REHEMA TAILORING SHOP

P.O BOX 221, KITALE

TEL: 0115630236

EMAIL: [email protected]
TITLE: BUSINESS PLAN

COURSE CODE: 2804

PAPER NO: 307 B

NAME OF PRESENTER: REHEMA KEPHRINA WAWIRE

INDEX NO: 5032100127

PRESENTED TO: THE KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILMENT FOR THE AWARD OF
DIPLOMA IN ACCOUNTANCY

SUPERVISOR: MINING GRACE

CENTRE NAME: THE KITALE NATIONAL POLYTECHNIC

CENTRE NO: 235032100

DATE PRESENTED: 2024 NOVEMBER SERIES

i
DECLARATION
I declare that this is my own knowledge, imagination and original work and that I presented with
passion to the Kenya National Examination Council as requirement for the award of Diploma in
Accountancy. This work has not yet been presented to any Examination body before for
academic purpose.

STUDENT NAME: REHEMA KEPHRINA WAWIRE

SIGNATURE……………………………………….

DATE……………………………………………….

SUPERVISOR

NAME: MINING GRACE

SIGN----------------------------------------

DATE --------------------------------------

ii
DEDICATION
Special dedication goes to my parents, lecturers from Kitale National Polytechnic and all those
who have encouraged and supported me through my academic journey in search for knowledge
and skills in order to accomplish my desired professional qualification.

iii
ACKNOWLEDGEMENT.
I acknowledge the guidance and encouragement offered to me by my supervisor Madam Mining
Grace throughout the entire process of this business plan. Her critique was a vital to this work. I
am overwhelmed to give thanks to the administration of Kitale National Polytechnic and all the
Business department lecturers who have committed themselves fully to train me while at collage.
It is through their assistance that I was able to acquire relevant knowledge and skills sufficient
enough to the business plan.

iv
Table of Contents
DECLARATION.......................................................................................................................................ii
DEDICATION..........................................................................................................................................iii
ACKNOWLEDGEMENT........................................................................................................................iv
EXECUTIVE SUMMARY......................................................................................................................vii
CHAPTER ONE........................................................................................................................................1
1.0; BUSINESS DESCRIPTION..............................................................................................................1
1.1; BUSINESS NAME.............................................................................................................................1
1.2; BUSINESS LOCATION AND ADDRESS.......................................................................................1
1.3; FORM OF BUSINESS (sole proprietorship & partnership)..........................................................2
1.4; TYPE OF BUSINESS........................................................................................................................3
1.5; GOODS AND SERVICES.................................................................................................................3
1.6; JUSTIFICATION OF THE BUSINESS...........................................................................................3
1.7; INDUSTRY.........................................................................................................................................4
1.8; GOALS OF THE BUSINESS............................................................................................................4
1.9; ENTRY AND GROWTH STRATEGY............................................................................................4
1.9.1; ENTRY STRATEGY......................................................................................................................4
1.9.2; GROWTH STRATEGY.................................................................................................................5
CHAPTER TWO.......................................................................................................................................6
2.0; MARKETING PLAN........................................................................................................................6
2.1; CUSTOMERS....................................................................................................................................6
2.2; MARKET SHARE.............................................................................................................................6
2.3; COMPETITION................................................................................................................................7
2.4; ADVERTISEMENT...........................................................................................................................8
2.5; PROMOTION....................................................................................................................................9
2.6; PRICING STRATEGY......................................................................................................................9
2.7; SALES TACTICS..............................................................................................................................9
2.8; DISTRIBUTION STRATEGY..........................................................................................................9
CHAPTER THREE.................................................................................................................................11
3.0; ORGANIZATION PLAN................................................................................................................11
3.1; ORGANIZATIONAL CHAT..........................................................................................................11
3.2; KEY PERSONNEL..........................................................................................................................11
3.3; OTHER PERSONNEL....................................................................................................................12

v
3.4; RECRUITMENT TRAINING AND PROMOTION.....................................................................13
3.4.1; RECRUITMENT..........................................................................................................................13
3.4.2; TRAINING....................................................................................................................................13
3.4.3; PROMOTION...............................................................................................................................13
3.5; RENUMERATION AND INCENTIVES.......................................................................................13
3.6; LICENCE AND PERMITS.............................................................................................................14
3.7; SUPPORT SERVICES....................................................................................................................14
CHAPTER FOUR...................................................................................................................................15
4.0; OPERATION AND PRODUCTION PLAN...................................................................................15
4.1; OPERATION PLAN........................................................................................................................15
4.2; PRODUCTION PLAN.....................................................................................................................15
4.3; PRODUCTION FACILITIES.........................................................................................................15
4.4; PRODUCTION PROCESS.............................................................................................................16
4.5; REGULATION AFFECTING OPERATIONS.............................................................................16
CHAPTER FIVE.....................................................................................................................................18
5.0; FINANCIAL PLAN.........................................................................................................................18
5.1; PRE-OPERATIONAL COSTS.......................................................................................................18
5.4; PROFORMA TRIAL BALANCE...................................................................................................22
5.5; BALANCE SHEET..........................................................................................................................23
5.6; BREAK EVEN ANALYSIS.............................................................................................................24
5.7; FINANCIAL RATES.......................................................................................................................26
5.8; DESIRED FINANCING..................................................................................................................28
5.9; PROPOSED CAPITALIZATION..................................................................................................28

vi
EXECUTIVE SUMMARY
CHAPTER ONE

BUSINESS DESCRIPTION

The name of the proposed business is REHEMA TAILORING SHOP . It will operate in
Bungoma town near Ng’arisha sacco opposite Khetia’s supermarket. It will be a sole
proprietorship business, it will be dealing with provision of services like designing clothes and
clothes printing.

CHAPTER TWO

MARKET PLAN

The business potential customers will be private individuals and public institutions, residence
and staff workers of Bungoma town, the business will take up 40% of the market shares. It will
have both direct and indirect competitors such as Ram sew and Tailoring center and Laila
Tailors. It will advertise its products through social media platform where it will also do in
promotion. The price of materials will depend on suppliers’ price and the competitors’ price.

CHAPTER THREE

The business will have ten employees, one manager, one accounts clerk, three supervisors, two
watchmen, two production officers and one receptionist. The business will recruit its workers
through advertisement in the local media, visiting various educational institutions, and through
family and friends. Promotion of workers will depend on performance of individual worker. The
business will obtain its license from Bungoma County Council. The finance of the business will
be kept at the bank and the workers will be paid through the bank.

CHAPTER FOUR

OPERATION AND PRODUCTION PLAN.

The business will operate from Monday to Friday at 8.30am to 10.00pm then Saturday and
Sunday at 10.00 am to 8.50pm. The customers will be offered with free delivery for those who
purchase products in large scale. The enterprise will provide quality goods and will train workers
for effective operation of the business. All the safety measures will be put in place to protect the
workers and customers who will be coming to buy goods.
vii
CHAPTER FIVE

FINANCIAL PLAN

The business Will have preoperational cost of 3 years . Preoperational cost will be Ksh. 635640.
Working capital will be; Year 1: Ksh. 5389160, Year 2: Ksh. 6295300 and Year 3: Ksh 6452420.
Net profit for the years will be: Ksh. 4564160, Ksh 6770300 and Ksh 6927420. Gross profit
percentage will be 97.36%, 97.75% and 91.70% respectively. The net profit percentage will be
62.35%, 76.06% and 76.38%. The rate of stock turnover will be 5.38%, 4.01% and 2.53%. the
business will be financed by; personal savings of Ksh. 500,000, contribution from friends and
relatives of Ksh. 300,000 and a loan from Bank of Ksh. 500,000,

viii
 CHAPTER ONE

1.0; BUSINESS DESCRIPTION

1.1; BUSINESS NAME

The proposed name of the business will be REHEMA TAILORING SHOP . The suggested name
is a family name meaning mercy and grace and that is why it is suitable for the business. The
business will be dealing with provision of services like designing models and sewing clothes for
individuals and public institutions. The business will be located in Bungoma town and the
starting capital will be 1,300,000.

1.2; BUSINESS LOCATION AND ADDRESS

The company will be located in Bungoma town near Ng’arisha Sacco opposite Khetia’s
supermarket. The location of the business is suitable and satisfactory therefore gives a conducive
environment for the operation of the business.

The intended business enterprise will have its address registered as

REHEMA TAILORING SHOP

P.O BOX 221

BUNGOMA

TEL NO.0115630236

E-MAIL: [email protected]

MAP

Khetias supermarket Small shops

Ng,arisha Sacco
Tumaini shop

REHEMA TAILORING SHOP

1
 street
LOGO

Welcome to phone no.0115630236

REHEMA TAILORING SHOP

SEW

SEW

1.3; FORM OF BUSINESS (sole proprietorship & partnership)

The legal form of business unit will be a Sole Proprietorship, meaning that the management and
policy formulations governing the business shall be handled by the business owner Rehema
kephrina wawire.

The proprietor decided to settle to this form of business ownership because of the following
merits:

-It involves few legal procedures and requirements to start up.

-Decision making and implementation is fast as compared to partnership where

consultations are so frequent.

-The owner gets to have a personal contact with his/her customers.

However the following are the demerits of Sole Proprietorship:

-It has unlimited liability

-The proprietor will have to work for long hours and will have little time for recreation

-Expansion of the business may be a problem due to scarce source of capital.

2
1.4; TYPE OF BUSINESS
The type of business will be a service providing industry and it will be a sole proprietorship type
of business. The business will be getting their stock from local industry and the number of
employees to be highered will be a maximum of 50 employees. The major machine that will be
used to transport the raw materials will be a pick-up because it can carry a high number of
materials per trip. The climate is most likely to affect the business because when the climate is
unfavorable such as heavy rains delays of delivery May occur .

1.5; GOODS AND SERVICES

REHEMA TAILORING SHOP will be dealing with selling designed clothes within Bungoma
town and outside Bungoma. The finished product that will be transported within Bungoma town
will be delivered for free where as those that will be transported outside Bungoma will be on a
basis of paying after delivery. The business will embark on provision of high quality and market
oriented services to its customers. The business will enhance quality services through the use of
professionally trained personnel who will ensure quality work and work done professionally.

1.6; JUSTIFICATION OF THE BUSINESS

Since Bungoma is a trading centre, its growing at a rapid rate and therefore there is a higher
chance of prosperity of the business due to the high population in the area.

The area’s population has also increased significantly due to the many investments coming up
around the vicinity and the local areas such as kandui and chepkube. This factor will help
towards boosting and promoting the growth of Rehema tailoring shop.

The security in the area is tight because of a good infrastructure system around such roads,
banking services and communication networks which makes the area the ideal place for any
business investment.

Availability of well trained personnel like fashion designers, fashion models, accountants among
many other professions in relation to the business shall help improve the day to day activities of
the business. The area also boasts of easy access to labour hence improving the level at which
customers shall be attended to.

The high demand for the trending fashion in the market will help the business to increase its
productions and skills.

3
1.7; INDUSTRY
The business will operate under service industry. This is because it will offer services to its
customers and the products sold will be permanent. The unskilled labor will be selling and
advertising the products. The business will be a big business, the climate is at some time
favorable and unfavorable. When the climate is unfavorable, losses may occur i.e. there will be
low demand of products and if there is low demand then the income will definitely be low.

1.8; GOALS OF THE BUSINESS

A goal is an objective or target that someone is trying to achieve or reach.

Short term goals

The intended business is seen viable and justified because of;

i. Market-there will be a large market arising from the large population within the town since
there are few firms providing such services to the population hence the opening up of such
business will be much instrumental.

ii. Raw materials-the intended business will be near the raw material.

iii. Employment-the intended business is basically meant to offer employment to the owner as to
earn income to enable him expand more quickly and employ more people hence solving the issue
of unemployment within the town.

iii. Role model-the proprietor is intending to act as a role model to the town population and will
encourage them to do so.

1.9; ENTRY AND GROWTH STRATEGY

1.9.1; ENTRY STRATEGY

Before commencement of the business, the company will acquire all the legal documents
required to avoid any confrontation with the authority which may cause business interruption.

The business shall acquire a trading license from the municipal council of Bungoma at a certain
fee which will permit the business to carry on officially.

4
Before commencing the business, the proprietor will advertise its intended activities so as to
bring attention of the potential customers to the existence of the new business. The intended
business will use the following means for advertising;

1.9.2; GROWTH STRATEGY

Market-due to a large population and familiarity of the business, it will secure a relatively large
market.

The business will require extra machines since it will secure a large market hence high demand
for its services.

Open up branches as a result of growth of the business and nearby towns.

5
 CHAPTER TWO

2.0; MARKETING PLAN

2.1; CUSTOMERS
The identified potential customers for the intended business will include the following;

i. Contractors and house holders- the intended business will draw its customers from various
nearby educational institutions around.

ii. Residence and staff workers/working capital around the town- those working with banks, post
office, petrol stations and other government offices.

The potential customers will majorly be looking for economy, convenience and comfort. Since
most customers are students, they will suit their status and the working groups will be targeting
performance and convenience as they will be requiring quality services within shortest time
possible.

Since the business is intending to operate on full time basis, the intended customers will be
getting their services daily.

2.2; MARKET SHARE

Since the intended business will be located in a strategic position, it will be in a position to
capture a relatively large number of customers.

The proposed business aims at a capturing of about 40% of the total market. The remaining 60%
will be shared by the business providing the same services as those of the proposed business.

Market shares of the competitor Percentage share of the market

including the proposed one at the
beginning
Name of the competitors
Rehema tailoring shop 40%

Ram Tailoring shop 30%

Nicely Tailoring store 20%

Leila Tailoring 10%

6
 Market Share
45%
40%
40%

35%
30%
30%

25%
20%
20%

15%
10%
10%

5%

0%
Rehema's Ram Nicely Leila

Market Share

2.3; COMPETITION
A competitive analysis is a type of market research that identifies your competitors, their
strength and weaknesses, the strategies they are using to compete with you and what makes your
business unique.

Direct competition is any company that offers the same thing as you while indirect competition
refers to a business whose products or services are different from yours but potentially could
satisfy the same need and reach the same goal.

The main competitors are;

BUSINESS NAME STRENGTH WEAKNESS

Rehema tailoring shop i. Ability to offer guarantee i. High cost
ii. Offer security ii. it will take time to get
iii. Quick services component
Ram Tailoring shop i. Quality services i. No guarantee offered
ii. Listen to customers ii. Lack of security
Nicel Tailoring store i. Availability of produce i. Low quality of products

7
 ii. Cheap services ii. Slow services
Leila Tailoring shop i. Ability to offer guarantee i. Few customers
ii. Cheap services ii. Lack of products

To push competitors out of market the companies will use the following strategies;

i. Offering of competitive prices which shall match with quality of the products.

ii. It shall be opened from 8:00am to 6:00pm from Monday to Sunday.

iii. Quality products will be offered.

2.4; ADVERTISEMENT
An advertisement is a notice or announcement in a public medium promoting a product, a
service, or event or publicizing a job vacancy.

Reasons for advertising

i. Generates brand loyalty-it allows companies to target their customers and form a lasting
connection within them.

ii. Increases company traffic-Many consumers are more likely to visit a business after viewing
an advertisement.

iii. Gives a company positive Image-Advertising tells your consumers and your competitors
that you are open and ready for business.

iv. Helps the business in Competition-It helps businesses stay ahead of the game while
competing with other businesses.

v. Keeps your consumers up to date-When a new product or event is ready to launch,

advertising allows your consumers to be informed and aware of the details.

The advertising method to be used include;

 Paid search advertising

 Social media advertising
 Display advertising
 Native advertising
8
  Print advertising
 Broadcast advertising

2.5; PROMOTION
Promotion is an activity that supports or encourages a cause, venture or aim.

The purpose of promotion includes; to increase brand awareness, create interest, generate or
create brand loyalty. The methods that will be engaged in the promotion includes; through
television, blogs, banner and pop up adverts.

The proposed business will also offer free training to whoever intends to get the knowledge of
production on the first two days from thereafter fee will be charged.

2.6; PRICING STRATEGY

Pricing is the amount of money given or set as consideration for the sale of a specified thing.

The intended business will consider some factors in fixing the prices which include; price fixing
basing on costs. It will consider production cost such as those of purchasing the materials and
labor employed in a smaller margin of profit.

The intended business will try as much as possible to avoid it except for institutions which pay
through a procedure set by the institution.

2.7; SALES TACTICS

The business will employ the following sales tactics which will attract customers and their
individuals to get to the business premises.

 The use of pictures and drawings

 Hiring well trained staff and remunerate them
 Staff training
 Accommodation

2.8; DISTRIBUTION STRATEGY

The enterprise will do the following to ensure that customers get into the business premise.

i. The premises building will be painted in unique and attractive colors.

9
ii. The customers of the intended business will get their services by coming direct to the premises
and served immediately.

iii. The business will also be receiving orders from various institutions and with these they will
be going to their places to provide such services.

iv. The intended business will be faced by the following problems when conducting its
distribution process;

 Congestion.
 Costs.

10
 CHAPTER THREE

3.0; ORGANIZATION PLAN

3.1; ORGANIZATIONAL CHAT

It shows the flow of authority and responsibilities of each employee in the organization.

MANAGER

ACCOUNTS CLERK SUPERVISOR

RECEPTIONIST OFFICER

WATCHMAN PRODUCTION OFFICER

3.2; KEY PERSONNEL

PERSONNEL QUALIFICATIONS DUTIES
The manager The manager possesses managerial -Be responsible for planning for the
skill and leadership and in addition business ad ensure plans are
she is creative and innovative and implemented.
therefore able to come up with -Be responsible for coordinating of all
new ideas and implement and resources and channeling them into
initiate them. production.
-Be in charge of ensuring that adequate
staff is provided and necessary training
given to them.
-Ensure that the set standards are
attained.

11
The supervisor -Should have a degree or diploma -Supervising the work of the
-Holder in fashion and designing subordinates.
technology -Liaise with the manager in coming up
-Must have at least 3years with new ideas and implement.
experience -Reporting to the manager concerning
-Should be a person of high the daily undertakings of the business.
integrity and diligence. -Advice the manager at times in
-Should be of age between 22-28 decision making.
years. -Analyze the progress of the business.

3.3; OTHER PERSONNEL

PERSONNEL AGE QUALIFICATIONS DUTIES
Accounts clerk 25yrs and -Should be an o-level -Maintaining up to date
above graduate. records of the business.
-Must have done KATC II -Processing of payrolls and
(final). payment of workers.
-Must have 2yrs experience. -Preparation of final accounts.
-Must be computer literate. -Preparing and balancing of
books of accounts.
Production officer 20-30yrs -Should be an O-level -Will be operating the
graduate. production of bricks.
-Have a certificate in -Providing the necessary
production management. materials on site.
-Should be creative and -Keeping the records of daily
innovative. production.
-Must be a person of high
integrity.
Receptionist -Should be an O-level -Welcoming and directing
graduate. visitors to the organization.
-God communication skills -Receiving mails and post out

12
 both written and spoken. going ones.
-2yrs experience.
Watchman -Must be a form 4 leaver. -Providing the overall security
-Must have undergone to the firm and the assets.
training preferably in NYS. -Taking the names and other
-Possess certificate of good particulars of those visitors
conduct from the Kenya coming to the premises.
police.

3.4; RECRUITMENT TRAINING AND PROMOTION

3.4.1; RECRUITMENT
The intended business will recruit its staff through advertising in the local media, visiting various
educational institutions and through family friends and relatives. The company will employ the
following recruitment process during its exercise positions will be advertised through media and
interested candidates will apply.

3.4.2; TRAINING
The intended business will acquire staff that are well trained and experienced to perform at the
job level where they’re employed upon promotion to the higher level. Staff will qualify for
training to enable them to perform at the higher level upon acquisition of new equipment and
technology or introduction of a new service, the business will offer training to its employees to
equip them to meet the demand.

3.4.3; PROMOTION
The intended business will be promoting its staff on the grounds that; when a position falls, the
person under is promoted to take over the job. During the expansion of the business, new
positions are created and the business will promote the staff to occupy the created positions staff
whose performance is satisfactory and pleasing is also promoted as a motivating factors.

3.5; RENUMERATION AND INCENTIVES

The intended business will remunerate its employees basing on their job titles and grades. They
will also earn different salaries according to the positions they hold in the organization.

There will be an increment along with allowances i.e. medical, transport and house allowances.

13
 PERSONNEL SALARIES NHIF NSSF TRANSPORT TOTAL
Manager 30000 1000 800 2000 38300
Supervisor 19000 500 500 1500 21500
Accounts clerk 17500 500 500 1000 19500
Receptionist 17000 250 200 1000 18450
Production officer 16000 250 200 2000 18450
Officer 15000 250 200 2500 17950
Watchman 7000 150 200 1000 8350
138000

3.6; LICENCE AND PERMITS

Name; Trade license

Use; Authorize trade practices

Cost; 5000

Duration; 1 year

Origin; Bungoma county council

3.7; SUPPORT SERVICES

Service Service officer cost
Bank (KCB) KCB BUNGOMA branch 1000000
Insurance (MAENI insurance BUNGOMA branch 50000 per year
company)
Electricity (KPLC) BUNGOMA branch 3000 monthly
Water (SINOKO) BUNGOMA branch 800 per month

14
 CHAPTER FOUR

4.0; OPERATION AND PRODUCTION PLAN

4.1; OPERATION PLAN

The intended business will engage in the provision of quality services to meet customers fashion
and preference, it will focus on quick services reasonable and careful handling of customers as
they are the most important contributors to the success of the business. The business would
operate throughout the week but a particular hours as follows

Mon-Fri (8:30Am-10:00Pm)

Sat & Sun (10:00Am-8:50Pm)

4.2; PRODUCTION PLAN

The proposed business would mostly provide services to its customers like free delivery to
customers within the town and those outside Bungoma town will be on a basis of paying after
delivery. The company will embark on provision of high quality and market oriented services to
its customers. The business will enhance quality services through the use of professionally
trained personnel who will ensure quality work and work done professionally.

4.3; PRODUCTION FACILITIES

TABLE 1

FACILITIES CAPACITY PRICE/UNIT TOTAL SOURCE

Sewing machine 10 500 5000 Sew production
industry
Machine needles 5 1000 5000 Supermarket

Pin cushions 6 900 5400 Textile rollings

Thimbles 5 1200 6000 Super market

Extra sewing 2 1500 3000 Sew production

machine industry
Hand sewing 3 500 1500 Supermarket

15
 needles
Pick-up 1 450000 450000 Toyota

475000

TABLE 2

FACILITIES CAPACITY PRICE/UNIT TOTAL SOURCE

Adjustment 12 pieces 800 800 Supermarket
dress maker
Cutting scissors 20 pairs 1500 3000 Supermarket

Drawing chalks 60 packets 800 3200 Bookshop

Cover tables 12 950 5700 Carpenter shop

4.4; PRODUCTION PROCESS

Since the proposed business will be dealing with provision of services, its production process
will be as follows;

i. Production

Customers will be coming to the premises and request for the services. Their request will adhere
to on time.

ii. Transportation

Customers will be given free transport on goods worthy 500 kg on 5km square land.

4.5; REGULATION AFFECTING OPERATIONS

i. Government regulations

Since the government requires that any business before commencing its operation must acquire a
trading license, health certificate and permits’ the business will have to acquire such documents
from municipal council of Bungoma at a cost of ksh.6000 renewable yearly.

ii. By-laws

16
These are rules and regulations enacted by the business and it covers all employees of the
business.

These by-laws must be adhered to by everybody concerned to facilitate the smooth running of
the business.

iii. Health and safety regulations.

A requirement that all workers should undergo a medical examination to ensure that they are
healthy and able to conduct the business effectively and serve the customers adequately
cleanliness must also be observed at all times.

iv. Environment regulations

Any pollutants or substances that are likely to affect people’s health must be kept of a distance.
The business building must be inspected properly.

17
 CHAPTER FIVE

5.0; FINANCIAL PLAN

5.1; PRE-OPERATIONAL COSTS

PARTICULARS COST
License 5000
Machinery tools 475000
Purchases 15900
Rent & deposit 12000
Transportation 6000
Water and electricity 7000
Insurance 1800
Repair and maintenance 5000
Advertisement 2000
Miscellaneous 105940
TOTAL 635640

5.2; WORKING CAPITAL

CURRENT ASSETS-CURRENT LIABILITIES

DETAILS YEAR 1 YEAR 2 YEAR 3

Current Assets
Debtors 72100 55200 64650
Stock 20000 30000 50000
Cash 5,622,860 5,714,960 6536900 6622100 6670770 6785420

Current Liabilities
Creditors 55800 56800 63000
Loan 270000 (325800) 270000 (326800) 270000 (333000)
5389160 5389160 6452420

18
5.3; CASH FLOW STATEMENT

YEAR 1

DESCRIPTI JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
ON
Bal b/f 962360 128236 1623160 198586 236836 277456 319746 3640060 410346 458806 509276 29831086
0 0 0 0 0 0 0 0
Capital 130000 - - - - - - - - - - - 1300000
0
Sales 500000 520000 540000 560000 580000 600000 620000 640000 660000 680000 700000 720000 7320000
Debtors 4000 5000 5500 6000 6100 6200 6300 6400 6500 6600 6700 6800 42100
Total cash 180400 148736 182786 2189160 257196 297456 340086 384386 4306560 479000 529476 581956 40310500
inflow 0 0 0 0 0 0 0 0 0 0
Cash outflow
Description
Preoperation 635640 635640
al cost
Purchases 15900 16000 16100 16200 16300 16400 16500 16600 16700 16800 16900 17000 179400
Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
License - - - - - - - - - - - 5000 5000
Transport 2000 1500 1600 2100 2500 1800 2300 2200 2000 1500 2400 2200 24100
Electricity & 800 600 800 500 400 500 600 900 600 800 900 1000 8800
water bills
Advertisemen 1000 600 400 700 600 500 200 300 500 200 300 400 5700
t
Insurance 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 21600
Salaries 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 1656000
Repairs 1000 - - - 1500 - - 2000 - - - 2500 7000
Creditors 5000 8000 7500 6500 4000 2500 3000 3500 5000 4500 3200 2000 55800
Interest 10% 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 40500
Loan 100% 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 270000

19
Miscellaneou 2000 2100 2200 2300 2350 2400 2500 2000 2100 2500 3000 2200 27650
s
Total cash 841640 205000 204700 203300 203600 200000 203400 203800 203100 202100 202000 210600 3083240
flow
Net b/f 962360 128236 162316 1985860 236836 277456 319746 364006 4103460 458806 509276 560896 37227420
0 0 0 0 0 0 0 0 0
YEAR 2

DESCRIPTI JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
ON
Bal b/f 560896 612386 665151 719161 773491 827876 922826 9770010 1031751 1086741 1143731 1200746 10521757
0 0 0 0 0 0 0 0 0 0 0 0
Capital

Sales 720000 730000 744000 741000 742000 743000 744000 745000 746000 748000 750000 752000 8901000
0
Debtors 4200 4250 4300 4400 4450 4600 4650 4700 4800 4900 4950 5000 55200
Total cash 633316 685811 739581 793701 848136 902636 947691 1051971 1106831 1162031 1219226 1276446 10605004
inflow 0 0 0 0 0 0 0 0 0 0 0 0 6
Cash outflow
Description
Preoperation
al cost
Purchases 17000 17100 17200 17300 17400 17500 17600 17700 17800 17900 18000 18100 210600
Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
License - - - - - - - - - - - 5000 5000
Transport 1500 2000 2500 2100 1600 2200 2300 1800 2400 1500 2000 2200 24100
Electricity & 500 800 600 800 900 600 500 400 1000 900 800 600 8800
water bills
Advertiseme 700 400 600 1000 400 300 200 500 300 300 500 800 6000
nt
Insurance 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 21600
Salaries 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 1656000
Repairs 1500 - - 2000 - -2500 - - - - - 3000 9000

20
Creditors 7500 8000 5000 6000 4000 3000 3000 3500 5000 2000 3200 4500 56800
Interest 10% 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 40500
Loan 100% 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 270000
Miscellaneou 2300 2550 2500 2600 2650 2700 2800 3000 3100 3200 3250 3300 33750
s
Total cash 209300 206600 204200 202100 202600 201900 206900 202200 200900 183000 184800 215300 2419800
flow
Net b/f 612386 665151 719161 773491 827876 922826 977001 1031751 1086241 1143731 1200746 1254916 11215777
0 0 0 0 0 0 0 0 0 0 0 0 0

YEAR 3
DESCRIPTI JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
ON
Bal b/f 1254916 1310061 1365191 1420466 1475366 1530621 1585756 1640936 1696611 1751783 1807293 1862988 18701988
0 0 0 0 0 0 0 0 0 0 0 0 0
Capital

Sales 753000 753500 754000 754500 755000 755500 756000 756500 757000 758000 758500 759000 907000
Debtors 5000 5050 5100 5200 5300 5350 5400 5500 5600 5650 5700 5800 64650
Total cash 1330716 1385916 4411010 1496436 1951196 1606706 1661896 1717136 1772871 1828048 1883713 1939468 21332439
inflow 0 0 0 0 0 0 0 0 0 0 0 0
Cash outflow
Description
Preoperation
al cost
Purchases 18100 18200 18250 18400 18450 18500 18600 18650 18700 18750 18800 18900 222300
Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000
License - - - - - - - - - - - 5000 5000
Transport 2250 2300 2400 2500 2550 2600 2700 2750 2780 2800 2900 3000 31530
Electricity & 400 450 600 500 550 600 450 700 500 750 800 400 67000
water bills
Advertiseme 1000 1500 800 600 400 500 700 850 900 950 450 600 9250

21
nt
Insurance 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 1800 21600
Salaries 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 138000 1656000
Repairs - 2000 - - - 3000 - - 3200 - - - 8200
Creditors 4000 4500 6000 5000 5500 6000 3500 4000 6500 7000 6000 5000 63000
Interest 10% 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 3375 40500
Loan 100% 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 22500 270000
Miscellaneou 2500 2600 2700 2800 3000 3200 3500 3600 3700 3800 3900 4000 39300
s
Total cash 206550 207250 206350 210700 205750 209500 209600 205250 210380 208550 207250 215209 2502830
flow
Net b/f 1310061 1365191 1420465 1475366 7530621 1585756 1640936 1696611 1751783 1807303 1862938 1917948 19365020
0 0 0 0 0 0 0 0 0 0 0 0 0

22
5.4; PROFORMA TRIAL BALANCE
DESCRIPTION YEAR 1 YEAR 2 YEAR 3
Sales 7320000 8901000 9070000
Purchases 197400 210600 222300
Opening stock 15900 20000 30000
Cost of goods available 213300 230600 252300
Closing stock 20000 30000 50000
Cost of goods 193300 200600 202300
Gross profit less expenses 7126700 8700400 8867700
Rent 72000 72000 72000
Electricity 8800 8800 6700
Salaries 1656000 1656000 1656000
Insurance 21600 21600 21600
Miscellaneous 27650 33750 39300
Repair and maintenance 7000 9000 8200
Transport 24100 24100 31530
License 5000 5000 5000
Advertisement 5700 6000 9250
Loan interest 40500 40500 40500
Pre-operational cost 635640 - -
Net profit 4564160 6770300 6927420

23
5.5; BALANCE SHEET
YEAR 1 YEAR 2 YEAR 3
Fixed Assets 475000
Machinery tools & equipment 475000 475000

Current Assets
Cash 5622860 5636900 6670770
Stock 20000 30000 50000
Debtors 72100 55200 644650
5714960 6622100 6785420

Current Liabilities
Loan 27000 270000 270000
Creditors 55800 56800 63000
325800 326800 333000
Working Capital 5389160 6295300 6452420

Financed by:
Capital 1300000 - -
Net Profit 4564160 6770300 6927420
5864160 6770300 6927420

24
5.6; BREAK EVEN ANALYSIS
Break even analysis is a financial calculation that weights the cost of new business, services or
product against the unit sell price to determine the point of which you will break even

Fixed cost Year 1 Year 2 Year 3

Salaries 1656000 1656000 1656000
Rent 72000 72000 72000
Loan 270000 270000 270000
Interest on loan 40500 40500 40500
License 5000 5000 5000
Insurance 21900 21600 21600
Total 2065100 2065100 2065100

Variable Cost Year 1 Year 2 Year 3

Purchases 197400 210600 222300
Transport 24100 24100 31530
Electricity 8800 8800 6700
Advertisement 5700 6000 9250
Miscellaneous 6700 7600 10000
Repair and maintenance 7000 9000 8200
Creditors 55800 56800 63000
Total 305500 322900 350980

Total Cost

Sales- Total variable

Year 1 7014500 7320000-305500

Year 2 8578100 8901000-322900
Year 3 8719020 9070000-350980

25
Total contribution margin

= Total contribution x 100

Sales

Total Contribution Margin

TOTAL CONTRIBUTION MARGIN

Year 1 95.83% 7014500x100
7320000
Year 2 96.37% 8578100X100
8901000
Year 3 96.13% 8719020X100
9070000

Break Even Point

= Total fixed cost

Contribution Margin

BREAK EVEN POINT

Year 1 22379.21 2144600
95.83
Year 2 22253.81 2144600
96.37
Year 3 22309.37 2144600
96.13

26
5.7; FINANCIAL RATES
Gross profit % = Gross Profit X 100

Sales

GROSS PROFIT %
Year 1 97.36% 7126700x100
7320000
Year 2 97.75% 3700400X100
8901000
Year 3 91.70% 8867900X100
9070000

Net Profit% = Net Profit X 100

Sales

NET PROFIT %
Year 1 62.35% 456160X100
7320000
Year 2 76.06% 6770300X100
8901000
Year 3 76.38% 6927420X100
970000

Rate of Stock Turnover

= Cost of goods sold

Average stock (Closing stock + opening stock)

27
 RATE OF STOCK TURNOVER (15900+2000)
Year 1 5.38% 193300
35900
Year 2 4.01% 200600
50000
Year 3 2.58% 202300
80000

Liquidity Ratio

Current Ratio= Current Stock

Current Liability

CURRENT RATIO
Year 1 17.54% 5714960
325800
Year 2 20.26% 6622100
326800
Year 3 20.38% 6785420
333000

Acid Taste Ratio

= (Current Assets- Closing stock)

ACID TASTE RATIO

Year 1 17.48% (5714960-20000)
325800
Year 2 20.17% (6622100-30000)
326800
Year 3 20.23% (6785420-50000)
333000

28
Working Capital

CA-CL

WORKING CAPITAL
Year 1 539160 5714960-325800
Year 2 6295300 6622100-326800
Year 3 6452420 6785420-333000

5.8; DESIRED FINANCING

DESCRIPTION YEAR 1 YEAR 2 YEAR 3
Preoperational cost 635640 - -
Working capital 5389160 6295300 6452420
Fixed assets 475000 475000 475000

5.9; PROPOSED CAPITALIZATION

SOURCE OF INCOME AMOUNT
Personal saving 500000
Friends & relatives 300000
Loan from Bank 500000
Total 1300000

29
MAP

Khetias supermarket Small shops

Ng,arisha Sacco
Tumaini shop

REHEMA TAILORING SHOP

Street

LOGO

Welcome to phone no.0115630236

REHEMA TAILORING SHOP

Sew

Sew

30