BUSINESS PLAN

LYNE POULTRY FARM

PRESENTER : GEVEDI MOREEN MINAYO

COURSE : CRAFT IN FOOD AND BEVERAGE PRODUCTION AND
SERVICE SALES
COURSE CODE : 106120
SUBJECT CODE : 1802/205
INDEX NO : 1061200380
INSTITUTION : KENYA COAST NATIONAL POLYTECHNIC
SUPERVISOR : MR JOHN MASITA
PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL IN
PARTIAL FULFILMENT FOR THE AWARD OF
CERTIFICATE IN FOOD AND BEVERAGE SERVICES
SALES

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 DECLARATION
NAME OF THE PROJECT: LYNE POULTRY FARM
I declare that;
The project above was approved by Kenya Coast Polytechnic and supervised by Mr. John
Masita.
I carried out the project whose report follows this project.
I received no undue help from authorized person other than the guidance from supervisor.
The report submitted to the council is original my work.
SIGNATURE OF THE CANDIDATE -------------------------------------- DATE-------------------.

THE SUPERVIOR------------TSC NO ----------------.

Declare that,i supervised the above name candidates work.

THE CANDIDATE PROJECT AND REPORT CONTAINED THERE IS GENUINE WORK

OF CANDIDATE.

SIGNATURE-----------------
DATE----------------------

ii
 ACKNOWELEDGEMENT
I would like to thank my supervisor for conducting working tirelessly in completion of this
project. I also want to acknowledge my family for supporting me through the project.
All above thank the Almighty for giving me strength through the writing process.

iii
 DEDICATION
The project was dedicated to my family who have supporting me through the process of writing
not leaving my supervisor Mr. Masita who help me in drafting of the project.

TABLE OF CONTENTS

iv
DECLARATION..............................................................................................................................................2
ACKNOWELEDGEMENT...............................................................................................................................3
DEDICATION................................................................................................................................................4
1.0 EXCUTIVE SUMMARY.............................................................................................................................5
1.1 BUSINESS DESCRIPTION.........................................................................................................................5
1.2 MARKETING PLAN..................................................................................................................................5
1.3 MANAGMENT AND ORGANISATION......................................................................................................6
1.4 OPERATIONAL PLAN..............................................................................................................................6
1.5 FINANCIAL PLAN....................................................................................................................................6
CHAPTER ONE..............................................................................................................................................7
1.0 BUSINESS DESCRIPTION.........................................................................................................................7
1.1 OWNER DETAILS....................................................................................................................................7
1.2 BUSINESS NAME....................................................................................................................................7
1.3 BUSINESS LOCATION AND ADDRESS......................................................................................................7
1.4 FORM OF OWNERSHIP...........................................................................................................................8
1.5 TYPE OF BUSINESS.................................................................................................................................8
1.6 PRODUCTS AND THE SERVICES..............................................................................................................8
1.7 JUSTIFICATION OF OPPORTUNITY..........................................................................................................8
1.8 INDUSTRY..............................................................................................................................................9
1.9 GOALS AND OBJECTIVES OF THE BUSINESS...........................................................................................9
1.10 ENTRY STRATEGY AND GROWTH.........................................................................................................9
1.10.1 ENTRY...............................................................................................................................................9
1.10.2 GROWTH.........................................................................................................................................10
CHAPTER TWO...........................................................................................................................................11
2.0 MARTENING PLAN...............................................................................................................................11
2.1 CUSTOMERS........................................................................................................................................11
2.2 MARKET SHARE....................................................................................................................................11
2.3 COMPETITION......................................................................................................................................12
2.4 ADVERTISMENT AND PROMOTION TRATEGY......................................................................................13
2.5 PRICING STRATEGY..............................................................................................................................13
2.6 SALE TACTICS.......................................................................................................................................13
2.7 DISTRIBUTION STRATEGY....................................................................................................................14
CHAPTER THREE........................................................................................................................................15

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3.0 ORGANISATION AND MANAGEMENT PLAN.........................................................................................15
3.1 BUSINESS MANAGER AND QUALIFICATION.........................................................................................15
3.2 OTHER PERSONNEL..............................................................................................................................15
3.4 LICENSE................................................................................................................................................17
3.4.1 NATURE OF THE BUSINESS...............................................................................................................17
3.4.2 BY-LAWS...........................................................................................................................................17
3.5 SUPPORTNG SERVICE...........................................................................................................................17
3.5.1 BANKING SERVICES...........................................................................................................................17
3.5.2 INSURANCE SERVICES.......................................................................................................................17
CHAPTER FOUR..........................................................................................................................................18
4.0 OPERATIONAL AND CO-OPERATION PLAN..........................................................................................18
4.1 PRODUCTION FACILITY AND CAPACITY................................................................................................18
4.2 PRODUCTION STRATEGY......................................................................................................................18
4.3 PRODUCTION PROCESS........................................................................................................................19
4.4 RULES AND REGULATION.....................................................................................................................19
4.4.1 AGRICULTURAL REGULATIONS.........................................................................................................19
4.4.2 HEALTH REGULATION.......................................................................................................................19
4.4.3 LICENCE AND PERMITS.....................................................................................................................20
4.4.3 ENVIRONMENTAL REGULATIONS.....................................................................................................20
CHAPTER FIVE............................................................................................................................................21
5.0 FINICIAL PLAN......................................................................................................................................21
5.1 PRE-OPERATION COST.........................................................................................................................21
5.2 PRE FORMA BALANCE SHEET...............................................................................................................21
5.3 WORKING PLAN...................................................................................................................................22
5.5 THE PRE-FORMA INCOME STATEMENT...............................................................................................26
5.6 BREAK EVEN ANALYSIS FOR THE FIRST YEAR.......................................................................................26
5.7 DESIRED FINANCING............................................................................................................................26
5.8 CAPITALIZATION..................................................................................................................................26
5.9 PROFITABILITY RATIO..........................................................................................................................27

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1.0 EXCUTIVE SUMMARY
Chicks is among the nutritious food on the planet contain with proteins and vitamins, in which
the body need in order to contain life in the world disease. The order
For the start of the business in the located area is because of the people love chicken meat and
eggs than cows and goat meats.
The beginning of the business also is to empower the young generation that employment does
not meant by being hired somewhere
By also one can be employee of him/herself. The business is to equipped young people with
productive skills of starting and run their own business to curb unemployment rate in the town.
1.1 BUSINESS DESCRIPTION
The proposed business will bear the names and address a follow:
LYNE POULTRY FARM
P.BOX 119-8300
BUNGOMA
Email: lynepoultryfarm@ gmail.com
Tel no: 0742143072

1.2 MARKETING PLAN

Potential customers will mainly come from the town centre surrounding area.The main targed
customers are the ones who have
butchers, cafe,hotels,schools.The main competitors are the Kasuku and Njogu farm nearby but
will compose to ensure i become
on top of them through the following :
1) Better serving.
2) Better pricing.
3) Better advertisment.
4) Good human and public relation.

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1.3 MANAGMENT AND ORGANISATION
The business will be owned by Moreen Gevedi with partner Bakari Charles and my brother
Bruce Gevedi, as the business improves I will employ two other assistant. The manager will be
in charge of all operation and supervising all activities taking place in the business.
1.4 OPERATIONAL PLAN
Before starting and running of the business, I will make sure the necessary things and procedure
are followed in order
For the successively running of the business. Whatever anything concerning the business like
equipment will be entitled?
Before the commence of the business.
1.5 FINANCIAL PLAN
In order for the business to start and an effectively capital will be required, to rent a building for
the business
Operation for the start as I think of building its own house for rearing of poultry farm. All the
necessary materials
For the business continuity will be calculated and recorded monetary to ensure running of the
business. The pre-occupational
Cost is estimated to be around she 91000 and the money to start the business will be shed
403000.This will come from different
Sources such as:
1) Loans i.e. from banks.
2) Partner contribution.
3) Form of borrowing.

viii
 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

LYNE POULTRY FARM
1.1 OWNER DETAILS
BUSINESS NAME : LYNE POULTRY FARM
ADDRESS : 35 BUNGOMA
TELEPHONE NO : 0742143072
E-MAIL : LYNEMOREEN 254@gmail.com
PRESENTED BY : GEVEDI MOREEN MINAYO
ADMISSION NO : 48120
CLASS : CRFB21J
PRESENTED TO : KENYA COAST NATIONAL POLYTECHNIC

I personally above was approved by Kenya Coast National Polytechnic and supervised by Mr.
Masita. I personally carried out the
Project whose report follows the declaration. I received no undue help from unauthorized
personal other than normal guidance
From my supervisor.
1.2 BUSINESS NAME
The business name will be LYNE POULTRY FARM. It is derived from [LYNE] Moreen an
abbreviation of my name and which is the
Owner business .As for easing identification by my customers on lines. The product will be
obtained from local sellers and
Producer at different prices and sold to potential customers at fast price.
1.3 BUSINESS LOCATION AND ADDRESS
Business will be located at Bingaman town along buncombe highway, near Kaka mega town.
The following reasons encouraged the
Owner to locate the business at Bingaman town:
1) Accessibility of raw materials.

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2) Market size.
3) Accessibity to transport.
4) Centralization of the place.
1.4 FORM OF OWNERSHIP
The business will be in form of partnership between Moreen Gevedi and Bakari Charless.The
following reasons encouraged
The traders to operate on a partnership form:
1) Raising a capital.
2) Problem solving.
3) Easy decision making on matters concerning the business, as each have different views.
1.5 TYPE OF BUSINESS
LYNE Poultry Farm will be dealing with mainly rearing chickens both broilers and layers. The
chicks will be acquired from
Different local providers and purchased reared and sold to customers at relatively quiet price.
1.6 PRODUCTS AND THE SERVICES
The business will be dealing with purchasing of rearing and selling the following products from
local provided:
1] Chicken meat.
2] Eggs.
3] Selling chicks.
1.7 JUSTIFICATION OF OPPORTUNITY
The capability of the business to survive and prosper is high due to the conditions that the
competitors do have many
Weakness which will favor line poultry farm to prosper include:
1) By having hardworking people who are willingly to look over chicks and provide them with
necessary needs on time.
2) Good working environment among the employers.
3] Co-ordination between the partner and the workers.
4) Good communication channel among others.
5) Proper planning and winning of business.

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1.8 INDUSTRY
LYNE POULTRY FARM belongs to agricultural industry which the main basic backbone of the
nation. Due to the presence of
Local hotels, cafes and butcheries in the town, the farm will rapidly develop as a result of
urbanization in Bingaman
It’s a town still expanding to reach the acquirement of big cities and increase of population will
result to expansion of
Such hotels, butcheries and cafes, the business is expected to thrive.
1.9 GOALS AND OBJECTIVES OF THE BUSINESS
The following are some of the business goals and objectives.
Goals:
1) Offering fair and quite prices in order to that the business is able to retain its customers.
2) Offering after sales services such as transport.
3) Providing credits to customers who are trustworthy wherever possible.
4) Providing quality products to attract many customers.
5) Making proper advertisements to acquire fame and to attract more customers.
Objectives:
1) Improving standard of living.
2) Steady supply of poultry products in the town and outsides town.
3) Ensure customers demand are well adhered to.
4) Human public relation which will increase sales hence leading to expansion of the farm.
1.10 ENTRY STRATEGY AND GROWTH
1.10.1 ENTRY
The business to run effectively, will be required to have a health Certificate and government
license through county or the
Bingaman municipal council in order for the business to be given a go ahead to start .For the
popularity of the business to
Customer’s different ways will be putted across which include:
1)The use of salesmen going around down educated people giving information, location, prices
services offered by the business

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1.10.2 GROWTH
The business is focused to grow faster such that within not more than three years we will able to
think of expanding.

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 CHAPTER TWO
2.0 MARTENING PLAN
2.1 CUSTOMERS
The business will, meet all potential customers who have not realized some of those products
especially where to get them
At favorable price. The expected customers are grouped into two classes namely:
1) Local/Domestic
2) Commercial
Domestic/Local customers are the ones who will be around the business and the ones that can be
supplied within the area at
A short period of time and in a low cost of transportation. Also they can risk the farm anytime
and get the products.
Commercial customers are those who will be buying the product of their own selling either as
retailers or wholesalers.
The business will serve all customers needing the product sold by the farm without
discrimination. The business will ensure
Satisfaction by maintain adequate stock, increasing market share and stave to have a competition
edge against competing business.
2.2 MARKET SHARE
The business will located at Bingaman town. It has been decided to be located at this place
because of;
1) Highly accessible by customers because it is centralize located.
2) Security is conducive.
3) Cheap labor.
4) Availability of resources.
According to the market research carried out, the population will be able to provide
approximately one thousand customers
Where line poultry farm will be able to enjoy good share of the customers about 70% hare will
be kabuki poultry and jog
Chicken farm will be share the rest. This is interpreted in the segment as in the percentage:
700/1000 x 100=70% LYNE POULTRY FARM

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200/1000 x 100=20% KASUKU POULTRY
100/1000 x 100=10% NJOGU CHICKEN FARM

Sales

10%

20%

70%

LYNE POULTRY FARM KASUKU POULTRY NJOGU CHICKEN FARM

2.3 COMPETITION
In order to enter the market with high impact. There are two exciting farms that is KASUKU
POULTRY and NJOGU CHICKEN FARM
In the location where LYNE POULTRY FARM will be operating and will assessed their
strength and capitalized on their
Weakness where it will gained an advantage over them as shown:
Type of business Strength Weakness
Kisumu poultry Large farm Poor quality producer
No after sell-services
Jogo chicken farm Discount high sell Unhygienic environment
Poor customer relation

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2.4 ADVERTISMENT AND PROMOTION TRATEGY
The business will favor and promote the customer so as to ensure it maintains and attracts them.
Advertising through the
Use of billboard, posters will be placed at strategy areas for easy visibility such a roundabout,
road junction, bill boards
Parts; local radios will be used such as iLembe FM which covers the located area.
2.5 PRICING STRATEGY
The business will calculate the selling price of product according to the product bought for and
the cost of rearing the
Chicken, cost of raw materials, labour (wage), salary and insurances, electricity bills and rent
Selling price=cost of product + mark up
The factors which will influence my pricing are:
1) Competitors cost-This will influence my competitors price is high mine drops.
2) Demand-When the demand of the product is high the price will be high and when the demand
is low the price is low.
The business will offer after sales services and 65% discount will be allowed to a customer
purchasing product much more.
2.6 SALE TACTICS
Most of the product shall be sold directly to customers to increase the sale while the rest sold
directly through
Wholesalers and agents where wholesalers will be buying any product in bulky then sell it for
profit and agent will sell
More commission. The management will use different tact’s to recruit and train sale force
1) Recruitment
2) Honesty/public relation-one should be honest to both customers and colleagues
3) Retention
The business will offer the following so as to retain sale force:
1) Lunch allowance
2) Salaries paid on time
3) Leave in-case of emergency

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2.7 DISTRIBUTION STRATEGY
The business is located at an area easing accessed by both local around customers and the far
customer. The business channel
Will begin from the producer of the producers of business the selling either to wholesalers and
agents then to retailers and
Lastly to customers, the implication of the channel is an indicated below:
1) Producers----->Wholesalers----->Retailers----->Customers
2) Producers----->Agent----->Retailers----->Customers
3) Producers----->Retailers----->Customers
4) Producers----->Customers
The business will use all business channels to effectively conduct its activities. The means of
transport used will be
Mostly road as it is widely cover the part.
Total cost per month of transport is total expense per day multiply number of days.
500x 7=3500
Limitation hindering the distribution is thieft, police, roadblocks.The business will be fully
licensed and will security
Guards to assess the transport.

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 CHAPTER THREE
3.0 ORGANISATION AND MANAGEMENT PLAN
LYNE POULTRY FARM will have the following staff.

Manager

Sales and marketing manger

Salesman Caretaker

3.1 BUSINESS MANAGER AND QUALIFICATION

The business will be managed by the owner who is answerable to some responsibilities and rules.
The manager duties will be:
1) Control financial statement of the business.
2) Undertake matter relating to decision making and entering in the transaction on behalf of the
business.
3) The manager will also hire and fire employess, because the scope of the organization is not
big, the number of staff will
Be enough to make the business to operate without difficult.
3.2 OTHER PERSONNEL
SALES MANGER
Qualifications
Diploma/relevant certificate in Agricultural.
Duties
1) Financial of the business.
2) Decision Maker.
3) Hiring eliminating employs.

SALES AND MARKETING

9
Qualification
Certificate in sales and marketing 2 years’ experience.
Duties
1) Controlling order from customers.
2) Marketing and advertisement of the business.
3) Assists in decision making.
4) Organize better distribution channel to customers
5) Look for various market for products.
CARETAKER
Qualification
Experience in handling poultry birds.
Duties
1) Looking after the poultry.
2) Feeding on time for the poultry.
3) Cleaning and doing farm choices.
3.3 RENUMERATION AND INCENTIVES
Remuneration will be awarded to employees according to the employment agreement which
shall increase according to the
Growth of the enterprise however, the starting salaries shall be as follows:
Title Salary Incentives
Manager 20000 House allowance
Annual leave
Sick off
Breakfast provided
Sale personal marketing 15000 Sick off
Breakfast provided
salesman 10000 Sick off
Breakfast provided
Seminars
caretakers 5500 Breakfast provided

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 Sick off
House allowance
Annual leave

3.4 LICENSE
LYNE POULTRY FARM will obtain its trading/business permit/license from Bingaman town
and the municipal council of buncombe
Town and the documents will be reserved annually. The trading license will cost ash 4500 and
the business permit at ash 2500
This will ensure activeness and smooth operation of the business.
3.4.1 NATURE OF THE BUSINESS
The business is under agriculture sector so it will need/obtain a permit from the ministry of
Agriculture in Bingaman town.
3.4.2 BY-LAWS
The business will be comply with the by-laws issued by the country council, municipal council.
This is to ensure:
1) Trust to the customer eye the product supplies.
2) To provide better services to the customers.
3) To avoid discrimination when operating the business across.
3.5 SUPPORTNG SERVICE
The business will requires supporting services to enable of to carry its operation effectively. This
services are:
3.5.1 BANKING SERVICES
The business will open different account to invest and easily accessed by employs when
collecting their salaries and also
Enabling the growing of the business.
3.5.2 INSURANCE SERVICES
The business will be able to insure itself against different risks such as fire etc. also the insurance
will cover the
Employees in the business.

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 CHAPTER FOUR
4.0 OPERATIONAL AND CO-OPERATION PLAN
This chapter entails to cover the operational plan of the proposed line of the business where it
will vividly cover their
Initial raw materials required, operation expenses.
4.1 PRODUCTION FACILITY AND CAPACITY
Items Quantity Cost @
Chicken food 5 bags 1000
Wire mash 3 bundle 1500
Basins 10 500
Empty house 5 rooms 10000
Store 2 rooms 5000
Electricity 6000
Tray of eggs 20 5000
Total 29000

4.2 PRODUCTION STRATEGY

LYNE poultry farm will carry out its activities effectively through poultry farm can be a very
tricky business. This is
Because close monitoring of the chicks while still developing is needed also demands of poultry
products come with
Specification like sizes i.e. in terms of weight and also the poultry supplied should be whole
without deformation. This call
For very careful handling during rearing and when collecting the products such eggs. To meet
the mention specification the
Following will be undertaken:
1) Caretaker will be given a thorough training on the whole process of rearing poultry for chicks
to chicken.
2) Close monitoring of the growth rate and weight gaining for broilers will be done to make sure
that the broilers chicken
Mature after the expected period.
3) To meet demand, rearing will be done at different levels so that poultry products are available
for sales throughout the
Year.

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4.3 PRODUCTION PROCESS
Chicks young one mono size [70-80gm]

Mature ready for sale between [4-6kg]for boilers for layers ready for laying eggs

Selling of the product farm[meat and eggs]

1) Chicks (young ones].These are acquired from different suppliers of poultry products, also
under Agricultural department
Sells chicks at a reasonable price. They should weigh between (70-80 years) stocking of the pens
should be done on arrival
Of the chicks.
2) Mature chickens the business farm will conduct two different section for layers and broilers,
layers at this stage will
Be starting laying eggs, while broilers will be reading from selling in terms of meat. Broilers
maturity is expected to be
Ready in 1-2 months if well feuded.
3) Selling. Selling can be done in intervals first for the broilers who grew fast and mature first
then layers who takes
Time to lay egg, but in a period of 1 year both broilers and layers business will have kick on.
4.4 RULES AND REGULATION
4.4.1 AGRICULTURAL REGULATIONS
The agriculture department has set rules and regulations governing the family of all livestock and
birds. This is to ensure
That the end product meat the required standard as per their statistics LYNE POULTRY FARM
will ensure that all it’s
Facilities have been inspected and satisfied by agriculture department before the production
starts.
4.4.2 HEALTH REGULATION
The ministry of health also sees regulation to be met by people/organizations in their field of
operations.LYNE POULTRY

13
FARM employees will be required to under medical checkup frequently to avoid transmission of
diseases from one another.
This is very essential since broilers are supplied in terms of meat.
4.4.3 LICENCE AND PERMITS
LYNE POULTRY FARM just like any other business virtue will acquire trading licenses from
local authority so as to
Legalize its operation.
4.4.3 ENVIRONMENTAL REGULATIONS
LYNE POULTRY FARM will not interfere with the surrounding. The waste products will be
given as manure to local farmers
Around or those who will enquire it without any payment.

14
 CHAPTER FIVE
5.0 FINICIAL PLAN
5.1 PRE-OPERATION COST
These are the cost incurred before the business starts to operate. The costs below gives an outline
of the expenses.
Estimated Expenditure
Operational facilities 43000
Training 20000
Equipment’s 28000
Total 91000

5.2 PRE FORMA BALANCE SHEET

Balance as at start up
Assets Amounts
FIXED ASSETS
premises 30000
Poultry equipment’s 28000
Pens and cages 43000
Motor vehicles 30000
Furniture and fittings 15000
Total 116000
CURRENT ASSETS
Stock of raw materials 20000
Stock of finishing ground 10000
Debtors 15000
Deposit account 14000
Bank and cash 27000
Total 86000
LESS LIABILITIES
Creditors 120000
Long term liabilities 10000
Long term loans 153000
Direct loans 10000
Trade and debtors 10000
Tax and insurance 5000
Member contribution 25000
Profit 50000
Total liability 383000
Working capital 383000-86000=297000
FINANCED BY
Opening capital 60000

15
Net profit 69000
Less drawing 64000
Closes capital 61000
loans 53000
Total 297000

5.3 WORKING PLAN

Current assets Amount
Stock of raw materials 20000
Bank and cash 27000
Total 47000
Less current liabilities
Long term liabilities 10000
Total 10000

W.C=C.A-C.L
47000-10000
=37000

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5.4 CASH FLOW PROJECTION
Project cash flow for the year 2022
Receipt Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
[cash in]
Loans 10000
Sales 30000 40000 60000 70000 80000 80000 90000 90000 92000 94000 96000 98000
Debtors 20000 20000 20000 22000 24000 30000 35000 38000 39000 40000 44000 48000
Discount 8000 8000 7000 7000 7000 6000 6000 5000 5000 5000 4000 4000
received
Total 68000 68000 87000 99000 111000 116000 131000 133000 135000 139000 144000 150000
Payments
[cash out
Salaries 10000 10000 10000 15000 15000 20000 25000 30000 31000 32000 34000 36000
Purchase 20000 20000 20000 30000 30000 40000 40000 50000 50000 60000 60000 64000
Creditors 20000 20000 24000 30000 32000 34000 36000 36000 38000 40000 40000 42000
Discount 10000 10000 10000 10000 8000 8000 6000 6000 5000 5000 4000 4000
Total 60000 60000 64000 85000 85000 102000 107000 122000 124000 137000 138000 46000

Cash flow 8000 8000 23000 14000 26000 14000 24000 11000 11000 2000 6000 4000
[cashin-
cashout]

Bal bld 0 8000 16000 39000 53000 79000 93000 117000 128000 139000 141000 147000
Bal cld 8000 16000 39000 53000 79000 93000 117000 128000 139000 141000 147000 151000

17
Project flow for year 2023
Receipt Jan Feb mar Apr May Jun Jul Aug Sep Oct Nov Dec
Loans
Sales 32000 38000 40000 42000 46000 50000 54000 58000 60000 70000 80000 99000
Debtor 20000 24000 26000 30000 36000 38000 40000 42000 44000 46000 48000 50000
Discount 9000 9000 9000 8000 8000 8000 7000 7000 6000 6000 5000 5000
received

Total 61000 71000 75000 80000 90000 96000 101000 107000 110000 122000 133000 154000
Payments
Salaries 20000 22000 24000 26000 27000 28000 30000 34000 36000 38000 40000 44000
Purchase 20000 20000 22000 24000 26000 28000 30000 34000 36000 40000 50000 52000
Creditors 10000 12000 14000 16000 18000 20000 220000 24000 30000 32000 32000 32000
Discount 8000 8000 7000 7000 6000 6000 5000 5000 4000 4000 3000 3000
Total 58000 62000 67000 71000 77000 80000 87000 97000 106000 114000 125000 131000
Cash flow 3000 9000 8000 9000 13000 16000 14000 10000 4000 8000 8000 23000

Bal bld 23000 26000 35000 43000 52000 65000 81000 95000 105000 109000 117000 125000
Bal cld 3000 35000 43000 52000 65000 81000 95000 105000 109000 117000 125000 148000

18
cash flow for the year 2024
Receipt Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Loans
Sales 40000 42000 46000 48000 50000 56000 58000 60000 70000 80000 99000 100000
Debtors 30000 38000 40000 42000 47000 48000 50000 54000 55000 56000 58000 60000
Discount 10000 10000 9000 9000 8000 7000 6000 6000 5000 5000 5000 5000
received

Total 80000 90000 95000 99000 105000 111000 114000 120000 130000 141000 162000 165000
payments
Salaries 26000 25000 24000 23000 22000 30000 33000 34000 38000 40000 42000 44000
Purchase 26000 25000 24000 22000 30000 32000 34000 36000 40000 42000 44000 48000
Creditors 12000 14000 16000 18000 20000 22000 24000 24000 26000 30000 36000 39000
Discount 7000 7000 6000 6000 6000 5000 5000 4000 4000 3000 2000 1000
Total 71000 71000 70000 69000 78000 89000 96000 98000 105000 115000 124000 132000
Cash flow 9000 19000 25000 30000 27000 22000 18000 22000 25000 26000 38000 33000

Bal bld 33000 42000 61000 86000 116000 143000 165000 183000 206000 230000 256000 294000
Bal cld 9000 61000 86000 116000 143000 165000 183000 205000 230000 256000 294000 327000

19
5.5 THE PRE-FORMA INCOME STATEMENT
Items Year 1 Year 2 Year 3
Sales 840000 669000 796000
Gross profit cld 1111000 978000 2075000
Gross profit bld 960000 876000 1814000
Any income 26000 28000 30000
Expenses 40000 60000 80000
Salaries 268000 366000 38000
Rent 20000 30000 40000
Water 10000 12000 14000
Telephones 4000 6000 8000
Postage 6000 8000 10000
Transport 42000 46000 48000
Total expenses 3327000 3079000 4945000
Net profit before 220000 440000 660000
Taxation 69000 70000 80000
Net profit before 256000 346000 456000

5.6 BREAK EVEN ANALYSIS FOR THE FIRST YEAR

B.E.P = fixed cost - variable cost
=840000-0
=$ 840000
5.7 DESIRED FINANCING
Items Amount
Pre-operational cost 760000
Working capital 37000
Fixed assets 116000
Total 913000

5.8 CAPITALIZATION
Items Amount
Owner contribution 453000
Borrowed contribution 206000
Total investment 653000

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5.9 PROFITABILITY RATIO
a) Gross profit rate =G.P/sales x 100
=1111000/840000 x 1000
=132.26%

b]Liquidity ratio = current asset/current liabilities

=47000/10000
=4.7%

c) Net profit rates = N.P/sales x 100

220000/840000 x 100
=0.26%

d) Assets turn over = total sales/assets

=840000/0
= 840000%

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