JUMA’S BUTCHERY

P.O.BOX 250
FUNYULA – SAMIA
CELL: 0720 117 783
EMAIL: juma’[email protected]

TITLE : BUSINESS PLAN

PRESENTER : SOPHIA NABWIRE JUMA

INDEX NUMBER : 701503/264

COURSE CODE : 1901

PRESENTED TO : KENYA NATIONAL EXAMNATION COUNCIL IN

PARTIAL FULFILMENT FOR THE AWARD OF CERTIFICATE

IN SECRETARIAL STUDIES

PROJECT SUPERVISOR : MADAM NORAH

DATE OF PRESENTATION : OCTOBER/ NOVEMBER 2011

CENTER : KISUMU POLYTECHNIC

DECLARATION

I declare that the business plan is my own faithful work. The owner came up with
the idea after a long experience from his/her fore fathers’ works. It’s thought that
the work would be proved in written form and therefore the owner came up with
this business plan.

Presented by : SOPHIA NABWIRE JUMA

Index Number : 701503/264

Signature :

This Business plan has been presented to the Kenya National Examination Council
with the consent of the supervisor.

Name : MADAM NORAH

Signature :

Date :
DEDICATION

The Juma’s butchery business plan was written by Sophia Juma who wishes to
dedicate to her sponsor, Madam Jose vas Kasareen, the mother and the whole
Juma’s family for their moral support and their positive ideas.
ACKNOWLEDGEMENT

I thank the people who assisted me to come up with this business plan. First and
foremost I will appreciate the people/ the fore fathers who came up with this idea
of business, next are the teacher who has guided me to come up with a good
plan. Lastly, I would appreciate all those who involved themselves in construction,
creation and binding of the business plan.
 CHAPTER 1

1.0 EXECUTIVE SUMMARY

Juma’s Butchery is a business that will be dealing in the sales of meat in the area
of Samia district, Funyula town in Western Province.

The firm’s intention is to provide meat which is one of the staple foods among the
residents at a fair price. In addition, the product sold is of good quality and from
the best slaughter houses/ farmers. The target of the business is to increase the
number of potential customers in the town and outside the main town center.

The initiative for the business is to sell meat to customers at relatively affordable
prices, be reliable and listen to customers’ needs.

The aim of the business will be to deliver excellent service and creating good
relationship with the customers which many similar businesses have not been
offering to customers.
CHAPTER TWO

2.0 BUSINESS DESCRIPTION

2.1 BUSINES NAME

The name of the business will be “Juma’s Butchery”. The word was derived from

the owner’s late fore father who was a prominent businessman and he used to

run butchery and owned a lot of cows.

The business will be located in Samia district, Funyula town. The business start

capital will be Kshs250, 000 of which Kshs 100,000 will be from her savings’ Kshs

100,000. From bank loans and 50,000, from friends since the owner of the

business will inherit some of building, tools and equipments from the fathers

wealth.

2.2 BUSINESS LOCATION AND ADDRESS

Jumas Butchery will be located in the centre of Funyula town, opposite the Mama

Watoto shop next to the offices of CDF along the moody Awori Highway road.

The area is preferable since it has covered a large population density since it’s in

the centre of the town. Trading activities takes place there, it serves an
administration center where we find offices such as chief’s, DO’S and police

camps. Next to institution, hotels examples are High schools (Nangina primary

school, also hospitals like Nangina/ hospitals. It has good infrastructure and also

security.

The town is situated in rural areas where raw materials are easily got due nearest

to the village where raw materials are readily available.

The business address will be as shown below;

2.3 FORM OF BUSINESS

The business will be sole proprietorship. The owner will be the manager of the

business who will set rules for the business major decision making and enjoys

profit and financial controller of the business. The challenges the owner will pass

through will be uncertainty of the business continuity like death or sickness and

lack of necessary skills like tiredness or bore some, Sometimes lack of capital and

unlimited liabilities.

The owner of the business has a certificate in Craft secretarial studies and

experienced in business management “Butchery” since owner parent (father) had

been running the same business for long period of time. The owner also

participated in the business management

2.4 TYPE OF BUSINESS

The business will be offering goods and services under small scale production.

Since it will be a starting business of in the area. The business will be partially

affected by weather either negatively or positively likes when the weather its too

hot he will experience low production and when its wet high production. Goods

offered will be meat (beef), liver, skins, tails, horns, legs, hooves,

“matumbo”.Services offered examples are credit facilities to potential customers

after sales services, transporting of goods and gifts sample.

2.5 GOODS AND SERVICES

The business will be offering the following goods according to the customer’s

examples 1kg- 10kgs

Meat, liver,”matumbos”

Legs- the owner will sell the legs per pair (2) two or more @ Kshs 70.00

Skin- will be sold when weighed at 5 kg @ 70 Kshs

Services offered are after sales services like means of transport to your place.

Offering free samples like calendars, magazines. Allowing discounts examples

quantity discount for buying large capacity of or a lot of goods bought on credit

facilities for the potential customers.

The goods that will be provided will be body building food rich in protein,

carbohydrates, fats oils blood calcium and fibers. Skin horns are also used to

make musical instruments.

2.6 JUSTIFICATION OF THE OPPORTUNITY.

There will be high demand of the products in town since it’s in the centre of the

town where buying and selling of the goods takes place. Administration offices

are found and also availability of good infrastructures. A part from those

institutions such as school, college hospitals

Since we will have goods such as skin hooves, horns intestine and tails apart from

the main products; we will have big room for expansion or growth after selling

them and getting profits from them.

2.7 INDUSTRY
Juma’s butchery will fall under livestock and fishery development industry. The

business will find the raw materials locally example from market and villagers.

Within Funyula town. The prices of products will depend on demand and supply

curve.

2.8 GOALSD OF THE BUSINESS.

Objectives of the business to be achieved;

Some of the short term goals include;

-To increase sell volume by 60%

- To increase profit level by 50%

-To make goods and services readily available on time.

Some of the long term goals; includes

-Open up other branches of the business

-Employing more employees

-Purchasing, Vehicles or vans

-Educating employees through seminars or colleges.

2.9 ENTRY AND GROWTH STRATEGY.

The owner of the business will enters the market through posters, display of the

goods on the shops and also by lowering the prices of the goods than the

competitors and also by advertising of the products by designing it on the

business. The owner of the business will use the new skills and technologies.

Provide after sales services to compete the others; can also make a slaughter

house for the owners `business. Good storage facilities & good preservation

methods.
CHAPTER THREE

3.0 MARKETING PLAN

3.1 CUSTOMERS

These are people, institution or organization that are willing to buy your products.

Juma Butchery is open to any individual who is ready to use or consume its

products examples are;

Commercial customers: institutions, individuals who will be wiling to buy in bulk

and not for sales example like tenders from schools, hospitals.

Individual customers. These are the customers/people living around the business

example our daily customers. Industrial customers: these are people whop buy in

bulk for resale examples are hotels and other butcheries.

3.2 MARKET SHARE

This is the proportion that served by your business population around. The

population around Samias district especially Funyula town is 3000 people. Juma’s
butchery will serve half of the population (1500 people) and the rest will go to the

competitor. The competitors are the Dish butchery and “Choma ushibe” butchery.

Dish butchery has 750 people 25% and Choma ushibe butchery 750 people 25%

people. Juma’s butchery will face stiff competition from the two surrounding

butcheries.

The business will intend to offer high quality products at the best price at a steady

supply. The business will also offer tenders to hotels, schools, hospitals and other

willing institutions at credit facilities.

The pie chart below shows Juma’s butchery and its competitor

3.3 COMPETITION

This involves the activities that the owner of the business does to ensure his/ her

products are sold better than others who do the same business. It is the

steadiness of the same kind of business in an area. It encourages the owner’s f the
business to work hard or to implement more skills in their businesses . The following
are the strength sand weaknesses of the business.

BUSINESS NAME STRENGTH WEAKNESS

JUMAS BUTCHERY -Has trained personnel - High prices

-Uses improved -Lack of transportation

techniques materials

-Its open always -Has less employees

-Steady supply of meat -Does not advertise the

-Quality meat business always

-Offers credit facilities

/tenders

DISH BUTCHERY -Enough employees - Poor time management

-offers transporting - Low quality meat

means -Lack of skills

-Offers after sales -Does not offer tenders

services.

CHOMA USHIBE -Always clean -Lack of enough skills

BUTCHERY -Fair prices -Low quality products

-offers samples - Lack of credit facilities.

 -Good time management

3.4 ADVERTISEMENT

These are ways in which you will reach the customers examples are branding of

the goods /production menu T.V and radios and through window glasses. Juma’s

butchery will advertise its business through posters or production of menus and

also by display the meat properly in the glass widows. By direct rate contact form

the wholesaler and retailers to the consumers. It will maintain cleanness at high

level.

3.5 SALES PROMOTION

This is the attractions offered by the business to make customers buy the

products. The Juma’s butchery will be offering gifts, prices after sales services,

calendars offering special business letters to target promotion. And will use the

display of fatty, good looking meat at the counter next to the door for everybody

to see.

3.6 PRICING STRATEGY

The prices at which will be determined by the demand and supply curve of the goods to the
market example. the prices at which the owner of the butchery will be selling in relation to market

prices completion and relations to production costs of the products e.g.

PRODUCTS JUMA’S BUTCHERY DISH BUTCHERY CHOMA USHIBE

BUTCHERY

Meat 1kg @ 100 1gkg @ 90 1kg @ 95

Liver 1kg @ 120 1kg @ 120 1kg @ 110

“Matumbo” 1kg @ 80 1kg @ 80 1kg @ 80

Skin 1kg @ 75 1kg @ 70 1kg @ 70

Legs 4 pair @ 270 4 pairs @ 480 4 pair @ 280

Tail I tail @ 60 1 tail @ 60 I tail @ 60

According to the quality and transport costs on the products will affect the prices

of the items or goods according to the supply of the goods in markets. Sometimes

it might be affected by supply and demand curve.

3.7 DISTRIBUTION
The business owner will supply the products direct. The customers sometimes it

will offer sometimes transporting facilities while it might sell to other retailers like

hotels and to consumers who are customers example;-

Retailers – consumers

Wholesalers - retailers - consumers

Manufacturer – retailers – consumers like Bat shop

Manufacture Wholesalers/ Retailers

Shoe making factories- Bata shops to consumers

CHAPTER FOUR

4.0 ORGANIZATIONAL AND MANAGEMENT PLAN

4.1 KEY PERSONNEL

This is the owner or owners of the business. Juma’s butchery is a sole

proprietorship business since it will be under one management. It will be owned
by a person who is the owner/ manager.

The table below describes the key personnel of the business in their respective
qualification, experiences duties and age.
PERSONNEL AGE EXPERIENCES QUALIFICATIONS DUTIES
Manager 30years 10 years experience in Craft in Control the
a butchery secretarial business
studies
Also has been Accounts in Control of
employed by Nangina KATC1 and finance
social work project as KACT2
a clerk for two years
Responsible
for all the
purchases
Salary
payment
Banking of
the money
Buying of raw
materials

4.2 OTHER PERSONNEL

They will be the other staff helping in the smooth running of the business. The
business owner who will be the manager will intend to employ other staff to help
him in the day to day running of the business.
The table below shows the qualification and duties of the support staff.

PERSONNEL AGE QUOLIFICATION EXPERIENCE DUTIES

Cashier 25 -35 years KACT1 with a C in - Five years Control the daily
mathematics and above in cash flow in the
any business
 institution or
butchery
Should be ready
to enter and
balance the cash
book
Butcher 24 – 35 Must have At least three Serving the
men years worked in a years customers at the
butchery experience butchery
Spoken English Cutting and
and Kiswahili selling meat
Physically strong
watchmen 35 years and Strong aged men Any security Provide security
above job
experience
Cleaning the
premise
Preparing
breakfast

4.3 ORGANIZATIONAL CHART

The chart below will show the key positioning from the top ranked to the lowest
in rank at the Juma’s butchery.

MANAGER

CASHIER
1ST BUTCHERMAN 2ND BUTCHERMAN WATCHMEN

4.4 RECRIUTMENT, TRAINING AND PROMOTION

4.4.1RECRIUTMENT

The manager of the business will be responsible to recruit the supportive staff
since him / her as the owner of the business wish to work without stress so that
the goal of the business could be achieved.

The business requires well experienced well experienced, qualified employees

with good conducts and maximum discipline. The vacancies will be advertised on
posters. They will be interviewed accordingly and finally the required candidate
be found

4.4.2TRAINING

The training of the new employees or the orientation will be done in about first
two weeks a they start the work by the employer himself/ herself. They will have
to attend seminars for new skills or improving their working skills for them to
perform better.

4.4.3PROMOTION

Promotion of any employee will depend on his or her performance, hardworking

or high production level with extra academic certificates will also be looked upon.
4.5 RENUMERATION AND INCENTIVES

4.5.1 RENUMERATION

This is the salary that the employee pays to his staff.

The salaries for the Juma’s butchery employees are shown in the table below:

Title Salary per month Salary per year

Manager 10,000 120,000
Cashier 8,000 96,000
1st butcher man 4,000 48,000
2nd butcher man 4,000 48,000
Watchman 2,000 24,000
Total 28,000 336,000

4.5.2 INCENTIVES

They will be provided with transport allowance and on top of the salary, there is
out of pocket allowance which one can use for buying credit card for hi/ her
phone.

Transport and communication allowance table

Personnel Transport communication

 Monthly Yearly Monthly Yearly
(Kshs) (Kshs) (Kshs) (Kshs)
Manager 1200 14400 500 6000
Cashier 900 10800 800 3600
1st butcher man 900 10800 200 2400
2nd butcher man 900 10800 200 2400
watchman 600 7200 100 1200
4500 54100 11300 15600

CHAPTER FIVE

5.0 OPERATION AND PRODUCTION PLAN

5.1 OPERATION PLAN

This is the graphical location of the business and measurements. Juma’s butchery
will be located in the center of Funyula town, opposite the Mama Watoto shop
next to the office of CDF along the Moody Awori highway. The site is more
marketable due to its location in the center of the town where buying and selling
takes place and serves as an administration town. It’s also next to a police station
which makes it more stable in terms of security.

The opening hours of the business will be on Monday to Saturday from 8.00am to
8.00pm. On Sunday it will be open as from 10am to 4.00pm. On public holiday, as
from 10.00am to 4.00pm.

The office layout will be as follows:

TABLE FOR PUTTING

WEIGHNG MACHINE

ENTRANCE
CUPBOARD

MEAT ON
DISPLAY CASHIERS’ DESK

WEIGHNG MACHINE
TABLE FOR PUTTING

FRIDGE GLASS WINDOW

5.2 PRODUCTION PLAN

The following are the names of the products, their uses and also the services offered in Juma’s butchery.
It is as follows:

NAME OF THE PRODUCT USES OF THE PRODUCT SERVICES OFFERED

Meat A food rich in proteins After sale services
(body building food)
Liver Food rich in irons Transport services
(protection against offered
 diseases)
Matumbo Food rich in fats (energy Discount allowed
giving foods
Horns Musical instruments Free samples given
Tail Food (rich in fats and
proteins, body building
food and energy giving
Legs Food rich in calcium
(bone building foods)

5.3 Production facilities and capacities

Facilities Qnty Price @ (Kshs) Source Total (kshs)

Counter table 1 500 Family wealth 1500
Covering glass 1large 1800 Family wealth 1800
Cashier’s desk 1 700 Family wealth 1700
Weighing 2 3000 Family wealth 6000
machine
Pangas 6 1200 Family wealth 7200
Knives 6 150 Family wealth 700
Weighing 200 Family wealth 1000
stones
Brooms 2kg 30 Funyula 60
market
File 2 70 Mama Watoto 140
wholesale
Small pieces 180 60 Funyula 195
market
Gum boots 4pairs 700 Funyula 2800
market
Cup board 1 2000 Family wealth 2000
Wire mesh 1 1500 Family wealth 1500
Doom 2 8 Mama Watoto
wholesale
Fridge Shop 23,500
TOTAL 30,595
Perishable facilities and capabilities

Facilities Qnty Price per unit Service Total

Paper gums 2pcs 65 Shops 130
News paper 6kg 70 Mama watoto 420
general shop
Meat 150kg 150 22500
Liver 4kg 170 680
Matumbo 20kg 120 2400
TOTAL 26,130

5.4 PRODUCTION STRATEGY

This is the processing of the raw materials to finished goods to satisfy human
wants. That is to say that Juma’s butchery will get the raw materials from village
or market – slaughter cows, take the meat to butchery and finally sell the meat to
the customers. Skins will be sold to the manufacturers and will be processed to
shoes and mats which will later on be sold.

The horns will be sold to dancers for musical activities. Finally the tails and the
legs are sold to hotel owners who cook them to their customers.

Cow slaughter house butchery consumers

Skins manufacturers retailers consumers

Wholesalers

Horns dancer’s consumers

 Tails retailers consumers

5.6 Regulation affecting the operation

Juma’s butchery will work under some regulations and consider environment in
terms of hygiene and cleanliness.

Environmental regulation

The business will dig a compost pit for all wastes to be dumped in. funs will also
be placed within the premise for fresh air circulation; fridges will be provided for
meat preservation and finally cleaning of the butchery will be done regularly.

Employer – employee relation

There, it is expected that high standards of discipline shall be observed between

the employer and the employee. The rules and regulations will be set guiding all
the employees on their day to day activities. Again, the employer should be able
to understand the employees and their weaknesses as much as he expects them
to work to the best of their standards for maximum production (profit making).

The business will give incentives and other encouraging activities to the
employees so that they can work to the satisfaction of all our customers.

CHAPTER SIX

6.0 FINANCIAL PLAN

6.1 PRE-OPERATIONAL COST

PARTICULARS/OPERATIONS COST

Renovations 30,000.00

Fixtures & Fittings 7,000.00

License(6 months) 6,000.00

Transportation 5,000.00

Advertisement 2,000.00

Electricity 5,000.00

Water 2,000.00

Rent (4 Months deposit) 8,000.00

Tools & Equipment 16,460.00

Machinery 23,500.00

Insurance(1 year) 1,500.00

Purchase 26,120.00

Preparation of B Plans 6,000.00

Miscellaneous 13,800.00

Total Kshs. 152,440.00

 PROFOMA CASHFLOW YEAR ONE
Months Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Cash Inflows
Opening Balance 133,310 120,110 113,410 107,405 84,426 58,121 69,156 51,311 62,666 56,901 54,361 1,011,237
Cash (Capital) 250,000 250,000
Sales 70,000 60,000 80,000 90,000 80,000 70,000 90,000 90,000 100,000 90,000 100,000 100,000 1,020,000
Debtors 2,000 1,000 2,000 2,000 1,000 2,500 1,000 11,500
Total Cash inflow 320,000 193,310 200,110 205,410 188,465 156,426 150,121 161,156 153,811 152,666 156,901 155,361 2,038,276
0
Pre-operational 152,440 0 0 0 0 0 0 0 0 0 0 0 152,440
cost
Purchases 20,000 40,000 40,000 50,000 40,000 30,000 60,000 40,000 50,000 50,000 50,000 470,000
Rent 0 0 0 0 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 16,000
Salary 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 336,000
Incentives 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000
Repairs & 0 0 0 5,000 4,000 7,000 3,000 2,000 3,000 6,000 30,000
Maintenance
License & 0 0 0 0 0 0 6,000 0 0 0 0 0 6,000
Permits
Transport 0 6,000 6,000 7,000 5,000 5,000 7,000 6,000 6,000 7,500 7,000 6,000 68,500
Insurance 0 0 0 0 0 0 0 0 0 0 0 0 0
Advertisement 0 1,000 500 1,500 1,000 1,000 2,000 500 1,000 1,500 2,000 0 12,000
Electricity 0 700 900 800 600 800 1,000 900 600 400 900 600 8,200
Water 0 500 600 500 600 400 700 400 500 700 500 700 6,100
Creditor 0 0 0 2,000 1,000 3,000 1,000 2,000 1,000 1,000 11,000
Loan Repayment 0 0 0 4,445 4,445 4,445 4,445 4,445 4,445 4,445 4,445 4,445 40,005
Interest on Loan 0 0 0 0 0 0 0 0 0 0 0 4,000 4,000
Postage 250 400 300 400 500 250 300 600 500 300 400 500 4,700
Telephone 500 600 400 300 200 700 500 400 600 400 300 500 5,400
Miscellaneous 1,000 1,500 2,000 2,500 2,500 2,000 1,500 1,000 1,000 1,500 2,000 2,500 21,000
Total Cash- 186,690 73,200 86,700 96,945 103,945 98,295 90,945 109,845 90,145 95,745 102,545 1,127,445 2,262,445
outflow
Net Cash flow 133,310 120,110 113,410 107,465 34,426 58,121 69,156 51,311 62,666 56,901 54,361 42,616 903,853
 PROFOMA CASHFLOW YEAR TWO

Months Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Cash Inflows
Opening Balance 42,616 33,866 35,866 29,916 21,916 19,466 124,566 109,536 73,236 73,236 57,786, 59,236
Cash (Capital) 0
Sales 100,000 90,000 90,000 80,000 100,000 110,000 90,000 80,000 100,000 90,000 100,000 120,000 1,130,000
Debtors 2,000 4,000 4,000 3,000 3,000 5,000 1,000 2,000 4,000 4,000 1,000 31,000
Total Cash inflow 144,616 127,866 129,866 112,916 124,916 134,466 214,566 190,526 175,236 151,786 168,386 180,236

Pre-operational
cost
Purchases 50,000 40,000 50,000 40,000 50,000 40,000 50,000 60,000 70,000 40,000 60,000 40,000 590,000
Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Salary 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 336,000
Incentives 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000
Repairs & 10,000 5,000 6,000 10,000 6,000 37,000
Maintenance
License & Permits 6,000 6,000 12,000
Transport 6,000 5,000 4,000 4,000 4,000 5,000 6,000 6,000 5,000 3,500 4,000 5,000 58,500
Insurance 0
Advertisement 1,000 500 1,500 2,000 2,000 1,000 1,500 500 1,000 1,500 2,000 500 15,000
Electricity 600 700 800 900 1,000 1,000 900 800 700 600 500 600 9,100
Water 700 800 600 500 400 300 400 500 600 700 800 900 7,200
Creditor 2,000 1,000 3,000 1,000 1,500 2,500 500 500 1,000 1,500 2,000 2,500 19,000
Loan Repayment 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Interest on Loan 0
Postage 450 400 350 300 250 500 550 600 650 700 450 500 5,700
Telephone 500 600 700 800 800 600 700 400 500 400 400 300 6,700
Miscellaneous 1,000 1,500 1,000 2,500 2,500 2,000 1,500 1,000 1,000 1,500 2,000 2,500 21,000
Total Cash- 110,750 92,500 99,950 91,000 105,450 189,900 105,030 117,300 117,450 87,400 109,150 23,450
outflow
Net Cash flow 33,866 35,966 29,916 21,916 19,466 124,566 109,536 73,236 57,786 64,386 59,236 156,766
 PROFOMA CASHFLOW YEAR 3
Months Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Cash Inflows
Opening Balance 156,766 165,816 177,116 187,010 165,460 151,200 165,000 122,400 70,050 70,050 99,450 98,050 1,628,368
Cash (Capital) 0
Sales 110,000 120,000 130,000 100,000 110,000 120,000 110,000 100,000 110,000 120,000 110,000 120,000 1,360,000
Debtors 4,000 5,000 6,000 5,000 60,000 4,000 3,000 2,000 1,000 6,000 3,000 4,000 103,000
Total Cash inflow 270,766 290,816 307,116 292,010 281,400 275,200 278,000 224,400 166,600 196,050 212,450 222,050 2,038,276
0
Pre-operational cost 0
Purchases 40,000 50,000 60,000 70,000 80,000 60,000 90,000 80,000 50,000 40,000 50,000 40,000 710,000
Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Salary 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 28,000 336,000
Incentives 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000
Repairs & 10,000 10,000 10,000 30,000
Maintenance
License & Permits 6,000 6,000 12,000
Transport 4,000 4,500 4,000 3,000 4,000 4,000 4,000 5,000 4,000 3,000 4,000 3,000 46,500
Insurance 1,500 1,500
Advertisement 1,000 1,500 2,000 2,000 1,500 1,000 500 2,000 1,500 1,000 14,000
Electricity 500 600 700 800 900 1,000 1,000 900 800 700 600 500 9,000
Water 500 600 700 400 300 600 700 800 900 600 400 500 7,000
Creditor 2,000 3,000 2,500 1,500 2,000 1,500 1,000 2,500 2,000 1,000 1,500 1,500 22,000
Loan Repayment 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Interest on Loan 3,000 3,000
Postage 450 400 500 550 600 650 550 500 450 400 350 300 5,700
Telephone 500 600 700 800 900 950 850 600 500 400 500 600 7,900
Miscellaneous 1,000 1,500 2,000 2,500 2,500 3,000 1,500 1,000 1,000 1,000 2,000 1,000 20,000
Total Cash-outflow 104,950 113,700 110,100 126,550 130,200 110,200 155,600 168,800 96,650 96,600 114,400 94,400 1,422,150
Net Cash flow 165,816 177,116 187,010 165,460 151,200 165,000 123,400 55,600 70,050 99,450 98,050 127,650 1,585,802
6.4 INCOME STATEMENTS YEAR ONE

SALES Kshs. 1,020,000

Purchases 1,470,000.00
Opening Stock 26,020
G..A.S 496,020
C. Stock 50,000
C.O.G.S 446,020 446,020
Gross Profit 573,980

EXPENSES

Rent 16,000

Transport 68,000

Advertisement 12,000

Salary 336,000

Electricity 3,200

Water 6,000

Telephone 5,400

Insurance 1,500

Incentives 54,000

Repair & Maintenance 30,000

License/Permit 6,000

Miscellaneous 21,000

Total Expenses 559,600

Net Profit 12,500

6.5 PROFOMA INCOME STATEMENT YEAR TWO

SALES Kshs. 1,130,000

Purchases 590,000
Opening Stock 50,000
G.A.S 540,000
C. Stock 40,000
C.O.G.S 600,000
Gross Profit 530,000

EXPENSES

Rent 24,000

Transport 53,500

Advertisement 15,000

Salary 336,000

Electricity 8,000

Water 7,200

Telephone 6,700

Insurance 1,500

Incentives 54,000

Repair & Maintenance 37,000

License/Permit 12,000

Miscellaneous 25,000

Total Expenses 572,200

Net Profit 42,200

6.6 PROFOMA INCOME STATEMENT YEAR THREE

SALES Kshs. 1,360,000

Purchases 840,000
Opening Stock 40,000
G.A.S 880,000
C. Stock 40,000
C.O.G.S 840,000
Gross Profit 520,000

EXPENSES

Rent 24,000

Transport 46,000

Advertisement 14,000

Salary 336,000

Electricity 8,900

Water 6,000

Telephone 7,000

Insurance 1,500

Incentives 27,000

Repair & Maintenance 30,000

License/Permit 12,000

Miscellaneous 17,000

Total Expenses 519,400

Net Profit 600

6.7 PROFOMA BALANCE SHEET YEAR ONE

FIXED ASSETS Kshs.

Machinery 29,000
Tools & Equipment 6,200
Fixtures & Fittings 7,000
Total Fixed Assets 42,2000
CURRENT ASSETS
Debtors 11,500
Opening Stock 50,000
X Cash 230,000
Total Current Assets 291,500
CURRENT LIABILITIES
Creditors 11,000
Loans 60,000
Total Current liabilities 71,000
Working Capital 220,500
Figure A 262,500
Financed by 250,000
Capital
Net Profit/Loss 12,500
Figure B 262,500
PROFOMA BALANCE SHEET YEAR TWO

FIXED ASSETS Kshs.

Machinery 29,000
Tools & Equipment 6,200
Fixtures & Fittings 7,000
Total Fixed Assets 42,2000
CURRENT ASSETS
Debtors 31,000
Opening Stock 50,000
X Cash 165,600
Total Current Assets 246,600
CURRENT LIABILITIES
Creditors 19,000
Loans 30,000
Total Current liabilities 49,000
Working Capital 203,600
Figure A 207,800
Financed by 250,000
Capital
Net Profit/Loss 42,200
Figure B 207,800
PROFOMA BALANCE SHEET YEAR THREE

FIXED ASSETS Kshs.

Machinery 29,000
Tools & Equipment 6,200
Fixtures & Fittings 7,000
Total Fixed Assets 42,2000
CURRENT ASSETS
Debtors 49,000
Opening Stock 40,000
X Cash 131,000
Total Current Assets 220,500
CURRENT LIABILITIES
Creditors 22,500
Loans
Total Current liabilities 22,500
Working Capital 214,600
Figure A 262,600
Financed by 250,000
Capital
Net Profit/Loss 250,600
Figure B 256,600
6.8 BREAK EVEN POINT ANALYSIS

YEAR ONE YEAR TWO YEAR THREE

Fixed Costs
Salaries 336,000 236,000 336,000
Incentives 54,000 54,000 54,000
Rent 24,000 24,000 24,000
I.F.C 414,000 414,000 414,000
Variable Costs
Transport 68,500 58,500 40,000
Advertisement 12,000 15,000 14,000
Water 6,100 7,200 6,000
Electricity 8,200 8,000 8,900
Telephone 5,400 6,700 7,700
Postage 4,700 5,000 2,200
T.V.C 104,900 100,400 78,800

i. Contribution Margin = Sales – Total Variable Cost

ii. Government contribution margin% = Contribution Margin x 100/Sales

iii. B.E.P. =

Contribution Margin = 1,020,000 – 104,900

= 905,100

Contribution Margin % =

= 89%

B.E.P =

B.E.P = 465168.54
YEAR 2

Contribution Margin = 1 1,130,000.00 – 1,010,400

= 1,130,000 – 100,400

= 1,029,600

Contribution Margin % =

= 91%

B.E.P = = 914 X

= 414,000 X

B.E.P = 687,581.21

YEAR 2

Contribution margin = 1,360,000 – 78,800

= 1,231,200

Contribution Margin % = Contribution Margin x

=
 =

= 94%

B.E.P =

B.E.P = 15,319.34

FINANCIAL RATIO

6.7.1 Profitability Ratios

i. Gross Profit Percentage

Year 1

ii. Net Profit Percentage

YEAR 2
 i. Gross Profit

Net Loss Percentage

YEAR 3

i. Gross Profit Percentage

ii. Net Profit Percentage

FINANCIAL RATIOS

Year 1

6.7.2 Liquidity Ratio

Current Assets

= 4:1

iii. Acid test ratio

= 1.992
= 2:1

LIQUIDITY RATIO

Year 2

i. Current Assets

= 5.0326
=5:1

ii. Acid test ratio

 =

YEAR 3

= = =

= 1.647

=2:1

ii) Acid test ratio

Ratio of stock turn over Year one

R.O.S.T =

=
= 1.173

Ratio of stock turn over Year Two

R.O.S.T =

Ratio of stock turn over Year Three

R.O.S.T =

Year 1 Year 2 Year 3

Working Capital 220,500 214,600 203,600
Fixed assets 42,200 42,200 42,200
262,700 256,800 244,800
Proposed Capitalization

The Juma’s butchery managed to get Kshs 100,000 from personal savings, Kshs
100,000 from a bank loan and Kshs 50,000 from friends as shown in the table
below.

Total Capital Kshs. 250,000

Personal Savings

Source Percentage % Amount

Personal Savings 40% 100,000
Bank Loan 40% 100,000
Inherits 20% 50,000
Total 250,000

APPENDIX
JUMA’S BUTCHERY

TO FUNYuLA TOWN
MAMA WATOTO
GEN SHOP

MOODY AWORI HIGHWAY

NANGINA