BUSINESS PLAN

ABBY’S COSMETIC

INSTITUTE: ELDORET TECHNICAL TRAINING INSTITUTE

NAME: ABIGAEL CHEPKOSGEI

INDEX NO:

COUSRE: CERTIFICATE IN BEAUTY AND HAIRDRESSING

SUPERVISOR: MADAM BRENDA ETOLE

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL PARTIAL

FULFILMENT FOR AWARD OF CERTIFICATE IN BEAUTY

AND HAIRDRESSING

SERIES: JULY, 2021

 DECLARATION
I Abigael chepkosgei declare that this plan is an original product of my personal work in the
field of my study. No one else has ever presented it for any academic award in any other
institution.

NAME: ABIGAEL CHEPKOSGEI

INDEX NO:

Signature................................................ Date.................................................

Declaration by the supervisor

This plan has been submitted for examination purpose with my approval as Eldoret Technical
Training Institute supervisor.

SUPERVISOR: MADAM BRENDA ETOLE

Signature............................................. Date.....................................
 DEDICATION

I dedicate this business plan to my aunt, my brothers and sister who assisted me morally and

financially throughout my study.

 ACKNOWLEDGEMENT
My acknowledgement goes to my supervisor Madam Brenda Etole and the entire staff of
Eldoret Technical Training Institute who assisted me in one way or the other throughout
preparation of this business plan.
 TABLE OF CONTENT
ABBY’S COSMETIC................................................................................................................1
DECLARATION........................................................................................................................i
DEDICATION...........................................................................................................................ii
ACKNOWLEDGEMENT........................................................................................................iii
TABLE OF CONTENT............................................................................................................iv
CHAPTER ONE.......................................................................................................................1
1.0 EXECUTIVE SUMMARY..................................................................................................1
1.1 BUSINESS DESCRIPTION................................................................................................1
1.2 MARKETING PLAN..........................................................................................................1
1.3 ORGANISATION AND MANAGEMENT PLAN.............................................................1
1.4 PRODUCTION AND OPERATION PLAN.......................................................................2
1.5 FINANCIAL PLAN.............................................................................................................2
CHAPTER TWO.......................................................................................................................3
2.0 BUSINESS DESCRIPTION................................................................................................3
2.1. BUSINESS IDENTITY......................................................................................................3
2.2 BUSINESS LOCATION.....................................................................................................3
2.3 OWNERS STRUCTURE.....................................................................................................4
2.4 NATURE OF THE BUSINESS...........................................................................................4
2.5. VIABILITY OF THE BUSINESS......................................................................................4
2.6 THE INDUSTRY.................................................................................................................5
2.7 BUSINESS OBJECTIVES..................................................................................................5
2.8 ENTRY AND GROWTH STRATEGY..............................................................................5
2.9 VISIBILITY AND ACCESS...............................................................................................6
CHAPTER THREE.................................................................................................................7
2.0 MARKETING PLAN..........................................................................................................7
2.1 COMPETITION...................................................................................................................7
2.2 COPE UP STRATEGIES....................................................................................................9
2.3 PRICING STRATEGIES....................................................................................................9
2.4 SALES TACTICS, ADVERTISING AND PROMOTION..............................................10
CHAPTER FOUR....................................................................................................................11
4.0 ORGANIZATIONAL AND MANAGEMENT PLAN.....................................................11
4.1 MANAGEMENT TEAM...................................................................................................11
4.2 ORGANISATIONAL STRUCTURE................................................................................11
Key Management Personnel Duties and qualificatons.............................................................12
a) The Manager.....................................................................................................................12
4.2. RECRUITMENT AND TRAINING.............................................................................13
4.2.1 Employee performance appraisal and promotion methods.............................................14
4.2.2. Termination of employment...........................................................................................14
4.2. RENUMERATION...........................................................................................................15
4.4 OTHER SUPPORT SERVICES.......................................................................................15
4.5 LICENCES AND PERMITS.............................................................................................15
CHAPTER FIVE......................................................................................................................16
5.0 PRODUCTION AND OPERATION PLAN.....................................................................16
5.1 OPERATION FACILITIES...............................................................................................16
5.2 EQUIPMENTS..................................................................................................................16
5.3 MAINTENANCE AND REPAIR......................................................................................17
5.4 PREMISE LAYOUT.........................................................................................................17
5.5 PRODUCTION STRATEGY............................................................................................17
The table below shows the monthly material requirement......................................................17
Monthly Labour requirement...................................................................................................18
5.6 PRODUCTION PROCESS................................................................................................19
5.7 REGULATIONS AFFECTING OPERATIONS...............................................................19
CHAPTER SIX........................................................................................................................20
5.0 Financial Plan.....................................................................................................................20
5.2 Pro-forma balance sheet.....................................................................................................21
5.3 Working capital..................................................................................................................21
ABBY’S COSMETIC BUSINESS PLANED CASH FLOW FOR THE YEAR 2022...........22
ABBY’S COSMETIC BUSINESS PLANED CASH FLOW FOR THE YEAR 2023...........23
ABBY’S COSMETIC BUSINESS PLANED CASH FLOW FOR THE YEAR 2024...........24
5.4 Cash flow business planion for the year 2022....................................................................25
5.5 Pro-forma income statement (Trading profit & loss account)...........................................26
5.5.1 ABBY’S COSMETIC Pro –forma Income Statement for the Ending 31st Dec 2022.....26
5.5.2 ABBY’S COSMETIC Pro –forma Income Statement for the Ending 31st Dec 2023.....27
5.5.3 Abby’s Cosmetic Pro –forma Income Statement for the Ending 31st Dec 2024.............28
5.6 Break even analysis............................................................................................................29
5.5.1 Gross profit......................................................................................................................29
5.5.2 The Gross Margin...........................................................................................................29
5.5.3 An Illustration of Total Overheads/Expenditure for Start Up.........................................29
5.5.4 Breakeven Level..............................................................................................................30
5.7 Desired Financing..............................................................................................................30
5.8 Profitability Ratios.............................................................................................................30
5.8.1 Gross Profit.....................................................................................................................30
5.8.2 Net Profit Ratio (After Taxation)..................................................................................30
5.8.3 Return On Investment.....................................................................................................31
APPENDICES..........................................................................................................................32
APPENDIX 3...........................................................................................................................33
APPENDIX 4...........................................................................................................................34
MAP SHOWING PREMISE LAYOUT..................................................................................34
EXECUTIVE SUMMARY.
1.1 BUSINESS DESCRIPTION
Abby’s Cosmetic is the name of the business which deals with all salon services including hair
dressing, blow drying etc services.

It will be located in Eldoret town. This business is entirely a sole proprietorship form of business
and it will start with a capital investment of five hundred and fifty thousand shillings (shs.
350,000).

1.2 MARKETING PLAN

The firm aims at maximizing profit through, intensive service delivery. The firm’s potential
customers consist of institutions both urban and rural who need printed examinations and copies.
The entire public will be constituted out potential customers because of the need of hair beauty
and hair cleaning e.t.c.

It will control a sizeable market share than the competitors and this is achieved by quality
services and advertisement.

1.3 ORGANISATION AND MANAGEMENT PLAN

The proprietor of the business will be the manager and will control all the acivities of the firm.
The firm will employ a competent and productive labour force consisting of hair dressing ladies,
hair dressing assitance, a marketing person and a supervisor incharge of all operations.

1.4 PRODUCTION AND OPERATION PLAN

ABBY’S COSMETIC will offer its quality services which includes; Hair dressing and hair
cleaning sevices. It will attain and retain market leadership by provision of quick and quality
services. Use of efficient and modern equipments and incoperaytion of information technology
will be enhanced to ensure a smooth operation

1.5 FINANCIAL PLAN

THE TABLE SHOWING THE FINANCIAL PLAN FOR ABBY’S COSMETIC

PARTICULARS 2022 2023 2024

Working Capital 332,000 378,000 1,018,300

Break even point 699,175 930,967 1,010,403

Pre-operational cost 342,000 - -

Net profit 484,280 435,465 439,695

Variable cost 656,200 978,750 1,210,850

Return on equity 277% 215 64%

Return on investment 262% 165% 172%

 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

The proposed business will be a sole proprietorship, it will engage in Hair dressing and hair
cleaning services etc. The business will produce the quality services compared to other business.

1.1. BUSINESS IDENTITY

ABBY’S COSMETIC is the name of the proposed business which is derived from the name
owners name Hair and Salon. It will be registered under the business act.

The address of the business will be:

ABBY’S COSMETIC

P.O. BOX 267

ELDORET

TELEPHONE: 0712333333

1.2 BUSINESS LOCATION

The business will be located in Eldoret town. The town will be suitable because of: -

a) High population
b) Many colleges and institutions within the town
c) It is a cosmopolitant town
d) It has high number of working class citizens

Research is being carried out to establish specific location of the business within the town as it is
being governed by availability.
1.3 OWNERS STRUCTURE
ABBY’S COSMETIC being a new business will be a sole proprietor kind of business managed

by Sharon assisted by an assistant manager who is above the operators.

The business will start as soon as the manager has gathered all the information from relevant
sources and when the initial capital will be fully at hand.

1.4 NATURE OF THE BUSINESS

ABBY’S COSMETIC will major on the following activities: Quality hair dressing, Blow-drying
and Washing

The principal customers will be the overall population of the town who require the above named
services.

Other customers will be the schools i.e secondary schools, colleges and working class clients.
These institutions will be reached by paying visits, emphasizing and persuading them to become
our customers by telling the range and quality of our services.

The operating hours will conform with the activities of the town. It will operate at all busy hours
since it is a profit oriented kind of business. It will probably be starting at 8.00a.m. and closing at
9.00p.m.

1.5. VIABILITY OF THE BUSINESS

Many people do much Hair dressing and hair cleaning services within the town which provides a
ready market to my business.

Also having been a volunteer community worker in the town, I realized that women and ladies
like having their hair done as they shop for clothes at one stall shop. The business will positively
contribute to technological advancement and improving the living standards of people through
designing of modern hair styles and creation of employment respectively.
1.6 THE INDUSTRY.
Abby’s Cosmetic is majorly a service industry intending to provide quality services to the general
public.

Its location within Eldoret town will offer easy access and visibility to all persons. The firm will
provide its best through the use of modern and high speed Hair dressing and hair cleaning
services so as to competitively engage in special and quality servicing.

Through enough capital and adequate managerial skills, the firm will be a large scale services
provider.

1.7 BUSINESS OBJECTIVES

The main objective of Abby’s Cosmetic will be to gain and retain market leadership in quality
hair dressing, and other related services within the town. To reach out to schools especially
primary and secondary schools to become out clients by providing them with quality printed
exams and other articles.

To have fully trained operators in various sections unlike our competitors.

1.8 ENTRY AND GROWTH STRATEGY

The ABBY’S COSMETIC has concluded that most hair dressing firms are affected by quality
and services provided following the research carried out.

The business will enter the market through advertisements i.e. use of posters and leaflets. It will
also find a specific and suitable location for easy

1.9 VISIBILITY AND ACCESS

Quick services will be provided through the use of modern equipments and efficient and skillful
operators. Emphasis on the importance of our services over other firms will also be among out
growth strategies.
 CHAPTER TWO

2.0 MARKETING PLAN.

2.1 CUSTOMERS

Abby’s Cosmetic will mainly deals with urban inhabitants will be students from various
institutions and workers in various offices.

The demand for our goods i.e. hair dressing, washing, in their day to day operations.

Harmonization of prices will be done to attract and retain customers while taking care of the
profits. It will also obtain long term clients from rural and urban schools who need beauty
activities and services. They general public form part of our customers. Since they require our
services. By offering affordable and quality service, the market share of the business will increase
to meet the growing demand

2.2 Market share

The target market population with the area is estimated to be 40,000 people of whom the
proposed business is expected to serve about 30% of the total population. Currently the other two
Abby’s Cosmetic are serving the people within Eldoret town .These two are the major
competitors .The target group including workshop dealers, institution and building the
construction firms. The proposed business intend to capture 60% of entire population in a period
of two years of operation .The market share percentage varies among enterprises dealing with
Abby’s Cosmetic goods within the locality Zipora, Ronfil and Abby’s Cosmetic market shares in
relative rations is as shown respectively 4:3:3

2.1.1 The percentage ratios are as show in the Pie-chart below.

 Zipora
30%
40%
Ronfil
Best In
Cosmetic

30%
4th Qtr

Zipora
20%

Ronfil
60% 20%
Best In Cosmetic

The change in the market share after two years of operation will be due to the growth strategy
and sales tactics implied by Abby’s Cosmetic against competitors .This competitors will include
quality products and services, advertising and promotional programs and marketing strategies .

2.1 COMPETITION
The potential competitors will be well established, well located and quality hair dressing firms.
The business will determine as stated earlier a suitable location within the town which will be an
advantage to it over other competitors.

A part from ensuring quality hair dressing output, the firm will try as much as possible to
harmonies the prices to attract more customers and in the other hand avoiding losses.

A clear and visible display of the cost of our services will be an advantage over other firms. The
firm will offer quantity discounts to hair dressing in bulk thus attracting and retaining
customers.
The strength and weakness comparison table

Name of Advertisement Quality Customer Efficiency Location

enterprise relation
ZIPORAH’S 5 5 5 3 5
RONFIL 3 2 3 2 5
BETTA 1 2 4 5 4
KEY

1. Poor
2. Below average
3. Average
4. Good
5. Very good

2.2 COPE UP STRATEGIES

Through the ongoing research the firm will come up with new ways of improving the quality of
our services.

The firm shall ensure that every worker has operational skills obtained through training, seminars
and workshops

2.3 PRICING STRATEGIES

The pricing will be comprehensive since it will be dealing in hair dressing, other related services

and sell of cosmetics.

The following is the breakdown of the cost of our services

a) hair dressing – Sh. 600-1000 per person

b) Blow dry- 250-500 per person

2.4 SALES TACTICS, ADVERTISING AND PROMOTION

For smooth service delivery the following should be adhered to:
 a) Ensuring that the adevrtisement is well done before and after the start of the business.
This will mainly be done through the use of posters and leaflets.
b) Quick service delivery and good interpersonal relation during the time of providing the
sevices
c) Ensuring a less erraneous, quality and more appealing paper work is produced which
interun gives confidence to our customers in using our firm to meet their needs.
d) Offering discounts when hair dressing, and buying in bulk thus encouraging the
customers to frequently use our firm.
e) Clear and visible writings bearing the name, logo andother necessary information about
the firm shall be made.

To measure the effectiveness of advertisements the firm will realized increase in customers
number requiring the firms services and goods.
 CHAPTER THREE

3.0 ORGANIZATIONAL AND MANAGEMENT PLAN

3.1 MANAGEMENT TEAM

The success of the business depends upon management, the owner, will be the manager of the
business assisted by one supervisor. There will also be workers (operators) who will be under the
supervisor.

The management team will be having basic salary and annual increments in their salary. Below is
the organisation chart for the firm.

3.2 ORGANISATIONAL STRUCTURE

MANAGER

ASS. MANAGER

HAIR MARKETING
DRESSERS PERSONS
Key Management Personnel Duties and qualificatons
The firm will have only two key management personnel i.e. the manager and the supervisor.

a) The Manager
Duties

He will oversee the general operations of the firm. To countercheck all financial transactions
carried out. Issuing reports and notices on any changes in the firm.

Qualification

 Must be a Diploma holder

 Must be computer literate
 Must be having atleast 1 year experience.

b) Assistant Manager

Duties

 Delagate duties and responsibles to operators

 Counter check all the day to day operations
 Report any arisings to the manager

Qualification

 Diploma in human resource management

 Must be computer literate
 Must be able to speak good Kiswahili and English.

c) Operators

The firm will have a total of seven junior employees. These will include:

i) Hair dressing operators

They will be responsible for washing and hair dressing operations.

Qualification

 Diploma in Computer science or any other relevant course.

 1 year experience in a hair dressing business.

ii) Operators

They will be responsible for operations.

Qualification

 Diploma in beauty and cosmetics or any other relevant course

 Must be an experience operator.

iii) Marketing person

Since Beauty and cosmetics will be dealing in sale of cosmetics, the marketing person will be
required who will be responsible for the same.

Qualification

 Must have a minimum of C- in KCSE exam

 Must be computer literate

3.1. RECRUITMENT AND TRAINING

For the firm to obtain qualified person for these positions, it will advertise through placing or
posters at strategic places. Interview will be done in order to obtain qualified employees. Two
business advisors will be hired at any given time of the interview.
Annual training will be provided by the firm to two employees in order to advance on their skills.
Mannuals relating to hair dressing business will be provided and education will be done at
regular interval in the year.

3.1.1 Employee performance appraisal and promotion methods

The firm will motivate its workers through

a) Monetary reward – payment as a result of good performance in the executioon of specific

duties.
 b) Salaries will be paid in time
c) Job specification – this makes employees to specialise in their field leading to effective
and productive work.
d) Payment for overtime.

3.1.1. Termination of employment

Termination of employment will be done when:

a) There is unsatisfactory behaviour or work for example an employee who is constanly

late for work despite of warnings.
b) When an employee is caught stealing, harassing customers and lack of co-operation
with other workers.
c) When an employee mises the job for one week without notice.
d) When an exployee quits the job for his reasons.

3.2. RENUMERATION
Remuneration will be done in accordance with the labour law act (Cap 229) which states that the
staff will be paid on the last working day of every month, advance payments which does not
exceed one third of the total salary of an individual will be paid out but only on request by early
application.
The following is the breakdown of the firms remuneration
Job title No Monthly salary
Manager 1 20,000.00
Supervisor 1 12,000.00
hair dressing operation 2 8,000.00
operator 2 8,000.00
Marketing person 1 6,000.00
TOTAL 54,000.00

3.4 OTHER SUPPORT SERVICES

ABBY’S COSMETIC will obtain its support services from a professional advisor and bank. The
firms bank will be equity who will advice on the appropriate amount the firm will require at any
given stage a skilled accountant will be required by the firm who will be needed at the end of
every financial year.
3.5 LICENCES AND PERMITS
The firm will obtain a licence in order to safeguard its operations. It is to honour all the laws and
policies from the government.
 CHAPTER FOUR

4.0 PRODUCTION AND OPERATION PLAN

ABBY’S COSMETIC will provide its services in accordance with the following factors;

Quality: The hair dressing and other hair services will ensure quality by the modern and
efficient equipments.

Speed: Through the use of modern equipments with our skilled labour, the business will operate
fast and efficiently.

4.1 OPERATION FACILITIES

The business will require a premise of medium size with two rooms.

One room will be occupied hair dressing while the other room will be a room washing room

4.2 EQUIPMENTS
The following is a list of production facilities and their preferable cost.

Equipment Number Cost Total

dryers 2 70,000 140,000
Combs 2 20,000 40,000
machines 2 25,000 50,000
towels 1 5,000 5,000
basins 2 3,000 6,000
cutex 1 50,000 50,000
files 1 12,000 12,000
TOTAL 303,000

4.3 MAINTENANCE AND REPAIR

Equipments will not need regular maintenance but at least after every six months, breakdown in

machines and dryers and other equipments will be checked at any time a problem occurs.
4.4 PREMISE LAYOUT
The premise will house the two departments under one roof. The layout wil be as shown in
appendix 3.

4.5 PRODUCTION STRATEGY

Since the business will be operating on normal basis purchases will be made weekly.

The table below shows the monthly material requirement

ITEM QUANTITY COST TOTAL
combs 20 reams 350 7,000
Towels 2packets 450 900
machines 10 200 2,000
Dryers 2 bundles 800 1600
TOTAL 11,500
Most of these materials will be procured from wholesalers in the town. Since the materials are
portable, transportation will be done on motor cycles. This will cost a maximum of one hundred
shillings.

Monthly Labour requirement

POST NO. OF BASIC SALARY TOTAL SALARY
EMPLOYEE
Manager 1 20,000 15,000
Supervisor 1 12,000 12,000
hair dressers 2 8,000 16,000
operator s 2 8,000 16,000
Marketing person 1 6,000 8,000
54,000 67,000

Monthly Production Expenses

ITEM COST (KSHS)

Salaries and wages 67,000
Materials 46,500
Advertisement 2,500
 Electricity 1,000
Transport 500
Maintainance and repairs 2,500
Telephone and postage 1,000
Rent 4,000
Licence 250
25,250

Monthly production cost

The monthly cost of services or production of the business are intended as follows:
All monthly production expenses are summed and total found which is Kshs. 25,250. These are
the cost incurred in buying materials and minor equipments..

4.6 PRODUCTION PROCESS

The management intends to work hard with relevant clients so as to delivery the quality goods
and services required. The stock of nail removers and comps will be ensured to avoid shortages.
The management will achieve smooth running of the business by ensuring that the staff and
manpower is available at all times.

Quick services will also be done of the business production process.

4.7 REGULATIONS AFFECTING OPERATIONS
Trade license
The firm wile be required to acquire business permits and licenses from the relevant authorities.
In addition the firm trademark will be registered by authorities.
Labour laws

The business will ensure minimum wage requirement and conducive working conditions.
 CHAPTER FIVE

5.0 Financial Plan

Management of cash – flows is very crucial part or rather very important in any organization,
which is aiming to make a profit. This calls for smooth running of the business operations and
measures the organization programmed so this drives the business to have well and defined
power.

The following sections are found in the financial plan.

i) Pre- operational costs.

ii) Pro – forma business planed cash flow.
iii) Capital requirements.
iv) Performa income statements.
v) Business planed balance sheet.
vi) Break even analysis.
vii) Desired financing.
viii) Proposed capitalization.
ix) Profitability ratios.
x) Return on investment ratios.

5.1 Pre-operational costs

The following expenditure will be incurred by the business before it starts or it become
operational.
ITEM AMOUNT (Kshs)
Business Registration 3,500
License 1,000
Electricity Software Installation 7,000
Telephone Installation 3,000
TOTAL 20,000
5.2 Pro-forma balance sheet
5.3 Working capital
The firm looks forward to have capital requirements as shown below:-

ITEM YEAR 1 YEAR 2 YEAR 3

Stock at start 70,000 140,000 280,000

Stock at End 15,000 14,000 105,000

Total 85,000 154,000 385,000

ABBY’S COSMETIC BUSINESS PLANED CASH FLOW FOR THE YEAR 2022
JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
Bal b/f - 47935 507000 536250 564850 591450 61780 645200 671750 629960 657510 68460 6585780
0
Cash sales 70000 70000 70000 70000 70000 70000 70000 70000 70000 70000 70000 70000 840000
Owners 25000 - - - - - - - - - - - 250000
Equity 0
Loan 20000 - - - - - - - - - - 200000
0
Total cash 52000 54935 577000 606250 634850 661450 687850 715200 741750 699960 727510 754610 787580
flow 0 0
Cash 14000 16000 14500 15000 17000 15650 16500 17000 15540 16000 16050 15000 188240
purchases
Salaries 21800 21800 21800 21800 21800 21800 21800 21800 21800 21800 21800 21800 261600
Telephone 1200 1100 800 1000 1000 600 900 1200 1100 1100 1300 1200 12500
Water 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 15600
Electricity 1000 800 1000 950 950 1100 800 800 700 900 1100 150 11250
Transport 400 400 400 400 400 400 400 400 400 400 400 400 4800
Advertising 600 600 600 600 600 600 600 600 600 600 600 600 7200
Bank 150 150 150 150 150 150 150 150 150 150 150 150 1800
Maintenanc - - - - - 400 - - - - - 400 800
e
Interest on 200 200 200 200 200 200 200 200 200 200 200 200 2400
loan
License - - - - - 1800 - - - - - 1800 3600
renewal
Total cash 40650 42350 40750 41400 43400 43600 42650 43450 41790 42450 42900 44000 509390
outflow
Bal c/f 47935 50700 536250 564850 591450 617850 645200 671750 629960 657510 684610 710610 7296390
0 0
Cumulative 47935 98635 104325 110110 115630 120930 126305 131695 130171 128747 134212 139522 1388217
cash flow 0 0 0 0 0 0 0 0 0 0 0 0 0
ABBY’S COSMETIC BUSINESS PLANED CASH FLOW FOR THE YEAR 2023
JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
47935
Bal b/f - 0 507000 536250 564850 591450 616050 643400 669950 698160 725710 752810 6783980
Cash sales 70000 70000 70000 70000 70000 70000 70000 70000 70000 70000 70000 70000 840000
Owners 25000
Equity 0 - - - - - - - - - - - 250000
20000
Loan 0 - - - - - - - - - - 200000
Total cash 52000 54935
flow 0 0 577000 606250 634850 661450 686050 713400 739950 768160 795710 822810 8074980
Cash
purchases 14000 16000 14500 15000 17000 15650 16500 17000 15540 16000 16050 15000 188240
Salaries 21800 21800 21800 21800 21800 21800 21800 21800 21800 21800 21800 21800 261600
Telephone 1200 1100 800 1000 1000 600 900 1200 1100 1100 1300 1200 12500
Water 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 15600
Electricity 1000 800 1000 950 950 1100 800 800 700 900 1100 150 11250
Transport 400 400 400 400 400 400 400 400 400 400 400 400 4800
Advertising 600 600 600 600 600 600 600 600 600 600 600 600 7200
Bank 150 150 150 150 150 150 150 150 150 150 150 150 1800
Maintenanc
e - - - - - 1800 - - - - - 1800 3600
Interest on
loan 200 200 200 200 200 200 200 200 200 200 200 200 2400
License
renewal - - - - - 1800 - - - - - 1800 3600
Total cash
outflow 40650 42350 40750 41400 43400 45400 42650 43450 41790 42450 42900 43600 510790
47935 50700
Bal c/f 0 0 536250 564850 591450 616050 633400 669950 698160 725710 752810 779210 7564190
Cumulative 47935 98635 104325 110110 115630 120750 125945 131335 136811 142387 147852 153202 1434917
cash flow 0 0 0 0 0 0 0 0 0 0 0 4 0
 ABBY’S COSMETIC BUSINESS PLANED CASH FLOW FOR THE YEAR 2024

PARTICULAR JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTAL
S
Cash Marketing
Beginning cash 10786 11129 11877 12272
862550 900650 963950 993750 1013000 1031750 00 00 50 00 1286850 1328300 12987250
Marketing 21500 21600 22200
200000 205000 206000 208000 210000 212000 0 0 22000 0 224000 225000 2563000
Debtors 10000 30000 15000 25000 17000 23000 50000 70000 10000 30000 5000 4000 289000
Total cash 13436 13989 14177 14792
inflow 1072550 1135650 1184950 1226750 124000 1266750 00 00 50 00 1515850 1557300 15839250
Cash outflow
Purchases 83000 84000 84000 86000 90000 90000 92000 93000 93000 94000 95000 95000 1079000
Creditors 10000 5000 20000 40000 30000 10000 50000 30000 15000 15000 10000 5000 240000
Salaries &
wages 67000 67000 67000 67000 67000 67000 67000 67000 67000 67000 67000 67000 804000
Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000
Advertisement 2500 2800 3000 3000 3000 2800 2500 2600 2700 2500 2600 2800 32800
Electricity 600 550 500 650 700 750 800 700 750 750 850 900 8500
Loan repayment 5000 5000 5000 5000 5000 5000 5000 5000 40000
Loan interest 1000 1000 1000 1000 1000 1000 1000 1000 8000
Bank changes 300 300 300 300 300 300 300 300 300 300 300 300 3600
Telephone 1200 1200 1100 1000 1000 950 1100 1100 1200 1200 950 800 12800
Maintenance 2200 2000 2200 2300 2500 2600 2700 2000 2200 3000 2500 3000 29200
Transport 600 650 600 700 750 750 800 850 900 800 850 800 9050
Miscellaneous 3500 3200 2500 2800 3000 3000 3500 3600 3500 3800 3500 3600 39500
Total outflow 23070 21115 19055 19235
171900 171700 191200 213750 208250 188150 0 0 0 0 187550 183200 2340450
Net Cash 11129 11877 12272 12868
900650 963950 993750 1013000 1031750 1078600 00 50 00 50 1328300 1374100 13498800
5.4 Cash flow business planion for the year 2022
ABBY’S COSMETIC BUSINESS PLANED CASH FLOW FOR THE YEAR 2022
1st Quarter 2nd Quarter TOTAL
Bal b/f 974551 1077827 2052378
Cash sales 70000 70000 140,000
Owners Equity 41667 - 41667
Loan 33334 - 33334
Total Cash Flow 1119552 1147827 2267378
Cash Purchases 15358 16015 31373
Salaries 21800 21800 43600
Telephone 950 1134 2084
Water 1300 1300 2600
Electricity 967 909 1876
Advertising 600 600 1200
Transport 400 400 800
Bank 150 150 300
Maintenance - 200 200
Interest on Loan 200 200 400
Total cash out flow 41725 41408 83,133
Bal c/f 1,077,827 1,106,419 2,184,246
Cumulative Cash Flow 2,052,378 2,184,246 4,236,624

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5.5 Pro-forma income statement (Trading profit & loss account)
This document helps the business to discover if the business is operating at a loss or profit at the end of
trading period.

5.4.1 ABBY’S COSMETIC Pro –forma Income Statement for the Ending 31st Dec 2022
ITEM AMOUNT AMOUNT
Sales 960,000
Less Direct Costs
Purchases 188,240
Wages (Indirect Labour) 40,000
Total Direct Costs (288,240)
Gross Profit 731,760
Less Expense
Salaries 260,500
Telephone 12000
Water Bill 15000
Electricity 11,250
Advertisement 7,200
Transport 5000
Maintenance 8,400
Interest on loan 800
License Renewal 2,400
Total Experience (322,550)
Net Profit before Tax (409,210)
Less Tax Payable (30%) (122,763)
Net profit After Tax 286,447
Balance Carried Forward 286,447

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5.4.2 ABBY’S COSMETIC Pro –forma Income Statement for the Ending 31st Dec 2023
ITEM AMOUNT AMOUNT
Sales 1,000,000
Less Direct Costs
Purchases 350,000
Wages (Indirect Labour) 30,000
Total Direct Costs (380,000)
Gross Profit 620,000
Less Expense
Salaries 261,000
Telephone 12,000
Water Bill 16,000
Electricity 12,000
Advertisement 3,500
Transport 10,000
Maintenance 8,750
Interest on loan 2,400
License Renewal 3,600
Total Experience (329,850)
Net Profit before Tax (290,150)
Less Tax Payable (30%) (87,045)
Net profit After Tax 203,105
Balance Carried Forward 203,105

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5.4.3 Abby’s Cosmetic Pro –forma Income Statement for the Ending 31st Dec 2024
ITEM AMOUNT AMOUNT
Sales 1,500,000
Less Direct Costs
Purchases 400,000
Wages (Indirect Labour) 20,000
Total Direct Costs (420,000)
Gross Profit 1,080,000
Less Expense
Salaries 350,000
Telephone 13,200
Water Bill 18,000
Electricity 12,250
Advertisement 2,800
Transport 12,250
Maintenance 20,000
License Renewal
Total Experience (432,350)
Net Profit before Tax (647,650)
Less Tax Payable (30%) (194,295)
Net profit After Tax 453,355
Balance Carried Forward 453,000

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5.6 Break even analysis
This term defines an act where revenue and expenditure is equal to the total cost. That is, the situation that
gives the firm neither profit nor loss. This is a formula used to study the relationship on cost volume
(variables, fixed assets, costs and revenue) at different levels of production. It is used to guide and format
approach for planning and analysis.

5.5.1 Gross profit

Amount (kshs) Amount (kshs)
Sales
Less Direct Costs
Purchases 188,240
Wages 40,000
Total Direct Costs (288,240)
Gross profit 731,760
5.5.2 The Gross Margin
G.M= Gross Profit
Sales
=731,760x100

960,000

=75.2%

5.5.3 An Illustration of Total Overheads/Expenditure for Start Up

ITEMS AMOUNT (kshs)

Salaries 200,000

Telephone Water Bills 12,500

Advertisement 15,000

Electricity Bill 7,200

Transport 11,250

Interest on Loan 2,400

Maintenance 800

License 3,000

TOTAL 256,950

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5.5.4 Breakeven Level
=Overheads/Expenses x100
Gross Profit Margin

=256,950x100
75.2

5.7 Desired Financing

ITEM AMOUNT
Owners Equity 150,000
Loan 100,000
Total 250,000

5.8 Profitability Ratios

This shows the enterprise market in relation to sales made in every year.

5.8.1 Gross Profit

= Gross Profitx100
Sales

Year1 =731,760x100
960,000 =75.2%

Year2 = 620,000x100
1,000,000 =62%

Year3 =1,080,000x100
1,500,000 =72%

5.8.2 Net Profit Ratio (After Taxation)

= Net Profit Tax x 100
Owner’s Equity (Capital Introduced).

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Year 1 = 286,447 x 100
250,000
= 113.58%

Year 2 = 203,105 x 100

250,000
=81.24%

Year 3 = 453,335 x 100

250,000
=181.34%

5.8.3 Return On Investment

= Net Profit after Tax + Interest x 100
Total Investment

Year 1 = 287,247 x 100

250,000
=113.9%

Year 2 = 205,505 x 100

250,000
= 81.2%

Year 3 = 453,355 x 100

250,000
=181.34

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APPENDICES
Appendix 1
Location Map

Eldoret Town

Best in Cosmetic Eldoret Polytechnic

KAPSABET

Eldoret Polytechnic

Junction To Kisumu Ndogo

KISUMU

Junction to Kona Mbaya

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APPENDIX 3
BUSINES SIGN POST

HAIR SALON

 Blaiting
 Blow Drying
 Washing

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APPENDIX 4

MAP SHOWING PREMISE LAYOUT

BLAITING ROOM

Washing and shaving room

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