ADIE'S WELDING AND FABRICATION

P.O BOX 194

SONDU

KENYA

MOBILE: 0717380360

EMAIL: [email protected]

DOCUMENT NAME: BUSINESS PLAN

COURSE CODE:

NAME OF PRESENTER: ONYANGO SILAS ADIE

INDEX NUMBER:7411053601

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL

(KNEC) IN PARTIAL FULFILMENT FOR THE AWARD OF
CERTIFICATE IN MECHANICAL ENGINEERING (PRODUCTION
OPTION)

SUPERVISED BY:

DATE OF PRESENTATION:

CENTER NAME: THE KISUMU NATIONAL POLYTECHNIC

P.O BOX 143-40600

KISUMU

1
DECLARATION

I declare that this is my own work and it has never been written by any other student to The Kisumu
National Polytechnic Examination Board.

Candidate's name ONYANGO SILAS ADIE sign Date

Supervisor's names sign: Date

2
ACKNOWLEDGEMENT

I would wish to acknowledge my mum and dad Annah and Joshua for the financial support they gave me
during the preparation of this business plan.

I wish also to acknowledge my fellow students and my supervisor for the guidelines they gave that were
of great importance in preparing this business plan.

3
DEDICATION

I dedicate this business plan to my father, mum, brothers and friends.

4
TABLE OF CONTENT

Contents DECLARATION

...................................................................................................................................i

ACKNOWLEDGEMENT..........................................................................................ii

DEDICATION..........................................................................................................iii

TABLE OF CONTENT.............................................................................................iv

EXECUTIVE SUMMARY........................................................................................v

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

1.1. BUSINESS DESCRIPTION........................................................................2

1.1 THE SPONSOR.........................................................................................2

1.2 NATURE OF THE BUSINESS...................................................................3

1.3 THE INDUSTRY........................................................................................3

1.4 PRODUCT/ SERVICES............................................................................3

1.5 BUSINESS GOALS / OBJECTIVES.........................................................4

1.6 JUSTIFICATION OF BUSINESS OPPORTUNITY....................................4

1.7 ENTRY AND GROWTH STRATEGY.......................................................4

CHAPTER TWO......................................................................................................5

2.1 MARKETING PLAN................................................................................5

2.2 POTENTIAL CUSTOMERS.....................................................................5

2.3 COMPETITION.......................................................................................6

2.3. MARKET SHARE....................................................................................6

2.4 PRICING STRATEGY AND POLICY.......................................................6

2.5 SALES TACTICS..........................................................................................6

2.6 PROMOTIONAL METHODS.......................................................................7

5
 2.7 DISTRIBUTION STRATEGY........................................................................8

2.8 CUSTOMERS SERVICES.............................................................................8

CHAPTER THREE........................................................................................................8

3.1 ORGANIZATION AND MANAGEMENT PLAN.............................................9

3.2 ORGANIZATION STRUCTURE.....................................................................9

3.3 KEY MANAGEMENT PERSONEL.................................................................10

3.4 SUPPORT STAFFS........................................................................................11

3.5 RECRUITMENT TRAINING AND PROMOTION............................................11

3.6 REMUNERATION..........................................................................................11

3.7 LEGAL REQUIREMENTS..............................................................................13

3.8 SUPPORT SERVICES...................................................................................14

CHAPTER FOUR..........................................................................................................15

4.1 OPERATION/ PRODUCTION PLAN...........................................................16

4.2 PRODUCTION FACILITIES AND CAPACITY..............................................17

4.2.1 MACHINARY TOOLS AND EQUIPMENTS..................................................18

4.2.2 REPAIRS AND MANTAINANCE.................................................................19

4.2.3 LAYOUT OF BUSINESS PREMISES...........................................................20

4.3 PRODUCT / SERVICE DESIGN AND DEVELOPMENT...............................21

4.2.1 SERVICE DESIGN AND DEVELOPMENT....................................................22

4.2.2. QUALITY CONTROL....................................................................................23

4.3. PRODUCTION /OPERATION STRATEGY....................................................24

4.3.1 MATERIAL REQUIREMENTS.......................................................................24

4.3.2 LABOUR REQUIREMENTS...........................................................................24

4.3.3 PRODUCTION COST.....................................................................................25

6
 4.4. PRODUCTION PROCESS..............................................................................25

4.5. REGULATIONS AFFECTING PRODUCTION.................................................25

CHAPTER FIVE..............................................................................................................25.

5.1 FINANCIAL PLAN..........................................................................................26

5.2 PRE OPERATIONAL COST...........................................................................26

5.3 WORKING CAPITAL.......................................................................................27

5.4 PROJECTED CASH FLOW STATEMENT OF THE THREE YEARS................28

5.5 PROJECTED BALANCE SHEET.....................................................................29

7
EXECUTIVE SUMMARY

1.2. BUSINESS DESCRIPTION

The business name will be ADIE'S WELDING AND FABRICATION. It engaged in the production of a
variety of building equipment. The business will be a partnership situated in CHABERA center along
MATONGO road and KADONGO road. The profit will be shared a among us since it is a partnership
business. The production includes Doors, Windows and fabrication services for truck bodies.

1.3. MARKETING PLAN

The business will serve within the chabera market and neighboring areas and locations. The business
intend to have a fairly large market share of about 50% and the rest shared by other competitors feasibility
studies carried out, shows viability of the business. The goods and services will be offered to Atela

8
dispensary, Atela secondary school and other customers who will buy the products for their personal use.
The business will provide credit facilities to the customers.

1.4. The business will be managed by both of us due to knowledge and skills on business management. It
will be assisted by other three members of staff in a counting, directing and supervising the production to
be in high quality. The business will be licensed and health license for the smooth operation in the
production workshop.

1.5. FINANCIAL PLAN

The proposed business will require approximately ksh. 100, 000 as a fixed capital of which ksh. 40,000 as
a working capital. It will be from our saving account and from family share. The profit will be shared a
among us and it be also be deposited from KCB BANK for security and some emergency which may
occur in the production workshop.

9
CHAPTER ONE

1.1 DESCRIPTION

The proposed business will be unique in that it will have a complete line of welding and fabrication items,
it will be dealing mostly with materials like windows, doors, metal cabinets and fabrication services for
truck bodies among others, it will be a moderately priced welding

1.2 SPONSOR

The owner of the business is ONYANGO SILAS ADIE aged 23 years old, a Kenyan by birth. I started
my education 2002 and I sat for KCPE in 2012. I scored good marks then I proceeded to Secondary
school in 2013, I sat for KCSE in 2016, I am currently pursuing certificate in Mechanical Engineering at
The Kisumu National Polytechnic. The amount of the capital to be invested in the business is 100,000

1.3 NATURE OF THE BUSINESS

The business name will be ADIE'S WELDING AND FABRICATION; it will be located in Chabera
along MATONGO road. The contact and the address will be;

ADDRESS: CONTACT

ADIE'S WELDING AND FABRICATION: 0717380360

P.O BOX 194

SONDU

The form of the business is a sole proprietorship

1.4 THE INDUSTRY

10
The proposed business falls under WELDING and Fabrication. The size of firms in the industry varies for
there are some which are smaller, medium and large size depends on the capacity of an individual since
the location of the business has favored medium size firm, this enhances the proprietor to go for the
medium size business so as to suit the market. The business intends to apply modern technology provided
by the main available and machinery. The capital required for the entry in the business is approximately
ksh. 200, 0000 to meet the business requirements like legal requirements and enough stock

1.5 PRODUCT/ SERVICES

The main features of product offered to customers will be of good and accepted quality and at a fair
price .The business intends to offer best packaging products, after sales services to customers with the aim
of customers’ retention

1.6 BUSINESS GOALS / OBJECTIVES

The overall objective of the business will be to maximize sales so as to be able to achieve high profit
and focus on customers services so as to attract many customers

1.6.1 Short-term goals

 To employ skilled workers in order to boost the sales volume and properly address

 To expand the number of premises to enable smooth running of the business

 Aim to meet high demand of products by people from around

1.6.2 Long-term goals

 .To increase the sales volume

 . To offer a good transport system

 Improve living standard of people

 To create more employment opportunities to people

1.7 JUSTIFICATION OF BUSINESS OPPORTUNITY

1.7.1 Personal factors

Having acquired technical skills at The Kisumu National Polytechnic and business experience acquired
in the family business Enterprise for a period of time this will enable me to exploit the opportunity very
well

1.7.2 Environmental factors

11
 Availability of market which has cost the high demand of the products to the customers

Due to favorable government regulations within the area which encouraged me to start the business

1.8 ENTRY AND GROWTH STRATEGY

ADIE'S WELDING AND FABRICATION will use the following advertising methods;

1.8.1 ENTRY

Print media -the business will print the some brochures with details of the business and

give out to people

Social media-this will create a good platform for both brand awareness and business promotion

1.8.2 GROWTH

First I will ensure there is steady flow of products

They should be good product at a friendly price so as more people to be able to afford them and even
enjoy using them.

12
CHAPTER TWO.

2.0 MARKETING PLAN.

The larger population will work to the advantage of the business.

The business intends to have a fairly large market share of about 50% and the rest shared by other
competitors feasibility studies carried out shows viability of the business.

To ascertain this market share in future, the business intends to ensure that quality products are offered.

2.1.1 POTENTIAL CUSTOMERS

The targeted customer comprises of 60% real estate within Chabera town and 40% other customers.

The goods and services will be offered to the institutions like Matongo Secondary school, Atela
secondary school, and Atela dispensary besides other customers who buy the products for their personal
use. The business will provide credit facilities to the customers.

2.2 COMPETITION

The business in the market is unique but there are some little competition for the already existing related
business from the estate and other towns which include

13
JAKADONGO WELDING

ASEMBO WELDING

OBURU WELDING

The competitors have got their weaknesses and strengths as follows

COMPETITORS STRENGTH WEAKNESS

OBURU WELDING -Good pricing strategy -Unqualified staff

-Quality products -Poor location

JAKADONGO WELDING AND -large number of shops -Poor management

FABRICATION
-High prices

ASEMBO WELDING AND -Qualified staff -Few shops

FABRICATION
-Good location -Poor pricing strategy

-Good management

-Fair prices

2.3. MARKET SHARE

The size of the market will be determined by the population around the market. When the population is
low, the market will be small while when the population is high, the probability of getting more and new
customers is high.

2.4 PRICING STRATEGY AND POLICY

The proposed business will provide fixed prices for the goods which will be less than that of the
competitors. The business will offer credit to loyal customers to whom they know the credit will be paid
after the given period. The business will also offer discounts to customers who buy in large quantities.

The business will offer after sales services like warrant of one year and also transportation if the
customers buy in bulk.

The following methods will be used to set the prices.

14
1) Going rate pricing

The prices will be set in relation to competitors’ price with lesser attention paid to the cost of the
provision of the service

2) Market penetration pricing

A low initial price will be set in order to reach the mass market and to attract as many customers as
possible

3) Target returns pricing

Prices that yield the targeted rate of return on investment are charged.

2.5 SALES TACTICS

The tactics adopted to make great sales will help keep on track .Some of the methods which will be used
are

1) Direct selling

To make direct sales, employees will inform clients on what we offer. This is the reason why the business
should have good inter personal and communication skills.

Employees will be motivated to focus their attention on customers. Creating a strong business image to
make customers believe in services being delivered and encouraging employees to communicate
positively to clients

2) Indirect selling

Aimed at favorably presenting organization's services with the aim of making customers by it's features in
news. Story in the media at no cost. This enhances the business image which may make attract more
potential buyers.

2.6 ADVERTISING AND PROMOTION STRATEGY

2.6.1 Advertising programmes

ADIE'S WELDING AND FABRICATION hardware will use the following methods of advertisement

1) print media-the business will print some brochures with details of the business and give out to people.

2) Social media-will create a good platform for both brand awareness and business promotion.

2.6.2 Promotional programmes

1) Discounts-offered to customers to enhance customer retention

2) Gifts-The business will also offer gifts to entice customers to come in large numbers.

15
3) Lowering prices- the prices will be lowered in bits in order to be fair with customers. This will
enable an increase of customers in the business.

2.7 DISTRIBUTION STRATEGY

Mostly clients will visit the business premises however, some clients may ask for the services at the
comfort of their homes. Consequently, they will be charged for the transportation since it's less costly and
later on as the business grows it will be able to purchase it's own pick-up to help in the outside service.

Manufacturer Agent consumer

Manufacturer wholesaler retailer agent consumer

16
CHAPTER THREE

3.1 ORGANIZATION AND MANAGEMENT PLAN.

3.2Organizational structure

The proprietor Will be the director of the business.

DIRECTOR

MANAGER

SECRETARY

SUPERVISOR

ACCOUNTANT

SECURITY

Other staff include; loaders, drivers and cooks.

3.3 KEY MANAGEMENT PERSONNEL

TITLE QUALIFICATIONS DUTIES AND

RESPONSIBILITIES

Director 3 years’ experience coordinating the operations of the

business

Motivating other employees

Supervisor Diploma in business management

1 year of experience

17
Account Preparing pay slips to employees

Diploma in accountancy Preparing business budget

3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1Recruitment

The recruitment of all the employees who are to be employees will be done through subjecting to the
business recruitment panel and allowing them to know the objective of the business.

The applicant will be shortlisted and afterwards an interview will be conducted to get the one who best
suit the opportunity.

3.4.2 Training

There will be Training offered to the employees to equip them with more skills so as to be able to achieve
greater success. This will be offered free of charge.

3.4.2 Promotion

Every promotion of an employee will be based on the performance of employees. One will be promoted
when he/she makes an improvement in the business that will lead to making of profits

3.5 RENUMERATION AND INCENTIVES

Remuneration

This is the compensation offered to employees for their services and it will be made monthly at the agreed
rates as shown below.

Title Number Monthly pay(kshs) Salary per year(kshs)

Director 1 40,000 480,000

Accountant 1 30,000 360,000

Supervisor 1 25,000 300,000

Secretary 1 20,000 240,000

Security 2 10,000 40,000

Loaders 2 9,500 228,000

Drivers 1 8,000 96,000

Cooks 2 5,000 20,000

18
Total 12 147, 500 1,464,000

3.6. LEGAL REQUIREMENTS

The proposed business will abide by the requirement of the country when starting a business

3.6.1 License

The business will pay for the trending license to make it legal. The trending license will be obtained from
the country municipal council which will cost 6000ksh.This will prevent disturbance from the tax
collectors

3.6.2 PERMITS

They protect the public health, before commencement of the business; it will be required by law to have a
trade license. The trade license will be renewed annually

3.7 SUPPORT SERVICES.

The business will carry out its operation with the help of support services which will make the business
run effectively.

These services include;

1) Banking services

The savings will be deposited KCB bank account for future use for emergency since having cash can be
risky to the growth of the business.

Some of the advantages of having a bank account include; earning interest, security, overdrafts.

2) Insurance services

The business will be insured by IPA insurance company against fire, theft and it will cost 9,000 per
month.

19
 CHAPTER FOUR

4.1 OPERATION / PRODUCTION PLAN.

This will give the direction and guidelines of the operations of the business in regards to the operation
objectives; it will also give the business a breakthrough on how the business would operate to help satisfy
the needs of the customers.

4.2 PRODUCTION FACILITIES AND CAPACITY.

20
The following facilities and equipment will be needed to ensure smooth running of the business;
computers, chairs, tables, receipt book, van, fire extinguishers, pens, files.

4.2.1 MACHINERY, TOOLS AND EQUIPMENTS.

ITEM DATE NUMBER COST(KSHs) INSTALLATION TOTAL

REQUIRED REQUIRED COST(KSHs) (KSHs)

Computer 1st Jan 2023 2 40,000 2,000 402,000

Fire 2nd Jan 2023 2 20,000 40,000

extinguishers

Welding 1st Jan 2023 10 80,000 1,000 801,000

machine

Trade license 1st Jan 2023 1 75000 75000

Insurance 1st Jan 2023 1 30000 30000

TOTAL COST 1,348, 000

4.2.2 REPAIRS AND MAINTAINANCE

ADIE'S WELDING AND FABRICATION will be doing repair and MAINTAINANCE in case of any
breakdown and routine maintenance getting spares from Obama enterprises a few meters away from the
premise.

4.2.3 LAY OUT OF BUSINESS PREMISE

Parking area. Workshops

Toilet Offices. Store

4.3 PRODUCT / SERVICE DESIGN AND DEVELOPMENT.

The dressing and the color of the products will depend on the customers' specification.

Some of the qualities the business would employ in its operation are;

Flexible cost, efficiency, simplicity and transparency to the customers.

The business will use computers in technology

SERVICE DESIGN AND DEVELOPMENT.

The business will offer services such as training to the customers on how to use the products. Such
qualities as simplicity, honesty and efficiency will be highly practiced in the business.

21
On delivery of goods, the business will use a van to deliver to the esteemed customers.

4.3.1 QUALITY CONTROL.

The business intends to achieve quality in its products by use of quality raw materials in production,
timely service and maintenance in machinery and equipment.

4.4 PRODUCTION / OPERATION STRATEGY.

The business will use raw materials like metal.

Skilled personnel will be employed to enable smooth running of the business.

4.4.1 MATERIAL REQUIREMENT

Item Quantity Unit cost Total

Z_angle 3/4 100 800 80,000

pieces

RHs1. 5×1/2×1.5 50 pieces 600 60,000

Paints 20 pales 1200 24,000

Welding rods 10 kgs 1000 10,000

Hoop irons 10 rolls 3000 30,000

Total 164,000

4.4.2 LABOUR REQUIREMENT

The firm will start with a capacity of 20 employees direct and indirect workers atleast will a certificate in
Mechanical Engineering and a certificate fabrication

No of direct workers × cost per hour × no of hours per month

15×150×264=594,000

No of indirect workers × cost per hour ×no of hours per month

5×100×33=16,500

Total cost of labour per month =594,000+16,500=610,500

610,500×30=18315000

22
4.4.3 PRODUCTION COST

Expenses Cost (kshs)

Material cost 400,000

Labour cost 34,000

Overhead cost 209,000

Total 643,000

OVERHEAD COST COST (Kshs)

Rent 20,000

Water 8,000

Electricity 20,000

License 75000

Repair and maintenance 10,000

Total 133,000

4.5 PRODUCTION PROCESS.

The processes of production will include;

Purchasing process, stores management, loading and unloading.

External factors that will affect the business operations include;

Political factors: such as payment of taxes, provision of licenses and business permits.

Economic factors: when there will be a boom, there will be compensation by adjusting the price match the
income level.

Technological factors: machinery will be provided to ensure quality services.

4.6 REGULATIONS AFFECTING PRODUCTION.

Government regulations that may affect the business will be;

Taxation

23
Health regulations; all public health requirements will be fully adhered to by the business.

Environmental regulations; the environment must be clean and no dumping of waste anyhow.

24
CHAPTER FIVE.

5.1 FINANCIAL PLAN.

5.2 PRE-OCCUPATIONAL COST.

Item Cost(kshs)

Machine, tools and equipment 1340000

Rent 6000

Transportation 200000

Legal fee 75000

Licensing 75000

Insurance 30000

Renovation of business premise 300000

Installation expenditure 40000

Total cost 1931000

5.3 WORKING CAPITAL.

25
Particulars 2023 2024 2025

CURRENT ASSETS

Stock 300000 500000 100000

Cash in hand 250000 350000 400000

Cash at bank 4500000 5000000 5500000

Debtors 700000 150000 100000

Total current assets 5750000 6000000 6500000

CURRENT
LIABILITIES

Loan 1000000 700000 500000

Creditors 450000 250000 180000

TOTAL LIABILITIES 1450000 950000 680000

Working capital 3930000 5050000 5820000

requirements

5.4 PROJECTED CASH FLOW STATEMENT OF THE 2023

Particu Janu Febr Mar April May June July Aug Septe Octo Nove Dece
lars ary uary ch ust mber ber mber mber

Beginn 3130 351 5496 9328 23065 2999 3178 38349 5054 58417 62545
ing of 00 600 00 00 001 300 800 00 900 00 00
the
month

Cash in 300 2500 130 3000 4000 10000 1500 1000 20000 2300 19000 15000
hand 00 0 00 0 0 0 0 0

Accou 375 8000 350 4000 4000 35000 3750 4800 40000 4400 45000 28000
nt 000 00 000 0 00 0 00 00 0 00 0 0
receiva
ble

Add 200 1600 190 3500 2000 40000 1500 4500 80000 6000 30000 25000

26
cash 000 00 000 00 00 0 00 00 0 00 0 0
sales

Self 3000 1000 20000 2000 1000 15000

help 0 0 0 0
group

TOTA 605 7280 905 1339 1572 32860 3539 4118 39569 6117 66107 68145
L 000 00 600 600 800 00 300 800 00 900 00 00
CASH
RECEI
PTS

Cash
payme
nt

Purcha 126 2000 180 2000 1000 15000 2000 1200 13500 1200 20000 20000
ses 000 00 000 00 00 0 00 00 00 00 0 0

Credito 400 3750 500 8000 2000 10000 4000 3750 55000 3000 30000 20000
rs 00 0 00 0 0 0 0 0

Wages 800 2000 150 200 300 700 500 400 500 200 250 100

Salarie 126 1260 126 1260 1260 12600 1260 1260 12600 1260 12600 12600
s 00 0 00 0 0 0 0 0

TOTA 292 3762 356 4062 2463 28670 3605 2839 31650 2762 35625 44610
L 000 00 000 00 00 0 00 00 0 00 0 0
CASH
PAYM
ENT

ENDI 313 3516 549 9328 2306 29993 3178 3834 50549 5847 62545 63684
NG 000 00 600 00 500 00 800 900 00 00 00 00
CASH
BALA
NCE

27
5.5 PROJECTED CASH FLOW STATEMENT OF THE YEAR 2024

Particu Janu Febr Mar Apri May June July Augu Septe Octo Nove Dece
lar ary uary ch l st mber ber mber mber

Beginn 6386 6853 7327 8087 8845 9424 1017 1047 11085 1162 12307 1289
ing of 400 200 200 200 800 700 8500 2150 150 4000 500 6300
the
month

Cash 30,0 40,0 45,0 3500 3000 4000 2500 2900 75000 3000 35000 1800
in 00 00 00 0 0 0 0 0 0 00
hand

Accou 5000 4500 3000 7000 6000 4500 2500 4500 25000 5000 35000 2000
nt 00 00 00 00 00 00 00 00 0 00 0 0
receiva
ble

Add 1500 2000 3500 2500 2000 1900 1700 3500 45000 3500 40000 4000
cash 00 00 00 00 00 00 00 00 0 00 0 00
sales

Self- 2000 2000 20000 4000

help 0 0 0
group

TOTA 7039 7543 8087 9072 9675 1042 1063 1130 11820 1250 13082 1313
L 400 200 200 200 800 4700 3500 1150 150 4000 500 6300
CASH
RECEI
PTS

Cash
payme

28
nt

Purcha 4000 3000 5000 7000 1000 2000 1000 7000 40000 5000 20000 8000
ses 0 0 0 0 00 0 0 0 0 0

Credit 2000 1500 1500 3000 2500 1000 2500 2000 30000 2000 40000 1000
ors 0 0 0 0 0 0 0 0 0 0

Wages 200 400 100 200 350 150 500 200 1000

Salarie 1260 1260 1260 1260 1260 1260 1260 1260 12600 1260 12600 1260
s 00 00 00 00 00 00 00 00 0 00 0 00

TOTA 1862 1710 1910 2264 2514 2464 1613 2160 19616 1965 18620 2870
L 00 00 00 00 00 00 50 00 0 00 0 00
CASH
PAYM
ENT

ENDI 6853 7372 8087 8845 9424 1017 1108 1108 11624 1230 12896 1284
NG 200 200 200 800 700 8500 5150 5150 000 7500 30 9300
CASH
BALA
NCE

5.6 PROJECTED CASH FLOW STATEMENT OF THE YEAR 2025

29
Partic Janua Febr Marc April May June July Augu Septe Octo Nove Dece
ulars ry uary h st mber ber mber mber

Begin 1289 1278 1232 1167 1170 1174 1186 1201 1230 1334 1473 1546
ning 6300 2600 6100 7335 0935 4735 9935 0235 3235 0235 5225 2225
of the
month

Accou 1600 1000 1000 1500 1200 2000 1200 1200 1000 7000 1300 1500
nt 00 00 00 00 00 00 00 00 00 00 00 00
receiv
ed

Add 1500 7000 9500 1000 3000 1000 2500 3500 1800 7500 1000 1500
cash 0 0 0 00 00 00 00 00 00 00 00 00
sales

Self- 4000 4000 4000 4000

help 0 0 0 0
group

TOTA 1307 1295 1256 1192 1212 1208 1223 1248 1262 1379 1500 1576
L 1300 2600 1100 7335 0935 4735 9935 0235 3235 0235 5225 2225
CASH
RECE
IPTS

Cash
payme
nt

Purcha 1200 3000 4500 5000 8000 9200 1260 1000 6000 2000 3000 2500
ses 00 00 00 0 0 00 00 00 00 00 00 00

Credit 1200 2000 7000 1500 6000 7000 5500 4500 7000 6000 5000 8000
ors 00 00 0 00 0 0 0 0 0 0 0 0

Wages 1000 500 3000 400 200 800 700 6000 7000 1000 500 1000

Salarie 1260 1260 1260 1260 1260 1260 1260 1260 1260 1260 1260 1260
s 00 00 00 00 00 00 00 00 00 00 00 00

TOTA 3667 6265 6490 3264 2662 3168 3077 2270 8030 9870 4765 4570
L 00 00 00 00 00 00 00 00 00 00 00 00
CASH
PAY
MEN

30
T

ENDI 1278 1232 1167 1170 1174 1186 1201 1230 1334 1473 1546 1621
NG 2600 0100 7335 0935 4735 9935 0235 3235 0235 5235 2225 9225
CASH
BALA
NCE

5.7 PROJECTED BALANCE SHEET

Assets 2023 2024 2025

Current Assets

Cash 250000 350000 400000

Debtors 700000 150000 100000

Stock 300000 500000 700000

Total Current Assets 5750000 1000000 1200000

Noncurrent Assets

Cost of machines and 1340000 1340000 1340000

equipment before

31
depreciation

Cost of machines and 1000000 800000 675000

equipment less
depreciation

Rent 6000 6000 6000

Installation 40000 40000 40000

Transport

Insurance 30000 30000 30000

Total noncurrent Assets 2416000 2376000 2376000

Total Asset 8166000 3376000 3716000

Total short term liability

Long term liability 4500000 700000 500000

Calculate the owners’

equity total assets- total
liability

Total Liability 5500000 950000 680000

Total liability or Equity 4381000 2441000 1580000

32
PROFITABILITY RATIO

YEAR ONE

Gross profit percentage

33
Gross profit/sales *100

2146000/4250000*100

=50.50%

YEAR TWO

Gross profit/sales*100

501000/3060000*100

=16.37%

YEAR THREE

Gross profit/sales *100

2806000/4905000*100

=57.21%

NET PROFIT PERCENTAGE

YEAR ONE

N.P=N.P/SALES*100

N.P=1684305/4250000*100

=39.63%

YEAR TWO

N.P=N.P/SALES *100

N.P=2067240/306000*100

=67.56%

YEAR THREE

34
2171988/490500*100

=44.25%

DISCURED FINANCING

ITEM AMOUNT IN KSH

Pre operational cost 2057000

Working capital 3930000

Long term asset (non-current asset) 1000000

Total desired financing 6987000

PROPOSED CAPITALIZATION

ITEM AMOUNT IN KSH

Owners’ equity 4381000

Borrowed or loan 2500000

Total for proposed capitalization 6881000

RETURNING ON INVESTMENT

YEAR ONE

21460000/3930000×100

=54.6%

YEAR TWO

501000/5000000×100

35
=10.02%

YEAR THREE

2806000/5820000×100

=48.2%

36