BOOK PUBLISHING

TITLE : BUSINESS PLAN

PRESENTER :

INDEX NUMBER :

CENTRE CODE :

CENTRE NAME :
COURSE :
SUBMITTED TO :
PAPER NO :
SUPERVISOR :

EXAM SERIES :

i
 TABLE OF CONTENT
TABLE OF CONTENT...............................................................................................................................ii
ACKNOWLEDGEMENT..........................................................................................................................iv
DEDICATION............................................................................................................................................v
DECLARATION........................................................................................................................................vi
EXECUTIVE SUMMARY........................................................................................................................vii
CHAPTER ONE..........................................................................................................................................1
1.0 BUSINESS DESCRIPTION..............................................................................................................1
1.1 BUSINESS NAME............................................................................................................................1
1.2 BUSINESS LOCATION...................................................................................................................1
1.3 FORM OF OWNERSHIP..................................................................................................................2
1.4 TYPE OF THE BUSINESS.........................................................................................................3
1.5 PRODUCTS/SERVICES.............................................................................................................4
1.6 JUSTIFICATION........................................................................................................................4
1.7 THE INDUSTRY..............................................................................................................................4
1.8 BUSINESS GOALS....................................................................................................................4
1.9 ENTRY AND GROWTH STRATEGY......................................................................................5
CHAPTER TWO.........................................................................................................................................7
2.0 MARKETING PLAN..................................................................................................................7
2.1 CUSTOMERS.............................................................................................................................7
2.2 MARKET SHARE......................................................................................................................8
2.3 COMPETITION..........................................................................................................................9
2.4 METHODS OF PROMOTION AND ADVERTISING.............................................................11
2.5 PRICING STRATEGY..............................................................................................................11
2.6 SALES TACTICS.....................................................................................................................12
2.7. DISTRIBUTION STRATEGY..................................................................................................12
CHAPTER THREE...................................................................................................................................13
3.0 ORGANIZATION AND MANAGEMENT PLAN...................................................................13
3.1. BUSINESS MANAGER AND RESPONSIBILITIES..............................................................13
3.2 PERSONNEL, NUMBER AND DUTIES.................................................................................14
3.3 RECRUITMENT TRAINING AND PROMOTION RECRUITMENT....................................17
3.4. RENUMARATION AND INCENTIVES.................................................................................19

ii
 3.5 LICENSES, PERMIT AND BY – LAWS.................................................................................20
3.6. SUPPORT SERVICES..............................................................................................................20
CHAPTER FOUR.....................................................................................................................................22
4.0. OPERATIONAL PLAN............................................................................................................22
4.1. OPERATIONAL FACILITIES AND CAPACITIES................................................................22
4.2. PRODUCTION STRATEGY....................................................................................................24
4.3. PRODUCTION PROCESS.......................................................................................................26
4.4 REGULATIONS AFFECTING THE OPERATION.................................................................27
CHAPTER FIVE.......................................................................................................................................29
5.0. FINANCIAL PLAN.......................................................................................................................29
5.1 PRE – OPERATIONAL COST.......................................................................................................29
5.2 WORKING CAPITAL REQUIREMENTS.....................................................................................30
5.3PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDEND 31ST DEC 2021.............31
5.4. PROFOMA INCOME STATEMENT FOR THE YEAR ENDING DECEMBER,...................33
2021.......................................................................................................................................................33
5.5. PROFORMA BALANCE SHEET...........................................................................................34
5.6. BREAK EVEN LEVEL.............................................................................................................36
5.7 EXPECTED PROFITABILITY RATIOS.......................................................................................38
5.8 DESIRED FINANCING.................................................................................................................38
5.9 PROPOSED CAPITALIZATION...................................................................................................39
APPENDIX 1: BUSINESS LAYOUT..................................................................................................39
APPENDIX 2: BUSINESS MAP LOCATION.....................................................................................41

iii
 ACKNOWLEDGEMENT
First, I am very gratefully to my supervisor Madam Jacinta Mwai for his effort in guiding
towards the completion of this plan and my course. In general, I appreciated him for his
guidance and advice on formal of preparation of this Project.

I also want to extend my special appreciation to my lovely parents, brother and sister for the
sacrifice to finance my college fees and co-ordination of materials for the completion of this
project.

iv
 DEDICATION
I dedicate this project to my beloved dad and mum, for their support and guidance financially
and prayers through my education. I also dedicate this work to my brother, sister and friends for
their prayers and encouragement. I thank you all. “May God Bless Them Abundantly?”

v
 DECLARATION
I declare this is my original work hand written ideas statement and structural and free from any
kind of duplication of ideas under any circumstances to whatever.

NAME:

SIGN: ………………………….

SUPERVISOR:

SIGN: ………………………

DATE: ……………………..

vi
 EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

This is the section where the background of the owner of the proposed business is described. The
name of the proposed business is BOOK PUBLISHING. It provides goods and services to its
customers.

2.0 MARKETING PLAN.

This chapter contains the customer’s business market share, competitors and also the method of
promotion and advertising of the products. Pricing and distribution strategy of products is also
included in this chapter.

3.0 ORGANIZATION AND MANAGEMENT PLAN.

BOOK PUBLISHING Organization consists of manager, accountant secretary, sales person and
watchman. These personnel have relevant qualifications. This chapter also contains the member
of personnel and their duties, recruitment, training and promotion also the remuneration and
incentives which carried out in this chapter. Besides the chapter also indicates where the
business will obtain the license permits and by-laws. The business support services therein this
chapter.

4.0 OPERATION/PRODUCTION PLAN

This includes: the production plan, production facilities and capacity with production strategy in
details also production process is included in this chapter with regulation affection production.

vii
5.0 FINANCIAL PLAN

Pre-operational plan, working capital, cash flow statement, pro-forma income statement, pro-
forma balance sheet, Break-even level, expected profitability ratios, desired financing and
proposed capitalization

viii
 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

The owner of the business proposed is . The proposer is aged 21 years old and she resides in
Kericho County. The owner went to Pinnacle Academy up the year 2011where she joined St.
Paul Secondary school in Kitale where she proceeded and sat for her Kenya Certificate of
Secondary Education in the year 2016 and got a mean of C Plain.

The proposer is currently a student at Rift Valley Institute of Science and Technology pursuing
Diploma in Accountancy.

1.1 BUSINESS NAME.

The proposed business name is BOOK PUBLISHING. The name of the business is derived from
English name meaning greatness. The name also is very easy to pronounce and very hard to
forget.

1.2 BUSINESS LOCATION

The business location will be located at Kericho town along Kericho –Nairobi highway.

The business address will be;

BOOK PUBLISHING
P.O BOX 2100
KERICHO .
TELEPHONE: 0798527774

EMAIL: [email protected]

1
1.3 FORM OF OWNERSHIP.
The business will obtain capital from personal savings, short term loan (KCB), friends and
family members’ contribution.

The source of capital of the proposed enterprise will be:

SOURCE AMOUNT (KSHS)

PERCENTAGE

Owner’s savings 200,000 29%

Equity bank loan 400,000 57%
Family and friends contribution 100,000 14%
Total 700,000 100%

2
1.4 TYPE OF THE BUSINESS
The business will be operated in a sole proprietorship. The owners will be entire to all activities
taking place in a business. The firm will be operating institutional because the stationeries are
sold bulk and many of the institutional are in high demand of it and they will get the advantage
of the discounts given for purchasing it in a bulk. In relation to that some of the retail shops will
be purchasing their stationaries here because of the affordable price they are sold and they will
go and sell them at a profit.

Since the business is centrally located, potential customers like commercial, domestic, and
institutional and other customers the business has a good chance to compete with its competitors.

The business will advertise its products and services at a means of production and making it
aware to many people. The business will also pay renal services once per year in order for the
business to gain profit. The business will also ensure that it has employees within the location
since they have a position effect to the business and this will contribute mostly to the business.

3
1.5 PRODUCTS/SERVICES.
The business will be dealing with the products such as text books, Exercise books, paper punches
and full scups. The firm will offer good services and sell a high quality.

Products to its customers and ensure get a constant supply of products and be treated well. The
firm also will give discounts of a certain amount to regular customers, quality discount to those
who buy in a bulk and free sample of its products in order to maintain and include customers.

1.6 JUSTIFICATION

The main aim of the business will be:

i) Create employment opportunities to the local people in the community thus
reducing unemployment which is affecting the local people.
ii) To meet the local demand of the people around the bookshop.
iii) To provide the revenue to local authorities through collection of taxes.

1.7 THE INDUSTRY

The business is under service industry which is using mainly both labour and capital.

The size of the business is generally medium and it is using the modern techniques to sell its
products and service to its customers.

Most of the services industries operate in shall scale especially due to high cost incurred at initial
stage when purchasing some capital requirement needed for operation.

The industry is also under regulation of education sector on advancing all the education sectors
to the modern techniques on learning.

4
1.8 BUSINESS GOALS

LONG TERM GOALS

i) To ensure that the client customers acquire quality services

ii) To increase products in the market to meet the local demand.
iii) To expand stock and sales volume.
iv) To maintain sound industries relation with the society around.
v) To maximize profit as much as possible.

SHORT TERM GOALS

i) Create employment.
ii) Ensure its customers get quality products and services.
iii) To maximize profit of this level
iv) Expansion of the business

5
1.9 ENTRY AND GROWTH STRATEGY
ENTRY STRATEGY

It will start by advertising its products through posters, radios and newspapers.

To penetrate and gain acceptance in the market the business will be delivering its products and
services promptly to customers and will be more concerned about the likes and dislikes of the
customers existence of the market a bid hard to their experience gained in the field and economic
stability.

The anticipation of the business is that after the periods of 3-4 years given a stable political and
economic stability it will have expanded. The proprietor will expand the business beyond the
entry products by opening new branches in other places and ensure that the products are supplied
to these branches so as to avoid shortages of the products in these places.

GROWTH STRATEGY

The products and services will be displayed well and products and services promotion should be
offered. As the business expands, new branches will be opened which will act as a source of
employment to people and being near to the customers. Promotion will be done in daily
newspapers; advertisements in different radio stations will enhance the well distribution of
products and services.

6
 CHAPTER TWO

2.0 MARKETING PLAN

In every business to prosper a market plan should be established. This will help the business to
identify the needs of customers and enable them to draw a well-funded plan that will aim at
enhancing trade as well as satisfying customers.

2.1 CUSTOMERS
These customers are categorized into groups namely;

(a) Industrial customers

(b) Domestic customers
(c) Commercial customers

Industrial customers will include those who will purchase goods and services in bulk for use.
These are the institutions within the located business e.g Bidii academy, Athinai Secondary
School, Kericho town academy and Kericho Girls high school. In bulk for use. These are the
institutions within the located business e.g Bidii academy, Athinai Secondary School, Kericho
Township academy and Kericho Girls high school.

Commercial customers are those who will buy the products and sell at profit like Wholesales,
Supermarkets and Retail shops e.g Biashara premises.

Domestic customers are those who purchase the products in small quantities for personal use.
They don’t sell the product at all. They include primary schools, secondary school students
buying the products individually.

7
The proposed business will be operated through the week except Sundays and public holidays

2.2 MARKET SHARE

The People of the area of business who are the customers of the business enterprise around who
require the products will be 15000 individuals and it will be five institutions purchasing once in
one week since they enjoy the discount they are offered two dispensaries which come once in a
month.

Supermarkets and other individuals within the community. The total cash sales per month will
be Kshs 300,000 that is an average of shs 10,000 per day. Pie Chart showing BOOK
PUBLISHING and its Competitors.

Market Share

20%
MASOMO BOOKSHOP
45%
ACHIEVERS BOOKSHOP
Excellent BookShop
35%

8
 20∗300000
=60000−MASOMO BOOKSHOP
100

35∗300000
=105000− ACHIEVERS BOOKSHOP
100

45∗300000
=135000−Exellent BOOKSHOP
100

2.3 COMPETITION
Competition will not be very stiff because as from the research done by the owner of the
proposed business, There are only two competitors in the area who have some many weaknesses
which can be the advantages of BOOK PUBLISHING by avoiding them thus easy penetration of
the market. The competitors of excellent book shop will be Masomo bookshop and Achievers
bookshop. The competitors are located very close to BOOK PUBLISHING it is escalated only
by the buildings.

Below is the table showing the business strength and weaknesses of the competitors compared
with the proposed business.

9
Business nameStrength Weakness

Masomo - Establishment - Low quality products

Bookshop - Owns the premise - Unskilled personnel

Doesn’t pay rent

Easy to manage since -The use absolute technology

It has two employees.

Its located near the main road - Lack of enough man-power

Achievers - Have room for expansion - Their products are very

Bookshop - More and better experience expensive

- No rent expenses since - Poor products

They own the premise - Price is very high
- Heavy capital invested - Poor road network
- Good customer relation

10
2.4 METHODS OF PROMOTION AND ADVERTISING
For the BOOK PUBLISHING to improve its sales is to choose the appropriate method to
advertise its products for the first week of its operation The Exellent is going to give 10%
discount on product sold to public institution to create positive attribute to potential customers
also it will be advertised through local and the rest of years it will be advertised twice a year to
enable the customers remember that BOOK PUBLISHING still exist.

Poster and Signpost

BOOK PUBLISHING will be promoting its products by engaging artist to draw and design
several posters. This poster will be stuck on walls of buildings alongside the road and some
institutions which are new in the area. The price of some of some of the books, location of the
business especially in the town and this will occur in the expense of Kshs.5000 every after a
year.

2.5 PRICING STRATEGY

BOOK PUBLISHING will calculate its selling price of its products by comparing the
competitors price demand of the customers government control price and the cost of raw
materials the proposed business will consider the above factors when setting its price costs so as
to meet its needs of achieving its common objective which is making profit and retaining of its
business this will act as a guiding tool to the business because if any change occurs it is easy to
realize and cope up will the change immediately.

11
2.6 SALES TACTICS
The owner of the proposed business intends to give free service to the regular customers e.g.
transporting of goods also any customer who will come during operation hours at exactly
opening hours and purchase products worth more than 5000Shs and above will get a quality
discount. This will be done in the first two weeks of its running. The firm will also print
calenders for its customers as an after sale service.

2.7. DISTRIBUTION STRATEGY

The proposed business (Firm) will distribute its products to the customers using public means of
transport at the start and later expansion it will buy a double cabin vehicle for distributing its
products. This is going to be done by sales person.

12
 CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

The business structure will lay a foundation in which the business will be operation it with and
promotes a good relation between the staff and the management and third parties. This will
enhance smooth running of the business hence more customers.

3.1. BUSINESS MANAGER AND RESPONSIBILITIES.

I will be the overall boss in the business and I will be required to make all the decisions
concerning the business.

Responsibilities.

i) Giving instructions and direction

ii) Recruiting employees
iii) Supervise other workers in the business
iv) Motivate workers
v) Approving salaries of workers.
vi) Maintain the image of the business.

Salary.

A basic salary of Kshs 25,000 a house allowance of Kshs 25000 medical allowance of Kshs 5000
and a transport allowance of Kshs 2500 totaling to Ksh 35,000.

13
3.2 PERSONNEL, NUMBER AND DUTIES.
Since the business cannot be run by one person he is a need of employing other key persons,
secretary.

Qualifications

i) Should have at least diploma in secretarial.

ii) Should have experience of at least 1 year
iii) Should be able to communicate fluently in English and Kiswahili.
iv) Should be a computer literate.

Duties.

i) Should keep records of the business

ii) Drafting and typing
iii) Receiving visitors in a good way
iv) Promote business image
v) Receive all calls from within the business basic salary of Kshs 10,000 house allowance
Ksh 1,500 totaling Kshs11,300

ACCOUNTANT

QUALIFICATION

i) Must have certificate in accountancy from recognized institution

ii) Must be able to work under minimum supervision form the manager.
iii) Must have experience of two and above years in similar field.
iv) Must be age 25 – 35 years old.
v) Must be computer literate.

14
DUTIES AND RESPONSIBILITIES.

i) He will be preparing annual accounts of the enterprise.

ii) He will be keeping the records of the enterprise.
iii) He will be ensuring that there are enough stocks in the store.
iv) Ensure write and vouchers of all transaction into and outside the enterprise.
v) Provide reference services.

Salary: he will be earning monthly salary of Kshs 12,000 and medical allowance of Kshs 1000
totaling Ksh 13,000

SALES PERSON

QUALIFICATION

i) He should have certificate in sales and marketing.

ii) He must have experience of two and above years.
iii) Must be able to work under minimum supervision .
iv) Must bi age 25 – 32 years old.
v) Must have communication skills and computer literate.

DUTIES.

i) To sell goods to the customers.

ii) To collect the market data by conducting market research and for making business
customer friendly.
iii) Pack all the products in required packages ready for sale.
iv) Displaying the products for the attraction of customers.
v) Collect the customer complaints and gives his opinions during general meeting.

The monthly salary of each person will be Kshs 15000.

15
DRIVER

QUALIFICATION

A holder of driving licence.

Holder of K.C.P.E certificate.

Should have a driving experience of at least 3 years. Able to communicate fluently in English
and Kiswahili.

A Kenyan Citizen.

DUTIES.

Transporting products from the place where products are ordered.

Delivering products to customers where a customer buy the products in bulky.

To take care of the company cars and ensure it is well maintained.

A basic salary of Ksh 6000 per month.

SECURITY OFFICER.

QUALIFICATION

i) Must have certificate of good conduct.

ii) Must be at least 30 – 40 years of age.
iii) Must be from a recognized security guard company.
iv) Should have a certificate of good conduct.
v) Should be able to speak fluently in English and Kiswahili.

DUTIES AND RESPONSIBILITIES.

i) Guarding the premises against theft.

ii) Receiving and directing firms client forwards various departments within the business.

16
3.3 RECRUITMENT TRAINING AND PROMOTION RECRUITMENT.
a) Recruitment

I will aim at identifying the prospective employees stimulating and encouraging them to apply
for the jobs with the purpose of having eligible persons from amongst after selection have been
made.

To achieve the above mentioned posts BOOK PUBLISHING will adopt the following
procedures in recruitment of its employers.

b) Advertising the vacancies.

The firm will identify the post and advertise them locally through notice boards and posters
stating all the requirements such as age, experience, citizenship, duties and qualifications stated.
The interest applications including curriculum vitae (cv) copies in two weeks time from the time
of advertisement.

c) Short listing

After receiving applications some of the applicants will be short listed depending on merits of
qualifications. Invitation letters for interviews will be sent to short listed applicants including
when to attend the interview and venue.

d) Interviews.

Interview will be oral or in written form. I will conduct it within the place of business.

c) Selection

Selection for merited applicants for employment shall be done on the same day of interview by
comparing all the necessary qualified personnel and choose the best this will be followed by
sending employment letters to the successful personnel and regret letters to those who failed to
qualify.

17
TRAINING

Orientation – the new personnel will be oriented for a period of two weeks to make the place
familiar with the assigned jobs and general understanding of the Firm.

The Firm will adopt two methods of training its personnel on job training. On the job training -
the Firm will be hiring experts in various fields depending on the types of training, the training
will be conducted in the Firm and in the field. Vocational area training – the Firm will be taking
its personnel for the training outside the firm relevant to employees work. They include
seminars exhibition, workshops and training centres. This will help employees to develop new
skills so as to Improve productivity of the business.

PROMOTION.

Promotion of personnel will be done by recognizing personnel education in relation with

business and the quality of service for the firm. It will be done by increasing their salaries,
elevation of job ranks or by reducing their tasks and responsibilities. It will also be based on
efficiency those who arrive at work on time and those who have attitude forwards work will be
considered as the first priority.

18
3.4. RENUMARATION AND INCENTIVES
RENUMERAION

Remuneration – employees will be paid a salary which will be enough to cater for their
requirements and will directly proportional to the position held in the Firm.

They will receive their salaries as follows:

Personnel
Manager 1 35,000
Secretary 1 11,500
Accountant 1 14,000
Driver 1 6,000
Sales persons 1 15,000
Security 1 12,000

Total 93,500

INCENTIVES

BOOK PUBLISHING is going to give incentives which will be either monetary or non –
monetary to employees to have enthusiasm and zeal to perform their duties better. The firm will
endeavor to motivate its employees in order to achieve optimum customers and client. In
monetary incentive the firm will be extra benefits including medical, housing and overtime
allowance to staffs and commission of 2% when he/she sold goods above 500,000 per month.

19
Through non – monetary incentives the Firm will motivate their employees through:

i) Training and for which will be available to employees twice a year.

ii) Annual leave for one month for all employees going differently during the course of lthe
year.
iii) The Firm will also issue vouchers for the employees who attend special occasion.

3.5 LICENSES, PERMIT AND BY – LAWS.

LICENCE AND PERMIT.

The Firm will suck a trade license to ensure that the business operate witching the customers
desire and with legality. The license will be obtained from the county council of Kericho the
trading license will include description act Cap 305 which prohibit false and misleading
information about the Firms employees this will cost 5,000 Kshs per year.

i) Environment acts regulations act 124. It advocate that careful consideration and
protective measures should be undertaken to protect our natural environment
pollution should be careful minimized both intend and external.
ii) Employment regulation. Employment regulation act entails that rules and regulation
should be adhered to employment act. Advocate for equity and fairness to workers.
Workers should be given good remuneration as per work done.

3.6. SUPPORT SERVICES.

1. BANK.

CO-OPERATIVE SOCIETIES KERICHO BRANCH

P.O. BOX 20100

KERICHO

KERICHO INSURANCE COMPANY

P.O. BOX 32

KERICHO

20
2. POSTAL SERVICES

The postal address will be available at Kericho Post Office.

KERICHO OFFICE

P.O BOX II

KERICHO.

4. ADVOCATE.

CHEPRUTO ALICEN

P.O. BOX 20,

KERICHO.

21
 CHAPTER FOUR

4.0. OPERATIONAL PLAN

4.1. OPERATIONAL FACILITIES AND CAPACITIES.

In order to meet the customers’ needs, Exellent Firm should have quality and desirable tool
which will also ensure smooth running of the business the tools required are as follows:

1. COMPUTER

This will be used for storing and recording important in formations in the business.
2. Detergents.

Used for cleaning the work place.

3. Broom

Used for cleanliness

4. Telephone
Used for communication within the firm.
5. Bucket

This is used to carry water to be used in cleaning the work place.

6. Receipt book.

Repair and maintenance will be carried out twice a year at a cost of Sh. 6000 this equipment will
be purchased according to their usefulness in the Firm. The other will be purchased when the
Firm is financially stable.

The Firm will require a number of fixed assets e.g. land, building and a motor car as it expand.

22
 ACCOUNTS MANAGER
REPAYING
OFFICE OFFICE OFFICE CLOAK ROOM

CLOAK
AREA STORE
SECRETARY'

OFFICE

ENTRANCE

23
4.2. PRODUCTION STRATEGY.
The Firm will vary the number of products needed in the course of the month depending on the
type of transactions taking place, the numbers of products and the demand for them.

MONTHLY MATERIALS REQUIREMENT.

Item Amount in Ksh.

Trolleys 12,000
Stationaries 500
Brooms 50
Detergents 1,300
Basins 300
Total 14,150

MONTHLY LABOUR REQUIREMENTS.

Position Salary Kshs

Manager 18,000
Account 16,000
Salesman 7,500
Driver 6,000
Secretary 11,500
Security Officer 6,000

Total 65,000

24
MONTHLY PRODUCTION EXPENSE

EXPENSES Amount in
Kshs
Postage 500
Electricity bill 2,000
Water bill 800
Licence 500

Total 4,300

COST OF PRODUCTION

Details Amount in
Kshs.
Materials requirement 14,150
Labour 65,000
Expenses 4,300
Total 83,450

25
4.3. PRODUCTION PROCESS.
i) Exellent Firm will commence/start to operate as from 5.30 am where the staff starts to
clean the work place so as when the customers arrive at 6.30 am the working place is clean and
transaction can take place.

ii) At around 6.00 am the working staff will have thirty minutes to take their breakfast and at
exactly 6.00am they are required to settle and wait for the customers. At 10.00 am the workers
will have a tea break of thirty minutes.

iii) They will back at 10.30 am and continue serving the customers till 1.00 pm where
they will get a lunch break of 1 hour and at exactly 2.00 pm they are required settle at
work place and resume their duties to 5.30 pm where business premise is closed and
each and every worked leave at his/her own whish.

As from 5.30 pm the accountant are to remain behind so as we carry out the cash for the all day
as we inquire the books of accounts. After that we update the figures into the computer before
we go out of the premise so as to keep them saved in the computer for future reference.

26
4.4 REGULATIONS AFFECTING THE OPERATION
i) Health regulation

My proposed business will adhere to the following;

i) Maintaining preventive medicine programs that during health stands for each job and
involves regularly audits of potential health hazards and regular examination for
everyone at risk.
ii) Isolates hazardous process and substances so that workers do not come into conduct
with them.
iii) Trade Mark

The trade mark used in the proposed business is Exellent and the students carrying books and
this will prevent any other person to use this label in the business Place

iv) Copy/Rights

Exellent business will adhere with the following copyrights.

i) Moral rights which are the rights to claim authorships to oppose changes to the work
that could harm the creator’s deportation.

ii) Economics rights which allow rights owners to device financial reward from the use
of his work by others.

27
 iii) SAFETY REGULATIONS.

This will be the ministry of labour to ensure that workers are working under good environment.
The business firm aim to process different documents as legal requirement. The premise will
always be clean, electric warning notices will be put on the walls, the floor will be dry all time to
avoid falls. The business firm will have fixed fire extinguishers for the case of firebreak down.

iv) ENVIRONMENT REGULATIONS.

The proper disposal of waste products will be taken into consideration to avoid the pollution of
environment. The environment permit has to be obtained from the ministry of environment in
Kericho town. This is to produce clean and conducive environment for the entire business and
the surroundings.

28
 CHAPTER FIVE

5.0. FINANCIAL PLAN

Financial plan is the tabulation and the analysis of the financial statement e.g the income and
expenditure, cash flow and the balance sheet. In order to have a valuable insight into the
business to enable one to plan well for the future.

5.1 PRE – OPERATIONAL COST

These are the cost incurred by the business before the start of the operation.

Item
Rent 2,000
Transport 5,000
Insurance 3,000
Postage 4,000
Permits 1,500
Purchase of machinery 300,000
Electrical installation 4,000
Advertisement 1,000
Water 5,000
Total 325,500

29
5.2 WORKING CAPITAL REQUIREMENTS.
Items Year 1 Year 2 Year 3
Current assets
Stock of education 200,000 250,000 260,000
materials
Cash in hand 150,000 10,000 60,000
Cash at bank 50,000 60,000 70,000
Debtors 60,000 150,000 160,000
Finish goods 430,000 440,000 450,000
Work in progress 70,895 85,000
Total 960,895 910,000 1,085,895

Assumptions

Working capital will increase every year. The business financial position increase.

30
 5.3PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDEND 31ST DEC 2021

JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC Total
Cash in flow KSH. KSH. KSH. KSH. KSH. KSH. KSH. KSH. KSH. KSH. KSH. KSH. KSH.
Cash sales 125300 131300 128300 138300 128300 138300 148300 128300 128300 1333000 138300 138300 1599600
Collection 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
from debtors
Cash In Hand 12000 13000 12500 12500 12500 12500 12500 11500 12500 12500 13000 13000 150000
Cash at bank 5000 4000 4500 4500 4500 5000 3500 3500 4000 4500 3500 4500 51000
Total cash 147300 15300 150300 160300 150300 160800 169300 148300 149800 155300 154800 160800 1860600
inflow
Cash 50000 50000 40000 30000 30000 25000 25000 36000 50000 35000 35000 50000 456000
purchases
Transport 4000 4000 3500 3000 3000 3500 4000 2500 2500 3000 3000 4000 40000
Electricity 1500 1500 2000 1000 1000 1500 1500 1500 1600 1500 2000 2000 18600
Water 5000 5000 4000 4000 5000 4500 4000 3500 3000 3500 3500 4000 49000
Repair and 500 500 500 500 400 400 500 600 600 500 500 500 6000
maintenance
Insurance 500 500 500 500 500 500 500 500 500 500 500 500 6000
Salaries and 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 600000
wages
Telephone 1000 800 800 1200 1200 1000 500 500 600 600 800 1000 10000
Permit/license 4000 4000
Advertisement 1500 1500 1000 1000 1200 1200 1500 1300 1300 1500 1000 1000 15000
Rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
Total cash out 120000 115800 104300 93200 94300 89600 89500 98400 112100 98100 98300 115000 1228600
flow
Net balances 27300 37500 46000 67100 56000 71200 79800 49900 37700 57200 56500 45800 632000
G/D
Less taxation 1365 1875 2300 3355 2750 3560 3960 2820 1885 2860 2825 2290 31845

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5%
Net cash flow 25935 35625 43700 63745 53250 67640 75840 47080 35815 54340 53675 43510 600155
after tax
Accumulative 25935 61560 105260 169005 222255 289895 365735 412815 448630 514970 556645 600155
tax

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ASSUMPTION TAX 5%

5/100*27300=1365

5.4. PROFOMA INCOME STATEMENT FOR THE YEAR ENDING DECEMBER,

2021

Item
Sales 12,798,300
L
Less: cost of sales
Opening stocks 200,000

Add: work in progress 455,000

475,00

242,900
Less: closing stock
425,000 1,356,700
Gross Profit
Less: Expenses
85,000
Transport
18,000
Electricity
6000,000
Salaries and wages
49,000
Water
6,000
Insurance
6,000
Repair and Maintenance
24,000
Rent
15,000
Advertisement
10,000
Telephone
4,000 544,500
License
812,200 584,100
Total
584,100 29,205
Net Profit before tax

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 Less 5% 29,202 812,200
Net Profit after tax. 554,895

5.5. PROFORMA BALANCE SHEET

Item Ksh
Asset

Machinery and 300,000 6,000

equipment
Current assets 200,000 1,200 352,800

Stock of raw material 20,000

Stock of finished 430,000
goods 70,000
Stock of working
progress 60,000

Debtors 150,000

Cash in hand 50,000

Cash at bank 960,000

780,895
Current liabilities 180,000
953,695
Bank loan 1,154,895
Financed by owners 600,000
equity 11,554,895
Net profit

Assumptions

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Accumulated Depreciation is 2%

Total Assets Turn Over = Net Sales/Total Assets

1,599,600

1,254895 = 1.27 times

1.3 times

Assumptions

Accumulated Depreciation is 2%

Total Assets Turn Over = Net Sales/Total Assets

1,599,600

1254895 = 1.27 times

1.3 times

5.6. BREAK EVEN LEVEL

This point whereby the business enterprise shall neither make profit or loss.

35
 Variable Coast Amount Ksh.
Cost of purchase 455,000
Advertisement 15,000
Electricity 18,600
Transport 40,000
Water 49,000
Repair and Maintenance 6,000
Telephone 450,000
Total 628,600

Total contribution margin = Sales – Variable Costs

= 1,599,600 – 588,600

= 1,011,000

= 101,100 x 100/1599600=63.2%

FIXED COSTS

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 FIXED COSTS AMOUNT (KSH.)
WAGES AND SALARIES 600000
INSURANCE 6000
RENT 24000
PERMIT 4000
TOTAL 634000

Total fixed cost= ksh. 865245

Break Even of sales = total fixed cost/contribution margin *100

=634000/0.632=ksh. 1003165

5.7 EXPECTED PROFITABILITY RATIOS

Calculate the expected profitability of the business

i. Gross profit ratio %.

37
 = Gross profit x 100
Sales

= 1356700 x100
15599600

= 78.56%
ii. Return equity %
= Net profit after tax x100
Owners’ equity
= 341,525 x 100
300,000
= 113.8%
iii. Return on investment
= Net profit after tax+ interest x 100
Owners’ equity
= 554895/1254895

= 44.21%

5.8 DESIRED FINANCING

Item Ksh
Pre Operational Cost 325500
Working Capital 960895
Fixed Assets 38 30000

Total 1186395
5.9 PROPOSED CAPITALIZATION.

ITEM COST KSH

Total investment 700000

Owners contribution 600000

Borrowing from other sources (KCB) 100,000

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APPENDIX 1: BUSINESS LAYOUT
SSS
SECURITY CHECK

OFFICE RECEPTION

DISPLAY AREA
DISPLAY AREA

MANAGER OFFICE
PRIVATE STUDY
PARKING ROOM
ROOM

WASHROOMS

STORE

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APPENDIX 2: BUSINESS MAP LOCATION

NAKURU-NAIROBI
HIGHWAY

EXELLENT
BOOKSHOP
KERICHO
GIRLS

KERICHO TOWN

41