KIRUI'S FABRIC AND ACCESSORIES SHOP

TITLE: BUSINESS PLAN

PRESENTED BY: FAITH JEMUTAI

BUSINESS NAME: KIRUI’S FABRIC AND ACCESSORIES SHOP

ADDRESS: P.O BOX 2087 BUNGOMA

PHONE NO: 0708207593

INDEX NO: 5531030047

CENTRE CODE: 5531030

EMAIL ADDRESS: faithjemutai7@gmail.com

INSTITUTION: KISIWA TECHNICAL TRAINING INSTITUTE

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL

COURSE NAME:
CRAFT IN FASHION DESIGN AND GARMENT
MAKING.

SERIES: JULY

SUPERVISOR: MR. ANDREW MATHITU

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL FOR PARTIAL

FULFILMENT OF AWARD IN CERTIFICATE IN FASHION DESIGN AND GARMENT

MAKING.
DECLARATION
This business plan has been compiled and written by Faith Jemutai. This is my original
work without any direct assistance from anybody. It has been done under supervision of Mr.
Mathitu.

Student Name: Faith Jemutai

Sign: ……………………………

Date: …………………..............

Supervisor Name: Mr. Mathitu.

Sign: …………………

Date: ………………….............

DEDICATION
I wish to dedicate this project to my parents, friends and relatives for the financial support
and encouragement they offered to me. My dedication also goes to my dear brothers and
i
sisters and also not forgetting my close friend Mercy for her moral support and my entire
course mate.

ACKNOWLEDGEMENT
I would like to pass my sincere gratitude to the people who gave me assistance that
enabled me to complete the project successfully. I would also like to thank my fellow

ii
 trainer in fashion and design department for enriching me with knowledge. Special thanks
go to Mr.
Mathitu for guidance and support in the structure and the flow of my business plan.

Table of Contents
DECLARATION.....................................................................................................................................i

iii
DEDICATION........................................................................................................................................ii

ACKNOWLEDGEMENT....................................................................................................................iii

EXECUTIVE SUMMARY..................................................................................................................vii

BUSINESS DESCRIPTION................................................................................................................vii

MARKETING PLAN...........................................................................................................................vii

ORGANIZATION AND MANAGEMENT PLAN.............................................................................vii

OPERATION/PRODUCTION PLAN.................................................................................................vii

FINANCIAL PLAN.............................................................................................................................vii

CHAPTER ONE.....................................................................................................................................1

1.0 BUSINESS DESCRIPTION...........................................................................................1

1.1 BACKGROUND OF THE OWNER..............................................................................1

1.2 BUSINESS LOCATION AND ADDRESS....................................................................1

1.3 FORM OF BUSINESS OWNERSHIP...........................................................................2

1.4 PRODUCTS....................................................................................................................2

1.5 JUSTIFICATION OF OPPORTUNITY.........................................................................2

1.6 INDUSTRY.....................................................................................................................3

1.7 BUSINESS GOALS.......................................................................................................3

1.8 ENTRYANDGROWINGSTRATEGY............................................................................3
CHAPTER TWO....................................................................................................................................5

2.0 MARKETING PLAN.....................................................................................................5

2.1 POTENTIAL CUSTOMERS..........................................................................................5

2.2 MARKET SHARE..........................................................................................................5

2.3 ADVERTISING AND PROMOTION METHODS........................................................7

2.4 PRICING STRATEGY...................................................................................................8

2.5. SALES TACTICS..........................................................................................................8

2.6. DISTRIBUTION STRATEGY......................................................................................8

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 2.7 PROBLEMS LEADING TO DISTRIBUTION..............................................................8
CHAPTER THREE................................................................................................................................9

3.0 ORGANIZATION AND MANAGEMENTPLAN.........................................................9

3.1 BUSINESS ORGANIZATION.......................................................................................9

3.2 PERSONNEL, NUMBER AND DUTIES......................................................................9

3.3 ACCOUNTANT............................................................................................................10

3.4 RECRUTIMENT TRAINING AND PROMOTION....................................................12

3.5. TRAINING..................................................................................................................12

3.6. PROMOTION..............................................................................................................13

3.7. REMUNERATION AND INCENTIVES....................................................................13

3.8. LICENCE PERMITS AND BY-LAWS.......................................................................14

3.9. SUPPORTIVESERVICES...........................................................................................14
CHAPTER FOUR................................................................................................................................16

4.0 OPERATIONAL/PRODUCTION PLAN.....................................................................16

4.1 PRODUCT FACILITIES AND CAPACITIES.............................................................16

4.2. PRODUCTION STRATEGY......................................................................................16

4.3. MONTHLY LABOUR REQUIREMENTS.................................................................17

4.4 MONTHLY PRODUCTION EXPENSES....................................................................18

4.5. PRODUCTION PROCESS..........................................................................................18

4.6. REGULATION AFFECTING OPERATION..............................................................18

CHAPTER FIVE..................................................................................................................................19

5.0 FINANCIAL PLAN......................................................................................................19

5.1. PRE-OPERATIONAL COST......................................................................................20

5.2. ESTIMATION OF WORKING CAPITAL..................................................................21

5.3 PROJECTED CASH FLOW STATEMENT........................................................................... 22

5.4. PRO-FORMA IN COME STATEMENT............................................................................... 23

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5.5. PRO-FORMA BALANCE SHEET......................................................................................... 24

5.6. BREAK EVEN LEVEL............................................................................................................ 25

5.7 EXPECTEDPROFITABILITYRATIOS.................................................................................. 27

5.8 DESIRED FINANCING............................................................................................................ 29

5.9 PROPOSED CAPITALIZATION............................................................................................. 29

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EXECUTIVE SUMMARY
BUSINESS DESCRIPTION
The proposed business name will be Kirui's Fabric and Accessory Shop. It will be owned
and sponsored by Faith Jemutai. She is a second-year student at Belgut Technical Training
Institute in the field of fashion and design. The business is a sole proprietorship and falls
under a trading industry. It is located in Kitale Town. Its major activity is selling of cloths,
fabric, shoes, bangles, bags and other related products.

MARKETING PLAN
The main customers of this business will range from travelers and commercial customers.
The major competitors are Best Lady Clothing, Star Clothing and Shalom Clothing. They
are all well established and the regular customers who will purchase from the enterprise
and can be classified into categories; commercial customers, industrial customers,
domestic customers.

ORGANIZATION AND MANAGEMENT PLAN

The manager who is the owner will run the business and the responsibilities will be to
control, organize and coordinate activities. She is to be assisted by the supervisor and the
secretary. The hard-working experience shall be promoted after showing a consistency in
hard work for not less than 3-7 years. The promotion will be specifically on the line of
specialization. The employees should show dedication to their work and show that they
can work with minimum supervision or no supervision at all.

OPERATION/PRODUCTION PLAN
The shop will provide products such as clothes, shoes, bangles and other related products. In
attaining this there are some equipment’s needed to enable the staff work efficiently to
provide quality goods and services for the people in the Centre.

FINANCIAL PLAN
The proposed business will be financed by owners’ ‘equity, family friends, relatives and
Bank loan. The capital required for the entry of the venture into the business will be Ksh.
600,000. The financial plan is the tabulation and analysis of the financial statement., the
income and expenditure, cash flow and the sheet etc. in order to have available insight for
the future business operations. The salary of any business depends upon the capability

vii
finance, So Kirui’s Fabric and Accessory Shop intends to solicit funds from the following
ways; preoperational cost, estimation of working capability, projected cash flow statement

SOURCE AMOUNT PERCENTAGE

KCB Bank loan 400,000 51%

Family 100,000 31%

Owners’ capital 80,000 14%

Friends and relatives 20,000 3.35%

Total 600,000 100%

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ix
 CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.1 BACKGROUND OF THE OWNER
I am Faith Jemutai aged 22 years old. A daughter of Mr. ABRAHAM RUTO. I am a
resident of Kitale county, Kitale-west district, matunda location, matunda sub-location and
Endebes village. I attend matunda primary school in the year 2008 and proceeded till I sat for
my Kenya certificate of primary education certificate exams in the year 2016 and pass well,
afterwards I joined chester girl high school in Westpokot for a four-year course where I did
well and attained good grades in my national exams of 2019 I am recently pursuing
certificate in
Fashion and Design at BELGUT TECHNICAL TRAINING INSTITUTE

1.2 BUSINESS LOCATION AND ADDRESS.

The business will be located at Kitale Town. This site is best for business because there Is
availability of possible good means of transport, adequate supply of power, availability of
customers, availability of enough security, availability of relatively cheap sources of raw
materials and it is in the middle of the Town. Its address is

KIRUI'S FABRIC AND ACCESSORIES SHOP

P. OBOX 2087

KITALE

TEL:0708207593

EMAIL ADDRESS: faithjemutai7@gmail.com

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1.3 FORM OF BUSINESS OWNERSHIP.
The business will be a sole proprietorship business. This form of business is very easy to
start as it does not require a lot of formalities to start as a registration partnership deeds
and to set it up. The capital required for the entry of the venture into the business will be
Ksh
700,000. This amount will be contributed by the owner Ksh 60,000, friends’ Ksh 40,000,
and family 200,000 and from KCB bank loan of Kshs. 300,000.

SOURCE AMOUNT PERCENTAGE

KCB bank loan 400,000 51%

Family 100,000 31%

Owners’ capital 80,000 14%

Friends and relatives 20,000 3.35%

TOTALS 600,000 100%

1.4 PRODUCTS
KIRUI'S FABRIC AND ACCESSORIES SHOP
Will be selling and distribution clothes and shoes product to its customers. The products
of the business will be as follows: fabric, dresses for ladies, skirts, trousers, t-shirt,
sandals, open shoes, bangles, bags, ties, sweaters, jackets, innerwear.

1.5 JUSTIFICATION OF OPPORTUNITY.

The location of business is strategic and centrally located to the Centre and it is a point
where the road branches. Research done around shows that the business will be making a
lot of income due to many customers around and even the existing competition are offering
poor quality to the its customers hence KIRUI'S FABRIC AND ACCESSORIES SHOP
aims in bringing change in the area through the following way. Creating of employment to
citizens who do not have jobs hence improving their living standards.

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 
Entry into self-employment with an aim of getting profit through working for
business.

To maximize the available profit in order to expand the business rapidly. The
business aims at meeting the high demand of increasing population within the
area since there are only those similar businesses in the area which are unable
to meet the demand in the market.

Change the wearing within the society as well as making easy availability of
clothes and shoes.

Improve the country foreign exchange by selling imported clothes and skin
shoes to the citizens.

Creating of employment opportunity within the society at the market hence
reducing insecurity through reduction of high crime rate

1.6 INDUSTRY
Kauri’s fabric and accessories shop will fall under business industry. Business is very big
source of income which deals in type of selling and buying of goods. The proposed type of
business will be medium scale business firm. The business will be labour intensive since it
will involve much family operations. The business will employ service workers to assist in
the running of the business and operations. This includes the manager, accountant and
shopkeeper.

1.7 BUSINESS GOALS.

SHORTTERM GOALS:
The business intends to build two or more rooms within a period of 2 years to accommodate
the products which will have increased due to high production. Hiring of a vehicle within a
period of twelve months for transporting goods and fencing of the business compound
within a period of 8 months to enhance security. Short-term loans are also settled within six
months to be able to focus on long-term goals.
LONG TERM GOALS.
The business intends to put more branches within the town. This will open up room for
graduates from college to university to join enterprise inform of employment. Hence,
diversity in the economic world.

3
1.8 ENTRYANDGROWINGSTRATEGY.
The entry at the initial will be hard since, customers live to be persuaded and informed about
the existing product. The possible marketing strategy planned to be involved in the business
are:

Advertisement.
The business will advertise its products through posters, signs, boards, calendars and local
chief Baraza.
Sales promotion.
The promotion method will be used in first few months of introduction to the market i.e.
when the customer buys the shoes or clothes there will be large quantity and to frequent
customers who buys in large amounts. Those will be provided with after sale service such as
free transport.
a) Pricing.
The pricing of the commodities at introduction stage will be fair, not too high or low but
moderate

4
 CHAPTER TWO
2.0 MARKETING PLAN
2.1 POTENTIAL CUSTOMERS
These are regular customers who will purchase the product from the enterprise and can be
classified into three categories.
Commercial customers
They buy the product and re sale It for a profit. They buy in large quantities as compared with
other small firms.
Industrial customers
The institutional customers will include local schools and tertiary institution like Kitale
primary schools, Moi University, Fountain school and small homes that are found within
the Centre where business is located.
Domestic customers.
They are buyers of the product for personal consumption or for their own use. Most of the
customers fall under the age of 1-65 years. They are both male and female who purchase
at their own level of expectation. Majority of these are literate of which some are
managers, clerks and teachers.

2.2 MARKET SHARE

According to the market survey that has been carried out by the proprietor, the population
data in that area is 91,000, according to the previous census. Most of the products to serve the
retailers are not adequately available at competitors ‘shop. The remaining percentage will be
shared among the competitors as shown in the chart below.
The market share

Market share

12%
25% Shalom clothing

Best lady

Kiruis farbric and

accessories shop
44% 19% Star clohing

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 The table below shows the strengths and wickedness of the four enterprises
Competitors Strengths Weakness

More popular than other enterprise Qualifications

Offer poor services to customers

BEST LADY Financially stable

Offer goods and quality products Small premises

SHALOM Offer credit facilities to customers Managed by other personnel

Use modern technology No room for expansion

Ensure well maintain records Does not offer discount to customers

Sell products at quantities needed by Poor location

STAR customers Opens business at time but close early

The business has been existing for It is managed by whole family members

long Offers low quality products

5
Located at the market

KIRUI'SFABRIC
ANDACCESSOR
IESSHOP Give discount and services to it’s a start up premise
customers Most popular to customers because it was

Offer goods and quality products Opening

Offer credit facilities to customers No room for expansion

Use modern technology Poor road transport to reach in time

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2.3 ADVERTISING AND PROMOTION METHODS
The proprietor decided to advertise the existence of the premise and product that are offering
to the market through the following media.
Billboard- This is to be erected along the road to show the direction at the market to building
where in
The advertisement through radio will be done weekly at 6.00pm to 6.30pm at ‘Light & Life”
and “Radio Anjali” Radio station. This will run for one month and it cost the business 10,000
ksh. Talking part in trade exhibition shows so as to promote products.
Magazine-it will be placed in the magazine indicating the items and sales on offers, a
number of services and discounts.
Since advertisement through radio might become expensive Kirui's Fabrics and Accessories
Shop may prefer the use of posters as the cost of photocopying is Ksh.1000 per month and
through visibility it reaches the intended group. Inhabitants of the area are mostly tuned into
Radio Anjali and Light & Life since the stations use the local language in their airing
intended clients would be communicated to.
Inclusion of photos and pictures and even distribution of posters will help in reaching the
intended customers. Effectiveness of the advertisement would be determined by the increase
in sale volume and winning new customers.

2.4 PRICING STRATEGY.

Pricing determination could be based on the following factors:
Cost of production in that it depends on the process of manufacturing and distribution of the
products. Competitors price at the start of the proposed business set the selling price to a little
less than that of competitors so as to win more customer
Discounts-the discount policy used in the business is the quantity and cash discount.
Government policy-in that depends on tax rates and the government regulations. The
amount paid to the government its tax will determine the selling price of a product/service.
The price should have to give a responsible net profit.
Demand-if the demand of the product is higher the cost is dictated by its demand Credit
facilities- The credit term should be monthly payable and those who get credit facilities
on their occupation amount earned, honest, trustworthy

7
2.5. SALES TACTICS
The proprietor employee in direct selling to the customers by using agents and retailers by
doing so discount will be given depending on the quality of the products purchased on credits
facilities and also direct selling is performed where customers are paying at the counter.

2.6. DISTRIBUTION STRATEGY

The proprietor will ensure all products get to the customers through personal selling method
the main transport will be through roads using motorbikes and pickups to transport of
products destination but with a limit distance and product business

2.7 PROBLEMS LEADING TO DISTRIBUTION

Rural areas served with poor roads which will create a lot of difficulties during transportation.
Rainy seasons also affect transportation since bulky products are not effectively distributed
thus reducing services offered.
Lack of enough security in some parts of the distribution areas where robbery is high
solutions.
The rural areas served by poor roads should be renovated by building in tarmac roads.
Organic to be selling to customers in some by visiting some areas on specific.

CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENTPLAN
3.1 BUSINESS ORGANIZATION
The owner of the business, the sole proprietor, will be the chief accountant. The business will
require five (5) personnel who will be assisting in various activities done by the management.
The personnel are: one salesman, accountant, storekeeper, driver and the watchman.
The following is the organization structure.

Manager

8
 Salesman Accountant Storekeeper

Driver Watchman

A business should have an effective top management team in order to make it competitive in
the market. To make sure that this all achieved the proprietors chose me as an accountant of
the business.

3.2 PERSONNEL, NUMBER AND DUTIES

Duties of the manager;
i. Support and implement the policies or top management by allocating responsibilities
to self-equitability.
ii. Plan the work of any section and to it that it is done on time.
iii. To motivate the workers iv. Approval of wages and salaries for the workers.
v. Promotion, recruiting and dismissing employees.
vi. Making good human relation in the business vii.
Making decision

Qualifications of manager
i. Should have knowledge in technical areas.
ii. Should be literate for easy communication and have care for customers. iii.
Should be able to co-operate with any kind of staff. iv. Should have
knowledge of simple accounting.
v. Diploma holder in business management.
vi. Age of 35 years old and above.

3.3 ACCOUNTANT
Qualification:
i. Person aged 25 years’ old
ii. Must be a CPAI certificate holder. iii. Must be a
computer literate. iv. Should be honest.
v. Have a working experience of at least two (2) years IV.
Trust worthy person.
9
Duties and responsibilities
i. Keep accounts for all income profit or money generated in the business.
ii. Preparing pay rolls of the workers and ensure that he pays them immediately when
money is withdrawn from the bank.
iii. Keep all the books of accounts and recollects the money from the bank.
iv. Prepares financials report and submit to the manager’s remuneration.
v. Advertisement on various methods of profit maximization.
SALESMAN Qualifications
i. Should be of aged 23 yrs.
ii. Should possess a certification in sales and marketing
iii. They should be fluent in both English and Kiswahili. iv. They should be
one-year experience.
v. Should have a good public relation.
vi. Should be faster and quick

DUTIESANDRESPONSIBILITIES
i. They should ensure that there is an increase in sales
volume.
ii. They are responsible of the stock in the firm. iii. They
should report any shortage of the stock.
iv. They are the ones to come up with the list of the products that need to be
bought.
v. They should be in a position to motivate customers by offering
distinctive services so as to win many customers
STORER-KEEPER Qualifications
i. Should be honest and energetic. ii.
Have a good public relation.
iii. Should be faster and quick.
DUTIES OF STOREKEEPER;
i. Receiving and issuing of ordered goods from store.
ii. Arranging store in good working condition.

10
 iii. Researching in the market and access charges in the portent and volume of
demand.
DRIVER Qualifications;
i. Should be a person aged 24 years. ii.
Should have a valid driving license. iii.
Should have 3-year driving experience.
iv. Should have a religious certificate v.
Should have ICE certificate
DUTIES AND RESPONSIBILITIES
i. Should ensure that he reports when the car serviced.
ii. Should drive responsible to avoid accident. iii.
Responsible for the product being transported.
iv. Should deliver the products being transported.

SECRETARY Qualifications
i. Should be of age 26 years
ii. Should possess a certificate of secretarial studies. iii. Should
be a computer literate.
iv. Should have a working experience.
DUTIES AND RESPONSIBILITIES;
i. Writing minutes during the meeting.
ii. Attending seminars in absence of manager in relation to the field.
iii. Photocopying and typing some papers of different schools and also some
documents

3.4 RECRUTIMENT TRAINING AND PROMOTION

RECRUITMENT.
The business will recruit employees through various ways such as advertisement posters,
educational institutions the uses of other employees even the local barazas
Posters
The business will print posters announcing the kind of vacancies being advertised in the
organization. It includes job description, the qualification required for the person and

11
deadline which the applications need to be submitted and received by the management. The
firm will do the short listing depending on qualification of the applicants. The interviews will
be given and after which, the successful applicants will be given letters of notice.
Learning institutions
Kauri’s Fabric and Accessories Shop will liaise with different institutions like the colleges,
polytechnics; this will enable the business enterprise to improve its skills and knowledge
handling different tasks efficiently.
Other employees
The business will also recruit employees by using those already existing in the firm. Existing
employees will be given a chance to propose the kind of persons they know and if such
person meets the qualifications of the firm they will be employed.

3.5. TRAINING
Employees will undergo training especially by institution and training and work methods of
the business. Each employee will be given a description of his/her job, to provide with asset
of policies, rulers and procedures employees will be sponsored to take part time lessons
related to their jobs to improve their skills and knowledge of running the business in the
current competitive world.

3.6. PROMOTION
This the way employees are being upgraded from their previous positions. The owner will
promote his employees by considering the following factors,
1. Merits
Performance, record and length of service will be considered while promoting employees
2. Academic qualification
Employee with high education standards will be considered first and promoted due to their
skills, knowledge and experience.
3. Hardwork and honest
Hardworking and honest employees for example those who attend to their work without
being supervised will definitely be promoted.
4. High future output/high profits
During the good seasons high profit making employees will be promoted because they are the
ones who have worked hard towards profit maximization.

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3.7. REMUNERATION AND INCENTIVES
This is the process that is mainly concerned with a method of staff payment and other benefits
like house allowance etc. The proprietor decided to pay her staff well than those Around so
that they will be more willing to work.
The table below shows the salaries that will be received as payment.
BASIC MEDICAL TRANSPORT HOUSE NET
POSITION SALARY ALLOWANCE ALLOWANCE ALLOWANCE SALARY
Manager 15000 1000 1200 1500 18700

Accountant 12000 800 1200 1500 15500

Salesman 8000 600 1200 1500 11300

Storekeeper 7500 600 1500 9600

Driver 7000 400 7900

Watchman 4000 400 4400

Secretary 7000 500 1200 1500 10200

TOTAL 77600
3.8. LICENCE PERMITS AND BY-LAWS
LICENCES
Kirui's fabrics and accessories shop is regard to the forms of the business
operation in the country. Will acquire some documents to legalize the operation to
be acquired, trade license from: Kitale County Council Break- down cost of
documents will be as follows.
14 Transport license 15,000/=
Transport license 1,000/=
PERMITS [CAP 265]
Kirui's fabrics and accessories shop permit will be obtained from the local government Act
[cap 265] laws of Kenya. Authority will be granted after filling a form showing the name
location nature and form of the business The proposed business will be registered under its
official name and address in order to commence its operation. The permit will be obtained
from the ministers of trade and industry

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 By–Laws
The proposed business will be governed by the provision of various by laws from Kericho
County Council this include.
• Registration of business name.
• Public health.
• Land and property.
• Regulation of wages and conditions of employees.
3.9. SUPPORTIVESERVICES
These are services offered by other business entities. This enables the firm to run smoothly.
They include
a) Banker-Kenya Commercial Bank
P.O BOX 70100 - 00200, NAIROBI
Mobile number: +254794387060

b) Insurance services CIC Insurance P.O BOX 1908,

ELDORET
Mobile number: +254728824133

c) Postal services
Kenya Postal co-operation
P.O BOX40, NAKURU
Mobile number: +254715120120

d) Legal Advisor Nathan Karana Advocates

P.O BOX 2580 KAPENGURIA
Mobile number: +254700141142

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 CHAPTER FOUR
4.0 OPERATIONAL/PRODUCTION PLAN
This part deals with the work to be done that will profit the enterprise.

4.1 PRODUCT FACILITIES AND CAPACITIES

The business will be equipped with shelves, chairs, electronic cash register, office tables,
paper cutter which will be maintained and repaired at the end of every seven months while
the shelves will be repaired and maintained at the end of every year together with the chairs
and office tables. The business will also require machine and equipment like computer, an
and M-Pesa whereby the customers can make payments through it. Plans for repair and
maintenance for machineries is that they will regularly need to be serviced and if need a
rises it will be taken to commercial technicians.

4.2. PRODUCTION STRATEGY

Will require the following materials from operation monthly.
ITEMS REQUIRED COST KSHS

Shirts 10,000

Notebooks 3,000

Trousers 8,000

T.Shirts 4,000

Receipts 1,500

Bags 20,000

Socks 4,000

Shorttrousers 2,500

Schoolsweaters 5,000

Skirts 3,000

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 Jackets 3,000

Blankets 5,000

Bedsheets 3,000

Earrings 1,000

Schoolshirts 2,000

Innerwears 2,000

TOTAL 77,000

4.3. MONTHLY LABOUR REQUIREMENTS

LABOUR EMPLOYEES COST KSH

Manager 1 15,000

Accountant 1 12,000

Sales persons 1 8,000

Security officer 1 4,000

Driver 1 7,000

Secretary 1 7,000

Storekeeper 2 7,500

TOTAL 72,500

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4.4 MONTHLY PRODUCTION EXPENSES
EXPENSES COST KHS

Electricity bill 500

Water bill 200

Rent 5,000

Telephone 300

Advertisements 10,000

TOTAL 16,000

Cost of production
=Requirement + Labor + Expenses
=165,500

4.5. PRODUCTION PROCESS

The shop open at 7:00 Am to 6:00 Pm whereby the workers started opening the shop,
mobbing, arrangement of the rooms in order to put everything in correct shelves and wiping
tables. By 6:00 Pm it closes and accountant does calculations of the days’ business.

4.6. REGULATION AFFECTING OPERATION

The business will require the following cost documents in its operation.
i. Health organization. This license will be obtained from the health office. ii.
Safety regulations. This deals with risks assessment and control of hazards. iii.
Environment regulations. This deal with how environment is protected against
exploitation or pollution. This is a regulation from the ministry of health and natural
environment conservation.

17
 CHAPTER FIVE
5.0 FINANCIAL PLAN
The financial plan is the tabulation and analysis of the financial statement e.g. The income
and expenditure, the cash flow and the sheet etc. in order to have a viable insight for future
business operations. The salary of any business depends upon the capability finance, so the
business intends to solicit funds from the following ways.

Source Percentage Contribution Amount

From owners savings 10% 70,000

FromFriends 20% 140,000

FromFamily 25% 175,000

FromLoan(KCB) 45% 315,000

5.1. PRE-OPERATIONAL COST

There are the costs that the firm has to incur before startup of the business.

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 ITEMS AMOUNT (KSHS)

Assete.g.,vehicle 250,000

Electricity installation 2,000

Telephone installation 2,000

Electricity and water 4,000

License permits 5,000

Transport 1,000

Insurance 5,000

Stock 150,000

Rent advance 5,000

TOTAL 424,000.

5.2. ESTIMATION OF WORKING CAPITAL

This is the amount that will keep the business running after starting.
ITEM YEAR 2021 YEAR 2022 YEAR 2023

CURRENT ASSETS

Cash at bank 200,000 400,000 600,000

Debtors 200,000 150,000 50,000

Cash at hand 400,000 500,000 700,000

Stock 600,000 700,000 900,000

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Stock in progress 200,000 250,000 300,000

Total current Assets 1,600,000 2,000,000 2,580,000

CURRENT -

LIABILITIES 400,000 100,000

Loans 40,000 60,000 80,000

Creditors 200,000 400,000 500,000

Owners’’Equity

Total Current 640,000 560,000 580,000

Liabilities

Working Capital 960,000 1,440,000 1,970,000

Working capital = Current Assets – Current Liabilities

Working capital for year 2016
=1,6000,000-640,000
=960,000/=

20
5.3 PROJECTED CASH FLOW STATEMENT
PARTICULARS JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL

Cash in flow
Cash sales 90000 78000 60000 61500 78000 72000 87000 84000 90000 78000 61500 60000 835300
Collection from debtors 60000 52000 40000 41000 52000 48000 58000 56000 60000 52000 41000 560000

Total cash in flow 90000 138000 112000 101500 119100 59200 135000 142000 146000 138000 113500 101000 1395300

Cash out flow

Purchase 40000 5000 10000 12500 10000 20000 10000 22560 27500 22500 10000 20000 210000
Payment to creditors 40000 5000 15000 12500 10000 20000 10000 22500 27500 22500 10000 195000
Wages and salaries 32500 32500 32500 32500 32500 32500 32500 32500 32500 32500 32500 32500 390000

Insurance 60000 60000

Transport 600 350 350 200 500 350 350 200 500 350 350 200 4300
Rent
Electricity and water 650 500 400 400 400 400 500 400 500 550 450 400 5550

Advertisement 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 72000

Telephone 300 150 300 200 100 400 200 300 200 150 300 100 2700

Miscellaneous expenses 3000 2750 1550 2750 2500 1950 2000 3750 2750 2000 2000 3000 30000
Loan repayment 20000
Interest on loan 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 40000

Total cash out flow 143050 87250 80100 93550 88500 95600 95550 99650 116450 15550 98100 152648 1265998

NET CASH 53050 50750 31900 7850 30600 36400 39450 42350 29550 22450 15400 51648 129302
ACCUMULATIVE CASH 53050 2300 29600 68150 31750 71200 113550 143100 16550 180950 129302
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5.4. PRO-FORMA IN COME STATEMENT
PRO-FORMA INCOME STATEMENT

Item Year 2023 Ksh. Year 2024 Ksh. Year 2025 Ksh.

Sales 407,900 4,642,000 4,997,000

Less Cost of sales

Opening stock 99,550 1,790,000

Add:Purchases 3,995,000 3,995,000 3,995,000

Less Closing stock 995,000 3,000,000 1,790,000 3,200,000 2,135,00 3,650,000

Gross profit 1,079,000 1,442,000 1,347,000

Salaries 516 516,000 516,000

Advertisement 30,400 41,500

Transport 42,800 40,500

Electricity 16,500 15,100

Rent 120,000 120,000

Telephone 10,250 11,000

Water

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5.5. PRO-FORMA BALANCE SHEET
PRO-FORMA BALANCE SHEET
As at 1st January 2023 As at 31st Dec 2023

Details Ksh Kshs Kshs Kshs

FIXED ASSETS

Equipment’s 25,600 22,950

Depreciation 2,560 22,950 2,560 20,390
Furniture & fittings 15,500 13,950
Depreciation 1,550 13,950 1,550 12,400

Total Fixed Assets 36,900 32,790

Current Assets
Stock 600,000 700,000
Debtors 200,000 150,000
Cash at bank 200,000 400,000
Cash in hand 220,000 450,000
Liabilities
Long term
liabilities 200,000 400,000
Owners’’equity 400,000 100,000
Loan 171,785 381,715
From relatives 245,115 585,045
Net profit
Current liabilities 400,000 600,000
Creditors 200,000 200,000
Overdraft
TOTAL 1,256,900 1,732,790
LIABILITIES

5.6. BREAK EVEN LEVEL

The break-even level analysis of the business as shown.
24
 Variable Expenses Year 2023 Year 2024 Year 2025

Advertising 304,000 41,500 18,000

Telephone 10,250 11,000 10,300

Electricity 16,500 3,850 15,300

Waterbill 3,200 65,000 3,580

Tax 27,235 2,100 58,575

Stationery 1,200 20,000 2,000

Interest on loan 40,000 9,500

Miscellaneous 9,300 15,100 14,300

Expenses

Total 138,085 168,055 122,025

Fixedcost

License and permits 2,000 2,000 2,000

Insurance 10,000 10,000 10,000

Rent 120,000 120,000 120,000

Salaries 516,000 516,000 516,000

Total contribution margin = sales-total variable cost

=40+9,000-138,915

=3,940,915

Contribution margin % = total contribution margin × 10/sales

25
=3,940,915×100/4,009,000 = 96.6%
Total fixed cost=Ksh648,000
Breakeven = total cost/contribution margin

=648,000/96.6%
=6.708

5.7 EXPECTEDPROFITABILITYRATIOS
Gross profit percentage = Grossprofit×100/sales

=1079,000/4,079,000
=26.5%
Return on equity = Net profit tax * 100

Owner equity = 245,115/200,000

=122.55%

=123%

Return on investment = Net profit after tax / total investment

=245,115×100/1,256,900

=19.5%

Gross profit % = Gross profit × 100% / sales

1,442,000 × 100 / 464,200

=31.04%

=31%

26
Return on equity = Net profit after tax × 100/Owners equity

=585,045×100/400,000

Return on investment = Net profit tax × 100/Total investment

=585,045×100/1,732,790

=33.8%

Year 2025
Gross profit percentage = Gross profit /Sales =
1,347,000×100/4,997,000=27%

Return on equity = Net profit after taxation × 100/Owner’s equity

=537,175×100/500,000

=27%
Return on equity = Net profit after taxation × 100/Owner’s equity
=527,175×100/500,000
=105.4%
Return on investment = Net profit after tax × 100/Total investment

=527,175×100/1,978,680
=26.6

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5.8 DESIRED FINANCING
This is the amount of money {capital} required to start a business of the proposed
business

Item Amount

Pre-operational cost 201,250

Working capital 960,000

Fixed assets 241,920

Total 1,403,170

5.9 PROPOSED CAPITALIZATION

Item Kshs

My own contribution 200,000

From salaries 171,785

Funds from borrowing source 400,000

Total 771,785

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29
APPENDIX II: BUSINESS LAYOUT

STORES

MANAGER’S OFFICE

GLASSTUBE

ACCOUNTANT OFFICE

KEY Doors
Windows Shelves

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