CHAPTER FIVE: FINANCIAL PLAN
5.1 PROJECT COST AND CAPITAL REQUIREMENTS
Table 5.1: Estimated Project Cost
ITEM DESCRIPTION AMOUNT
(KSH)
Premises Renovation Painting, plumbing, signage, structure setup 60,000
& Setup
Equipment & Tools Pressure washers, vacuum cleaners, polishers, 240,000
compressor, tanks
Furniture & Office Desk, chairs, shelves, waiting area seats 25,000
Setup
Licenses & County permit, fire safety, NEMA certificate 20,000
Registration
Initial Stock Car shampoos, wax, air fresheners, microfiber 40,000
towels
Marketing & Branding Flyers, online promotion, signage 15,000
Working Capital (3 Rent, wages, utilities 50,000
months)
TOTAL PROJECT 450,000
COST
5.2 SOURCES OF FINANCE
Table 5.2: Sources of Finance
SOURCE AMOUNT (KSH) PERCENTAGE (%)
Owner’s Equity (Personal Savings) 300,000 67%
Family Support 100,000 22%
Short-term Loan (Friend/Chama) 50,000 11%
TOTAL CAPITAL 450,000 100%
5.3 PROJECTED SALES
Table 5.3: Monthly Sales Projection (Year 1)
SERVICE UNITS/MONTH AVERAGE PRICE TOTAL (KSH)
(KSH)
Exterior Wash 300 600 180,000
Interior Detail 200 1,500 300,000
Full Detailing 100 3,000 300,000
Engine Detail 80 800 64,000
Headlight Restoration 60 1,000 60,000
Ceramic Coating 20 6,000 120,000
TOTAL MONTHLY SALES 1,024,000
Table 5.4: Annual Sales Projection
YEAR AVERAGE MONTHLY SALES TOTAL ANNUAL REVENUE GROWTH
(KSH) (KSH) (%)
1 1,024,000 12,288,000 —
2 1,200,000 14,400,000 17%
3 1,350,000 16,200,000 12%
5.4 OPERATING EXPENSES
Operating expenses consist of recurring monthly costs incurred during the daily running of
the business.
Table 5.5: Monthly Operating Expenses
ITEM AMOUNT (KSH)
Salaries & Wages 120,000
Rent 30,000
Utilities (Water, Electricity, Internet) 12,000
Cleaning Supplies 25,000
Transport 10,000
Maintenance & Repairs 8,000
Marketing & Advertising 5,000
Loan Repayment 6,000
Miscellaneous 4,000
TOTAL MONTHLY EXPENSES 220,000
5.5 CASH FLOW PROJECTION
Table 5.6: Projected Cash Flow Statement (Year 1)
MONTH CASH INFLOW CASH OUTFLOW NET CASH FLOW
(KSH) (KSH) (KSH)
January–March 1,200,000 660,000 540,000
April–June 1,600,000 720,000 880,000
July–September 1,800,000 720,000 1,080,000
October– 2,000,000 780,000 1,220,000
December
TOTAL YEAR 1 6,600,000 2,880,000 3,720,000
Interpretation: The business is expected to achieve positive cash flow from the third
month of operation.
5.6 PROJECTED INCOME STATEMENT
Table 5.7: Projected Income Statement for the Year Ending 31st December 2025
ITEM AMOUNT (KSH)
Total Revenue 12,288,000
Less: Cost of Goods Sold (300,000)
Gross Profit 11,988,000
Less: Operating Expenses (2,640,000)
Net Operating Profit 9,348,000
Less: Tax (15%) (1,402,200)
NET PROFIT AFTER TAX 7,945,800
5.7 BREAK-EVEN ANALYSIS
Fixed Costs: KSh 220,000
Average Contribution Margin: 50%
(a) Gross Profit Percentage
11,988,000
Gross Profit %= ×100Gross Profit %=0.975 ×100=97.5 %
12,288,000
(b) Return on Equity (ROE)
7,945,800
ROE %= × 100ROE %=26.486 × 100=2,648.6 %
300,000
(c) Return on Investment (ROI)
7,945,800
ROI %= ×100ROI %=17.657 ×100=1,765.7 %
450,000
5.8 PROJECTED BALANCE SHEET (AS AT 31ST DECEMBER 2025)
ASSETS KSH LIABILITIES & OWNER’S EQUITY KSH
CURRENT CURRENT LIABILITIES
ASSETS
Cash at Bank 1,200,000 Accounts Payable 60,000
Cash on Hand 200,000 Short-term Loan 50,000
Debtors 100,000 Accrued Expenses 20,000
Inventory 40,000
Total Current Assets 1,540,000 Total Current Liabilities 130,000
FIXED ASSETS OWNER’S EQUITY
Equipment & Tools 240,000 Owner’s Capital 300,000
Furniture & Fixtures 25,000 Retained Earnings 1,485,000
Renovation & Setup 60,000
Motorbike 50,000
Total Fixed Assets 375,000 Total Equity 1,785,000
TOTAL ASSETS 1,915,000 TOTAL LIABILITIES & EQUITY 1,915,000
5.9 FINANCIAL RATIOS
Table 5.9: Key Financial Ratios
Ratio Formula Result Interpretation
Net Profit Margin Net Profit ÷ Revenue × 100 64.7% High profitability
Current Ratio Current Assets ÷ Current Liabilities 2.5:1 Excellent liquidity
Debt to Equity Ratio Total Liabilities ÷ Equity 0.07 Low debt exposure
ROI Net Profit ÷ Capital × 100 1765% Exceptional return