BUSINESS PLAN

NAME; GOLDEN TOMATO PROCESSING INDUSTRY

P O BOX: 227,649 931

TEL: 0793938514

EMAIL: essykwekwe@gmail.com

WEBSITE WWW.GOLDEN TOMATO.ORG.KE

PRESENTED BY: ESTHER KWEKWE CHOME

INDEX NO:

COURSE CODE:

CENTRE CODE:

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL

CENTRE NAME: KENYA COAST NATIONAL POLYTECHNIC

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILMENT OF THE REQUIREMENT OF AWARD OF DIPLOMA IN FOOD
SCIENCE AND TECHNOLOGY

SUPERVISOR: MADAM MWAKINA

SERIES: JULY 2022

i
 DECLARATION
I hereby declare the business plan is my original work and that it has not been presented for

award of diploma in any institution

NAME: ESTHER KWEKWE CHOME

INDEX NO:

SIGNATURE………………….. DATE……………..

SUPERVISORS NAME: MADAM MWAKINA

SIGNATURE ……………………………………… DATE ……………………………..

ii
 DEDICATION
This project is dedicated to my family and friends for their devotion, love and endless support
towards this project.

iii
 ACKNOWLEDGMENT
I wish to express my sincere gratitude to all that have given me the moral and financial support
throughout in this upstanding project.

My special thanks to my supervisor for her guidance in writing this project, my mum for
financial support and making sure that I have successfully completed within the limited time
frame.

I sincerely thank the almighty God for granting me this chance and enabling me all through the
course.

iv
TABLE OF CONTENTS
DECLARATION.............................................................................................................................ii
DEDICATION...............................................................................................................................iii
ACKNOWLEDGMENT................................................................................................................iv
EXECUTIVE SUMMARY..........................................................................................................viii
1.0: BUSINESS DESCRIPTION.................................................................................................viii
2:0 MARKETING PLAN............................................................................................................viii
3.0 ORGARNIZATION PLAN...................................................................................................viii
4.0PRODUCTION PLAN/OPERATIONAL PLAN...................................................................viii
5.0 FINANCIAL PLAN...............................................................................................................viii
CHAPTER ONE..............................................................................................................................1
1.0: BUSINESS DESCRIPTION....................................................................................................1
1.1BUSINESS NAME.....................................................................................................................1
1.2 BUSINESS LOCATION...........................................................................................................1
1.3 BUSINESS ADRRESS.............................................................................................................1
1.4: FORMS OF BUSINESS OWNERSHIP..................................................................................2
1.5: PRODUCT OR SERVICES OFFERED..................................................................................2
1.6: IDENTIFICATION OF BUSINESS OPPORTUNITIES........................................................2
1.7: THE OBJECTIVE OF THE BUSINESS PLAN......................................................................3
CHAPTER TWO.............................................................................................................................4
2:0 MARKETING PLAN................................................................................................................4
2:1 CUSTOMER.............................................................................................................................4
2:1:1 Domestic Customers...............................................................................................................4
2:1:2 Commercial Customers..........................................................................................................4
2:2 COMPETETION.......................................................................................................................4
2:2:1 Competitors Weaknesses........................................................................................................4
2:2:2 Competitors Strength..............................................................................................................4
2:2:3 Golden Tomato Processing Industry Competitive Advantage...............................................5
2:3 MARKET SHARE....................................................................................................................5
FIRST YEAR...................................................................................................................................6
2:4 PRICING STRATEGY.............................................................................................................7

v
2:5 DISTRIBUTION STRATEGY.................................................................................................7
2:6 SALES TACTICTS...................................................................................................................8
2:7 ADVERTISEMENT AND PROMOTION PLAN....................................................................8
2:7:1 Advertisement.........................................................................................................................8
2:7:2 Promotion...............................................................................................................................8
2:8 MARKETING MATERIALS...................................................................................................8
CHAPTER THREE.........................................................................................................................9
3:0 HUMAN RESOURSE...............................................................................................................9
3:1 MANAGEMENT TEAM..........................................................................................................9
3:1:1 Manager..................................................................................................................................9
3:1:2 Accountant..............................................................................................................................9
3:1:3 Salesman.................................................................................................................................9
3:1:4 Worker....................................................................................................................................9
3:1:5 Security Guards......................................................................................................................9
3:2 RECRUITMENT, TRAINING AND PROMOTION OF PERSONEL..................................10
3:2:1 Recruitment..........................................................................................................................10
3:2:2 Training................................................................................................................................10
3:2:3 Promotion.............................................................................................................................10
3:3 REMUNERATION AND INCENTIVE.................................................................................10
3:3:1 Incentives..............................................................................................................................10
3:4 LICENCE................................................................................................................................10
3:4:1 Permit...................................................................................................................................10
3:4:2 By - Laws.............................................................................................................................11
3:5 SUPPORT SERVICES............................................................................................................11
3:5:1 Banking Services..................................................................................................................11
3:5:2 Insurance Services................................................................................................................11
3:5:3 Consulting Services..............................................................................................................11
CHAPTER FOUR.........................................................................................................................12
4:0 PRODUCTION PLAN............................................................................................................12
4:1 PRODUCTION FACILITY AND CAPACITY......................................................................12
4:2 PRODUCTION STRATEGY..................................................................................................12

vi
4:3 PRODUCTION PROCESS.....................................................................................................13
4:3:1 EXTERNAL FACTORS AFFECTING PRODUCTION....................................................14
4:3:2 Internal Factors Affecting Production..................................................................................14
4:4 RULES AND REGULATION AFFECTING PRODUCTION..............................................14
4:4:1 Healthy Regulations.............................................................................................................14
4:4:2 Safety Regulation.................................................................................................................15
4:4:3 Environmental Regulation....................................................................................................15
4.4: FIRM LAYOUT.....................................................................................................................15
CHAPTER FIVE...........................................................................................................................16
5:0 FINANCIAL PLAN................................................................................................................16
5:1 PRE – OPERATION...............................................................................................................16
5:2 WORKING CAPITAL ESTIMATES.....................................................................................16
5:3 PRO - FORMA BALANCE SHEET.......................................................................................17
5:4 CASH FLOW PROJECTION.................................................................................................19
5:4:1 Cash Flow Projection for the Year 2022..............................................................................19
5:4:2 Cash Flow Projection for the Year 2023..............................................................................20
5:4:3 Cash Flow Projection for the Year 2024..............................................................................21
5:5 PROFORMA INCOME STATEMENT..................................................................................22
5:5:1 Trading Profit And Loss Account........................................................................................22
5:6 BREAK-EVEN ANALYSIS...................................................................................................22
5:6:1 Break-Even Analysis for the First Year...............................................................................22
5:6:2 Break-Even Analysis for the Second Year...........................................................................23
5:6:3 Break-Even Analysis for the Third Year..............................................................................24
5:7 DESIRED FINANCING.........................................................................................................24
5:8 CAPITALLIZATION..............................................................................................................25
5:9 PROFITABILITY RATIO......................................................................................................25

vii
EXECUTIVE SUMMARY

1.0: BUSINESS DESCRIPTION

The name of the business is GOLDEN TOMATOES PROCESSING INDUSTRY. It will only be
dealing with processing of tomatoes to produce various types of tomato products which are of
high quality. The business will be located at the Tiribe in Kwale County. This is because there is
availability of raw materials for processing. There is also availability of market, good
infrastructure, security hence it provides good condition for the business. The cost of production
is very low since the raw materials and labour are readily available in Tiribe.

2:0 MARKETING PLAN

Customer refers to the people who buys products or services of the business. Golden Tomato
Processing Industry will have the following types of customers;-Domestic customers and
Commercial customers.

According to the report of the Kwale County, currently population of the county is about 6ooooo
people. Out of their number purchase goods from my competitors, that is, supermarkets and
Londwe Investment. A survey was done and the following information were gathered. Out of
600000 people in Kwale County, 300000 people normally purchase from local tomatoes, 200000
people from supermarkets and the remaining 100000 are not settled.

3.0 ORGARNIZATION PLAN

The business will employ different people such as manager, accountant, salesman, security
guards in the business. This employees will have different responsibilities in the business.

4.0PRODUCTION PLAN/OPERATIONAL PLAN

Golden Tomato Processing Industry will use different facilities to start the business. The
equipment’s which will be used in the business are washing machine, storage tanks, pulp
machine and filling machine. The business will also use other facilities such as offices, and
electricity facilities.

5.0 FINANCIAL PLAN

This simply classifies how much money will be used for a certain payments like license,
advertisement and transport. It will also include the profit gained, gross profit and net profit.

viii
 CHAPTER ONE

1.0: BUSINESS DESCRIPTION

1.1BUSINESS NAME
The name of the business is GOLDEN TOMATOES PROCESSING INDUSTRY. It will only be
dealing with processing of tomatoes to produce various types of tomato products which are of
high quality.

1.2 BUSINESS LOCATION

The business will be located at the Tiribe in Kwale County. This is because there is availability
of raw materials for processing. There is also availability of market, good infrastructure, security
hence it provides good condition for the business. The cost of production is very low since the
raw materials and labour are readily available in Tiribe.

1.3 BUSINESS ADRRESS

GOLDEN TOMATO PROCESSING INDUSTRY,

P.O BOX 227,

TIRIBE-KWALE

TEL:0793938514

EMAIL:essykwekwe@gmail.com

1
 MOMBASA – UKUNDA ROAD

KWALE TOWN

TIRIBE

1.4: FORMS OF BUSINESS OWNERSHIP

The form of my business will partnership. This is because I cannot raise the funds needed to start
the business alone. That is my why I choose partnership since we can contribute with my fellas
to start this business.

The business will be of partnership of 10 people only. In which everyone will specialize I
various areas according to their ability and area of specialization in the business.

1.5: PRODUCT OR SERVICES OFFERED

There will be a variety of tomato products which will be offered in this business such as
processed tomato fruits, tomato sauce and canned tomatoes paste. The products offered in this
business will be of high quality.

1.6: IDENTIFICATION OF BUSINESS OPPORTUNITIES.

The business will satisfy the following specific needs;

2
 a) Indigenous technology and service provision:-My business will use different modern
technology so as to ensure my goods meet the required standards. These include use of
modern methods of preservation such as refrigeration so as to provide high quality
products.
b) Contribution to the local community:-My business will use the local community for
labour so as to provide employment to the local people hence raising the living standard
of the society.
c) Satisfy the current local demand:-My business will supply goods not only to the broad
areas but also to the local the community.

The current community demands that the goods coming through the parts are cleared at a faster
rate thus reducing extra charges that the clients incur in terms of storage, fine and also products
according to my field of study.

1.7: THE OBJECTIVE OF THE BUSINESS PLAN

The objective and goods of my business plan includes:-

1) To obtain maximum profit for expansion and growth of the business.

2) To provide high quality of products to the customers.
3) To provide employment to the local people hence improving the living standards of the
society.
4) To ensure the products are readily available to the local community.

3
 CHAPTER TWO

2:0 MARKETING PLAN

2:1 CUSTOMER
Customer refers to the people who buys products or services of the business. Golden Tomato
Processing Industry will have the following types of customers;

2:1:1 Domestic Customers

These are the targeted customers of the business. The Golden Tomato Processing Industry will
not only provide good and services to the broad but also to the local people in the area. The
business will be set to improve qualitative products and services to the local customers at
affordable price. The business will provide products for home basic needs such as processed
tomato fruits and canned tomatoes.

2:1:2 Commercial Customers

These are those customers who will buy goods in bulk to resell to the retailers and customers.
These customers include KAMWENGA SUPERMARKET, LONDWE INVESTIMENT and
ROSEMARY SUPERMARKET.

2:2 COMPETETION
Golden Tomato Processing Industry will have different competitors such as Rosemary
Supermarket, Londwe Investment and Kamwenga supermarket

2:2:1 Competitors Weaknesses

 They do not have specific time of opening the business hence loss of customers
 Delay of products and has unskilled workers
 Lack of reliabilities of their products

2:2:2 Competitors Strength

The competitors offers high quality products and services. They also offers good products and
services as expected.

4
2:2:3 Golden Tomato Processing Industry Competitive Advantage
The business will use different advantages over its competitors. They include;

 Good location where customers will easily access the goods and services.
 Proper and skilled labor efficiency of the business
 Defined working hours.

2:3 MARKET SHARE

According to the report of the Kwale County, currently population of the county is about 6ooooo
people. Out of their number purchase goods from my competitors, that is, supermarkets and
Londwe Investment. A survey was done and the following information were gathered. Out of
600000 people in Kwale County, 300000 people normally purchase from local tomatoes, 200000
people from supermarkets and the remaining 100000 are not settled.

In the first year, Golden Tomato Processing Industry will be targeting all those 100000 unsettled
customers and some 100000 people from my competitors which will make it to be 200000
people in the first year and the remaining customers will be shared by the three competitors in
the area.

In the second year, Golden Tomato Processing Industry will expect to raise its target to 300000
customers and the rest to be shared by the three competitors.

In the third year, Golden Tomato Processing Industry will target 4ooooo customers and the
remaining to be shared by the three

5
FIRST YEAR

Sales

20%

33%
GOLDEN TOMATOES
ROSEMARY SUPERMARKET
LONDWE INVESTIMENT
KAMWENGA SUPERMARKET
12%

35%

SECOND YEAR

17%

GOLDEN TOMATOES
13% ROSEMARY
50%
LONDWE
KAMWENGA

20%

6
THIRD YEAR

Sales

10%

10%
GOLDEN TOMATOES
ROSEMARY
LONDWE
KAMWENGA
15%

67%

2:4 PRICING STRATEGY

Golden Tomato Processing Industry will use different pricing strategies that will not only favour
the business but also to the customers. The business will provide discount to the customers
purchasing the goods or servicesses. The busiess will provide products or servicesses at low cost
as compared to the competitors. The price will be a bit lower than the competitors.

2:5 DISTRIBUTION STRATEGY

The business will use different strategies to distribute their products and sernices, that is, direct
and indirect distribution. In direct distribution, the customers will purchase their products
directly from the business hence an immediat interuction between the customers and producer. In
indirect distribution will involve the use of internet to distribute goods and services. It will also

7
use the morter bike to distribute the products to the customers. The use ofmorter bike is cheap
and flexible since it can distribute products to the interior areas.

2:6 SALES TACTICTS

For the wholesale customers will use till number to pay for their goods in the business. Discount
will be provided to the regular customers in the business. For the direct customers, they will pay
for their products to the cashier in the business.

2:7 ADVERTISEMENT AND PROMOTION PLAN

2:7:1 Advertisement
Golden Tomato Processing Industry will advertise its goods and services through various means
such as radio,posters, television. The business will type and print fliers, bronchures giving to any
person passing at that place and notice with the same information about the business name,
location and address.

2:7:2 Promotion
The business will offer transport to customers who will buy goods in bulky. Discount will be
provided to customers who buy goods in bulky.

The business will also offer T-shirts to the reguler customers which are printed on them
indicating the business name, location and business address.

2:8 MARKETING MATERIALS

The business will offer business cards to the distributors indicating the business name, location
and the business address. The business cards will also be provided to the regular customers.

8
 CHAPTER THREE

3:0 HUMAN RESOURSE

3:1 MANAGEMENT TEAM

The business will employ different people such as manager, accountant, salesman, security
guards in the business. This employees will have different responsibilities in the business.

3:1:1 Manager
This is the person whose responsibilities it to manage all the processes in the business. He or she
must have at least C plain in KCSE and must have at least diploma in Food science and
Technology and have at least one year of experience.

3:1:2 Accountant
This is the person who will be dealing with money and receipt issues in the business. He or she
should have at least C plain in mathematics in KCSE and have at least certificate in accounting,
computer literature and must have at least one hour of working experience.

3:1:3 Salesman
This will provide services to the customers. He or she will be dealing with loading and
offloading of goods in the business. He or she should be able to speak in English or Kiswahili.
He or she should be creative.

3:1:4 Worker
This will provide services to the customers and other officials in the business. He or she will be
dealing with loading and offloading of goods in the business. He or she should be able to speak
in English or Kiswahili.

3:1:5 Security Guards

The business will employ two security guards who will maintain and ensure security in the
business. They should be able to speak English or Kiswahili. They should be of high morals.

9
3:2 RECRUITMENT, TRAINING AND PROMOTION OF PERSONEL

3:2:1 Recruitment
Recruitment will be done by advertising through television, radio, posters and notices. The
application letters will be collected and shortlisted. Those who be shortlisted will be called for an
interview.

3:2:2 Training
The training will be offered to the new members of the business. The manger will ensure that all
workers have received training from the trainers. This will reduce the rate of supervision in the
business since the workers will be having a lot of knowledge about the work.

3:2:3 Promotion
Promotion will be done to workers who do well in the business. This will be done to motivate the
employees in the business. Also the promotion will be provided to motivate the employees.

3:3 REMUNERATION AND INCENTIVE

Remuneration is the pay or other financial compensation provided in exchange for an
employee`s services performed. Remuneration will be provided on monthly basis to motivate the
employees.

3:3:1 Incentives
Allowances will be given to the employees who work extra hours in the business. The business
will provide tea to the workers. The business will also provide incentives to the workers who will
do internet marketing of the business. The business will do this to motivate the workers and also
encouraging them to work extra hard in the business.

3:4 LICENCE
The business will acquire a business license from Kwale county council at 500 Shillings. This
will be renewable after every one year at the same cost.

3:4:1 Permit
The business will acquire its permit from the public health officer of Kwale County at 400
shillings which will be renewable every year at the same cost.

10
3:4:2 By - Laws
Golden Tomato Processing Industry will provide the employees with the protective gloves, durst
coat and protective shoes to ensure they are safe. This will be done so as to comply with the by-
laws issued by the county council or municipal council. Also the business will provide clean
toilets to the employs for their safety.

3:5 SUPPORT SERVICES

The business will acquire different support services to enable it carry out its operations
effectively. These services will include banking services and insurance services.

3:5:1 Banking Services

The business will open its bank account for its operations. The bank account of the business will
be Co-operative bank. The account will be a current account. The manager will be in charge of
this banking operation. This is done to provide the business with ease access of its money with
checks or debit cards.

3:5:2 Insurance Services

The business will acquire an insurance from Insurance Regulatory Authority at 600 shillings
which will be renewable after every year at the same cost. This will provide an assurance of the
business safety.

3:5:3 Consulting Services

The business will conduct consultation from various expert of the business of the same kind. The
business will also allow the expert to come in the business to check if the business is going well.

11
 CHAPTER FOUR

4:0 PRODUCTION PLAN

4:1 PRODUCTION FACILITY AND CAPACITY

Golden Tomato Processing Industry will use different facilities to start the business. The
equipment’s which will be used in the business are washing machine, storage tanks, pulp
machine and filling machine. The business will also use other facilities such as offices, and
electricity facilities.

ITEM QUANTITY COST CAPACITY

Washing machine 1 3000 Size:
2500*1200*1300
Enzyme inactivation 1 5000 1T/H
equipment Size: 1220*615*1250
Pulp machine 1 4000 1-2.5 tons/hour
Temporary storage 2 6000 500L
tank
Filling machine 2 6000 1200*350*350
Voltage: 200-250v
Broken screw pump 1 5000 0.5-1tons/hour
Power: 1.5kw
Office 2 rooms 2500 High office personnel
Electricity 2 phases 20000 1000kw

4:2 PRODUCTION STRATEGY

Golden Tomato Processing Industry will use a well-defined processing strategy to ensure
production of high quality products. The business will use quality equipment’s in processing.
Products will be handled and stored in a safe equipment’s to avoid contamination of the products
hence producing high quality products which are acceptable to consumers. The business will also
use good and safe packaging materials to ensure safety of the products.

12
4:3 PRODUCTION PROCESS
Golden Tomato Processing Industry will involve the following process in production of tomato
paste. The complete set of tomato paste production line include Tomato washing, sorting,
impurity removal, breaking, tomato pulping, Vacuum concentration paste sterilization and finally
filling of the tomato paste into aseptic containers. The following is the flow chart illustrating the
production process of tomato paste

Raw Tomatoes

Tomato Washing

Sorting Of The Tomato

Impurity Removal

Breaking

Tomato Pulping

Vacuum Concentration

Paste Sterilization

Filling

13
4:3:1 EXTERNAL FACTORS AFFECTING PRODUCTION
1. COMPETITORS

Competitors are the main external factor that affect the production. This is due to their
production of high quality products which enable them to be more marketable and preferable to
consumers. Golden Tomato Processing Industry will provide high quality tomato products and
also will products at lower cost as compared to the competitors so as to get more customers
hence raise the production of the tomato product in the firm

2. TECHNOLOGICAL ADVANCES

The emerging technologies affects the production firm. The business will use the modern
technology of production to produce high quality products which are desirable to the consumers.
The business will be flexible in change of technology to ensure continuous production of high
quality products to consumers.

4:3:2 Internal Factors Affecting Production

 LABOUR

Labor input is affecting the production in the business firm. The business will use the skilled and
motivated workers to ensure production of high quality products in the business firm.

 ORGANIZATION STRUCTURE

This also affects the production in the business firm. The industry will create a suitable
organization structure to ensure smooth working in the business firm. The business will set rules
and regulations to be applied to ensure they benefit both employees and the business as well.

4:4 RULES AND REGULATION AFFECTING PRODUCTION

4:4:1 Healthy Regulations

The business firm will set rules which will be applied by the employees in the business not only
for the production but also for the health of the workers in the business. The health regulation
will include;

I. Every employee MUST have an insurance card

14
 II. Every employee MUST use the suitable personal protective equipment’s
III. Report of any outbreak of disease
IV. Training on the use of equipment

4:4:2 Safety Regulation

The business will put measures that they should be followed to guard against the health of
workers in the production masks, durst coats, gloves and protective boots not only to ensure the
production of high quality but also to ensure safety of the workers in the production firm.

4:4:3 Environmental Regulation

The business will ensure safety to waste disposal. The waste products will be treated and
disposed into a safe place which complies with the governmental rules and regulation. Also the
business will ensure that the environment is clean and durst free to ensure production of high
quality products and safety of the society around the business firm.

4.4: FIRM LAYOUT

OFFICE

PRODUCTS
EXIT

Y
ENTR

15
 CHAPTER FIVE

5:0 FINANCIAL PLAN

5:1 PRE – OPERATION

ITEM COST
Tools and equipment 50000
License 4000
Rent deposit 10000
Advertisement 6000
Designing 12000
Installation 15000
Recruitment 10000
Research 35000
Other business requirements such as cards 5000
Electricity 3000
Transport 8000
Registration 7000
TOTAL 165000

5:2 WORKING CAPITAL ESTIMATES

CURRENT ASSETS AMOUNT
Cash at hand 100000
Cash at bank 140000
Debtors 60000
Stock 180000
TOTAL 480000

16
LESS CURRENT LIABILITIES

Creditors 60000
Bank over draft 100000
Accrual 50000
TOTAL 210000

Working capital = Current assets – Current liability

WC = 480000 – 210000

=270000

5:3 PRO - FORMA BALANCE SHEET

FIXET ASSETS

Rent 10000
Furniture 10000
Land 15000
Motor vehicle 100000
TOTAL 130000

CURRENT ASSETS

Cash at hand 150000

Debtors 100000
Cash at bank 250000
TOTAL 500000

17
LESS CURRENT LIABILITIES

Creditors 30000
Accruals 25000
Bank overdraft 20000
TOTAL 75000

(130000+500000) - (75000)

630000 – 75000

= 555000

18
5:4 CASH FLOW PROJECTION

5:4:1 Cash Flow Projection for the Year 2022

RECEIPTS JAN FEB MAT APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
Cash at hand 20000 26500 34000 41000 46000 51000 71000 73000 45000 12000 19000 16000 454500
Sales 40000 40000 40000 40000 40000 40000 30000 30000 30000 30000 30000 30000 420000
Loan 20000 10000 20000 20000 70000
Debtors 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
Discount 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
Received
TOTAL 92000 78500 86000 93000 98000 113000 133000 115000 87000 74000 61000 58000 1088500
PAYMENT
Stock 10000 10000 10000 12000 12000 12000 20000 20000 20000 20000 10000 10000 166000
Creditors 10000 10000 10000 10000 10000 15000 15000 15000 10000 10000 10000 10000 135000
Rent 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
Salary 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
License 500 500 500 500 500 500 500 500 500 500 500 500 6000
Discount 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
allowed
Transport 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Loan 20500 10000 20000 50500
repayment
Electricity 500 500 500 500 500 500 500 500 500 500 500 500 6000
SURPLUS 26500 34OOO 41000 46000 51000 71000 73000 45000 12000 19000 16000 13000 447500

19
5:4:2 Cash Flow Projection for the Year 2023
RECEIPT JAN FEB MAT APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
Cash at hand 13000 22000 31000 38000 42000 43000 39000 38000 42000 41000 38000 40000 427000
Sales 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 45000 540000
Loan
Debtors 12000 12000 12000 10000 10000 10000 12000 12000 12000 10000 10000 10000 132000
Discount 3000 3000 3000 2000 2000 2000 3000 3000 3000 3000 3000 3000 33000
received
TOTAL 73000 82000 91000 95000 99000 100000 99000 98000 102000 99000 96000 98000 1132000
PAYMENT
Stock 15000 15000 15000 15000 15000 20000 20000 20000 20000 20000 20000 20000 215000
Creditors 10000 10000 12000 12000 15000 15000 15000 10000 15000 15000 10000 12000 151000
Rent 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
Salary 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
License 500 500 500 500 500 500 500 500 500 500 500 500 6000
Discount 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000
allowed
Transport 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Loan
repayment
Electricity 500 500 500 500 500 500 500 500 500 500 500 500 6000
TOTAL 51000 51000 53000 53000 56000 61000 61000 56000 61000 61000 56000 58000 678000
SURPLUS 22000 31000 38000 42000 43000 39000 38000 42000 41000 38000 40000 40000 454000

20
5:4:3 Cash Flow Projection for the Year 2024
RECEIPT JAN FEB MAT APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
Cash at hand 40000 51000 62000 67000 57000 47000 37000 37000 43000 39000 30000 21000 531000
Sales 46000 46000 46000 40000 40000 40000 40000 46000 46000 46000 46000 46000 528000
Loan
debtors 14000 14000 10000 10000 10000 10000 10000 14000 14000 14000 14000 15000 149000
Discount 4000 4000 3000 3000 3000 3000 30004000 4000 4000 4000 4000 4000 43000
received

TOTAL 104000 115000 121000 120000 110000 100000 90000 101000 107000 103000 94000 86000 1251000
PAYMENT

Stock 16000 16000 16000 20000 20000 20000 16000 20000 25000 25000 25000 20000 239000
Creditors 10000 10000 10000 15000 15000 15000 10000 10000 15000 20000 20000 10000 160000
Rent 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 12000
Salary 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 12000
License 500 500 500 500 500 500 500 500 500 500 500 500 6000
Transport 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Loan
repayment
Electricity 500 500 500 500 500 500 500 500 500 500 500 500 6000
TOTAL 53000 53000 54000 63000 63000 63000 53000 58000 68000 73000 73000 58000 733000
SURPLUS 51000 62000 67000 57000 47000 37000 37000 43000 39000 30000 21000 28000 518000

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5:5 PROFORMA INCOME STATEMENT

5:5:1 Trading Profit And Loss Account

ITEM FIRST YEAR SECOND YEAR THIRD YEAR
Sales 420000 540000 528000
Stock 166000 215000 239000
Closing stock 13000 40000 28000
Cost of sales 153000 175000 211000
Gross profit 267000 365000 317000

LESS EXPENSES
Rent 120000 120000 120000
License 6000 6000 6000
Salary 120000 120000 120000
Electricity 6000 6000 6000
Transport 12000 12000 12000
TOTAL 264000 264000 264000
Net profit before tax 3000 101000 53000
Tax provision 5% 150 5050 2650
Net profit after tax 2850 95950 50350

5:6 BREAK-EVEN ANALYSIS

5:6:1 Break-Even Analysis for the First Year

Break-even = Fixed Cost * Variable/ Contribution

Contribution = (Sales) – (Variable cost)

Fixed cost AMOUNT (KSH) VARIABLE COST AMOUNT (KSH)

License 6000
Salary 120000 Stock 166000
Electricity 6000
Rent 120000
TOTAL 252000 166000

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Cash sales =420000

Contribution = 420000 – 166000

= 254000

Break-even analysis = 252000 * 166000 /254000

= 164692.9134

5:6:2 Break-Even Analysis for the Second Year

Break-even = Fixed cost * Variable / Contribution

Contribution = Sales – variable cost

FIXED COST AMOUNT (KSH) VARIABLE COST AMOUNT(KSH)

License 6000
Rent 120000 Stock 215000
Salary 120000
Electricity 6000
TOTAL 252000 215000

Sales = 540000

Contribution = 540000-215000

= 325000

Break-even analysis = 252000 * 215000 / 325000

= 166707.6923

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5:6:3 Break-Even Analysis for the Third Year
Break-even = Fixed cost * Variable / Contribution

Contribution = (Sales) – (Variable)

FIXED COST AMOUNT (KSH) VARIABLE AMOUNT (KSH)

License 6000
Rent 120000 Stock 239000
Salary 120000
Electricity 6000
TOTAL 252000 239000

Cash sales = 528000

Contribution = 528000 – 239000

= 289000

Break-even = 252000 * 239000 / 289000

= 208401.3841

5:7 DESIRED FINANCING

ITEM AMOUNT (KSH)
Pre-operation cost 165000
Working capital 270000
Fixed asset 130000
TOTAL 565000

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5:8 CAPITALLIZATION
ITEM AMOUNT (KSH)
Cash at hand 1412500
Loan 70000
TOTAL 1482500

5:9 PROFITABILITY RATIO

Net profit ratio = Net Profit X 100

Sales

Net profit ratio for the three years = (2,850 + 95,950 = 50,350)

=149,150

Sales for the three years = (420,000+540,000+ 528,000)

= 1,488,000

149,150 X 100

1,488,000

=10.02%

Owner profit = (opening capital + net profit) – (withdrawing)

(1,088,500 + 2850) – (641,000)

= 1,091,350 – 641,000

= 450,350

QUICK RATIO FOR THE 1ST YEAR

Quick ratio = current asset – closing stock

Current liability

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 500,000 – 13,000

75,000

487,000

75,000

= 6.493%

QUICK RAIO FOR THE 2ND YEAR

Quick ratio = current assets – closing stock

Current liability

= 500,000 – 40,000

75,000

= 6.133%

QUICK RATIO FOR THE 3RD YEAR

Quick ratio = Current assets – Closing

Current liability

= 500,000 – 28,000

75,000

= 6,293%

RETAIN ON THE EQUITY

Retain on the equity = Net Profit X 100

Owner Profit

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= 149,150 X 100

450,350

= 33.12%

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