BUSINESS PLAN

KORIR MODERN ELECTRICAL HARDWARE.

P.O. BOX 100 KABARNET, KENYA

Phone No: 0111570036

PAPER NO. :

PRESENTER. : GEOFREY KIPKORIR

INDEX NO. :

CENTER CODE : 206101

CENTER NAME :

PRESENTED TO. : THE KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULLFILMENT FOR THE

AWARD OF CRAFT CERTIFICATE IN

ELECTRICAL AND ELECTRONIC
ENGINEERING.

SUPERVISOR. :

SERIES. : NOVEMBER 2024

 DECLARATION

I declare that this project was clearly designed and worked on by myself hence is my own work
and has never been presented to the Kenya national examination council or any other examining
body.

NAME : GEOFREY KIPKORIR

SIGN :

DATE :

SUPERVISOR :

SIGN :

DATE :

PREFACE
This project has been prepared keenly as required by the Kenya national
examination council for award in craft course.

This project is about how to establish and start an outstanding business in the
business and is written in form of chapter. The business plan is a major reference
for a person who wants to apply for a loan from a certain bank or any other source.
It shows how money can be raised and spent for a good profit maximization which
reflects the success of the business. It also helps to avoid the business failure.
ACKNOWLEDGMENT

I want to sincerely thank our heavenly father for giving me life and strength
to come up with such a good work. Special thanks to my parents for their
psychological and economical support they gave me during my work. I thank my
business plan supervisor Mr. Collins and other lecturers for their wonderful
guidance.
Also special recognition and thanks to my friends Peter,George and Swakei
for being with me always. God bless them always.

In a Nutshell, I cannot forget to thank God for the strength he has given me
throughout the whole process of writing this project.
DEDICATION
I have the pleasure to dedicate this project to my parents, siblings and the whole family at large. I

also would like to dedicate it to my classmates for their continuous support throughout the

drafting of this plan.

Also my gratitude goes to my supervisor Mr. Collins Agalo and the entire teaching staff who

offered their contributions towards the success of this business plan.

Table of Contents
DECLARATION................................................................................................................................ 2

PREFACE………………………………………………………………………………………………………............................................3
ACKNOWLEDGEMENT.................................................................................................................... 4

DEDICATION................................................................................................................................... 5

CHAPTER ONE................................................................................................................................ 6

1.0 BUSINESS DESCRIPTION........................................................................................................... 6

1.1 BUSINESS LOCATION AND ADDRESS........................................................................................ 6

1.2 FORMS OF BUSINESS OWNERSHIP........................................................................................... 6

1.3 PRODUCT AND SERVICES......................................................................................................... 6

1.4 JUSTIFICATION OF THE OPPORTUNITY..................................................................................... 7

1.5 INDUSTRY................................................................................................................................. 7

1.6 GOALS OF THE BUSINESS......................................................................................................... 7

1.7 ENTRY AND GROWTH STRATEGY............................................................................................. 8

CHAPTER TWO........................................................................................................................... 9

2.0 MARKETING PAN..................................................................................................................... 9

2.1 INTRODUCTION...................................................................................................................... 10

2.2 CUSTOMERS........................................................................................................................... 10

2.3 MARKET SHARE...................................................................................................................... 10

2.4 COMPETITION........................................................................................................................ 10

2.5 METHODS OF PROMOTION................................................................................................... 12

2.5.1 PROMOTION METHODS...................................................................................................... 12

2.5.2 ADVERTISING METHODS..................................................................................................... 12

2.6 PRICING POLICY..................................................................................................................... 12

2.7 SALES TACTICS....................................................................................................................... 13

2.8 DISTRIBUTION POLICY............................................................................................................ 13

CHAPTER THREE........................................................................................................................... 14

3.0 ORGANIZATIONAL STRUCTURE.............................................................................................. 14

3.1 OTHER PERSONNEL................................................................................................................ 15

3.3 RECRUITMENT, TRAINING AND PROMOTION........................................................................ 16

3.4 RECOMENDATIONS AND INCENTIVES.................................................................................... 16

3.5 LEGAL REQUIREMENTS.......................................................................................................... 17

3.6 EXTERNAL SUPPORT SERVICES............................................................................................... 18

CHAPTER FOUR............................................................................................................................ 19

4.0 OPERATION PLAN................................................................................................................... 19

4.1 PRODUCTION FACILITIES AND CAPABILITIES.......................................................................... 19

4.1.1 EQUIPMENT FACILITIES....................................................................................................... 19

4.2 OPERATION STRATEGIES........................................................................................................ 20

4.3 PLAN LAYOUT......................................................................................................................... 20

4.4 PRECAUTIONS AFFECTING OPERATION/PROMOTION........................................................... 21

CHAPTER FIVE.............................................................................................................................. 22

5.0 FINANCIAL PLANS................................................................................................................... 22

5.1 BOOKS OF ACCOUNT............................................................................................................. 22

5.2 ESTIMATION OF WORKING CAPITAL...................................................................................... 23

5.3 PROJECTED CASH FLOW FOR YEAR ONE................................................................................ 24

5.4 PROJECTED CASH FLOWFOR YEAR TWO................................................................................ 25

5.5 PRO-FORMA BALANCE SHEET FOR YEAR ENDING DECEMBER............................................... 27

5.6 BREAK EVEN POINT FOR AM BROILER PRODUCTION FIRM FOR YEAR 1, 2, 3 ........................28
EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

This chapter contains the name of the business i.e. KORIR MODERN ELECTRICAL HARDWARE hence the
title and thus my name. There is full description of the location and the address of the business .

2.0 MARKETING PLAN

Chapter two describes different ways of trading and the type of customers the business targets. Its
growth will be determined by the quality and services offered hence determining the profit of the
business.

3.0 ORGANIZATION STRUCTURE

Chapter three contains the management of the business and its organization structure. The business has
managing director, Deputy manager, marketing manager,supervisors, Cashier, Cleaners and Security
with stated responsibilities respective for their qualifications.

4.0 operation plan

Chapter four contains the production and operation plan for the business. It also shows the business
layout, production strategies, design and the development of the business. There are also some
precautions that should be taken for the business to operate efficiently.

5.0 FINANCIAL PLAN

Chapter five includes the calculations and totals of different finance plans like per-operational cost,
working capital etc. It also shows the cash flow projection for the whole year.
This other calculations include the pro-former balance sheet, income statement which has the net profit
after taxation, break-even level of business profit, contribution margin and the break-even level of sales.

CHAPTER ONE
BUSINESS DESCRIPTION
 1.0
The proposed business plan KORIR MODERN ELECTRICAL HARDWARE.
The name of the business is derived from my own name thus the sole owner of the
business. The business intends to sell modern electrical supplies within the district and
commercial reach by the buyers. Establishment of the business in the town is an advantage to the
proprietor since there are a few electrical hardware in the specified area.

1.1 BUSINESS LOCATION AND ADDRESS

The business is to be located in Baringo County, kabarnet town along the Kabarnet
-Eldoret road. There is full description of the location and address of the business,
form of ownership etc.

Address of the business will be:

KORIR MODERN ELECTRICAL
HARDWARE

P.O BOX 100

KABARNET.

0111570036

1.2 FORMS OF BUSINESS OWNERSHIP

The proposed KORIR MODERN ELECTRICAL HARDWARE store is proposed
to be a sole proprietorship. It will raise about 30% of its initial capital while the
rest loaning services from financial institutions to ensure the business is started
and operated smoothly.

1.3 PRODUCT AND SERVICES

The following are the products that the business will be dealing with;

 CCTV cameras
  Solar panels

 House electrical fittings

 Cables

 Sockets

 Pliers

 Motor

 Energy meter

The services will be as follows:

 CCTV camera installations

 Solar panel installations

 House fitting installations and etc.

The business will tend to offer both the products and services at affordable prices
to enable attraction of many customers as possible with the shortest duration as
possible.

1.4 JUSTIFICATION OF THE OPPORTUNITY

Through the market surveys and research I did in the area enabled me to come out
with several reasons to start up such a business in the area.

Here are just but few reasons that I concluded after the market survey in the area:

i. There are several building construction taking place that require the services
and the gap can never be bridged by the available business.

ii. The availability of growing institutions in the both the learning and
government such us the county offices
iii. The increase demand of electrical equipment’s due to the increased rise in
the population in the area.

iv. Good transport and communication network that make it easy for the locals
to access the market easily from other part of the country.

1.5 INDUSTRY
The proposed business will operate under the distribution industry, dealing with
electrical products of different types as well as sizes. The industry is at the moment
growing at a very high rate because the population is increasing rapidly.

1.6 GOALS OF THE BUSINESS

Short term objectives

i. To increase rural to urban migration.

ii. To increase the efficiency in both the service and goods delivery in the area.

iii. To increase employment opportunities to the people from locality that will
in turn increase their standard of living.

iv. Becoming the most preferable and the best firm to provide such services
within the locality.

Long term objectives

i. To expand the market by 30% through opening of other branches.

ii. Maximize the sales opportunities even beyond the county.

iii. Expansion of the job market that will in turn employ over 100 people.

1.7 ENTRY AND GROWTH STRATEGY

The business will get into the market through the following strategies;

i. Pricing; the business shall offer a bit lower prices as compared to other
competitors that it can attract more customers.
 ii. After sales services; the business shall offer after sales services such as free
delivery of goods of up to a certain value and within the outreach of the
business to capture more customers.

iii. Creating awareness; this will be made through putting of posters,

announcements in the public gatherings, radios and more so televisions.

Growth strategy will be developed on the demand of electrical services as well as

goods being that the customers will always be attracted to a successful business.
This may also depend on entrepreneurs’ public relations and the following
professional ethics;

i. Punctuality; opening of the business at the right time that will enable the
customers to have their desired goods as per their demand as well as their
services.

ii. Self-organization of the entrepreneur which attract many as well.

iii. Cooperation and team work between the entrepreneur and the employees.

iv. Self-control; control your temper, as you give issues a diplomatic approach
to solve them amicably.

v. Cleanliness that is personal hygiene and the working environment.

 CHAPTER TWO
MARKETING PAN
2.0 MARKETING PAN
In this business area there are different types of customers’ target who shall be
attracted. I will visit the targeted locations and through observation I will
understand who the customers are and their behaviors. The customers include
institutions and people within and outside the town. After which I will use the
appropriate competitive approaches, for example advertising and diversification to
win more customers than the competitors.

2.1 INTRODUCTION
The business is intended to give quality goods and services to the customers. The
objective of the business is to meet as many customers as possible and satisfy their
respective needs fully.

By starting other branches in the nearby towns and local areas will enable the
business to meet as many customers as possible with time.

The business also intends to make large volume of profits according to the capital
invested and also raise higher level of income per year calculated to gross income.

The business intends to procure as many contracts as possible in the industries

around the town. By doing this the business will be able to expand and increase in
profit maximization.

2.2 CUSTOMERS
The customers targeted by the business are institution customers, individual
customers and commercial customers, churches, hospitals, among others.

The population of the area is mostly youths and middle age people who are mostly
working which will constitute to the labor required.
 The frequent customers are developing institutions, industries and the county
government.

2.3 MARKET SHARE

The appropriate population in the area is about 1 million. The prospective
customers are about 30% of the population that will seek services from the
business as the targeted group increases due to the rapid growth of population in
town.

The peak service delivery will be during the holidays (school holidays) when the
parents are off the burden of the school fee.

The market is expected to grow rapidly by the next five years from the starting
year due to economic development.

2.4 COMPETITION
The business will be able to compete favorably with other businesses by identifying their
strengths and perfecting on them and taking an advantage of their weaknesses by finding
amicable solutions for them.

The competitors in the market are Kioko, Mwale, Kaloz and Guba construction companies.

Competitors Location %share Strengths Weakness Strategies to compete

Kioko Kabarnet 20%  After sales.  Poor  Fair pricing
 Skilled man customers’  Training business
power. relations. personnel.
 High  High profit  Better customer
technology. margin target relations.
Mwale Kabarnet 20%  Offer credit  Lack of  Allow discounts to
facilities. variety of customers.
 Skilled products  Conduct researches
personnel.  Poor pricing relating to the
 Adequate of the products business.
personnel.
Kaloz Kabarnet 15%  Offer ready  Small amount  Advertisements of
services and of inventory. services.
products to  Improper  Fair pricing of
customers. management services.
 Excellent skills.  Training of
technology.  Poor managers.
advertisements
policies.
Guba Kabarnet 15%  Customers  Limited  Improve business
with high business hours.
income. hours.  Maintain qualified
 Excellent  High prices. personnel.
managemen  High rental  Adopt good pricing
t. expenses. policy.
Ochieng Kabarnet 30%  Offer after  Poor pricing.  Business will offer
sales  Poor training to the
services and advertising employees.
other  The business will
services adopt proper
advertisements
strategies.
 Sales

15%
KIOKO
15% MWALE
20% KALOZ
GUBA
0CHIENG

30%
20%

2.5 METHODS OF PROMOTION.

2.5.1 PROMOTION METHODS

The business will promote the products and services by offering unique goods and services from
the competitors that are employing employees who will handle customers properly. The business
will also offer cash discounts and also after sales services to customers who buy goods and come
from within the area of operation.

The business also display plans and drawings of structures on the wall of the business premise as
a way of promotion. The business premise will also be decorated so as to it more appealing and
attractive. A billboard to attract and direct customers to the business premise at the main junction
will also be erected.
2.5.2 ADVERTISING METHODS
To create awareness to the people on the existence of the business, the proprietor intends to use
the following method; To print posters and place those at strategic position in the town such
positions include; market places,bus stations and entrances to public buildings.

2.6 PRICING POLICY

The products and services are to be priced at relatively affordable prices but considering the cost
of production and also realize reasonable profits that will keep the business moving.
The business will consider competitors’ method of pricing so as to avoid over pricing the
products thus losing customers to the competitors or under-pricing thus operating at a loss.

2.7 SALES TACTICS

The business will apply sales tactics such as personal selling of policy where the person
approaches the customers individually directly either through door to door or in town centers.

2.8 DISTRIBUTION POLICY.

Business policy will reach customers through direct selling as most of the customers will come
to buy and goods delivered to them at their promises.

Roads will be mode of transport using vehicles to reach out the customers.

In cooperation with the government (county government) the business is planning to improve the
roads in the area so as to reduce transport problems during rainy season.

CHAPTER THREE
3.0 ORGANIZATIONAL STRUCTURE
The business is to have rules and regulations which are enable employees within
the organization objectives.
Employees will be managed by a manager to ensure effective production takes
place. The staffs will be motivated through offering leaves, increasing their salaries
promotions among others.

MANAGING DIRECTOR

The manager

The manager will be controlling all business operations and activities.

Qualifications

 Effective communication skills

 Exceptional customers services skills

 Certificate in electrical engineering

Duties and responsibilities

  Organizing all the activities and allocations of each of the employees to
the job which he/she fits and has relevant skills.

 Controlling all the activities of the organization.

 Planning all the activities of the organization.

 Orders the employees as per the work required.

 Pricing of the services and goods.

3.1 OTHER PERSONNEL

The workers will be provided with health insurance due to accidents associated
with construction work.

The mode of recruitment for the workers will be through interviews by looking for
qualifications, experience and capacity to work. Workers who have potential and
good working records over a given period of time will be able to acquire training
and get promotions to higher levels.

Personnel title Qualifications Duties Wages/salaries

Assistant general At least certificate Monitoring the KSH 20000 plus KSH
manager (foreman ) course in electrical and works and the other 10000 benefits on
electronic engineering. workers on site. health and transport.
 Installation officer Artisan in electrical Doing the actual KSH. 10000 plus KSH
and electronics work of the wiring. 1000 benefit on health
and transport.

Unskilled workers One year experience in Doing the manual KSH 5000 plus KSH
respective field. job on site and 500 benefit on health
offices. and transport.

Security One year experience in Will be responsible KSH 8000 plus KSH
security field. for the security of 800 benefit on health
the business. and transport.

3.3 RECRUITMENT, TRAINING AND PROMOTION

Recruitment

The process that will be used to fill the vacant positions in the business is announcement in
social, social gatherings like churches and institutions of higher learning among others.

Advertisements/announcements.

The announcement is to be made explaining the detailed information about the job in the media
and social gatherings.

Interviewing

The committee of appointed persons is to conduct the interview hence the once with specified
qualifications will be employed.

Orienting

This will be done by the same committee who has conducted the interview, explaining to the
new employees about the rules and regulations of the business.

Placement
The newly selected employees will be placed in their respective positions in the business.

Training.

Development of the skills of the workers will be job training and attachments.

Workers with potential capabilities will be offered with training to improve their skills.

Promotions

Trained and experienced workers will be promoted according to their performance record over a
given period of time.

Education level, experience obtained, hard work and ability are the main factors to be considered
in the promotion of workers.

3.4 RECOMENDATIONS AND INCENTIVES.

Employees are to be motivated through the following ways;

Leaves

Employees will be entitled to at least one week leave in every two months and a day off in every
week that is on Sunday.

Working hours

Working hours will be from Monday to Saturday from 8.00am to 5.00pm.

Motivating and supervision.

The employees are to be motivated by being given allowances such as housing benefit, medical
benefit and transport allowance.

Rules and regulations will be put in place with all the employees in the meeting. The employees
will also be able to obtain loans and advances at low interest rates so as to boost them
economically and make them to the employer.

3.5 LEGAL REQUIREMENTS

The legal requirement required is a trade license which will permit the owner of the business to
start up and run the business.
This is acquired from the county government of Baringo.

Another legal requirement is NHIF which is to cater for the employees on medical bills if need
arises. This is acquired from the NHIF office Baringo Branch.

NSSF is also a legal requirement which the business is committed to obtain to cater for the
employees welfare at old age.

Business insurance is another requirement. The business will undertake insurance cover against
any related risk which will be charged a monthly premium.

Requirement Description Where obtained Fee payable Renewal

License Gives the business permit of Baringo county Ksh 5000 Annually
operation. government.
NHIF Covering the employees’ health. Baringo NHIF Ksh 500 Monthly
office
NSSF Covering the employees at old Baringo NSSF Ksh 300 Monthly
age. office.

Insurance Covers the business against risk CIC Insurance Ksh 300 Monthly
related to the business. company Baringo
3.6 EXTERNAL SUPPORT SERVICES
For the success and smooth running of the business it needs the following external services;

Banking services

The business will open an account with Equity Bank that is;

EQUITY BANK,

P.O BOX 550,

BARINGO.

The account will be the business serving account and may also enable the business to acquire
loan from the bank.

Communication services

The business will be provided with telephone services to enable employees to communicate with
customers and among themselves.

CHAPTER FOUR
4.0 OPERATION PLAN
The business will be dealing with offering of construction work and selling of construction
materials that will be supplied as per the requisition made.

4.1 PRODUCTION FACILITIES AND CAPABILITIES

4.1.1 Equipment facilities

The business will require the following facilities for its effective running; furniture, telephone,
calculator, tape measure, internet, fire extinguisher, stationeries, desktops and laptops.

The facilities and equipment will be bought at a cash price. For those that require installation
such as internet and desktops will be offered by the supplier.
Qty Description Supplier Use Cost Total

3 Office tables Siloam furnitures Used by manager assistant Ksh 10000 Ksh 30000
and site supervisors.
9 Chairs Olive furnitures Used in the offices together Ksh 3000 Ksh 27000
with the tables.

3 Telephones Safaricom company Communication in the offices. Ksh 10000 Ksh 30000

1 Safe board Shell furnitures Keeping of files and other Ksh 15000 Ksh 15000
valuable documents
Stationeries Kabarnet bookshop Record keeping and office Ksh 20000 Ksh 20000
work.

3 Tape measure Bidii hardware Measuring and setting out of Ksh 200 Ksh 600
structures.
2 Desktops Hitech computers Record keeping and office Ksh 15000 Ksh 30000
work.

2 Laptops Kabianga Office work and drawings. Ksh 30000 Ksh 60000
computers

The proprietor will use rented premises which will be installed with water, electricity and air
conditioners that will be useful in the business operations.

4.2 OPERATION STRATEGIES

Quality control

Since the business will be dealing with construction and delivery of of goods it will ensure the
work done is of high standards and materials supplied are of high quality to ensure effectiveness
in the work.

This will help to achieve quality work that is;

  There will be good working conditions for workers to enable them provide quality services.

 Improving on the goods to be supplied before to the clients.

 Ensuring proper security around the working sites.

Provision of protective gears to avoid injuries in case of accidents.

Time control

The normal working hours will be from Monday to Saturday from 8.00am to 5.00pm and on
public holidays from 10.00am to 2.00pm.

Overtime and shifts will be planned for during the peak seasons so as to cover the increased
demand on labor.

There shall be tea breaks and lunch breaks.

SUMMARY OF THE TIMETABLE

7.00-8.00am 8.00-10.30am 10.30- 11.00- 1.30- 2.00- 5.00

11.00am 1.30pm 2.00pm 5.00pm onwards
Reporting, Work Tea break Work Lunch Work Leaving
preparation and continuity continuity break.
work
continuity.

4.3 PLAN LAYOUT

The business will be dealing with construction work and other related activities such as structural
drawings and structural plans will be displayed outside the office to attract more customers.

The business will also make some attractive advertisements within the town to enable it attract
more customers.
4.4 PRECAUTIONS AFFECTING OPERATION/PROMOTION.
Safety measures of the employees are to be catered for during the working hours. This regulation
therefore requires the business to provide workers with safety gears such as helmets,
gumboots/safety boots, dust coats/overalls, fire extinguisher, gloves, glasses and nose masks.

The business will ensure it has registered itself according to the factories Act so that the safety of
workers is taken into consideration.

CHAPTER FIVE
5.0 FINANCIAL PLANS
This section will help the proprietor to know the financial aspect of the proposed business to
start and run it.

It also helps the proprietor gauge the future financial potential in the market.

5.1 BOOKS OF ACCOUNT

The business will keep the following books and many more as time goes by;

1. Cash book

This shows the record of cash received and spent.

2. Purchases ledger

This will keep record of goods bought over a period of time.

3. General ledger
This will show record of bills such as rent, electricity, water and phones

4. Debtors book

This book will be used to record all the debts the customers owes the business.

No. Item Amount

1 Loan fee Ksh 500000
2 Electricity Ksh 2000
3 Advertisements Ksh 5000
4 License and permit Ksh 5000
5 Stationery Ksh 20000
6 Water charge and installation Ksh 1000
7 Bank account opening fee Ksh 2000
8 Furniture Ksh 57000
9 Rent Ksh 15000
TOTAL Ksh 607000
5.2 ESTIMATION OF WORKING CAPITAL
The working capital is the finance used in day to day running operation of the business.

S/N ITEM AMOUNT

1 Assets
2 Cash in hand 200000

3 Cash at bank 5500000

4 Furniture 57000
5 Car 500000
TOTAL KSH 8, 057, 000

1 Liabilities
2 Salaries 109300
3 Water 1000
4 Electricity 2000
5 Rent 15000
6 Telephones 5000
7 Stationery 20000
8 Loan payment 10000

TOTAL KSH 162, 300

 5.3 PROJECTED CASH FLOW FOR YEAR ONE
Cash flow JAN FEB MAR APR MA JUN JULY AUG SEPT OCT NOV DEC Q1 Q2 Q3 Q4
Y
Balance b/f 100 93.62 217.6 227.9 245. 266.1 293.1 321.36 349.6 375.62 401.7 427.68 411.04 739.84 960 1205
2 8
Cash sales 224.2 114 1060 133 150 150 150 150 150 150 150 459.2 409 450 450
Credit sales 5 0 0 0 0 0 0 0 0 0 0 0 15 0 0 0
(debit)
Loans 120 0 0 0 0 0 0 0 0 0 0 0 120 0 0 0
(credit )
Cash receipt 22.42 114 1060 133 150 150 150 150 150 150 150 459.2 409 450 450
Total cash 320 317 114 106 133 150 130 123 231 133 323 324 323 323 223 332
available
Cash out
flow
Purchases 42 38 42 46 50 50 50 50 50 50 50 50 114 138 150 150
Loan 0 0 0 0 6 6 6 6 6 6 6 6 12 18 18 18
repayment
Creditors 0 0 0 0 0 0 3 0 0 2 5 0 0 3 7 7
Wages 10 10 10 10 10 10 10 10 10 10 10 10 30 30 183 183
Salaries 61 61 61 61 61 61 61 61 61 61 61 61 183 183 183 183
Rent 5 5 5 5 5 5 5 5 5 5 5 5 15 15 15 15
Water 4 4 4 4 4 4 4 4 4 4 4 4 16 11 16 11
Telephone 0.8 0.5 0.5 1 1 1 1 1 1 1 1 1 1.4 1.4 1.6 1.9
Electricity 1 0.9 1 0.8 6.6 0.72 0.72 0.72 0.72 0.72 0.72 0.72 2.9 1.9 2.7 2.3
Transport 0.8 0.8 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 2.1 1.4 1.8 1.4
Postage 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 1.5 1.5 1.5 1.5
Insurance 0 0 0 0 0 0 0 0 0 0 0 15 0 0 0 15
Advertisem 3 0 0 0 0 3 0 0 0 0 0 0 0 3 3 3
ent
Licence 0 0 0 0 0 0 0 0 0 0 0 5.5 0 0 0 5.5
R/ 0 0 1.9 0 2 0 0 0 1 3 0 0 1.9 2 1 3
maintenance
Permit 0.5 0 0 0 0 0 0 0 00 0 0 0 0.5 0 0 0
Tax cash 9.28 30.43 16 16 16 16 16 16 16 16 16 16 51.87 43 48 48
out flow
Total cash 128.6 116.7 121 122 136. 136.1 136.1 136.1 136.1 136.1 136.1 136.1 503.1 394.9 420.8 442
out flow 1
Balance b/d 93.62 217.6 227.9 245.8 266. 293.1 321.3 349.6 375.62 401.7 427.68 434.96 538.96 805 1047 1264
2 1 6

5.4 PROJECTED CASH FLOWFOR YEAR TWO

Cash flow JAN FEB MAR APR MAY JUN JULY AUG SEPT OCT NOV DEC

Balance b/f 434.96 427.6 434.6 450 472.86 499.02 491 506.28 533.86 554.44 292.9 55.4.44

Cash sales 221 224.2 114 1060 133 150 150 150 150 150 150 150

Credit sales (debit) 5 0 0 0 0 0 0 0 0 0 0 0

Loans (credit ) 120 0 0 0 0 0 0 0 0 0 0 0

Cash receipt 22.42 114 1060 133 150 150 150 150 150 150 150

Total cash available 614 537.6 554.36 500.7 612.86 621 577 670 456 704 352.9 385

Purchases 32 40 42 45 50 50 32 32 32 32 32 32

Loan repayment 0 0 0 0 6 6 6 6 6 6 6 6

Creditors 0 0 0 0 0 0 3 0 0 2 5 0

Wages 10 10 10 10 10 10 10 10 10 10 10 10

Salaries 61 61 61 61 61 61 61 61 61 61 61 61

Rent 5 5 5 5 5 5 5 5 5 5 5 5

Water 4 3 3 3 1 1 1 2 3 3 1 1

Telephone 1 0.8 0.7 0.7 1 0.8 0.7 0.7 1 0.7 0.7 0.8

Electricity 0.8 0.7 0.8 0.6 0.8 0.8 0.8 0.9 0.6 0.6 0.5 0.6

Transport 0.8 0.6 0.6 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6

Postage 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Insurance 0 0 0 0 0 0 0 0 0 0 0 15

Advertisement 3 0 0 0 0 3 0 0 0 0 0 0

Licence 0 0 0 0 0 0 0 0 0 0 0 5.5

R/maintenance 0 0 1.9 0 2 0 0 0 1 3 0 0

Tax 16% VAT 10.88 11.2 12.48 13.6 14.4 16 10.8 4.7 16.7 12.4 12.4 13.43

Total cash out flow 126.2 235.5 348.4 572.4 123.4 342.12 341.3 123.4 232.4 232.56 138.8 161.6

Balance b/d 427.6 434.6 450 472.86 499.02 491 506.28 533.86 554.44 292.9 554.44 557.52
5.5 PRO-FORMA BALANCE SHEET FOR YEAR ENDING DECEMBER
PARTICULARS YEAR 1 YEAR 2 YEAR 3

Asserts

Fixed asserts

Equipment 35000 270000

Vehicles 90000 520000 580000

Total fixed cost 1250000 520000 850000

Current asserts

Cash in hand 240000 300000 310000

Cash at bank 300000 320000 380000

Stocks 500000 510000 512000

Debtors 60000 620000 80000

Total asserts 1100000 119200 1282000

Liabilities

Long term liabilities

Bank 270000 405000 296000

Owner’s equity 280000 163100 345000

Net profit

After tax 150678 307678.5 499707

Creditors 399322 316221.5 141293

TOTAL 1100000 1192000 1282000

LIABILITIES
5.6 BREAK EVEN POINT FOR AM BROILER PRODUCTION FIRM
FOR YEAR 1, 2, 3
FIXED COST

Particulars YEAR 1 YEAR 2 YEAR3

Salaries 153000 153000 153000

Licenses 9000 9000 9000

Rent 480000 480000 480000

Loan repayment 54000 54000 54000

Total fixed cost 713000 713000 713000

Variable cost

Purchases 697000 748000 902000

Advertisement 304000 13900 10800

Water bill 4180 3135 3270

Electricity bill 18200 15300 18500

Promotions 14800 19300 6500

Total valuable cost 764580 799635 941070

Contribution margins for year 1 sales-total variable cost

2273000__764580

1508420
Contribution margins for year 2 2240000___ 799635

1440360

Contribution margins for year 3 2265000__941070

1323930

Contribution margin % = contribution margin /sales multiplied by 100

Year 1 1508420/2273000 multiplied by 100

66.362516%

Year 2 1440360/224000 * 100

64.3%

Year 3 1323930/2265000 * 100

58.45%

Break even= total fixed cost/ contribution margins

Year 1 713000/62.5

14408/=

Year 2 713000/64.3

11088.65/=
Year 3 713000/58.45 1220.90/=

APPENDIX