BUSINESS PLAN

BUSINESS NAME: CUMBERLAND HOTEL

ADRESS: P.O BOX 88 60200

WESTLANDS

EMAIL:[email protected].

TEL: 0715729217

PRESENTED BY: NDUNGU NAFTALY MWANGI.

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILLMENT FOR THE REQUIREMENT IN THE AWARD OF DIPLOMA IN
BUILDING CONSTRUCTION TECHNOLOGY

INDEX NO: 3041011606

INSTITUTION: MERU NATIONAL POLYTECHNIC

COURSE: DIPLOMA IN BUILDING CONSTRUCTION TECHNOLOGY

SERIES: JUNE/JULY 2024

i
DECLARATION

I NAFTALY MWANGI hereby declare that this project is my original work and it has never
been presented to the Kenya national examinations council or any other examinations body for
the award of diploma certificate to any other institution

Name: NDUNGU NAFTALY MWANGI

Index No: 3041011606

Signature:…………………………………………

Date: ……………………………………..

The business plan has been approved with my approval as the business plan supervisor

Supervisor Name: EVANS MUTWIRI

Signature:……………………………

Date:………………………………

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DEDICATION

This business plan is dedicated to my beloved parents for their moral and financial support in my
education. I also dedicate to my late beloved nephew Brian James whose memories have helped
me so much to come up with this business plan.

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ACKNOWLEDGMENT

I acknowledge the mighty GOD who has given me grace, energy and wisdom to start and
complete this business plan. I also acknowledge my sisters for their unwavering support during
my studies and my fellow students for offering conducive learning environment throughout the
course.

I would also like to pass my appreciation to my lecturers who have worked tirelessly to give me
the best knowledge possible in my field of study not forgetting my business plan supervisor Mr.
Evans Mutwiri who has worked tirelessly to ensure that this business plan is in order.

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Contents
CHAPTER 1 ................................................................................................................................... 1
1.0: BUSINESS DESCRIPTION ....................................................................................................1
1.1: BACKGROUND OF THE OWNER .......................................................................................1
1.2: BUSINESS NAME ..................................................................................................................1
1.3: BUSINESS LOCATION AND ADRESS ............................................................................... 1
1.4: FORMS OF OWNERSHIP ......................................................................................................2
1.5: THE TYPE OF BUSINESS .....................................................................................................3
1.6: PRODUCTS AND SERVICES ............................................................................................... 3
1.7: JUSTIFICATION OF OPPORTUNITY ..................................................................................3
1.8: THE INDUSTRY .....................................................................................................................3
1.9: GOALS OF THE BUSINESS OR OBJECTIVES OF THE BUSINESS ................................4
1.9.1: GOALS ..............................................................................................................................4
1.9.2: OBJECTIVES ....................................................................................................................4
1.10: ENTRY PLAN AND GROWTH STRATERGY .................................................................. 4
1.10.1: ENTRY PLAN ................................................................................................................ 4
1.10.2: GROWTH STRATERGY ............................................................................................... 4
CHAPTER 2 ................................................................................................................................... 4
2.0: MARKETING PLAN .............................................................................................................. 4
2.1: CUSTOMERS ..........................................................................................................................5
2.2: MARKET SHARE ...................................................................................................................5
2.3: COMPETITION ...................................................................................................................... 5
2.4: METHODS OF PROMOTION AND ADVERTISMENTS ................................................... 5
2.5: PRICING STRATERGY ......................................................................................................... 5
2.6: SALES TACTICS ....................................................................................................................6
2.7: DISTRIBUTION STRATERGY ............................................................................................. 6
CHAPTER 3 ................................................................................................................................... 6
3.0: ORGANIZATION PLAN ........................................................................................................6
3.1: THE ORGANIZATION STRUCTURE .................................................................................. 6
3.1.1: OTHER PERSONNEL ......................................................................................................8
3.2: RECRUITMENT AND PROMOTION ...................................................................................8

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 3.2.1: RECRUITMENT ...............................................................................................................8
3.2.2: TRAINING ........................................................................................................................8
3.2.3: PROMOTION ................................................................................................................... 8
3.3: REMUNERATION AND INCENTIVES ............................................................................... 8
3.4: LEGAL REQUIREMENTS .....................................................................................................9
3.4.1: LICENCES ........................................................................................................................ 9
3.4.2: PERMITS .......................................................................................................................... 9
3.4.3: BY LAWS ....................................................................................................................... 10
3.5: SUPPORT SERVICES .......................................................................................................... 10
3.5.1: Banking services ..............................................................................................................10
3.5.2: Insurance services ............................................................................................................10
3.5.3: Legal services .................................................................................................................. 10
CHAPTER 4 ................................................................................................................................. 10
4.0: OPERATIONAL PLAN ........................................................ Error! Bookmark not defined.
4.1: PRODUCTION FACILITIES AND CAPACITIES ..............................................................10
4.2: THE PLAN FOR THE PROPOSED BUSINESS PREMISES ............................................. 11
4.3: PRODUCTION OF SERVICES STRATERGY ................................................................... 11
4.4: PRODUCTION PROCESS ................................................................................................... 11
4.5: REGULATON AFFECTING OPERATION ........................................................................ 11
4.5.1: FACTORY ACT ............................................................................................................. 11
4.5.2: BUILDING REGULATION ........................................................................................... 12
4.5.3: TRADEMARK ................................................................................................................12
4.5.4: SAFETY MEASURES ....................................................................................................12
CHAPTER 5 ................................................................................................................................. 12
5.0: FINANCIAL PLAN ...............................................................................................................12
5.1: BOOKS OF ACCOUNT ........................................................................................................12
5.2: PRE-OPERATIONAL COST ................................................................................................13
5.3: WORKING CAPITAL REQUIREMENT .............................................................................13
5.4: ESTIMATION OF FIXED ASSETS .....................................................................................14
5.5: PROFORMA INCOME (TRADING PROFIT AN LOSS ACCOUNT ................................14
5.5.1: PROFOMA INCOME STATEMENT FOR MLIMA RESTAURANT YEAR 1 .......... 14

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 5.5.2: PROFORMA INCOME STATEMENT FOR MLIMA RESTAURANT YEAR 2 ........15
5.6: PROFORMA BALANCE SHEET ........................................................................................ 16
5.7: BREAK EVEN ANALYSIS ..................................................................................................17

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 EXECUTIVE SUMMARY

CHAPTER 1: BUSINESS DESCRIPTION

Cumberland is a restaurant is an upscale dining establishment that seeks to bring the rich and
diverse of African cuisine to the people from both rural and urban residence who visit
Cumberland restaurant at their convenience.it will offer traditional African dishes and modern
culinary techniques all set in an elegant and contemporary. The business will be located along
westlands road opposite kempinski

The mission of the restaurant is to provide vibrant and diverse flavors to the people visiting the
mlima shrine which opposite the restaurant’s location

Our vision as the business will be to attract and invite more believers to the shrine as they will be
assured of having the best delicacies and the best rooms to stay during their visit

Key Objectives

1. Offering quality and authentic meals to all of its customers

2. To offer customer satisfying meals that will give them the best dining experiences of
their life time
3. To achieve profitable business model by the end of the first 18 months with a steady
growth of the restaurant.
4. To engage the local community in their day to day activities by buying their local farm
produce and offering them job opportunities

CHAPTER 2: MARKETING PLAN

The restaurant industry is thriving with a growing demand of dining experiences target market is
the large number of believers that visit the big church behind the location and also the travelers
that stop over to view the beautiful scenery of the green land

The advertisements will be carried out using road shows, social media pages and sign board. To
survive competition, the restaurant will guard its recipes closely and it will offer religion aligned
accommodation services.

CHAPTER 3: MANAGEMENT

The restaurant will employ highly skilled and experienced workers. The restaurant will also
provide workshops to train its workers about the new trends in the market due to changes in
technology. The restaurant will also request for certificate of good conduct from its workers to
ensure that they are free of any criminal records in their past life.
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CHAPTER 4: OPERATION OF PRODUCTION PLAN

The business will acquire equipment to enable its smooth running and offer the desired
delicacies to its customers. Farm produce will be acquired locally from the local community. The
restaurant aims at providing African and modern delicacies to the believers frequently visiting
the mlima restaurant.it will offer the best delicacies to win the customers and give them their
best memories of delicacies

CHAPTER 5: FINANCIAL PLAN

The expected amount capital to fund the running of the CUMBERLAND HOTEL will be around
2,500,000. This amount will be obtained from business loans, family and friend contribution and
sale of personal assets.

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CHAPTER 1

1.0: BUSINESS DESCRIPTION

The business CUMBERLAND HOTEL will be in Westlands in Nairobi County. The business
will provide foods to its customers and accommodation services.it will also provide guidance and
counseling sessions to its customers who are emotionally depressed.

1.1: BACKGROUND OF THE OWNER

The business will be owned and operated by Naftaly mwangi who is 22 years old. He is a Kenyan
citizen. He is a successful businessman and a construction contractor who holds a Diploma in
Building Construction Technology

1.2: BUSINESS NAME

The business will be called Naftaly mwangi. I choose the name Cumberland as it is easy to recall
and it’s also a unique avoiding cases of copyright.

1.3: BUSINESS LOCATION AND ADRESS

The business will be located at Westland’s in
Nairobi County opposite Kempinski which is

1
situated along westlands road.

VILLAROSA KEMPINSKI

CUMBERLAND HOTEL

CUMBERLAND HOTEL

P.O BOX 88-60200

WESTLANDS, NAIROBI

The business will be located at the stated place and the target customers will be people visiting
the neighboring church and the karura Forest. Its nearness to the church makes it appropriate and
easily accessible by the people visiting the church.

1.4: FORMS OF OWNERSHIP

The business will be a sole proprietorship.

Advantages of this form of ownership

1. The owner will have full control of the business

2. There will be no sharing of profits
3. Decision making in the business will very fast

2
Disadvantages of this form of ownership

1. The owner will incur the losses alone

2. The sources of capital are limited

3. The owner will be overworked

I chose these type of ownership because I wanted to have full control over the business and I was
not interested in sharing profit as sometimes it may be unfair compared to the amount of work
inputted

1.5: THE TYPE OF BUSINESS

It is a startup business but the building has already been put up

1.6: PRODUCTS AND SERVICES

The business will be offering both products and services. The products offered will foods either
fast moving or other types of food. There will be also free delivery of ordered foods to customers
within the area of location of the business. Services offered will include accommodation services
and guidance and counseling where guidance and counseling will be free and a way of attracting
customers to the business. The customers will enjoy fresh delicacies from highly trained chefs
and cooks and foods prepared under high standards of hygiene. The customers who arrive with
private cars seeking for accommodation services will be offered free carwash.

1.7: JUSTIFICATION OF OPPORTUNITY.

The business was chosen in order to cater for the unmet demands of foods and accommodation by
the people visiting the shrine. The business is also meant to increase the population of people as
they will not be necessarily required to carry foods on their own or worry about the place they
will have to sleep during the nights as Cumberland hotel will be offering both at affordable prices.

1.8: THE INDUSTRY

The business falls under hospitality industry, the industry is currently facing challenges as the
cost of living keeps skyrocketing making it hard for the restaurants to offer prices that are
agreeable with the customers.

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1.9: GOALS OF THE BUSINESS OR OBJECTIVES OF THE BUSINESS

1.9.1: GOALS
The business will provide accommodation and foods to people visiting the shrine hence relieving
the burden of carrying foods from their homes and it will be aligned with Christian values.it is
also meant to increase income for the owner and also provide job opportunities in the local
community.

1.9.2: OBJECTIVES
The main objective of the business will be serving quality delicacies and providing other services
in line with the customs and believes of the Christianity.

1.10: ENTRY PLAN AND GROWTH STRATERGY

1.10.1: ENTRY PLAN

The business will start by offering free freshly made fruits drinks. The frequent customers will
also be given cards on which they will earn points according to their buying and the points will be
redeemed for drinks. Any customer who buys more than 6 plates at once will be offered extra
drinks. Customers who arrive with their cars will have them cleaned for free.

1.10.2: GROWTH STRATERGY

The business will grow by printing business cards and offering them to the potential customers. It
will also use road convoys to notify people of its existence. It will also offer branded T-shirts to
its customers as a way of advertising it existence.

CHAPTER 2

2.0: MARKETING PLAN

The business will put in place strategies that will help the business to grow attract and retain its
customers and make sure they are fully satisfied with the goods and services offered. The ways of
attracting and retaining customers will include:

4
 1. Offering good and quality services to the customers.
2. Printing and distributing business cards to all the potential customers.
3. Offering Christian friendly environment at the restaurant.

2.1: CUSTOMERS
Cumberland hotel will be offering goods and services to its customers. The main target of
customers is the Christians visiting the neighboring church. The customers will be offered similar
quality services without favors or any form of discrimination based on either skin color or tribal
basis or social status. The restaurant will be always open for 24-hours in 7-days of the week.

2.2: MARKET SHARE

The business is expected to earn at least four hundred thousand monthly from the goods sold and
the services offered. This opportunity has not yet been utilized by big firms and the small firms in
it are making use of barely 20% of it. Opening up of this restaurant will see to it that the available
opportunity is utilized maximally and will also enable the business to create monopoly powers.

2.3: COMPETITION
If other firms enter the business I will consider what they are doing. The business will look at the
factors that are hindering the growth of the existing local firms in the area. I will also study what
is making the new hotels and restaurants to grow. The restaurant will also check if there are gaps
and it will also try to find the strengths and weaknesses of the would be competitors and later find
a suitable method to capitalize Cumberland hotel above all other rival restaurants and hotels.

2.4: METHODS OF PROMOTION AND ADVERTISMENTS

To promote and advertise the business I will use printed business cards and Radio stations. I will
try to make the restaurant the best place for people to take meals and seek for accommodation
after long tiring experience in Karura forest. After every 3 months the restaurant management
will be hiring a roadshow to remind and inform the public of our existence. Each roadshow may
cost around thirty thousand Kenyan shillings. The effectiveness of the advertisement will be
measured by the turnout of new customers 3 weeks after the advertisement. The business will be
offering free drinks to any group of customers who are in a group of 10 or more to encourage
visiting in groups.

2.5: PRICING STRATERGY

The cost of selling each plate will be calculated from the cost of things used to prepare it plus an
additional 30% on top of it to cater for the profit and payment of labor. The target clients are
middle class earners so the price set will be one to fit their income and expenditure. There will be
first class services for the rich and the customers requesting for them. The restaurant will

5
maintain fair competition of customers. To increase the number of customers, the restaurant will
be subsidizing its goods and services during some important Christian feast days. The restaurant
will be offering trade discount to customers who buy in large quantities. For customers who order
meals for events, delivery services and also catering services will be free.

2.6: SALES TACTICS

The restaurant will sell directly to its customers. The management will contact a software
developer that will be used by the customers to place orders online by customers who will be
requesting for home delivery within the designated area. Customers requesting for delivery in
large quantities will be advised to place their orders in time to avoid keeping them waiting as
their orders are being prepared.

2.7: DISTRIBUTION STRATERGY

The goods and services will reach the customers through the restaurant’s sales personnel’s as they
will be directly served at the restaurant and those requesting for delivery it will be carried out by
the restaurant’s delivery man. The restaurant management will purchase a van and two
motorbikes to be used for making deliveries. The van will be used for making deliveries to events
while the motorbikes will be used for normal home deliveries. The delivery maybe faced by
problems such as delays due to jam, impassable roads due to unfavorable weather conditions. To
solve these delays there will be a suggestion box where the customers can express their view on
how to better the services offered to them by the restaurant which will be considered positively
by the management.

CHAPTER 3

3.0: ORGANIZATION PLAN

This is how the individuals and personnel’s working at the restaurant will be organized. It’s also
the chain of command and how orders and instructions will be passed in the restaurant from the
general manager to the other employees in the business. The restaurant’s general manager will be
fully in charge if the restaurant’s activities.

3.1: THE ORGANIZATION STRUCTURE

6
 General manager

Assistant manager Chief chef

chefs

Cashier Cleaner Security

Guard
Waiters

GENERAL MANAGER

Qualification and Duties

(1) Qualification
• A holder of bachelor’s degree in business management and have vast knowledge and
experience in hotel and restaurant management.
• Be of the age of 35 and above.
• Be willing and ready to work under minimum supervision.
(2) Duties

He/She will be directly answerable to the owner.

Assign duties to other employees without favourism and discrimination

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 Listen to customer claims and solve them.

3.1.1: OTHER PERSONNEL.

This refers to the other personnel’s involved in the business to the ensure the smooth running of
the restaurant and offering of quality services.

ASSISTANT MANAGER

1. Act in the place of general manager whenever he is not around to carry his duties.
2. Conduct the employees roll call
3. Create a good relationship between the business and its customers.

He should have a diploma in catering and hotel services and at least a working experience of 3
years.

3.2: RECRUITMENT AND PROMOTION

3.2.1: RECRUITMENT
Whenever there’s a vacancy in the business, it will be advertised using the restaurants official
website and also aired by radio station and all the eligible candidates will be allowed to apply for
the job.

3.2.2: TRAINING
Training workshops will be free and compulsory to newly employed employees for the first 2
weeks to enable them cope with the new trends in restaurant industry. Newly promoted workers
will be required to attend a one week workshop to enable them be conversant with their new
positions in the restaurant. These trainings are meant to make workers conversant with the new
trends in the industry as a result of changes in technology in the industry.

3.2.3: PROMOTION
Promotion will be mainly based on the extra training gained by the employee whilst he works for
the restaurant. And worker’s exemplary and outstanding performance will also be a key factor
considered during the promotions.

3.3: REMUNERATION AND INCENTIVES

The basic salary of employees will always be increased by 5% after every 6 months so as to retain
the experienced workers in the firm.

8
TITLE NO SALARY/ALLOWANCES NET SALARY

Basic Salary Allowances Shillings Cents

General Manager 1 60,000 20,000 80,000 00

Assistant Manager 1 50,000 17,000 67,000 00

Chief Chef 1 45,000 17,000 62,000 00

Chefs 5 30,000 10,000 40,000 00

Cashier 3 25,000 8,000 33,000 00

Waiters 8 25,000 8,000 33,000 00

Cleaners 5 10,000 3,000 13,000 00

Security Guards 4 10,000 3,000 13,000 00

Bonus will be given to the best employees. They will be selected and awarded annually based on
the fellow workers selection and also recommendations by customers. Whenever the employees
have to work for extra hours, they will be paid 300 per hour and this will happen only when the
exceeded time is more than one hour.

3.4: LEGAL REQUIREMENTS

3.4.1: LICENCES
The restaurant owner will apply for a trading license in relation to public health regulation
authority before opening up. The license will be applied and obtained from the local authority
that is governing the area that is Nairobi local authority. The trading license gives one the right to
operate the business freely and in line with the involved authorities

3.4.2: PERMITS
The restaurant will apply for permit from KFC and McDonald’s to be retailing their foods and
drinks freely.

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 3.4.3: BY LAWS
The business will comply with all the by-laws set by the local authorities .This is to ensure that
the restaurants managements is in good words with the authority and to have a smooth
coexistence.

3.5: SUPPORT SERVICES

3.5.1: Banking services

The restaurant will open an account at the trans-nation Sacco. It will be a normal account so as to
allow movement of money safe from thieves and being mismanaged.

3.5.2: Insurance services

The restaurant will take insurance under the jubilee insurance company limited. It will be insured
against theft and fire outbreak. The insurance is likely to cost-200,000 Kenyan shillings per year.

3.5.3: Legal services

The restaurant will have it lawyer to help in drafting contracts when getting in business. The
lawyer will be registered under the name Murithi law firm and the head office will be situated in
Westlands Nairobi county

CHAPTER 4

4.0 OPERATIONAL PLAN

The business will be operating under rules and regulations prepared by the manager .These rules
are meant to ensure that they create conducive environment for all customers.

4.1: PRODUCTION FACILITIES AND CAPACITIES

The facilities required at the restaurant will include utensils, refrigerators, oven, water dispensers,
tables, chairs and sufurias. A hall will also be required to act as the dining area and some offices
too. There will also be accommodation houses. All of which will help in management smooth
running of the restaurant.
Equipment. NO Required Unit Cost Cost
Refrigerator. 2 30,000 60,000

10
Oven. 3 10,000 30,000
Water dispenser 4 5,000 20,000
Tables. 10 10,000 50,000
Chairs. 50 500 25,000
Sufurias. 5 6,000 30,000
Desktop. 3 25,000 75,000

The office equipment will be kept under regular inspection to prevent bias in the goods and
services offered in the restaurant in case of breakdown.

4.2: THE PLAN FOR THE PROPOSED BUSINESS PREMISES

The Cumberland hotel will be situated on the owners land and building which is opposite
kempinski. The restaurant will also own a pickup van to be used to transport farm produce and
other supplies to the restaurant.

4.3: PRODUCTION OF SERVICES STRATERGY

Cumberland hotel will find a unique customer agreeable way of checking the level of satisfaction
of its customers by requesting their customers to rate their services from 0-10 on the restaurant’s
official app. The restaurant will advertise itself through use of roadshows and vernacular radio
stations. The most frequent customers will be given the restaurant’s branded t-shirts and all the
customers who visit on Christian feast days.

4.4: PRODUCTION PROCESS

The general manager will be in charge of all running of the company. The chief chef will be in
charge of the kitchen production department. The assistant manager will be in charge of the
finances, maintaining of the accommodation facilities at the restaurant and the ordering of farm
produce to the restaurant. He will be also in charge of all the companies’ financial records.
Communication will be carried out normally through the use of text messages. Urgent messages
will be conveyed through phone calls by the general manager. In case of need for emergency
meetings, memos will be used

4.5: REGULATON AFFECTING OPERATION

4.5.1: FACTORY ACT

Approval will be made as per the restaurant control and regulatory act in the 2010 constitution

11
4.5.2: BUILDING REGULATION
The building will be ensured to have enough space. It will be well ventilated to prevent spread of
communicable diseases and will have easy to clean floors and proper roofing onto it. The storage
room will be also made so as to properly store vegetables and other raw materials required in the
restaurant.it will be also ensured to have access ramps and stairs to facilitate by all groups of
people including those with special needs.

4.5.3: TRADEMARK
The business will have its original trademark. It will have its own unique delicacies whose recipe
will be well guarded by the restaurant management to prevent it from falling in the competitors
hands. The restaurant will also apply for copyrights to prevent opening of branches under its
name without authorization.

4.5.4: SAFETY MEASURES

Protective gears will be provided to all the restaurant workers for free. This is to ensure that the
workers are not at risk when they are working. They will be replaced by the restaurant
management annually. Fire extinguishers will be also strategically placed and serviced annually.
Anti-theft alarms will also be placed in the building.

CHAPTER 5

5.0: FINANCIAL PLAN

This helps the potential business owner to know the financial aspects of the proposed business
operation. It also helps the entrepreneur to gauge the future potential of the business he is to be
operating

5.1: BOOKS OF ACCOUNT

1. Cash book – this will be used to show records of cash received in the business and
how it is spent
2. Purchase leger – this will keep records of all the goods bought by the business
over a given period of time
3. Sales ledger – it will show the records of goods sold by the business to its
customers over a given period of time
4. General ledger – it will show the records of bills incurred to run the business
5. Petty cashbook – it will be used to record the minor transactions incurred day to
day to run the restaurant

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 5.2: PRE-OPERATIONAL COST
NUMBER ITEM/ ACTIVITY AMOUNT
1 Refrigerator 60,000
2 Oven 30,000
3 Water dispenser 20,000
4 Tables 50,000
5 Sufurias 30,000
6 Desktop 75,000
7 Building partitioning 60,000
8 Utensils 60,000
9 Construction of Makuti 100,000
10 Electrical installation 40,000
11 Water installation 30,000
12 Advertisement cost 20,000
Total 575,000

5.3: WORKING CAPITAL REQUIREMENT

This is the amount of money required to be circulating in the proposed business,
ITEM ITEM AMOUNT
NUMBER
1 Farm produce 50,000
2 Spices and kitchen supply 30,000
3 Insurance 5,000
4 Electric bills 4,000
5 Miscellaneous 3,500
6 Promotion and advertisement 15,000
7 Cash in hand 40,000
8 Cash at hand 150,000
Total 297,500

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 5.4: ESTIMATION OF FIXED ASSETS
These are capital investment incurred by the business purchasing permanent equipment for long
term use.
NUMBER ITEM NUMBER AMOUNT
REQUIRED
1 Delivery van 1 1,000,000

2 Motorbikes 2 500,000

3 Lawn mower 2 50,000

Total 1,550,000

5.5: PROFORMA INCOME (TRADING PROFIT AN LOSS ACCOUNT.

5.5.1: PROFOMA INCOME STATEMENT FOR CUMBERLAND HOTEL.

ITEM AMOUNT (SHS) AMOUNT (SHS) AMOUNT (SHS)

Sales 2,350,000

Less cost of sales 900,000

Add carriage in 55,000 955,000

C.O.G.A.S 955,000 (955,000)

Gross profit 1,395,000

Add other income

Commission received 55,000

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Total income 1,450,000

Less operational cost

Salaries 500,000

Telephone 20,000

Water 10,000

Electricity 15,000

Advertisement 10,000

Miscellaneous 30,000

Repair and maintenance 50,000 (635,000)

Net profit before tax 815,000

Tax 15% of net profit (122,250)

Net profit 692,750

5.5.2: PROFORMA INCOME STATEMENT FOR CUMBERLAND HOTEL YEAR 2 .

ITEM AMOUNT(SHS) AMOUNT(SHS) AMOUNT(SHS)

Sales 2,600,000
Less cost of sales 1,000,000

Add carriage in 62,000 1,062,000

C.O.G.A.S (1,062,000)

Gross profit 1,538,000

Add other income

Commission received 60,000

Government incentive 60,000 120,000

Total income 1,658,000

Less operational cost

15
Salaries 650,000

Telephone 22,000

Water 15,000

Electricity 15,000

Advertisements 20,000

Miscellaneous 40,000

Repair and maintenance 20,000 (782,000)

Net profit before tax 876,000

Less tax 15% (131,400)

Net profit 744,600

Summary of net income for two years

YEAR NET PROFIT(SHS)
Year 1 692,750
Year 2 744,600
Total profit 1,437,350

5.6: PROFORMA BALANCE SHEET

Current assets
Stock 100,000
Debtors 150,000
Cash in hand 200,000
Cash at bank 500,000
Total 950,000

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 Current liabilities
Creditors 200,000
Bank overdraft 250,000
Total 450,000

5.7: BREAK EVEN ANALYSIS

ITEM COST
Salaries 650000
Telephone 22000
Water 15000
Advertisement 20000
Repair and maintaince 20000
Miscellaneous 40000
Total 782000
Sales-total variable

2600000-782000=1818000

17