TINA‘S CLASSIC HOTEL

TITLE: BUSINESS PLAN

BUSINESS NAME: TINA'S CLASSIC HOTEL

P.O BOX: 87-40100 KISUMU

TELEPHONE: 0797536280

EMAIL: Oumachristine2002@gmail.com

NAME OF PRESENTER: OUMA

CHRISTINE ACHIENG

INDEX NO:7410040156

COURSE CODE: 2901

CENTER NO: 7410040

SUPERVISERS NAME: MR PAUL PETER

PRESENTED TO: KENYA NATIONAL EXAMINATION IN PARTIAL

FULFILMENT FOR AWARD OF DIPLOMA IN SECRETARIAL STUDIES

SERIES: JULY SERIES

1
Declaration
I hereby declare that the business plan is my original work that has not been
presented for award in DIPLOMA in any institution.
Index Number:
Signature

2
Dedication
The project is dedicated to my father Nicholas Ouma who has encouraged me to
work hard to complete my project on time and be also support me to cater all the
requirements needed during project writing.

3
Acknowledgment
I take this opportunity to pass my gratitude to all who participated in project
success by offering me a necessary assistance and contribution. I pass my
gratitude to my supervisor Mr. Paul who has been consulting me throughout in
the course of the project. I also thank my lecturers of their continue support
during the project writing. I also thank the institution Kisumu National Polytechnic
by giving a chance to study diploma in secretarial studies and finally giving thanks
to my to the family for their continued support and motivation.

4
Table of Contents
INDEX NO:7410041156......................................................................................................................1

COURSE CODE: 209/108...................................................................................................................1

CENTER NO: 7410040........................................................................................................................1

SUPERVISERS NAME: MR PAUL PETER..............................................................................................1

Declaration.........................................................................................................................................2

Dedication..........................................................................................................................................3

Acknowledgment...............................................................................................................................4

EXECUTIVE SUMMARY.......................................................................................................................9

. BUSINESS DESCRIPTION...................................................................................................................9

. MARKETING PLAN............................................................................................................................9

. ORGANISATION PLAN......................................................................................................................9

. PRODUCTION AND OPERATION.......................................................................................................9

. FINANCIAL PLAN..............................................................................................................................9

CHAPTER ONE..................................................................................................................................10

1.0 BUSINESS DESCRIPTION.............................................................................................................10

1.1 Background of the owner..........................................................................................................10

1.1.2 Education Background............................................................................................................10

1.0 Business Name.......................................................................................................................11

1.1 Business location and address...............................................................................................11

1.2 Business ownership................................................................................................................11

Characteristics of a sole proprietorship..........................................................................................11

Advantage of Sole proprietorship...................................................................................................11

Disadvantages of Sole Proprietorship.............................................................................................12

5
1.3 Type of business.....................................................................................................................12

1.4 product and services..............................................................................................................12

1.5 Justification for opportunities................................................................................................12

1.6 Industry..................................................................................................................................12

1.7 Goals and objectives of business...........................................................................................12

1.8 Business and growth strategy................................................................................................12

CHAPTER TWO.................................................................................................................................14

2.0 MARKETING PLAN..................................................................................................................14

2.1 Potential customers...................................................................................................................14

2.2 Market Share.............................................................................................................................14

2.3 Competition...............................................................................................................................15

2.4 Method of promotion................................................................................................................16

2.5 Pricing Strategies.......................................................................................................................16

2.6 Sales tactics................................................................................................................................16

2.7 Distribution strategy..................................................................................................................16

CHAPTER THREE...............................................................................................................................17

3.0 MANAGEMENT PLAN.................................................................................................................17

3.2 Organization structure...............................................................................................................17

.........................................................................................................................................................17

MANAGER........................................................................................................................................17

a.......................................................................................................................................................17

3.3 Recruitment, Training and promotion.......................................................................................18

3.3.1Recruitment.............................................................................................................................18

3.3.2Training....................................................................................................................................18

6
3.3.3 Promotion........................................................................................................................18

3.4 Other personnel numbers and duties.......................................................................................18

3.5 Remuneration and Incentives....................................................................................................18

3.5.1 Remunaration.........................................................................................................................18

3.5.2 Incentive.................................................................................................................................19

3.6 License, By -laws and permit..................................................................................................19

3.6.1 License and By-law..................................................................................................................19

3.6.2 Permit..............................................................................................................................19

3.7 Support services.....................................................................................................................19

CHAPTER FOUR................................................................................................................................20

4.0 PRODUCTION AND OPERATION METHOD.............................................................................20

4.1 Production facilities and capacity..........................................................................................20

4.2 Proposed premises.................................................................................................................21

4.3 PRODUCTION OPERATION STRATEGY.......................................................................................22

4.4 Transport cost of materials into premises.................................................................................22

4.4.1 External and Internal factors likely to affect business....................................................22

4.5.1 External factors................................................................................................................23

4.6 Regulations affecting operation 4.6.1 Health regulations.........................................................23

4.6.2 Safety...............................................................................................................................23

4.7 Environmental Regulations....................................................................................................23

4.8 production process..........................................................................................................23

CHAPTER FIVE..................................................................................................................................24

5.0 FINANCIAL PLAN.....................................................................................................................24

5.1 Pre-operational cost...............................................................................................................24

7
5.2 Estimation of cooking capital.....................................................................................................25

5.3 Cash Flow Projection Cash flow projection 2021......................................................................26

5.4 Cash Flow Projection Cash flow projection 2022......................................................................27

5.5 Cash Flow Projection Cash flow projection 2023......................................................................28

5.6 proforma income statements/..................................................................................................29

5.6.1 (i) Proforma balance sheet for year 2021...............................................................................32

5.6.2 (ii) Proforma balance sheet for year 2022..............................................................................33

5.6.3 (iii) Proforma balance sheet for year 2023.............................................................................34

5.7 CALCULATION OF BREAK EVEN POINTS.....................................................................................35

5.7.1Calculation of Profitability Ratio..............................................................................................35

5.8 Desired Financing.......................................................................................................................36

5.9 Proposed Capitalization.............................................................................................................36

8
 EXECUTIVE SUMMARY.
This is a brief of business venture and will summarize all other chapter of the
proposed business in TINA'S CLASSIC HOTEL
. BUSINESS DESCRIPTION
This chapter covers the background of the business, name, location, type of
business and its products and services.
. MARKETING PLAN
The chapter covers the potential of customer who will buy goods and services in
TINA’S CLASSIC HOTEL Method of promotion and advertising procedure to be
also discussed here.
. ORGANISATION PLAN

This chapter covers management team and their duty and responsibility,
organization structure also has been discussed here. How members will be
recruited, train and promote. It’s also show how employees will receive their
salary.
. PRODUCTION AND OPERATION

It’s cover about the production facilities and capacity and also firm layout. It also
covers external and internal factors that likely to affect business operation and
lastly regulations affecting operation plan.
. FINANCIAL PLAN
This chapter is aimed at enabling the business to success financial and work
towards targeted objective which is to make profit.

9
 CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.1 Background of the owner

The owner of the business is Christine Achieng Ouma, Age 21 years and single,
student. The address is 87, Usare, Homabay county.

1.1.2 Education Background

2022_up date: Kisumu National Polytechnic
Diploma in Secretarial studies
2017 to 2021: Nyakach Girls High School KCSE CERTIFICATE
2008 To 2016: Usare Primary school KCPE CERTIFICATE

2005 To 2008: Victory Academy E.C. D level.

1.0 Business Name
The name of business will be named TINA’S CLASSIC HOTEL, this is because Tina is
a family name and the business will have anything to do with food .
1.1 Business location and address
1.1.1 Business location
This business will be located along Kisumu Nairobi road opposite Kisumu
International Airport

1.1.2 Business address

Email: Oumachristine2002@gmail.com

Postage: Kisumu postage

PO BOX:420100

KISUMU _KENYA
10
 1.2 Business ownership

This business will be a sole proprietorship type of a business because it will be

form by a single person who will managed all activities.

Characteristics of a sole proprietorship

 Own by one person

 Decision made by one person
 Capital contributed from friends and family and also owner’s savings
Advantage of Sole proprietorship
 Faster in decision making
 Easy to start and run

 Owner enjoy profit alone

Disadvantages of Sole Proprietorship
 Poor decisions making
 Risk facing alone
 Low profit made
1.3 Type of business

This will be a startup business which will start with a lower capital and
increase as time goes by until it achieves better results.

1.4 product and services

This business will offer all types of services e.g. Accommodation, bar,
restaurant, camping site, tours and excursions, beachside, speedboat rides.
Walk ins are also allowed

1.5 Justification for opportunities

11
 Due to high populations in Kisumu area I will locate my business at the
center of the town to attract residents within especially current generation.
1.6 Industry

This business will be under Hotel industry, which will help in accommodation of
our tourists that visit the country.

1.7 Goals and objectives of business

Main goals of this business is to promote good health through offering all source
of food in a hotel in a tidy and contusive environment. To maximize profit and to
be ambitious firm that wants to achieve great things.

1.8 Business and growth strategy.

Business will penetrate the market through advertisement e.g. celebrity and
compete type of advertisement.

12
13
CHAPTER TWO
2.0MARKETING PLAN

2.1 Potential customers

My potential customers will be Kisumu residents especially those juakali people

and those who works within Airport.

2.2 Market Share

Since it will be a new business in town it must face a lot competition like many
hotels that will offer the same services e.g. Bonge Hotel, Acacia Hotel, Sunset
Hotel. The income will be increasing due to high turn of customers.

Before penetration in the market.

Competitors Bonge Acacia Sunset

hotel Hotel Hotel
Sales 200000 400000 500000
Market 25% 35% 40%
share

market share

25%

40%

35%

Bonge hotel Acacia hotel Sunset hotel

14
After penetration in the market

Competitors Bonge Acacia

Hotel Hotel Sunset Hotel
Sales 100000 300000 400000
Market 10% 30% 40%
share

2.3 Competition
Particular strength weakness opportunity

Bonge HOTEL More skilled Few working hours Expansion

Personnel High prices

Acacia Hotel Affordable products Insecurity Expansion

Skilled personnel Few working hours

Sunset hotel Qualified personnel Insecurity Expansion

High prices

Tina classic hotel Qualified personnel Less skilled personnel More space
Quality services Expansion
Good communication
skills
Security
Affordable products

15
In any new business competition must be there for example Along the highway
there is 3 competitors who I will faced.

2.4 Method of promotion

The business will promote and market for its goods through social media that’s
will be done by using platform such as Facebook and WhatsApp. Also mass media
by using radio channels and TV stations then lastly advertisement using posters
and billboard.

2.5 Pricing Strategies

My Hotel will offer foods at a favorable price and also discount to those who buy
in bulk.

2.6 Sales tactics

The goods that will be available at my hotel and will be sold directly to my
customers.

2.7 Distribution strategy

Products will reach customers through wholesale, distributors agents or direct

customers.

16
 CHAPTER THREE
3.0 MANAGEMENT PLAN
3.1 Management Team

The Hotel will be managed by one manager, four Cooks and four security
officers who will be working in shifts also work as a cleaner, accountant and
six waiters.

3.2 Organization structure

WAITER/
ACCOUNTANT SECURITY CLEANERS
MANAGER WAITRESS
a

Manager is to run the business in a daily basis, accountant encounters for all the
transactions carried out in the business, security is to ensure the safety for the smooth
running of the business. Waiters and waitress to serve our customers and finally
cleaners to ensure the tidiness of the business.

17
 Cooks A Cooks B Security officer

3.3 Recruitment, Training and promotion

3.3.1Recruitment

All the vacancies needed will be advertised through social media platforms.

3.3.2Training

Training of any new employee will take only one day and it will be done by an
outside Human resources management company.

3.3.3 Promotion

Workers will be promoted according to how they will perform their duties.

3.4 Other personnel numbers and duties

The business also need other personnel like suppliers to supply the business products.
Massager that the business can send to various places for meaningful reasons and IC
personnel that can advertise and promote business services in all media platforms.

3.5 Remuneration and Incentives

3.5.1 Remunaration

Title Salary Allowance Total

General 20000 3000 23000
manager
Cooks A 15000 2000 17000
Cooks B 10000 1000 11000
Security 6000 500 6500

18
 3.5.2 Incentive

The business will organize weekly rewards to the better performing worker per
week.

3.6License, By -laws and permit

3.6.1 License and By-law

Business will register and obtain trading license from county government of
Kisumu which will cost 2000/-. The Hotel will also strictly follow rules and
regulations of the county government of Kisumu regarding business.

3.6.2 Permit

Permit for business will processed and obtain from Kenya Revenue Authority.

3.7 Support services

Items Branch Services

Bank Kenya Cash
commercial deposit,
Bank withdrawals,
savings and
loans
Insurance AAR Covers any
Insurance risk that may
Kenya occur during
the business

19
 CHAPTER FOUR

4.0 PRODUCTION AND OPERATION METHOD.

4.1 Production facilities and capacity

Items Quality Cost(Ksh) Capacity

Fridge 1 15000 Make

environment
conducive

20
 Chairs 15 40000
Land 240000
Subordinate 1 60000
room
Toilets 4 25000
Electricity 2phase 18000
Sufuria 7 7000
Dishes 26 12000
Gas 3 10000
Cookers
Spoons and 60 27000
foods
The money will be generated from:

Personal savings:400000

Bank loan:260000

Friends and family contribution:180000

4.2 Proposed premises

ACCOUNTANT/
SECRETARY

MANAGER COLDROOM

WORKING AREA

SUPERVISOR

WASHROOM
GATE

4.3 PRODUCTION OPERATION STRATEGY

21
ITEMS COST PER ITEM NO. TOTAL

COMPUTERS 40000 2 80000

CHAIRS 500 30 15000

TABLES 300 3 900

TOTAL 40800 35 95900

4.4 Transport cost of materials into premises

TITLE NO. OF PEOPLE SALARY PER TOTAL AMOUNT
MONTH
MANAGER 1 20000 20000
SUPERVISOR 1 15000 15000
ACCOUNTANT/SECRETARY 1 10000 10000
SECURITY 1 5000 5000

4 50000 50000

4.4.1 External and Internal factors likely to affect business

Liability Liability cost Total
Advertisement 5000 5000
Insurance 100 100
Electricity 1000 1000
Water 4000 4000

TOTAL 10100 10100

22
4.5 Internal factors

Some of the internal that are likely to affect business will be electricity breakdown
which will delay process in business and also traffic jam which will affect supply
procedure.
4.5.1 External factors

This are the factors that will affect business outside and they are political changes,
poor infrastructure security and natural calamities.

4.6 Regulations affecting operation

4.6.1 Health regulations

Hotel will hand its products in accordance to the public health regulation and
adhere to general public health laws.

4.6.2 Safety

The Hotel will ensure safety for its workers and customers by providing them a
health measure that can’t cause any injury.

4.7 Environmental Regulations

The Hotel will also ensure cleanliness is highly maintaining and proper
disposal of waste material to avoid any pollution of
environment.
4.8 production process

All products from Tina classic hotel will be produce from Kenya industry.
Time in for workers is 8.00 am and no time out but they work in shift. The
business operates every day all the time except very late in the night. The worker
will be provided with t – shirts printed the name of the business.
23
CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 Pre-operational cost

This is the amount of money or expenses that will be spend before the business starts its
operation.

ITEM COST

Advertisement 3000

Licenses and permits 3000

Rent 4000

Recruitment 7000

24
 Installation 3000
Transport 1500
Designing 4000
Utility bills 10000
Insurance 2000
Furniture 5000
Total cost 87,500

5.2 Estimation of cooking capital

The working capital is the difference between current assets and current liabilities.

Current assets ksh.

Stock 60000
Debtor 5,000
Cash at hand – 40,000
Cash at bank – 80000
Total: 185,000/

Current liabilities

Creditors -25000

Loan -18000

Total - 43,000/

Working Capital = Current Assets - Current Liabilities

185000-43, 000

142,000/=

25
5.3 Cash Flow Projection Cash flow projection 2021.

CASH FLOW STATEMENT

CASH FLOW STATEMENT FOR YEAR 1
Months/Itmes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Totals
Balance B/F 119,500 100,100 886,000 81,200 71,250 65,500 59,250 55,250 50,450 43,450 38,120 41,190 1,611,260
Cash Sales 2,000 25,000 30,000 32,000 34,000 35,000 38,000 40,000 41,000 42,000 44,000 45,000 408,000
Debtors 5,800 4,000 3,500 3,000 3,500 2,000 2,500 2,000 - - 8,000 5,000 38,500
Total Inflow 144,500 129,100 919,500 116,200 108,750 102,500 99,750 97,250 91,450 85,450 90,120 91,190 2,075,760
Outflow - - - - - - - - - - - -
Purchases 20,000 20,000 21,000 22,000 23,000 24,000 25,000 26,000 27,000 28,000 29,000 30,000 295,000
Creditors 3,000 3,000 2,000 2,500 2,500 2,000 2,000 3,000 3,000 2,500 2,500 3,000 31,000
Electric bill 500 8,000 600 5,000 800 700 500 800 500 600 500 600 19,100
Water bill 800 800 1,000 800 700 500 1,000 800 1,000 800 700 100 9,900
Rent 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Insurance 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Transport 1,000 800 1,200 1,000 1,100 1,000 800 1,200 1,000 800 1,100 1,000 12,000
Salaries 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
License 1,500 - - - - - - - - - - - 1,500
Advetisement 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Tax 600 600 600 600 600 600 600 600 600 600 600 600 7,200
Repairs 300 300 300 350 350 300 400 400 400 330 330 330 4,140
Total 41,900 40,500 40,900 42,750 43,250 44,500 44,500 46,800 47,500 47,830 49,930 49,730 539,090
Balance C/F 5800 77700 9050 70750 153950 176600 25110 320610 396610 46610 51490 59820 3198910

26
5.4 Cash Flow Projection Cash flow projection 2022.

CASH FLOW STATEMENT

CASH FLOW STATEMENT FOR YEAR 2
Months/Items Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Totals
Balance B/F 11,500 100,100 886,000 81,200 71,250 65,500 59,250 55,250 50,450 43,450 38,120 41,190 1,611,260
Cash Sales 2,000 25,000 30,000 32,000 34,000 35,000 38,000 40,000 41,000 42,000 44,000 45,000 408,000
Debtors 5,800 4,000 3,500 3,000 3,500 2,000 2,500 2,000 - - 8,000 5,000 38,500
Total Inflow 143,500 129,100 919,500 116,200 108,750 102,500 99,750 97,250 91,450 85,450 90,120 91,190 2,075,760
Outflow - - - - - - - - - - - -
Purchases 120,000 20,000 21,000 22,000 23,000 24,000 25,000 26,000 27,000 28,000 29,000 30,000 295,000
Creditors 3,000 3,000 2,000 2,500 2,500 2,000 2,000 3,000 3,000 2,500 2,500 3,000 31,000
Electric bill 500 8,000 600 5,000 800 700 500 800 500 600 500 600 19,100
Water bill 800 800 1,000 800 700 500 1,000 800 1,000 800 700 100 9,900
Rent 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Insurance 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Transport 1,000 800 1,200 1,000 1,100 1,000 800 1,200 1,000 800 1,100 1,000 12,000
Salaries 8,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
License 1,500 - - - - - - - - - - - 1,500
Advertisement 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Tax 600 600 600 600 600 600 600 600 600 600 600 600 7,200
Repairs 300 300 300 350 350 300 400 400 400 330 330 330 4,140
Total 276000 99000 92150 58750 153350 276600 321110 220610 32210 442540 5321490 7820 1398910

27
5.5 Cash Flow Projection Cash flow projection 2023

CASH FLOW STATEMENT

CASH FLOW STATEMENT FOR YEAR 3
Months/Itmes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Totals
Balance B/F 119,500 100,100 886,000 81,200 71,250 65,500 59,250 55,250 50,450 43,450 38,120 41,190 1,611,260
Cash Sales 2,000 25,000 30,000 32,000 34,000 35,000 38,000 40,000 41,000 42,000 44,000 45,000 408,000
Debtors 5,800 4,000 3,500 3,000 3,500 2,000 2,500 2,000 - - 8,000 5,000 38,500
Total Inflow 144,500 129,100 919,500 116,200 108,750 102,500 99,750 97,250 91,450 85,450 90,120 91,190 2,075,760
Outflow - - - - - - - - - - - -
Purchases 20,000 20,000 21,000 22,000 23,000 24,000 25,000 26,000 27,000 28,000 29,000 30,000 295,000
Creditors 3,000 3,000 2,000 2,500 2,500 2,000 2,000 3,000 3,000 2,500 2,500 3,000 31,000
Electric bill 500 8,000 600 5,000 800 700 500 800 500 600 500 600 19,100
Water bill 800 800 1,000 800 700 500 1,000 800 1,000 800 700 100 9,900
Rent 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Insurance 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Transport 1,000 800 1,200 1,000 1,100 1,000 800 1,200 1,000 800 1,100 1,000 12,000
Salaries 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
License 1,500 - - - - - - - - - - - 1,500
Advetisement 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Tax 600 600 600 600 600 600 600 600 600 600 600 600 7,200
Repairs 300 300 300 350 350 300 400 400 400 330 330 330 4,140
Total 729810 7474680 898610 1062810 1139710 1310010 1470210 1067560 1783295 1940635 1984385 2137185 16829870

28
5.6 proforma income statements/
(i) Proforma income statements for the year 2021.
sales 1436,500
Less cost of goods sold
Opening stock 30000
Purchases 20000
Carriage inward 800
50800

Closing stock - 20,000 - 30000

30,000 Ksh 1406500
Add income
Discount received 365000
Rent received 40,000
405000 405,000
Ksh 1,811,1500
Expenses
Salaries and wages 50000
Utility bills 500
Creditors 800
Rent 5000
Discount allowances 6000
62300 Ksh 62300
Net profit 1749200

29
Proforma invoice statement for the year 2022

sales 1997400
Less cost of goods sold
Opening stock 60000
Purchases 40000
Carriage inward 1000
101000

Closing stock - 60000 - 41000

41000 Ksh 1956400
Add income
Discount received 1909300
Rent received 60,000
1969300 1969300
Ksh 3925700
Expenses
Salaries and wages 70000
Utility bills 8000
Creditors 1000
Rent 6000
Discount allowances 7000
92000 Ksh 92000
Net profit 3,833,700

30
Proforma income statement for the year 2023

sales 1873450
Less cost of goods sold
Opening stock 70000
Purchases 50000
Carriage inward 1500
121000

Closing stock - 70000 - 51000

51000 Ksh 1, 821,950
Add income
Discount received 1955950
Rent received 70,000
2025950 2025950
Ksh 3,847,900
Expenses
Salaries and wages 75000
9000
Creditors 1500
Rent 7000
Discount allowances 7500
90000 Ksh 90000
Net profit 3,757,900

31
5.6.1 (i) Proforma balance sheet for year 2021
Fixed Assets Amount
Furniture 400000
Land 560000
Car 125000
Machinery 30000
Total Sh 1,380,000 Ksh 1,380,000

Current assets Amount

Cash in hand 150,000
Cash at bank 140,000
Stock 160,000
Debtors 120,000
570,000 =ksh570,000

Current liabilities Amount

Bank overdraft 30000
Creditors 25000 =70000
Accruels 15000 500000
Total 70000 +1380,000
1880,000
Financed by
Capital 100000
Profit 1749000 +1849200
1849,200 30800
Non-current liabilities
Bank loan 30,800 1880,000

32
5.6.2 (ii) Proforma balance sheet for year 2022
Fixed Assets Amount
Furniture 5000
Land 70000
Car 45000
Machinery 30000
Total Sh 195000 Ksh 195000

Current assets Amount

Cash in hand 170,000
Cash at bank 160,000
Stock 170,000
Debtors 140,000
640,000 =ksh640,000

Current liabilities Amount

Bank overdraft 40000
Creditors 30000
Accruels 20000
Total 90000 90,000
755,000
Financed by
Capital 300000
Profit 150000
450000 Shs450,000
Non-current liabilities
Bank loan 305,000 305,000
755,000

33
5.6.3 (iii) Proforma balance sheet for year 2023
Fixed Assets Amount
Furniture 600000
Land 800000
Car 200000
Total Sh 1800,000

Current assets Amount

Cash in hand 350,000
Cash at bank 200,000
Stock 200,000
Debtors 150,000
850,000 =ksh850,000

Current liabilities Amount

Bank overdraft 80000
Creditors 50000
Accruels 25000
Total 155000 155000
695000
Financed by
Capital 150000
Profit 757900
607900 Shs607900
Non-current liabilities
Bank loan 87100

34
5.7 CALCULATION OF BREAK EVEN POINTS.
Break even amount is whereby the total revenue is equal to the total

cost.. Formula of the break even points.

Fixed cost/units = 1880/12 = 156.67 units

Value = fixed cost x selling price

Units

1880 x500

12

= 78336

5.7.1Calculation of Profitability Ratio.

Gross = Gross Profit X 100 %

Sales

= 30000 X 100%

20000

=150%

35
5.8 Desired Financing
ITEM AMOUNT
Pre-operational cost 40000
Working capital 40000
Fixed asset 200000
Total 280,000

5.9 Proposed Capitalization.

ITEM AMOUNT
Owner contribution 300,000
Borrowed funds 60,000
Friends contribution 40,000
Family contribution 600,000
Total 1,000,000

36