BUSINESS PLAN

NAME OF BUSINESS: CREAMY DAIRY SHOP

NAME OF THE BUSINESS OWNER: MILLICENT NJOKI MUIRURI

ADDRESS: P.O BOX 241-00232

PHONE NO: 0724507353

EMAIL: millycreamy@[Link]

BUSINESS MOTTO: only the best

INSTITUTION: KENYA TECHNICAL TRAINERS COLLEGE

NAME OF STUDENT: MILLICENT NOKI MUIRURI

ADMISSION NUMBER:2022BS148442

SUBMITTED TO: DR. FLORENCE MBITI

 DECLARATION AND APPROVAL
DECLARATION BY THE STUDENT
I hereby declare that the business plan is my original work and it has never been presented for
award of the certificate, diploma, or bachelor in any institution.

MUIRURI MILLICENT NJOKI

2022BS148442
Signature………………… Date……………

SUPERVISOR`S APPROVAL
I confirm that this business plan was carried out by the candidate under my supervision.
DR. FLORENCE MBITI
KENYA TECHNICAL TRAINERS COLLEGE
Signature ………………. Date…………….
 DEDICATION
I dedicate this work to my parents and siblings who have given me support.
 ACKNOWLEDGEMENTS

First and foremost, gratitude’s go to my supervisor Dr. Mbiti who has devoted a lot of her time

and was patient towards the business plan preparation. I would also wish to thank my family

members who have supported me. They encouraged me and gave me company especially when

things seemed too hard. Without them it would have been very difficult. I also thank the Lord

Almighty for all the strength, knowledge and inspiration he provided to me in carrying out this

business plan.
EXECUTIVE SUMMARY
1.1 BUSINESS DESCRIPTION
The business will be operated under the name Creamy dairy shop. It will be located in Ruiru at
Kwa kairu near Kenyatta University. It will be a full service milk shop dedicated to constantly
providing high quality products and services. It will also maintain friendly fair and creative work
environment which respects diversity, ideas and smart work.

1.2 MARKETING PLAN

Creamy dairy shop will serve several categories of customers. Also, there are other competitors
leading with this type of products and services, but the most competitive activity is the customer
care service, product quality and pricing strategy.

1.3 ORGANISATIONS STRATEGY

The manager who is the owner of the business with full knowledge on the running of the
business, shop-attendant, dairyist and a security officer will assist in smooth running of the
business Recruitment will be done to the new employees.

1.4 PRODUCTION AND OPERATION PLAN

This chapter has the information regarding the product design and development of products,
facilities and capacity. The business is to be operated on the rented room around the business
plaza at kwa-kairu. The business will be operated daily from 7.30am to 9pm.

1.5 FINANCIAL PLAN

This chapter contains the pre-operational cost, the working capital required, the proposed cash
flow statement and the pro-forma income statement
CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.1 THE SPONSOR/OWNERS BACKGROUND
The new business will be a sole trader type of business. This means that the business will be
owned by one person who will be the sole manager. Due to this, the sole trader will enjoy all
profits of the business, incur all loses and eliminate causes of delay in decision making since
there will be no consultation in making business decisions. The sole trader will also be in contact
with her own customers hence creating good customer relationship with them. The starting
capital will be Kshs. 200,000 from friends, savings and family donations. The sole trader will use
the capital to register the business legally to the local authorities and be issued with a trading
license to the business. The sole trader will also use part of the money to buy machines and pay
for the power supply. The sole proprietor will be Millicent Njoki Muiruri who is 26 years old.
She is a graduate from Moi University with a degree in Entrepreneurship currently she is
passionate on entrepreneurship and this has driven her to start this enterprise. She has experience
in business of 2 years.
The capital contribution will be as follows:
source Amount in kshs.
Personal saving 130,000
Friends 20,000
Family donations 50,000
Total 200,000

1.2 THE BUSINESS

The name of the business will be creamy dairy shop. The name creamy means having the rich
taste or thick, smooth texture of cream. I will to use this name to attract customers as they come
to the shop, they will be assured to enjoy the sweetness of good quality milk. The sole proprietor
intends to open the enterprise in December 2022.
1.3 THE LOCATION AND ADDRESS
The business will be located in Ruiru at Kwa Kairu near Kenyatta University (Ruiru campus).
The business address is P.O Box 241 Ruiru.
Our email address is millycreamy@[Link]
1.4 THE INDUSTRY
The business will be under agricultural sector. According to the current research, it shows that
this kind of sector is under rapid growth since milk and some of dairy products are used as
prevention or cure to some diseases i.e., Milk is used to treat countless conditions including TB,
cancer, heart diseases, obesity, kidney diseases and underweight patients. Example of dairy
products include milk, cheese, butter, yoghurt, butter milk and custard. Dairy farming is a class
of agriculture for long term production of milk which is processed (either on the firm or at a
dairy plant, either of which may be called a dairy) for eventual sale of a dairy product.
Depending on where the sole proprietor will start the business, milk dispensing business, Kenya
Dairy Board permits license permits and other levies including business permits from the county
government will cost approximately Kshs 10000. ATM machines cost anywhere from around
KSHS 75,000 or more. A free-standing ATM machine cost approximately Kshs 25 000 to 35000.
A built in/ through the wall ATM cost roughly 35 000 and above. A used ATM can be purchased
starting from 20000. The ATM machines have an in built cooler and use electricity to store and
dispense milk. It works like a money ATM machine. Where one keys in the amount of money,
they would like to spend the ATM in turn dispenses the equivalent amount of milk. The milk
ATM is the main machine required for this business with milk costing ksh. 50,000- 55,000 can
dispense milk at Kshs 60-70 per litre.

1.5 THE PRODUCT/SERVICES

The sole trader will use dairy products and services. Dairy products are types of food produced
from or containing milk of mammals e.g., cattle, goats, sheep and camels. The sole trader will
also produce yoghurt, cheese and butter from milk products. Highly modernized milk machines
will also be used. This will enable the business to enter the field of competition with other
relative businesses, hence expanding the business. Since the products will be of high quality due
to use or the latest version of technology and selling the products at an affordable price. The
customers will benefit since they will save their money which they would have spent in
travelling for long distance to get low quality products at higher a price.
1.6 GOALS AND OBJECTIVES
The business goals are categorized into 2 different categories Long term and short-term goals.
1.6.1 Short term Goals.
1. Acquire customers. The business aims at acquiring / serving most people around the area
with its products
2. Customer satisfaction. For the business to succeed, it must take into account the needs of
its customers and satisfy the economy. With this in mind, the business will avail its
products in time and offer at fair prices with the best customer service rendered.
3. Making profits. As it is usually the aim of any business is to make profits to enable it to
cater for its needs such as rent, generating salary for the sole proprietor and getting more
dairy stock. The business does not aim on making profits only but also maximizing them.
1.6.2 Long term goals
 1. Employment. The business will need workers, expertise different type of humans. All this
people will be employed by the business to create employment opportunities to the
jobless people.
2. Expansion. In future the business intends to maximize the profits and build other
branches to major town thus leading to expansion.
1.7 THE ENTRY AND GROWTH STRATEGY
1.7.1 Entry Strategy Plan
The business will penetrate and gain in the market competing with its competitors by using a
different pricing technique example psychology pricing technique. This is whereby for example
the business competitors charge ksh 70 per litre and the business play around with the mind of its
customers hence charging ksh 69 per litre. If the method does not work, the business will apply
another technique e.g., penetration pricing. This is where the business charge low prices
compared to its competitors. When choosing distribution strategy, the business will use
exclusive, this is where it uses few specialized distributors. The entrepreneur will also focus on
word of mouth, referrals and offering leaflets to the member of the society as a way of marketing
1.7.2 Growth Strategy Plan
It’s always good to carry a SWOT analysis or use the 4Ps of marketing as strategy for growth
and entry. They include product, price, place, and promotion. Value addition to the milk to come
up with the yoghurt and cheese. The entrepreneur will also open more branches in other areas
and also own their own farm to produce their own milk instead of getting it from other farmers
CHAPTER TWO
2.0 MARKETING PLAN
2.1 POTENTIAL CUSTOMER
The business mostly targets travelers’ students, villagers, hospital and the church. Travelers from
different places passing through where the business is will be able to refresh themselves by
taking milk, yoghurt, hence promoting the business. The school also will promote the business
since teachers and other staff’s members will be prepared tea during break time period. The shop
will be located along the road thus the travelers will be potential customers. The shop will be
located near a college in the area thus students will be customers mostly for the yoghurt. The
low-income earners in the area will also be potential clients of the milk which will be sold in
different quantities according to the financial capability of the customers; quarter and half litre of
the milk. There is also a church and a hospital within the area thus the residents visiting the
hospital and also attending church are potential customers.

2.2 THE COMPETITION

Competitors being three of them, they have poor customer care services and hence located far
from the main road. They still have strength such as well-trained team which enable them to
perform quite good .The business will analyses its competitors weakness and strengths and use
them to make the business grow positively .However the business will make their weaknesses to
be its strength .This is by locating the business near the main road and also near institutions since
there are no dairy products sold there hence filling the gap in the market .The business will also
ensure that there is good relationship to its customers and ensure good customer care services
and promote peaceful working conditions.
competitor strength weakness
Kamau enterprises Large market share Poor customer service
Milk parlour Has its own farm, thus they Over pricing their products
don’t incur the cost of getting
raw materials
Fresh dairy Well-trained team Located far from the main
road

2.3 THE MARKET SHARE

The firm’s unit of production will be one hundred litres of milk per day. The unit sales per day
are 90 litres per day which is equivalent to thirty shillings per litre. The total sales per month are
estimated to eighty-thousand even though it varies due to changing production units.
2.4 THE PRICING STRATEGY
The business will sell products at favorable price which favors the market. It will consider the
pricing strategy of other firms so as not to charge less or expensive. Credit will be offered to
customers who will buy milk in large quantity. Also, psychological pricing will be used. This
involves playing around with customers’ mind whereby if, other firms charge ksh 70 per litre,
the business will charge ksh. 69 per litre. Using this method, the business will play with many
customers’ mind, hence increasing its customers. This will make the customers to consider its
products are cheaper than others and therefore they will opt for it.
2.5 PROMOTION AND ADVERTISING STRATEGY
The business chooses to promote its products by using advertising method, sales promotion, and
personal selling. Advertisement is considered efficient since it spreads faster in a short period of
time. The method of advertisement could be the television, radios, journal, newspapers, and
billboards. It is considered that that advertisement would influence people. The firm will also use
sale promotion to encourage people to buy its products. The firm also will participate in personal
selling as this will help the workers to persuade the customers face to face and influence them to
promote the business
2.6 THE DISTRIBUTION STRATEGY
The business will distribute through agents who have a common knowledge. The business will
also use sales person to distribute the packaged yogurt in the shops and the local supermarkets in
the area.
CHAPTER THREE
3.1 ORGANISATIONAL/MANAGEMENT PLAN
3.2 ORGANIZATIONAL CHART
Manager/owner

Shop attendant dairyist

Security officer
3.2 ORGANIZATIONAL STRUCTURE
The business will have a structure that would show how different people in the organization have
different positions. It will define the manager and the other team that help her work with.
3.2.1MANAGEMENT TEAM
The business will be managed by the manager who is in-charge of the overall business operation.
Manager
Duties:
1. Final decision maker
2. Supervising the business operation
3. Ensure proper running of the business
4. Ensure proper handling of business equipment i.e., machines
Details of the manager
Name: Millicent Njoki Muiruri
Age: 26 years
Experience: 2 years’ experience
Qualification
1. Have a degree in Entrepreneurship
2. Good leadership skills
3. Good management skills
4. Computer literate

3.2.2 OTHER PERSONNEL

 [Link] attendant
Name: Caroline wairimu
Qualifications
 Good communication skills
 Good marketing skills
 Diploma in sales and marketing
 business and accounting skills

Duties:
 Give samples products to public and convincing them to purchase.
 Receiving customers in the shop and selling the products to them.
 Receiving payments from the customers.
[Link]
Name: Daniel kamau
Qualifications
 Good communication skills
 interpersonal skills,
 attention to detail
 food handler's permit
Duties
 Production of the yoghurt and packaging it.
 Receiving the milk from the supplier and labelling and storage of the milk
3. Security officer
Name: Philip Ouko
Qualification
 Good martial skills
 Kcse certificate
 National identification card
Duties
 offering security services during the night

3.3 RECRUITMENT, TRAINING AND PROMOTION

3.3.1 RECRUITMENT
The business will advertise any vacancy through its website.
The recruitment will be based on the qualification before the selection process is carried out. The
available personnel can also work on overtime basis for which they will be paid for
3.3.2 TRAINING
This will help the employees acquire the necessary skills required to perform various tasks thus
boosting production.
Orientation will be done for the new employees hired or recruited. Safety training will also be
conducted for all the workers.
3.3.3 PROMOTION
The staffs will be promoted according to their performance ability when the vacant arises. This
will be able to motivate the employees to work harder towards the business objectives. These
available employees can be added duties and responsibilities or given gifts to feel appreciated
and respected
3.4 REMUNERATION AND INCENTIVE
Remuneration
The business will also find it important to remunerate the salaries for workers as this will
encourage them attract more customers to buy from the business also to benefit
Title No Monthly pay allowance
Manager 1 60,000 45,000
Shop attendant 1 50,000 30,000
dairyist 1 40,000 25,000
Security Officer 1 30,000 15,000

Incentive
This includes commissions, overtime allowance and lunch.
Commissions will be given to workers after they have made sales to the agreed level.
Working overtime will also be considered and payment will be done.
Break and lunch will be provided for the workers.
3.5 License permits and by-laws
3.5.1. Licenses
Trading license are always for the business to operate under the government laws.
The license ensures that the business is legal, and the government is aware about its existence. It
also detects any competition in the market to be done in the good way.
3.5.2 Permits
Permits are given by the respective board. The business will get permit from (KDB) Kenya Dairy
Board to allow it work smoothly without any disturbance from the National government that has
not been registered with its head.

3.5.3 By laws
The business will need to work following the laws of the country. This is law of the country
government and national government. This is to help it get any support from the government. In
case the government is offering support. A good business portrait its good pictures to the
government.
3.6 Support Services
Support Services
The business will require a support service for it to work smoothly
3.6.1 Banking services
The bank will help the business to open an account with it. This will help the business to make
business transactions safety without corruption.
This is because bank offers security to the money deposited in i.e., the customers can not reverse
the money.
3.6.2 Insurance services
Insurance services are important in the business. It will have to take an insurance cover to protect
its property.
The business will be insured against theft, fire and burglary. Bad debt and payment of insurance
will be done monthly.
3.6.3 Consulting services
Consultation in a firm makes it grow effectively. In the business, construction will be done
anytime incase the business is stranded on what to do.
Payment of consultation will only be done after construction.
Payment of consultation will be done through cash. This is to avoid any other forms of payment
e.g., credit and cheque.
3.6.4 Legal services
This will be mainly used when writing contracts, drafting legal letters, interpreting labor laws for
employment.
It will be registered under a well-known office to ensure its services are well started and no
problems are faced.
4.0 CHAPTER FOUR
4.1 PRODUCT/SERVICE DESIGN DEVELOPMENT
There are materials needed in this production. This include the milk atm machine, timber boards
and metallic boards. However, in production the process is affected by internal and external
factors Internal factors include poor technology, old fashioned / outdated equipment, lack of
proper co-ordination with the manager and other workers, poor payment, and poor working
environment.
External factors include legal factors, infrastructure, political factors, unfavorable government
policies such as high taxes and culture of the customers. To minimize both internal and external
factors, the business will ensure good relationship among the workers, good working
environment good payment and acquisition of the modern equipment. For external factors such
as culture of the customers, the business will avoid producing products that are not used by the
customers/society.
Yogurt is a dairy product, which is made by blending fermented milk with various ingredients
that provide flavor and color. Yoghurt is produced by the controlled fermentation of milk by two
species of bacteria (Lactobacillus sp. and Streptococcus sp.). The sugar in milk (called lactose) is
fermented to acid (lactic acid) and it is this that causes the characteristic curd to form. The acid
also restricts the growth of food poisoning bacteria and some spoilage bacteria. So, whereas milk
is a potential source of food poisoning and only has a shelf life of a few days, yoghurt is safer
and can be kept for up to ten days, under proper storage conditions The procedure is as follows:
1. Collect the milk in carefully cleaned, covered vessels.
2. Pasteurize the milk at 80-85°C for 15-20 minutes. This is especially important if
tuberculosis bacteria are thought to infect animals locally.
3. Cool the milk to 40-45°C as quickly as possible and add a starter culture of the yoghurt
bacteria. Keep the milk at this temperature for 3-4 hours while the fermentation takes
place. If possible, then cool the yoghurt in a refrigerator until it is eaten or sold.
4. Add the flavors

4.2 PRODUCTION FACILITY AND CAPACITY

Equipment is required for production. This equipment include harmer, nails, timber (wood
board), saw, tape measure and metal sheets including atm machines.

EQUIPMENT COST
Nails 3 inch @ 10
hammers 600
Timber 3 inch @750
saw 350
Metal sheets 1500
Tape measure 500
Atm machine 135,000

The office layout will be open office layout

Advantages of open office layout
1. Easy sharing of equipment
2. Promotes teamwork
3. Easy supervision of work
4. Enhance faster learning
5. Ensures individual participation in decision making
Disadvantages
1. Lack privacy
2. Disturbance from workers
3. Noise
4. Lack of security
5. Prone of infections
Table, Production, facilities, and capacities
ITEM QUANTITY COST CAPACITY
office 2 rooms 42000 2 offices
Store 2 rooms 20000 1
Bs/room 1 room 45000 2
Electricity 1 30000 10

4.3 MAITENANCE &SPAREPARTS

Repairs and maintenance will be done monthly to help the workers have smooth time with the
equipment. The firm will be hiring somebody to come and do all repairs in the building.
4.4 PROPOSED LAYOUT
Customer serving office store
Area

Customer ordering production area

Area/customer care
 4.5 PRODUCTION STRATEGY
The method of production is labor intensive method where workers participate directly. The
workers are to make the tables and sits. The business intends to diversity to capital intensive
method of production. It will cost the business an estimate of sh. 200000 to move to the new
mode of producer. The method will be quite expensive as it will need power and it would require
the little personnel.

4.6 GOVERNMENT REGULATIONS

Health regulations
In the business, the requirements of public health will be adhered to in handling the business e.g
the business will ensure hygiene in milk and everything else surrounding the milk including
workers. Regular advice to ensure health of the business will also be considered. The business
will prefer advice to be made by the government sector than the private sector department.
Safety
Necessary measures that would guard the workers against physical injuries of the workers will be
taken. This includes equipment such as fire extinguishers, wearing of white gumboots in working
places to avoid injury that may occur.
Environmental Regulation.
This is a major emerging issue in running of the business environmental regulation set by the
government will also be adhered to. Measures to ensure environment will also be adhered to this
includes recycling of milk and water bottles to reduce plastics in environment. Planting tress
after cutting others. Burring of plastic bottles instead of burning them, this will help in reduction
of air pollution in the environment
 CHAPTER FIVE
5.1 Financial plan
Financial plan is a statement prepared to show the financial resources over a given period. It
gives alert to an investor on changes that must be made to ensure smooth transition throughout
the financial phases such as changing the assert location.
Financial plan should flow and provide occasional updates when financial changes occur.
5.2 Pre-operational plan
ITEM COST(KSH)
Rent and rent deposit 15,000.00
Trading license and permit 5,000.00
Advertisement 3,500.00
Insurance 7,000.00
Maintenance 5,000.00
Stationeries 2,000.00
Equipment’s 57,500.00
Overheads 2,500.00
Total 97,500.00

5.3 Working capital= current assets- current liabilities

ASSETS AMOUNT(KSH)
Cash balance at bank 560,000.00
Stock 55,000.00
TOTAL 615,000.00
Loan payable within a period of two 400,000.00
years
Creditors 350,000.00
Bank overdrafts 150,000.00
TOTAL 900,000.00

5.4 Projected cash flow statement (1 year)

PARTIC JA FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTA
ULARS N L
Cash at 35 685,5 748, 807, 865,
Bank 2, 00 717, 370 776, 720 836, 060 896, 922, 954, 980,1 9,543
50 685,5 300 420 970 060 960 130 80 ,170
0 00
Cash 11 110, 110, 111, 111, 111, 111, 111,9 1,334
Sales 0, 110,5 750 110, 950 100 200 111, 650 800 111, 50 ,050
00 00 900 400 850
0
Cash 25 0 0 0 0 0 0 0 0 0 0 0
from 0, 250,0
friends 00 00
0
Cash in 0 0 0 0 0 0 0 0 0 0 0 10,00
hand 10 0
,0
00
Total 72 828, 918, 976, 1,00 1,03 1,06 1,092 11,13
Inflows 2, 796,0 050 859, 887, 820 948, 460 7,71 4,76 5,98 ,130 7,220
50 00 270 370 170 0 0 0
0
Outflo
ws
Teleph 2,200 2,80 2,95 3,00 2,80 2,76 3,05 3,00 3,10 3,20 3,250 34,61
one bill 2, 0 0 0 0 0 0 0 0 0 0
50
0
Insura 10 0 0 0 0 0 0 0 0 0 0 0 10,00
nce ,0 0
00
Loan 0 4,500 4,50 4,50 4,50 4,50 4,50 4,50 4,50 4,50 4,50 4,500 49,50
repay 0 0 0 0 0 0 0 0 0 0
ment
Purcha 4, 4,000 4,00 4,00 4,00 4,00 4,00 4,00 4,00 4,00 4,00 4,000 48,00
ses 00 0 0 0 0 0 0 0 0 0 0
0
Salarie 55,00 55,0 55,0 55,0 5,00 55,0 55,0 55,0 55,0 55,0 55,00 605,0
s 0 00 00 00 0 00 00 00 00 00 0 00
Mainte 0 0 2,10 2,40 0 2,00 0 2,30 0 8,800
nance 0 0 0 0
Electric 1, 1,200 1,50 1,55 1,30 1,45 1,70 1,80 1,85 1,85 1,80 1,880 19,38
ity bill 50 0 0 0 0 0 0 0 0 0 0
0
License 5, 0 0 0 0 0 0 0 0 0 0 0 5,000
s 00
0
1, 1,550 1,58 1,40 1,45 1,58 1,60 1,62 1,60 1,70 1,50 1,400 18,48
Station 50 0 0 0 0 0 0 0 0 0 0
eries 0
Adverti 2, 0 0 900 0 2,00 800 0 2,50 0 3,00 0 11,20
semen 00 0 0 0 0
t 0
Water 50 250 300 450 400 520 350 430 300 480 500 380 4,860
bill 0
Rent 10 10,00 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,0 10,00 120,0
,0 0 00 00 00 00 00 00 00 00 00 0 00
00
Total 37 78,70 79,6 82,8 79,6 81,8 83,1 80,4 84,7 80,6 85,8 80,41 934,8
Outflo ,0 0 80 50 50 50 10 00 50 30 00 0 30
ws 00
Net 68 717,3 748, 776, 807, 836, 865, 896, 922, 954, 980, 1,011 10,20
cash 5, 00 370 420 720 970 060 060 960 130 180 ,720 2,390
50
0
Cumul 68 1,402 2,15 2,92 3,73 4,57 5,43 6,33 7,25 8,21 9,19 10,20 12,07
ative 5, ,800 1,17 7,59 5,31 2,28 7,34 3,40 6,36 0,49 0,67 2,390 2,050
cash 50 0 0 0 0 0 0 0 0 0
0

5.5 Pro-forma income statement. ( 3 years)

PARTICULARS YEAR 1 YEAR 2 YEAR 3
Sales 3,408,020.00 3,700,000.00 4,100,000.00
Purchases 70,000.00 82,000.00 100,000.00
Gross profit 3,338,020.00 3,618,000.00 4,000,000.00
EXPENSES
Salaries 605,000.00 625,000.00 630,000.00
Maintenance 8,800.00 6,500.00 5,600.00
Electricity bill 19,380.00 20,000.00 22,000.00
Licenses 5,000.00 5,100.00 5,200.00
Advertisement 11,200.00 10,200.00 8,000.00
Water bill 4,860.00 3,500.00 2,000.00
Insurance 10,000.00 9,500.00 9,400.00
Telephone bill 34,600.00 32,000.00 30,000.00
Loan repayment 49,500.00 9,500.00 800.00
Rent 120,000.00 118,000.00 11,700.00
TOTAL EXPENSES 868,340.00 839,300.00 724,700.00
Net profit before tax 2,469,680.00 2,778,700.00 3,275,300.00
Tax 20% 493,936.00 555,740.00 655,060.00
Net profit after tax 1,975,744.00 2,222,960.00 2,620,240.00

5.6 Pro-forma balance sheet (3 years)

ASSETS YEAR 1 YEAR 2 YEAR 3
CURRENT ASSETS
Cash 570,000 865,000 874,000
Stock 5,000 20,000 22,000
FIXED ASSETS
equipment’s 4,500
Furniture 250,000
TOTAL 830,000 890,000 896,000
LIABILITIES
LONG TERM
LIABILITIES
Bank 430,000 360,000 310,000
CURRENT
LIABILITIES
Creditors 250,000 400,000 476,000
Bank overdrafts 150,000 130,000 110,000
TOTAL 830,000 890,000 896,000

5.7 Break-even analysis

BREAK-EVEN ANALYSIS=FIXED COSTS*SALES*100%
SALES-VARIABLES

15,000*3,405,020 *100%
3,405,020-103,000
=15,467.9%
5.8 Desired financing

Item Kshs

Pre-operational cost 97,500

Working capital 615,000

Fixed assets 830,000

Total 1,542,500

5.9 Proposed capitalization

The project capitalization is 600,000

Total investments 600,000

Bank loan 400,000

Owners contribution 130,000

Friends and relatives 70,000

5.10 Profitability ratios

GROSS PROFIT RATIO
Gross profit*100
Sales
3,338,020*100%
3,408,020
=97.95%
NET PROFIT RATIO
Net profit after tax*100%
Sales
1,975,744*100%
3,408,020
=57.97%