CHAPTER FIVE
FINANCIAL PLAN
5.1 Pre-Operational Costs
These are costs required before the clinic starts operating.
Item Cost (Ksh)
Equipment and Installation 80,000
Water Deposit 5,000
Electricity Deposit 15,000
Telephone Deposit 20,000
Advertisement & Opening 20,000
Licensing & Registration 15,000
Miscellaneous 10,000
Total Pre-Operational Costs 165,000
5.2 Estimation of Working Capital
Working capital covers expenses needed to run the clinic for one year.
Item Monthly (Ksh) Annual (Ksh)
Rent 4,000 48,000
Electricity 1,000 12,000
Water 2,000 24,000
Advertising 4,000 48,000
Salaries & Allowances 100,000 1,200,000
Transport 2,000 24,000
Maintenance 5,000 60,000
Miscellaneous 5,000 60,000
Total Working – 1,476,000
Capital
5.3 Pro-Forma Balance Sheet (As at December 2025)
Assets Ksh Liabilities & Equity Ksh
Fixed Assets Capital & Liabilities
Equipment & Furniture 500,000 Owner’s Capital 2,500,000
Building Renovation 300,000 Bank Loan 1,000,000
Creditors 100,000
Current Assets
Cash at Bank 800,000
Accounts Receivable 200,000
Inventory (Drugs & 300,000
Supplies)
Total Assets 2,100,000 Total Equity & Liabilities 2,100,000
5.4 Cash Flow Projection
RECEIPTS JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS
Beginning Cash 500,000 - - - - - - - - - - - 500,000
Debtors - 6,000 8,000 9,000 6,000 4,000 7,000 11,000 5,000 7,000 11,000 15,000 100,000
Sales 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 240,000
TOTAL CASH 700,000 206,000 208,000 200,000 206,000 204,000 207,000 211,000 205,000 207,000 211,000 215,000 3,000,000
OUTFLOW
EXPENSES
Salaries 69,500 69,500 69,500 69,500 69,500 69,500 69,500 69,500 69,500 69,500 69,500 69,500 834,000
Support Services 8,416.7 8,416.7 8,416.7 8,416.7 8,416.7 8,416.7 8,416.7 8,416.7 8,416.7 8,416.7 8,416.7 8,416.7 101,000
Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Telephone 900 1,000 1,500 3,000 1,700 1,300 4,000 5,000 2,000 3,000 4,000 6,000 36,000
Loan Interest 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 25,200
Water 300 400 200 300 400 700 250 250 500 700 900 1,000 6,000
Electricity 800 1,200 1,300 1,300 1,300 2,400 3,000 2,000 2,000 2,500 1,500 1,500 24,000
Depreciation 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Purchases 50,000 50,000 60,000 76,000 72,162 72,162 72,700 73,000 73,500 74,000 74,135 75,434 851,613
Miscellaneous 3,000 3,500 3,500 4,000 4,000 4,100 3,3575 6,045 3,800 3,900 4,800 7,000 55,835
TOTAL 134,016.7 136,716.7 145,116.7 159,416.7 157,378.7 158,178.7 161,966.7 162,336.7 160,116.7 162,316.7 162,651.7 166,050.7 1,958,840
EXPENSES
NET CASH FLOW 563,283.3 69,283.3 62,833.3 49,583.3 48,621.3 45,821.3 45,033.3 48,663.3 444,883.3 44,683.3 48,348.3 48,949.3 1,041,152
5.5 Pro-Forma Income Statement for Uzima Clinic
(For the Years Ending December 2025 – 2027)
Item 1st Year 2nd Year 3rd Year
(Kshs) (Kshs) (Kshs)
Sales (Consultations, Drugs, Lab Tests) 3,600,000 4,200,000 4,800,000
Less: Cost of Services (Drugs, Medical 1,200,000 1,350,000 1,500,000
Supplies)
GROSS PROFIT 2,400,000 2,850,000 3,300,000
EXPENSES
Salaries and Wages 1,200,000 1,250,000 1,300,000
Rent 48,000 50,000 55,000
Water 24,000 26,000 28,000
Electricity 12,000 15,000 18,000
Telephone & Internet 18,000 20,000 22,000
Advertising & Marketing 48,000 60,000 70,000
Transport 24,000 28,000 32,000
Repairs & Maintenance 60,000 70,000 80,000
Miscellaneous 30,000 35,000 40,000
Total Expenses 1,464,000 1,554,000 1,645,000
Net Profit Before Tax 936,000 1,296,000 1,655,000
Less: Provision for Tax (30%) 280,800 388,800 496,500
Net Profit After Tax 655,200 907,200 1,158,500
5.6 Trading, Profit and Loss Account
Particulars Debit Credit (Ksh)
(Ksh)
Trading Account
Opening Stock 100,000 –
Purchases 1,100,000 –
Less: Closing Stock – 200,000
Cost of Goods Sold (COGS) 1,000,000 –
Sales – 3,600,000
Gross Profit c/d – 2,600,000
Total (Trading Account) 3,600,000 3,600,000
Profit & Loss Account
Gross Profit b/d – 2,600,000
Operating Expenses 1,500,000 –
Net Profit – 1,100,000
Total (Profit & Loss A/c) 1,500,000 2,600,000
5.7 Break-Even Analysis
Break-Even Point (BEP) = Fixed Costs ÷ Contribution Margin Ratio
Fixed Costs = Ksh 1,500,000
Sales = Ksh 3,600,000
Variable Costs (Drugs & Supplies) = Ksh 1,200,000
Contribution Margin = Sales – Variable Costs = Ksh 2,400,00
Contribution Margin Ratio = 2,400,000 ÷ 3,600,000 = 0.67 (67%)
BEP = 1,500,000 ÷ 0.67 ≈ Ksh 2,238,806
This means the clinic must make sales of about Ksh 2.24 million to cover all costs. After
that, any sales become profit.
5.8 Profitability Ratios
• Gross Profit Margin = (Gross Profit ÷ Sales) × 100
= (2,400,000 ÷ 3,600,000) × 100 = 67%
• Net Profit Margin = (Net Profit ÷ Sales) × 100
= (900,000 ÷ 3,600,000) × 100 = 25%
• Return on Investment (ROI) = (Net Profit ÷ Capital Invested) × 100
= (900,000 ÷ 2,500,000) × 100 = 36%
5.9 Desired Financing
The clinic will need about Ksh 5 million to start and run smoothly.
Financing Sources include:
Owner’s Savings: Ksh 2,500,000
Bank Loan: Ksh 1,000,000
Family & Friends: Ksh 800,000
Cooperative Bank Contribution: Ksh 700,000
5.10 Proposed Capitalization
Source of Capital Amount (Ksh)
Owner’s Savings 2,500,000
Cooperative Bank Loan 1,000,000
Family & Friends 800,000
Cooperative Bank Shares 700,000
Total Capitalization 5,000,000