BUSINESS PLAN

TITLE: TABU'S PIPE FITTING WORKSHOP

PRESENTED BY: TABU AUSTINE
INDEX NO: 6211010139
INSTITUTION: MATILI TECHNICAL TRAINING
INSTITUTE
PRESENTED: THE KENYA NATIONAL EXAMINATION COUNCIL IN
PARTIAL FULFILMENT FOR THE AWARD OF CRAFT
CERTIFICATE IN PLUMBING
CENTRE CODE: 621101

SUPERVISOR: PETER ASTUTSA

EXAM SERIES: MARCH/APRIL 2025

1
DECLARATIION
I declare that the information contained in the business plan is my own original work and no one
has ever been presented by any examination council

NAME: AUSTINE TABU

SIGNATURE..................................... DATE....................

SUPERVISOR................................................................

SIGNATURE..................................... DATE...................

2
DEDICATION
I declare this book to my beloved parents, brothers, sisters and friends for the financial support
which made the production of the document to be successful and not forgetting the supervisor
and my course mate for their love and support

3
AKNOWLEDGEMENT
My sincere acknowledgement and gratitude to my entrepreneurship project lecturer who
supervised and made corrections towards the accomplishment of this business plan. I would also
like to pass my sincere gratitude to my parent for their financial support

4
Contents
BUSINESS PLAN..................................................................................................................................................................1
DECLARATIION.......................................................................................................................................................................2
DEDICATION............................................................................................................................................................................3
AKNOWLEDGEMENT.............................................................................................................................................................4
CHAPTER ONE.........................................................................................................................................................................9
BUSINESS DESCRIPTION......................................................................................................................................................9
BUSINESS NAME.....................................................................................................................................................................9
BUSINESS LOCATION AND ADDRESS...............................................................................................................................9
Form of ownership............................................................................................................................................................10
1.5 PRODUCTS AND SERVICES..........................................................................................................................................10
1.6 JUSTIFICATION OF OPPORTUNITY.............................................................................................................................10
1.7 SIZE OF INDUSTRY.........................................................................................................................................................11
1.8 BUSINESS GOALS...........................................................................................................................................................11
i. Short term goals.......................................................................................................................................................11
ii. Long term goals.......................................................................................................................................................11
1.9 ENTRY AND GROWTH STRATEGY.............................................................................................................................11
a. Industry trends.........................................................................................................................................................11
b. Entry strategy...........................................................................................................................................................11
c. Growth strategy.......................................................................................................................................................11
CHAPTER TWO......................................................................................................................................................................12
2.0 MARKETING PLAN.........................................................................................................................................................12
i. Institutional..............................................................................................................................................................12
ii. Commercial.............................................................................................................................................................12
iii. Individual.................................................................................................................................................................12
a. Age group................................................................................................................................................................12
b. The education background.......................................................................................................................................12
c. Income level profession and occupation.................................................................................................................13
2.2 Market share............................................................................................................................................................13
2.1 Competition........................................................................................................................................................................15
Jomo plumbing and installation........................................................................................................................................15
Vincent workshop.............................................................................................................................................................15
2.2 Advertising and promotion strategy....................................................................................................................................15
a. Poster.......................................................................................................................................................................15
b. Billboards.................................................................................................................................................................15
c. Radio.......................................................................................................................................................................16
Cost of promotion and advertisement.......................................................................................................................................16
5
2.3 Pricing strategy...................................................................................................................................................................16
i. Classified pricing.....................................................................................................................................................16
ii. Demand...................................................................................................................................................................16
iii. Competitor’s price...................................................................................................................................................16
iv. Cost of the products.................................................................................................................................................16
2.4 Sales tactics.........................................................................................................................................................................16
b. Discount...................................................................................................................................................................16
c. Credit offering.........................................................................................................................................................17
d. After sales services..................................................................................................................................................17
e. Provision of show room..........................................................................................................................................17
2.5 Distribution strategy............................................................................................................................................................17
i. Poor roads................................................................................................................................................................17
ii. Insufficient infrastructure........................................................................................................................................17
iii. Insecurity.................................................................................................................................................................17
CHAPTER THREE..................................................................................................................................................................18
3.0 Organizational and management plan..........................................................................................................................18
3.1 Describe the business management and responsibilities.....................................................................................................18
ORGANIZATIONAL CHART................................................................................................................................................18
3.2 The manager........................................................................................................................................................................18
Duties and responsibilities................................................................................................................................................18
Supervisor Qualification....................................................................................................................................................20
Accountant........................................................................................................................................................................20
Sales officer......................................................................................................................................................................20
Watchman Qualifications..................................................................................................................................................21
Duties and responsibilities................................................................................................................................................21
Sweeper............................................................................................................................................................................. 21
Duties and responsibilities of a sweeper...........................................................................................................................21
Watchman and sweeper....................................................................................................................................................22
Other personnel.................................................................................................................................................................22
Office messenger Qualifications.......................................................................................................................................22
Duties and responsibilities................................................................................................................................................23
Recruitment.......................................................................................................................................................................23
Training............................................................................................................................................................................. 23
Promotion..........................................................................................................................................................................23
3.3 Remuneration and incentives Rewards and recognition.....................................................................................................23
Auditing............................................................................................................................................................................ 23
Advice the firm.................................................................................................................................................................23

6
 Incentives..........................................................................................................................................................................23
Incentives..........................................................................................................................................................................24
3.4 License, permits and By-laws.............................................................................................................................................24
By-laws.............................................................................................................................................................................24
Insurance law....................................................................................................................................................................24
3.5 Support service....................................................................................................................................................................24
The bank uses the following addresses.............................................................................................................................24
Accounting consulting or advisor.....................................................................................................................................25
Postal services...........................................................................................................................................................................25
CHAPTER FOUR.....................................................................................................................................................................26
4.0 Operational plan...........................................................................................................................................................26
4.1 Product design and development........................................................................................................................................26
4.2 Product facilities.................................................................................................................................................................26
i. Beam balance...........................................................................................................................................................26
ii. Trolley.....................................................................................................................................................................26
iii. Wheelbarrow...........................................................................................................................................................26
iv. Hand drill.................................................................................................................................................................26
Repair and maintenance....................................................................................................................................................26
Product strategy........................................................................................................................................................................27
Monthly labour requirement.....................................................................................................................................................27
Monthly production expenses...................................................................................................................................................27
4.3 Production process..............................................................................................................................................................27
Stage 1.............................................................................................................................................................................. 28
Stage 2.............................................................................................................................................................................. 28
Stage 3.............................................................................................................................................................................. 28
Stage 4.............................................................................................................................................................................. 28
Stage 5.............................................................................................................................................................................. 28
Stage 6.............................................................................................................................................................................. 28
4.4 Government regulations affecting operations Company act caps 586...............................................................................28
Safety regulations act cap 225..........................................................................................................................................28
Public health regulations act 242......................................................................................................................................28
Insurance...........................................................................................................................................................................29
Trade license act 479........................................................................................................................................................29
Insurance tax cap 476........................................................................................................................................................29
CHAPTER FIVE......................................................................................................................................................................30
5.0 financial plans.....................................................................................................................................................................30
5.1 Pre operational costs...........................................................................................................................................................30

7
5.2 Working capital requirement..............................................................................................................................................30
5.3 TABU’S PIPE FITTING WORKSHOP CASH FLOW STATEMENT FOR THE YEAR ENDING 31ST
DECEMBER 2028....................................................................................................................................................................31
5.4 TABU’S PIPE FITTING WORKSHOP BALANCE SHEET AS AT 21ST DEC 2024.....................................................32
5.5 Breakeven level...................................................................................................................................................................33
5.6 Expected probability rates...................................................................................................................................................33
5.7 Desired financial.................................................................................................................................................................34
Proposed capitalization.............................................................................................................................................................34
TABU’S PIPE FITTIND INCOME STATEMENT FOR THE 1ST THREE YEARS.............................................................34
APPENDIX:.............................................................................................................................................................................35

8
 CHAPTER ONE
BUSINESS DESCRIPTION
The sponsor of the business is Austin Tabu’s. The sponsor resides in Bungoma
County. He joint primary school of KIBISU EDUCATION CENTRE PRIMARY
and sat for his Kenya Certificate of Primary Education in the year 2010 before
joining KIBISU SECONDARY SCHOOL where he later sat for Kenya Certificate
of Secondary Education in the year 2014. And the sponsor is currently a student at
MATILI TECHNICAL TRAINING INSTITUTE pursuing craft certificate in
plumbing. The owner came up with business idea of starting pipe fitting work shop
BUSINESS NAME
The business name is to be Tabu's pipe fitting work shop. The business was named
TABU'S PIPE FITTING WORKSHOP since most of the residents in the area are
familiar with the name
BUSINESS LOCATION AND ADDRESS
TABU'S PIPE FITTING WORKSHOP is to be located at Kisumu town. The
infrastructure that exists in the location of the business is marram and tarmac road
from Kisumu town hydroelectric power, telephone services and proper security due
to Kisumu police station which is near the place

The address of the business

TABU'S PIPE FITTING WORKSHOP

P.O BOX 42-60210

KISUMU

Tel: 0712238971

9
 BONDO ROAD
KISUMU KISUMU
TOWN AIR PORT

SIAYA
CBD

Kisumu NAIROBI HIGHWAY

KISUMU ROAD
TABU’S PIPE FITTING SHOP
WORK
KCB
BRANCH

KAKAMEGA

Form of ownership

The table below shows how the business owner plans the capital break down.

Source Amount (Ksh) Percentage

Owner equity 40, 000 6.0
Family and friends 180, 000 43.00
Bank loan 60, 000 51.00
Total 280, 000 100%

1.5 PRODUCTS AND SERVICES

TABU'S PIPE FITTINF WORKSHOP will be specialized in selling PVC pipes, PPR pipes, GI
pipes, BMS pipes which will be used in plumbing work in that region
1.6 JUSTIFICATION OF OPPORTUNITY

Reason for starting the business

 Due to the location the business anticipants to archive maximum penetration to the
market demand.
 Create self-employment instead of depending to be employed
 To create employment to those who are unemployment

10
 1.7 SIZE OF INDUSTRY

TABU'S PIPE FITTING WORKSHOP is a very large workshop in Kenya economy at large. The
numbers of employees to be employed are about ten. The level of technology to be applied to the
workshop is also modern
1.8 BUSINESS GOALS

TABU'S PIPE FITTING WORKSHOP is general achieving the following goals

i. Short term goals

 Supplying quality products such as pipes, pipe fitting and pipe joints
 Promoting employment in the area to unemployed
 Improving living standards to the business owner, customers and the employees
ii. Long term goals

 To purchase modern equipment that generally improves production hence higher profit
margin

 To open another workshop elsewhere

1.9 ENTRY AND GROWTH STRATEGY

a. Industry trends

A positive trend in sales volume indicates the sign of the business achievement due to the combined
efforts of employees of the firm in treating customers well and ensures that commodities are in
orderly way with reasonable prices. The trend is stable volume by noticing cause of sales decline
and eliminating measures that have affected the trend

b. Entry strategy

In order of the business to penetrate into the market some factors must be applied such as sector
including advertising using posters especially an industry area

The quality supplied plays a vital role. As a business manager and owner of the firm is to maximize
the sales by maintaining of good management

c. Growth strategy

The owner of the business will ensure the business roles within the short period of time since there
will be available resources to run in the workshop smoothly without having any loss

The businesses will also operate seven days of the week. And the competitors shall work six days of
the week

11
 CHAPTER TWO
2.0 MARKETING PLAN

The potential customers of TABU'S PIPE FITTING WORSHOP to be grouped into the
following categories

i. Institutional

The division host many institutions such as friend school Kaimosi and Bondo University. All the
institutions are to purchase pipe fittings, PVC pipes and PPR pipes for the purpose of water tanks
installations in the institution to ensure adequate supply of water

ii. Commercial

These are customers where to buy from the premises of the business with the intentions of re-
selling. These customers include business men, and commercial constructors. Sectors which is
growing within the business location

iii. Individual

Individual customers include farmers, government constructors.

Local residents and its surroundings when development associates that have project on rural are
building water projects

A market survey indicates that most institutions commercial customers and individual
organization from a large plot of leading market

Characteristics of potential customers

a. Age group

Customers are age between 18 to 65 years is expected among the customers. Age margin i snot
to be considered much in the business as long as the customers buy and sells in other business

b. The education background

At the customer is not specific service buying do not look at levels of education but do require
only skills

Hence, they are both literate and illiterate customers to determine the advertisement trends when
written media is used

12
c. Income level profession and occupation

The wind of people expected to visit the workshop are mainly working-class farmers. It
comprises of middle-, low-, and high-income earners

The workshop operates on week day from 8.00 am to 10.00pm

2.2 Market share

According to research earned out by the sponsors of the business the estimated potentials
customers is about 21, 000 from this it is seen that the area is densely populated. The population
is to be shared among the competitor in percentage as shown below

Sales

10%

15%

50%

25%

TABU'S PIPE FITTING WORKSHOP WASTE APPLIANCES WORKSHOP

JEMO PLUMBING AND INSTALLATION VINCENT WORKSHOP

13
COMPETITPRS STRENGTH WEAKNESS
TABU’S  Have skilled personnel  Few
WORKSHOP Proper stocking employees’
 Good time management Poor
advertisem
ent
 Hostile when dealing with
customers
WASTE APPLIANCES  Many employees’  Operates only on week
good advertisement days and close on
 Well, established weekend
JEMO PLUMBING AND  Proper time management  Employees are not professional
INSTALLATION Have good reputation
 Financially stable  Very expensive and negotiable
VINCENT  Honest to her customers  The business is
WORKSHOP  Skilled employees Honest new Few
to employees employees
 Concentrates within the town

14
 2.1 Competition

My potential competitors are

Wait appliances workshop

It is located five hundred meters away from TABU'S WORKSHOP but same area

Jomo plumbing and installation

This workshop is located opposite to my workshop and it sales plumbing materials similar to
mine

Vincent workshop

This workshop is located only 400m away from TABU'S workshop and it deals with same pipe
size which is different to my workshop which only gives me a good advantage
2.2 Advertising and promotion strategy

In order to win the heart of great number of customers the business will plan on deliberate
promotion through

i. Offering discount to customers

The sponsor will offer discount to customers who buy the product in bullet also free delivery of
their materials

ii. Offer a free sample

Offer them a free sample to so many products at a certain time of the year

iii. Trade show and exhibition

The employees will be attending shows by presenting their product to customers in order to
increase the stock

iv. Advertisement

Advertisement will be used to create public awareness of the business existence. The following
methods will be used

a. Poster

The poster will be used to pinned at different places especially on a busy streets in town, middle
of the town market place and village areas on poles and cartoons

b. Billboards

15
 The billboards are placed to show the name of the business the address of the business and cell
phone number working hours both weekend and week days

c. Radio

Advertisement are done through a radio where most of the adverts is through FM Radio
Cost of promotion and advertisement
The method or charts cost the business a considerable amount but it is done yearly. The business
is using approximately a total of Ksh 40, 000 per year and although the advertisement has added
and expense to the business
2.3 Pricing strategy

The business products are supplying all plumbing equipment and fittings. And all these have
different verities of different prices

The different in price is due to quality size and quantity technology employed content

The following factors will be considered when pricing the service rendered and products sold

i. Classified pricing

This will be done by classifying goods and services according to quality and quantity

ii. Demand

When demand is high price will rise by a certain percentage

iii. Competitor’s price

When competition is high the business will lower the price as one of the strategy

iv. Cost of the products

The cost of the equipment will be determined by the cost

2.4 Sales tactics

a. Direct selling

The business owner will do servicing and selling of items to customers the method enables the
business owner to meet customers directly

b. Discount

16
 This includes sales of products with reduced to customers who will be done to maintain and
attract customers

c. Credit offering

Customers and family owners will enjoy credit facilities

d. After sales services

Equipment that breaks down after package of the products and equipment that attractive to
the customers

e. Provision of show room

The workshop is to provide a show room for the products provided displaying them in an order
where customers can view then create awareness of what is available and satisfying their needs
2.5 Distribution strategy

A second distribution strategy will be organized in order to ensure that customers are well served
as well as to maintain its reputation

i. Poor roads

Some roads are with the area cannot be used during heavy rains that is they are impassable

ii. Insufficient infrastructure

Some telephone lines may be damaged during heavy rain or sometime it may not be working
leads to communication break down

iii. Insecurity

Robbery and theft may arise which leads to less property

Possible solutions to the problems

a) Have a reliable means of transport that is hire potters or cost to deliver the products
b) Hire security guards in case of robbery
c) Poor communication breakdown is to be dealt with by using photos

17
 CHAPTER THREE
3.0 Organizational and management plan
3.1 Describe the business management and responsibilities

The business owner intends to organize the available resources by utilizing prudent management
practice which shall be possible through the help of appropriate staff
ORGANIZATIONAL CHART

GENERAL MANAGER SUPERVISOR

MANAGER

SHOP WORKING BENCH CONTER

ATTENDANTS ACCOUNTANT
TOP

STORE KEEPER MAIN STORE

SECURITY OFFICER

3.2 The manager

The manager is involved in the overall management of the business by engaging herself in all
activities of the business

The business is to manage by the sponsor who is aged twenty years old and a holder of
certificate in information studies he would meet the following qualifications

Three years in experience in the field of management Good

public relations

Computer literature

Duties and responsibilities

To recruit and select The

18
 final decision maker

Retain and motivate other employees Make

sure the work flow is as required

He is expected to be earning a salary as shown below

Monthly

Remuneration KSh
Basic salary 6, 000.00
House allowance 2, 000.00
Medical allowance 1, 500.00
Travelling 1, 000.00
Entertainment 500.00
Total 11, 000.00

19
Supervisor

Qualification

Should be above 18years

Have a minimum of two years’ experience in busy environment

Should have a certificate in business administration and electronics

Duties and responsibilities

Overseas the work of the employees

Assets the manager in managing day to day activities of the business

Responsibilities for administration of the business when the manager is absent

Responsibilities in motivating and monitoring employee’s performance

Remuneration KSh
Basic salary 5, 000.00
House allowance 3, 000.00
Medical allowance 1, 500.00
Total 9, 500

Accountant

Qualifications

Must have a good public relations

Must be a computer literate

Preparing salaries for employees of the business

Duties and responsibilities

Sales officer

Qualifications

Must be at least 18years of age

Must be a holder of 0level certificate with at least a grade of C plain and pass in math and
commerce

Duties and responsibilities

20
To distribute firm’s products and expand sales

Arrange other sales services to customers

Selling products to customers

Accountant and sales officer

Remuneration Ksh
Basic salary 3, 000.00
House allowance 1, 500.00
Medical allowance 500.00
Travelling allowance 300.00
Total 5, 300.00

Watchman

Qualifications

Must be above 20years of age

Must be a form four leaver

Must be honest, obedient and trust worthy

Duties and responsibilities

Have a duty to maintain the general security of the premise

Must keep watch on the business hours are over (during the night)

Must discharge any other duty assigned by the authority

Sweeper

Qualifications

Must be above 19years

Must be responsible with her duties

Must be healthy

Duties and responsibilities of a sweeper

Enhance cleanliness is maintained in the compared and in the house

Should be responsible for cleanliness of the area around and inside the premises

21
Watchman and sweeper

Remuneration Ksh
Basic salary 2, 400.00
House allowance 1, 000.00
Travelling allowance 200.00
Total 3, 600.00

Incentives

To boost and maintain employees a motivation, the management of the form allows some
incentives offered and promote to the profits

These include

Provide medical and house allowance

Have paid leaves

Pay advance money of an urgent need

Other personnel

The sponsor of the business requires other three employees

Business management advisor

Office messenger

Store keeper

Management advisor

Should be qualified person with at least C minus

Should have skills and knowledge

Should possess skills from other advisors

Duties and responsibilities

He will be guiding the manager on how to progress the business

Office messenger

Qualifications

He/she should be a qualified person with a mean grade of C minus

22
Duties and responsibilities

He should be a mathematician

He should be qualified with a mean grade of C plain

Should have an experience of one year

Remuneration and incentives

Recruitment

The should be done by use of posters and advertisement through local duties, calcified columns
and radios

Chosen candidate should be required to attend an interview only these who pass the interview

Training

Both formal and informed is used to train employees of the firm

Promotion

The firm is to give promotion on those employees who are hardworking punctual and honest.
This may go hand in hand with salary increment
3.3 Remuneration and incentives Rewards and recognition
Better payments for the employees are which differentiates well and performance in the business
in such a case the employees should be paid well according to their qualifications and experience
in the job

Auditing

The firm uses both individual and public auditors to calculate its financial books. A private
auditor John Onene who has an office at Bondo town. He has done ICT and he deed the
following

Advice the firm

Auditing books of accounting and defecting the effects computation of taxation

Incentives

The recruitment of employees will depend on performance of every individual

23
Incentives

The business owner is to give no monitoring to the employees incentives includes appreciation
for work done
3.4 License, permits and By-laws

The organization needs attaining and permits for the business to operate legally. This will be
done obtained from the local government authorities for example city council

By-laws

Workmen compensation act cap 236

The form as kept some package of profit per year to cater for workmen compensation in case of
death liability or incapable as result of accident while performing their duties in the firm

Weight measures act

The business makes sure that all the products manufactured corresponds with the weight and
measurement as stated in the package and its quality

Insurance law

The business moves to the service offered by the insurance to cater for the whole business for an
outcome that may occur and the firm run at loss
3.5 Support service

In order for the business to be able to provide services from some of organization and personnel

Provider of loans when required

Money transfer from one party to another

Receiving deposits and giving interest on the deposits

The bank uses the following addresses

Equity Bank

Kisumu Branch

P.o Box 49 Kisumu

Tel: 0712238971

24
Accounting consulting or advisor

He/she is responsible to carry out calculations of the activities carried on the business

JOHN OWINO

P.O BOX 39-003

KISUMU

Postal services
Post office helps the business to communicate with other organizations and individual within the
country and abroad

KISUMU POSTAL OFFICE

P.O BOX 142

KISUMU

25
 CHAPTER FOUR
4.0 Operational plan
4.1 Product design and development

The proposed business plan produces very well products to the customers developing by
qualified workers and by use of modern methods of managing them
4.2 Product facilities

i. Beam balance

This machine is used in in weigh of quality of items such as nails, screws and other items

ii. Trolley

This is used in transportation within the workshop other than carrying heavy items is not
sufficient

iii. Wheelbarrow

This is equipment used in horizontal transport for a short distance

iv. Hand drill

This is a machine used to make holes

Repair and maintenance

All the machines and tools used are maintained and repaired immediately once failure occurs

26
Describe other fixed assets

For business to prosper smoothly requires room to establish and e maintain the business
Product strategy
Equipment Quantity Cost per unit Total
Wheelbarrow 6 3, 000 18, 000
Trolley 4 3, 000 12, 000
Hand drill 2 1, 500 3, 000s
Beam balance 3 2, 000 6, 000
Total 39, 000

Monthly labour requirement

Job title No Salary
Manager 1 29,000
Supervisor 1 25, 000
Accountant 1 18, 000
Security officer 3 10, 000
cleaner 4 9, 500

Monthly production expenses

Item Cost
Trading license 1,000
Water and electricity 600
Rent 2,700
Insurance 4,000
Repair and maintenance 3,500
Transport 2,500
Advertisement 3,000
Total 17,000

How to calculate the cost of product

Total monthly required + total labour cost per month + Production over head
4.3 Production process

Firm provide both goods and services for effective production

Allocation of duties and responsibilities is maintained so as to have high quality products

27
Stage 1

Purchasing this is where the goods are bought from Kisumu where they are of supplying in large
qualities and also cheaper price

Stage 2

Receiving of products after the products are purchased, they are received by the manager so that
he can ensure that goods bought the current ones and also the price

Stage 3

Selling after all the above process the shop attendant is now ready to do selling to the customers
both retail and wholesalers’ customers

Stage 4

Display of products according to design so that it can help customers to know the hardware has
recent goods bought plus their prices

Stage 5

Selling after all the above process the shop attendant is now ready to do selling to the customers
both retail and wholesale customers

Stage 6

The products through the sales. The hardware now is in the position for sale or provides the
goods and services effectively. This attracts customers
4.4 Government regulations affecting operations Company act caps 586
The business owner will require obtaining trading license by registering so as to operate legally.
The permit is obtained from municipal council

Safety regulations act cap 225

Tabu's workshop tries its best level to protect all its customers and workers the products
produced are given its descriptions on quality materials and strength to permit customers use

Public health regulations act 242

Workers must receive medication and proper treatment and compensation in case of accident.
The working environment in the business shall be made as conducive as possible

28
Insurance

The business will be insured against theft, accident, fire and any other damages

Trade license act 479

The business will be licensed as per laws with legal government through the municipal council
Kisumu

Insurance tax cap 476

In act of parliament which provide taxation of income by an individual or business which

qualifies for deduction

29
 CHAPTER FIVE
5.0 financial plans
Financial plan is an important tool often to be utilized by an entrepreneur on proper planning
resource available
5.1 Pre operational costs
Item Cost
Equipment and tools 6,000
Water 500
Electricity 500
Furniture and fittings 2,000
Rent 2,700
Advertisement 6,000
Total 6,900

5.2 Working capital requirement

Item Year 1 Year 2 Year 3
Stock of raw materials 60,000 130,000 140,000
Work on progress 30,000 40,000 80,000
Stock of finished goods 20,000 30,000 15,000
Debtors 20,000 10,000
Cash in hand 25,000 45,000 40,000
Cash in bank 200,000 200,000 180,000
Total 335,000 465,000 325,000

30
 5.3 TABU’S PIPE FITTING WORKSHOP CASH FLOW STATEMENT FOR THE YEAR ENDING
31ST DECEMBER 2028
Item Jan Feb Mar Apr May Jun Jul Aug. Sep Oct Nov Dec Total

Cash in flow - - - - - - - - - - - - -

Cash sales 207,000 207,000 207,000 207,000 207,000 207,000 207,000 207,000 207,000 207,000 207,000 207,000 2,484,000

Credit sales - 2000 3,000 3,200 3,400 3,600 3,700 3,900 4,100 4,200 4,400 4,500 40,000

Owner equity 40,000 - - - - - - - - - - - 40,000

Friends & relatives 180,000 - - - - - - - - - - - 180,000

Loan 60,000 - - - - - - - - - - - 60,000

Salary 85,800 85,800 85,800 85,800 85,800 85,800 85,800 85,800 85,800 85,800 85,800 85,800 102,000

Rent 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 32,400

Stationery 600 - - - - - - - - - - - 600

Telephone 600 600 600 600 600 600 600 600 600 600 600 600 7,200

Electricity 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Advertisement - 600 - - - - - - - - - - 600

Water 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Transport 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 20,400

Furniture & fittings - - - 2,000 - - - - - - - - 2,000

Repair maintenance - 2,500 - - - - - - - - - - 2,500

License 2,500 - - - - - - - - - - - 2,500

Miscellaneous 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

Tax - - - 1,000 - - - - - - - - 1,000

Net cash 85,800 95,800 96,800 101,000 103,000 105,000 106,000 107,000 110,000 111,000 112,000 113,000 1,135,400
5.4 TABU’S PIPE FITTING WORKSHOP BALANCE SHEET AS AT 21ST DEC 2024
Fixed assets Ksh
Machine and equipment 39,000
Less accumulated depreciation 20,000
Furniture and fittings 2,000
Total fixed assets 39,000
Debtors 6,000
Cash at bank 60,000
Cash at hand 40,000
Total current 12,000
Assets -
Liabilities 18,000
Current liabilities 29, 000
Net worth 60,000
Liabilities and net worth 61,800

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5.5 Breakeven level

Item Fixed level Variable cost Ksh

Water 500
Electricity 500
Transport 2,200
Rent 27,000
Salary and wages 8,500
Advertisement 600

Total contribution = sales – total variable costs

207,000 – 27,000
= 204,000
Contribution margin percentage = contribution margin × 100
Sales
204,300 × 100
207,000
98.69%
Determine the total fixed cost i.e operating expense for the year
Total fixed assets = 39,000
Calculate the breakeven level of sales in shillings breakeven (in shillings)
= total fixed cost
Contribution margin
39,000 =395.176

98.69

5.6 Expected probability rates

Calculate the expected probability ratios

Gross profit percentage = gross profit × 100

Sales
20,000 ×
= 9.66%
100
207,000
Return on equity = Net profit after tax × 100
Total investment
10,000 × 100
= 33.33%
30,000

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5.7 Desired financial
Item Amount
Pre operating 30,000
Working capital 40,000
Fixed 4,000
Total 74,000

Proposed capitalization
Source Amount Percentage (%)
Owners’ equity 40,000 6.0
Family & friends 180,000 43.00
Bank loan 60,000 51.00
Total amount 280,000 100

TABU’S PIPE FITTIND INCOME STATEMENT FOR THE 1ST THREE YEARS
Items 2024 2025 2026
Sales 30,000 40,000 60,000
Gross profit
Expenses
Tools and equipment 450 100 2,000
Salaries 85,800 85,800 85,800
Rent 2,700 2,700 2,700
Stationery 600 1,200 1,800
Telephone 7,200 7,000 6,900
Electricity 6,000 5,400 5,000
Advertisement 600 400 300
Water 6,000 5,400 500
Transport 26,400 20,000 18,000
Furniture 2,000 2,100 2,200
License 2,500 2,500 2,500
Miscellaneous 12,000 10,000 8,000
Total expenses
Net profit tax
Provision for tax 10%
Net profit after tax

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 APPENDIX:
BUSINESS LOCATION

BONDO ROAD
KISUMU KISUMU
TOWN AIR PORT
CBD

Kisumu NAIROBI SIAYA

KISUMU ROAD HIGHWAY

TABU’S PIPE FITTING WORKSHOP

KCB
BRANCH
KAKAMEGA

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