATIO FOR 2023

Gross profit percent = gross profit sales x 100

= 395,797 x 100

= 3,300,000

= 66.5%

38
Return on equity = net profit after tax x 100 owners equity

= 1,392,894 x 100

= 260,000

= 535.75%

Return on investment = net profit after tax x 100

= total investment

= 12.83%

6.7.2 EXPECTED PROFITABILITY RATIO FOR YEAR 2024

Gross profit percent m = Gross profit sales x 100

= 2,390,000 X 100

= 3,460,000

Return on equity = net profit after tax x 100 owners equity

= 2,276,676 x 100

= 300,000

= 758.9%

Return on investment = net profit after taxation x 100

Total investment

= 204,800 x 100

= 890,550

= 23%

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6.8 DESIRED FINANCE

Items Amount

Pre-operational cost 1,722,660

Working capital 1,082,000

Total 2,807,660

6.9 PROPOSED CAPITALIZATION

Source Amount

Personal saving 750,000

Family contribution 500,000

Loan from Bank 450,000

Relatives 1,000,000

TOTAL 2,700,000

40