BUSINESS PLAN

CLASSIC LADIES ENTERPRISES

P.O BOX 8259

EMBU
Tel:0721221031
EMAIL: [email protected]

PRESENTER: DIBA HABIBA GUYATU

INDEX

COLLEGE: MERU NATIONAL POLYTECHNIC

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL FOR AWARD OF

DIPLOMA IN SUPPLY CHAIN MANAGEMENT

SERIES: JULY 2018

ACKNOWLEDGEMENT

I DIBA HABIBA GUYATU wish to dearly acknowledge the endless, efforts of my Lecturer Mr. Isaac

muthiga for equipping me with invaluable insight part of which has enabled the completion of this work. I

am also thankful to my loving parents ,my brother and my sisters and also my friends for their generous

financial support towards my prospect. Special thanks also go to my classmates for their advice and

critisms.To God almighty be the most acknowledged for making me wise.

DEDICATION

I whole heartedly dedicate this business plan to my loving mum, brothers, cousins, nephews, nieces and

all my friends. Also I dedicate it to the almighty God because it only because of him that I have been able

to complete all this work

DECLARATION

I declare that this business plan is my original work and it has been never presented to any examining

body for award of any certificate.

NAME: DIBA HABIBA GUYATU

SIGNATURE………………………………….

DATE:……………………………………………

This business plan is presented to the Kenya National Examination Council with my approval as the

project supervisor.

NAME:………………………………………………

SIGNATURE………………………………………..

DATE:…………………………………………………..
 CHAPTER ONE

1.1 business name

The proposed business name is called classic ladies enterprises, which means we offer classic cosmetic
products with potential customers buying the products

Business location: it is located in embu town opposite embu college. We have selected the place
because it has many young people from embu college and other neighbouring schools who will be
buying the product

Combination of owners: the name classic ladies was agreed on by the two owners who are partners of
the business

Business products:

we offer cosmetics like body creams, herbal creams, perfumes, body sprays, hand bags, lipstick,
lipbams ,high heel shoes ,earings, jewelaris and other many products which are mostly consumed by
ladies

The business is associated with miss habiba diba who is self employed and mr ben mugaa who is a
clinical offer

The emerging issues in the business are:

 Competition from other shops around .

 Customer shortage because the business is new hence customers are few.

I intend to start the business in 2 years time.the business trade mark is a picture of herbs and smooth
baby face lady with shining skin and moisturized. Itsfeature explains that when you use any product
from classic ladies enterprises , you will get good results on your skin because we offer herbal products
which has no side effects on your body, e.g body lotions and soaps

In addition classic ladies does not sell outdated products to is customers because its much cares about
them and also the products are sold at affordable price

The business slogan is “in effort we believe” which means that any effort and step you make will make
you better than the way you were before .
 1.2 business location and address

The business shall be located in embu town ,third floor of teachers sacco plaza ,main road when moving
towards embu college approximately 2kilometer from embu county head quarters

The business physical location is third floor teachers sacco plaza on your left with herbal decorations just
before you just enter the entrance door

Contact details

Email: [email protected]

Tel:0707270928

Address: 1285 ,EMBU

Website: www.classicladies.com

Foctors considered while selecting the business location

Born in the area –I was born in the place hence I considered it because am well known in the
place.Accessibility of the place- embu town has good roads ,electricity and water which makes the place
accessible and suitable for business

Customers-potential customers are students from embu college and other neighbouring schools. Also
the security of the place is adequate.

Trading area:

Embu region to be covered by cosmetics business is of approximate population of around 19000 people

1.3 form of ownership

The form of ownership is public ownership. The business is to be started by two agreed partners. the
reasons for choosing this form of ownership is that raising capital will be easy and also better satisfying
and adequate decisions can be made for the betterment of the business.

Sketch of the business location

Equity
bank
Run –
up
Embu college
mills

Mapete
Classic ladies enterprise
ses 1
1.4 type of the business

The business type is a retail one as it will be getting the products from supplies in bulk and the breaking
the bulk to sell to it customers in small quantities. the business will be committed to be availing the
products for its customers all the time.no customer coming to the business will lack anything.

1.5 product and services

We offer cosmetics products which are:

Herbal body lotions-its good for skin since it has some natural element in it which has no side effects.

Herbal soaps-these cleans and removes dead skin on your body making it smooth and soft

Herbal creams-these are similar to the herbal body lotions

The benefits of these products are that the customers will be treated with herbal natural products which
will not affect them.

Also the products are of low prices and of high quality which makes them affordable by anyone wishing
to buy them. other products like bags and shoes are very durable.

1.6 justification of opportunity

To benefit my customers with the best affordable products and more over to make profit s for my
business hence expanding it more and more.

The unique concept of my business is to educate people on herbal products which does not have
negative side effects to them.

The contribution of my business to the local community is that itwill :

Create employment to the locals

Use of local resources in the community

Provision of goods and services to the people

Promotion of indigenous technology

Improve living standards of people

1.7 which industry does your venture fall

Haco industry

Characteristics of the industry

Requires high capital

The is capital intensive

There is major level of technology

The size of the firm is medium

1.8 business goals and objectives

To ensure that the business expands and increases in number of products approximately over 8000
herbal products and sold for the first 2-5 years

The strategy of achieving long term and short term goals is:

s-specific

m-measurable

a-achievable

r-realistic

t-time frame

setting measurable or approximate number of sales done on the products during the period
1.8.1 ENTRY AND GROWTH STRATEGIES

when I start up the business the competitors are very many and active towards achieving the goals,
this will make me to work extra hard so that I can achieve my goals too .Purchasing more machines
for handling materials that are sold in the business to make work more easier There will be
extensive advertising of the business through media, newspaper, posters, shows etc. It will also
create fair pricing of materials and offering of discount to customers. Though this the business will
attract as many customers as possible.

CHAPTER TWO

2.0 MARKETING PLAN

I will offer promotions to my customers as per what they buy from our shop. Then customers who
will be buying in large quantities will be given trade discounts and also after sale services.our
products will be available all the time to satisfy the needs of our customers

2.1 MARKETING GOALS

MARKET GOALS

We intend to serve as many customers as possible per week

A profit of 40% per month

Gross income of not less than 50%

Having acquired some contracts during the first 2 years of operating the business

2.2 CUSTOMERS

The potential customers are mostly students from the college (ladies)and others as the have had
the advertisements of the business in the media.

The most targeted customers are individual customers due to the nature of the business more over
to become whole sellers in the near future

My customers are mostly ladies aged 18 to 40 years

The business will be operating on week days from 8:00am to 6:00pm and also it will be being
opened on Saturdays and Sundays for few hours
2.3 COMPETATION

Classic ladies enterpries targets about 10000 customers from the area which is a market share of
about 40% .Below is a competitor’s list and market share.

Sales

run up hills shop classic ladies en-

25% terprises
40%
mapete shop
15%

cosmetic en-
terprise
20%

Peak earnings.

Peak earnings is experienced during the months of january to march, may to july and september to
December when students are in school and also during the festive sessions are going on.

Low earnings.

The business experience low earnings when the students are on holidays

Strategies to adjust.

During peak earning, the business is to give discount to customers who are in need of the business
product in large volumes, on the other hard the business is to lower the prices of the product so as
to help the customers to be conversant with the business. When there is low earning the business is
to employ vigorous advertisement so as to get more customers.

Changes is the market in the next 3-4 year.

 The customers are expected to increase in number as the business becomes more popular Locally
and regionally. Due to technological changes the business is to penetrate grater in the market hence
increasing the markets share.

The business is also expected to increase its profit rapidly due to high sale of the product.

2.4 MARKET SHARE

SUMMARY COMPETATION ANALYSIS

Competitors Location Percentage Strength Weakness Strategy to complete
Cosmetic Opposite serena 20% Have acquired Poor The business will
enterprises hotel customers loyalty management of charge affordable prices
business funds. on its products.
High working
capita Charge high Advertise in order to get
prices. known.

A lot of unskilled Hiring vehicles for

labour transporting
employment.
Mapete shop Embu plaza 15% Located at a Over works his Since the business
strategic works. intends to sell its
position. product directly to
Charge high customers directly
Have skills in prices without
entrepreneurship anintermediary there
Long operating No legal will be delay.
business hours formalities
required by Lower the prices.
authorities .

Run up hills shop Opposite 25% Hardworking Very expensive The product will lower
teachers plaza in employees product prices
embu
Fair quality Not financially Motivating employees
stable
Fair products The proprietor will offer
Lack of good qualified staff
courtesy
Obtain full legal
formalities.
Advertise in order to get
known to the people
Classic ladies Embu town 40% Hardworking New in the The business will
enterprises employees business charge affordable prices
on its products.
Located at a Few workers
strategic The product will lower
position. Lack of special prices
machines to Advertise in order to get
Have skills in handle the known to the people
entrepreneurship product

2.5 METHODS OF PRODUCT PROMOTIONS AND ADVERTISEMENT TO KEEP AND MAINTAIN

CUSTOMERS

PROMOTIONAL CAMPAIGNES

This includes making the products attractive by branding the smartly ,products like soaps and body
lotions will have good perfumes to make the smell nicely to attract more customers

We will promote our products through road shows , bill board and posters and also giving free
sample to our customers for try.

ADVERTISING METHODS

We will advertise through local radio stations to cover a large number of local area and also to
make them aware of the business

Also the business will take it advertisements to social medial groups like facebook and different
watsapp groups

2.6. PRICING STRATEGY

The products will be priced in indirect costs i.e indirect costs = all other cost of production

pre determined prices

Manufucturers determine prices for our products

Cosumer prices
Since customers go for the most cheapest prices in the market, our business will be determined to
set the prices according to the economic situations and also according to the customers pockets so
that to suit them

The business will be affering discount and credit facilities to those who buy goods at large
quantities so that it can sell many units hence making more profit.

2.7 SALES TACTICS

Personal selling will be the main mode of selling except when need for assistance arises and will
only be given training and attention on how to carry out sales activities. The business will be
producing the best products at most affordable prices in order to favor all the customers.

A discount of 10% will be given to customers who buy goods worth Ksh 10,000 and formal training
will also be offered to them. More than this the price will be negotiated according to customers
financial and set a figure where business will not incur a loss. Sales will be maintained through
frequent business cards

2.8 DISTRIBUTION METHOD

The mode of transport to be used will be a motorcycle for short distances . The products will be
reaching customers through direct selling. This should be through a well-established road in the
area so that all the customers can be served equally.

The motorcycles will be costing 50,000 each and will be driven by the qualified personnel with
experience. The distribution problem to be faced by the business is the accidents that can be
occuring during the rainy season due to the poor roads hence failing to supply the quality products
instead a lot of loss is incurred. The business is planning to improve the mode of it distribution by
purchasing a car in the future so that to reach many place even when its raining .By doing this the
business will be able to supply the products frequently even to the customers who are far from the
market hence increasing more profit.
 CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

The job analysis and description should be outlined for employees so that there can be no
confusion and they can do it better. employees should conduct themselves as per the business
policy
Training will be offered by the business to the supporting staff to make them conversant with
the job and also so that they can offer good services to our customers

3.1 THE MANAGEMENT TEAM

The business is managed by the owner who will carry out duties like planning and controlling the
employee’s performance. The manager has the managerial skills so he is able to operate and
manage the business well.

Manager

accountant

Sales personnel

watchman
 Roles of the manager will be.

1. Ensuring the employee’s Perform their duties well in order to achieve their goals.
2. The manager also conduct purchases of the products and their transportation.
3. He also plan and make decisions for business and how it will operate on daily basis.

3.2. OTHER PERSONAL

The duties of business manager is delegating duties to the employees supervise work being carried
in the business and recruit new employees. He also assigns and co-ordinates all tasks to be
performed in the business.

The business has set goals that it wants to achieve by the end of its runi.e annually and also takes
cover of all finance in the business. In order to achieve the target the business is proving leadership
by influencing activities and behavior of employee by showing out prices by approaching a
customer and guiding them where necessary. The entrepreneur is working with other employees at
every level of business in striving towards goals as a mediator of disputes which may affect the
productivity of the workers

Personal Number Qualification required Duties and Salary and benefits

responsibilities
Manager 1 Certificate in building and -Paying of wages and Basic salary of Ksh
construction salaries 30,000
-Delegating duties to
Aged 24 years the employees.
-Planning , organizing
and controlling the
business

Accountant 1 Diploma in accountancy and -Handle all finances Basic salary of Ksh
finance and prepare day to 20,000
day financial records
-Keep accounts of
money received
Sales personnel 2 Diploma in sales and -Handing customer Basic salary of Ksh
marketing properly, making 15,000
sure order are
Good communication skills collected and
delivered at right
Aged 25-35 years time and the right
people. Bring more
customer
Watchman 1 Able to communicate well Provide security and Basic salary of Ksh
with the customer . night. 8,000

Be of good conduct. Ensure business

premises are opened
Aged 35-50 years and closed when
necessary.

3.3. RECRUITMENT TRAINING AND PROMOTION.

Recruitment

The vacant positions will be advertised through the media so that those qualified can apply. The
applicant will receive application form of copy of the job specifications.

The interview is expected to be conducted by the manager and The successful candidate is offered
job and given a specific day to report.

Training

A training is important, there will be an introduction of new technology in order to improve

efficiency enabling the business to offer better services . The business is also will be conducting
seminars to the employees and in case of business expansion, training is offered to the usual
employees so as to hold a high rank.

Promotion

Hard working employees are to be motivated by increasing their salaries and be given privileges to
be the supervisors, it is done regularly in the business enterprise and also by the look of academic
achievement on the job training. A percentage of 15% of the income is added to the basic salary
after the job evaluation.

3.4 REMUNERATION AND INCENTIVES

Remunerations

The employees are entitled to receive their salaries at the end of the month and later than two days

Incentive

These are wage to encourage employees and motivate them to work harder so as to achieve the
objective more effectively. Each employee has his own rights to express everything that he or she
feels is not making the environment conducive to them. When employees express their ideas freely,
they improve the business and are able to get the right pay at the right time.

Motivation.

The business is ensuring that employees are recognized as roots of the business by providing
various documents like medical hence there is annual leave for the best employee so that they can
be given time for their personal activities

3.5 LEGAL REQUIREMENT

The business is to conduct its operation a mounting. It requires the following legal
requirements.

Requirement Description Where obtained Fees payable

1 Business information license To show the type Embu municipal council 4,000
business in
operation

2 Insurance cover Personal accident Madison insurance 5,000

cases company in Marimanti
 3 National flag Import license District headquarter 1,500

4 Government duties Chamber commerce 150 for goods

worth 5.000

3.6 EXTERNAL SUPPORT SERVICES

Banking services

The business is using bank transition on matters concerning cash and borrowing loans.
The business is to use

Equity bank

EMBU BRANCH

P.o box 204-00122

EMBU
INSURANCE
The business will insure itself with a insurance company so that it can be covered and
compensated on the happening of certain perils
Amaco insurance
p.o.box 204-00122
embu
3.7 general organization
the organization of the business is divided into four major department which work together for
the success of the business
 managing department-will be managing the whole business
accounting department-this will be dealing with money and finances in the business
sales department-this will be dealing with selling and distribution in the business
security department-this is concerned with safeguarding the business assests and property

CHAPTER FOUR

4.0. OPERATION PLAN

The business will be offered products from wholesalers through the following process

The sales person indentifies the products which are running out in stock and then writes them
down ,

He the submits the list to the accountant and the then the accountant submits its to the manager
who will make arrangements on how to purchase some more products

4.1 PRODUCTION FACILITIES AND CAPACITIES

The following are the facilities needed I the business

Computer

Cars

Internet

Table showing fixtures needed

NAME USE QUANTITY COST

BENCHES For customers 10 1,800
to sit on while
being served
SHELVES For arranging 15 2,500
the products for
display
TELEPHONE For ease 5 4,500
communication
between staffs
and also
customers
FIRE protection 4 20,000
EXTINGUISHERS

4.2 BUSINESS PREMISES

The business premises used will be buildings which is owned by mr mugo who is also the business
partner. The type of the premise of the business will be complex

The facilities installed include : water

Telephone

Counter shelves

The working space for the business is medium space as the business is a retail business. The
renovations required in the premises are paintings and repairs

4.3 OPERATION PROCESS

The business will offer it services through availing the products readly from suppliers

The anticipated cost in deciding and developing the business is to give out special offers to our
customers and motivating our employees

(ii)QUALITY CONTROL

The business is to ensure that all production activities are carried out in an environment away from
pollution and poor disposal of wastage materials. The business is also to count its profit after a
period of time and be able to know the progress. This would determine whether the business has
good corporate image to the certain standard to ensure that customers are well served and quality
is maintained. These standards may include -:

Performance

The business is to attend all customers need hence creating good customers relations.

Affordable prices

The business is to charge fair prices to the customers. The prices are to be fair compared to the
prices of the competitors.

Use of quality products

The business is to use standard measurements or materials to ensure they produce quality product

(ii) LABOUR CONTROL

The business will both employ direct and also indirect labour.this is to improve the services of our
business

(ii) TIME CONTROL AND WORKING SCHEDULES

The normal working hours in our business is 8 hours a day , also the employees will be working till
noon and they will be paid over time

Time schedule summary

Opening hours Break time Lunch time Closing time

7:00am-8:00am 9:30am- 1:00pm-2:00pm 5:30pm-6:00pm
10:00am

PURCHASING POLICY

Purchasing of product will be done centrally, so that the enterprise can enjoy large trade discount.

The purchasing order will be done by the manager and all purchases will be on cash basis. The
purchase record will be kept by the manager.

INVENTORY CONTROL

The business inventory is to be controlled by the stores man ,the business is intending to invest more in
stock as to avail products on time

The stock taking is done every week and half of the stock should be maintained at every time
ITEMS DESCRIPTION SUPPLIER COST QUANTITY TOTAL
PER UNIT
HERBAL GREEN HACO 1000 11 DOZEN 11000
SOAPS
HERBAL WHITE HACO 11000 3 DOZEN 33000
LOTIONS
EARINGS ROUND ONCE FREE 1000 15 PKTS 15000
MARKET
HERBAL YELLOW HACO 15500 2 DOZEN 31000
CREAMS

4.3 PRODUCTION PROCESS

The extra factors that are most likely to affect our business are:

Inadequate workers to serve the customer when they are many,,,

The business manager should also intend to minimize the impact of the external foctors of power failure
by purchasing a generator to work with when there is power failure.

4.4 PLANT LAYOUT

MANAGERS ACCOUNTANT

LADIES CHANGING OFFICE OFFICE

ROOM

GENTS

CLASS COSMETIS ENTERPRISES SHOP

 MAIN GATE SECURITY

OFFICE

4.5 REGULATIONS AFFECTING THE BUSINESS

The proprietor is to ensure that the sanity and hygiene used and state of promises is up to standard
for the better health of employees.

This is by having the toiled cleaned well and compost pit for disposing waste materials within the
firms.

Safety regulation

The business is to have its workers working in an open space. The proprietor is to provide the
employees with overall to prevent their clothes from dirt and groves to protect their hands being
damaged by tools

Environment

More to this the business in collaboration with the municipal council of EMBU to participate in
repairing the drainage around the town to ensure people are staying in a clean place

License

Government license should be paid for before starting the business in most cases the license for the driver
and the permit.

Health regulation.
Health authority will certify the business and production activities. Before employing the employees,
everyone has to be certified by the ministry of health.

All safety regulations relating to the products will be kept in a safe area where every customer entering
the business sees them clearly. Fire extinguishers will be placed at a strategic place in the business. Also
emergency exit will be provided by the firm in case of emergency care and hygiene will be highly
practiced to avoid contamination.

Employee regulations.

The government have regulated the positioning of the business to the strategic position and on an
identification area in terms of sanitations, toilets etc. be handled in a good manner.

CHAPTER FIVE

5.0. FINANCIAL PLAN

5.1 BOOKS OF ACCOUNT

Cash book – This book will be showing cheques, cash money spend or received

General ledger – It will be showing all bills and expenses of the business like electricity, telephone
and water bills.

Purchase ledge – This book will contain the materials and equipment to be brought over a period

5.2 PRE OPERATIONAL COST

These are costs which the business will incur before it begins operating officially,

e.g water bil

Electricity bills

Equipment installation
 Obtaining license e.t.c

The sketch shows the pre- operational cost of the project CLASSIC LADIES ENTERPRISES

ITEMS AMOUNT
Shelves 25,000

Benches 15,000

Telephones 6,000

Purchase of fixed assets 30,000

Water bill 4,000

Electricity 7,000

Equipment installation 8,000

5.4 ESTIMATION OF WORKING CAPITAL

This is the finance which is required to run the business day to day activities.

ITEM COST (SHS)

Opening stock 65,400

Electricity bill 500

Salary 73000

Telephone bill 500

Loan repayment 6,475

Advertising 3,000

Transport 2,265

Stationery & furniture 10,400

Cash at hard 20,000

TOTAL 181540
5.4 ESTIMATION OF FIXED ASSETS

Money invested in capital equipments are:

Computers 80000

Motor bikes 150000

Tools and equipments 55000

Summary fixed assets estimation

ITEMS QUANTITY AMOUNT (KSHS)

Display counter 2 4,000

Table cabinet 2 2,000
Mobile phone 1 4,000
Chair 4 1,700
Rubber stamps 2 200
Stationery 200
5.5 PROJECT CASH FLOW FOR YEAR 1

MONTHS
particulars jan feb mar apr may jun jul aug sep oct Nov dec
Cash 100 900 750 700 800 500 100 110 130 120 110 135
inflows 0 0 0 0 0 0 0
Cash sales 6 4 3 2 4 1 6 7 8 9 7 10
Debtors 300 150 300 400 350 325 500
Total 130 100 120 130 150 160 170 170 170 180 170 180
inflow 0 0 0 0 0 0 0 00 00 00 0 00
Cash flow
Purchases 400 500 600 700 800 400 500 600 700 800 900 900
0 0 0 0 0 0
Adverts 150 200 250 300 400 500 600
Loan 200 200 200 210 200 200 200
payments
Electricity 350 410 400 400 400 450 500 500
Equipmen 300 400 500 600 700 700 750 100
ts 0
Salaries 400 500 700 700 700 750 800
Insurance 100 150 200 250
0 0 0 0
Lunch 100 100 100 100 100 100 100 100 100 100 100 100
License 700
Water bill 500 550 600 700 800 900
Transport 200 150 150 150 150 100 100
Renovatio 40 50 40 60 100
n
Lunch 100 100 100 100 100 100 100 100 100 100 100 100
Bank a/c 110 110 110 110 100 100 100
00 00 00 00 00 00 00
Total 50 50 50 50 50 50 50 50 50 50 50 50
outflow
Net cash 70 80 80 80 70 90 80 80 80 90 90 95
Accumula 101 944 110 133 115 314 746 227 494 180 481 208
tive cash 16 4 93 83 94 1 6 87 8 39 2 05
flow
Net cash 125 950 115 125 145 155 165 165 165 175 165 175
0 0 0 0 0 0 0 0 0 0 0
Active 135 105 125 155 165 175 175 175 175 185 175 175
cash 0 0 0 0 0 0 0 0 0 0 0 0

PROJECT CASH FLOW FOR YEAR 2

MONTHS
particulars jan feb mar apr may jun jul aug sep oct Nov dec
Cash 100 200 650 600 600 600 700 700 800 800 800 800
inflows
Cash sales 300 300 200 200 200 300 300 200 200 200 300 300
Debtors 300 400 300 400 450 450 460 470 480 490 500
Total 200 300 400 300 400 300 400 400 300 400 300 400
inflow
Cash 200 200 200 200 200 200 200 200 200 200 200 200
inflow
Purchases 600 600 700 700 600 700 700 700 800 800 900 110
0
Adverts 60 60 60 60 60 65 65 65 65 65 65 65
Loan 300 300 300 300 300 300 300 300 300 300 300 300
payments
Electricity 50 50 50 50 50 50 50 50 50 50 50 50
Equipmen 100 100 100 100 100 100 100 100 100 100 100
ts
Insurance 120 120 120 120 120 120 120 120 120 120 120 120
Lunch 100 100 100 100 100 100 100 100 100 100 100 100
License 700
 Water bill 500 550 600 700 800 900
Transport 200 15 200 150 150 200 200 150 200 150 250 100
Renovatio 200 200 200 200 200 200 200 200 200 200 200 200
n
Lunch 100 100 100 100 100 100 100 100 100 100 100 100
Bank a/c 100 200 200 200 200 100 100 100 200 100 200 100

Total 100 100 100 100 100 100 100 100 100 100 100 100
outflow
Net cash 50 50 50 60 60 60 60 50 50 60 60 60

totals 380 437 448 395 476 481 465 476 494 394 396 456
0 0 0 5 5 5 5 5 5 5 4 4

PROJECT CASH FLOW FOR YEAR 3

MONTHS
Particular jan feb mar apr may jun jul aug sep oct Nov dec
Cash 100 200 650 600 600 600 700 700 800 800 800 800
inflows
Cash 300 300 200 200 200v 300 300 200 200 200 300 300
sales
Debtors 300 400 300 400 450 450 460 470 480 490 500
Total 200 300 400 300 400 300 400 400 300 400 300 400
inflow
Cash 200 200 200 200 200 200 200 200 200 200 200 200
inflow
Purchase 600 600 700 700 600 700 700 700 800 800 900 1100
s
Adverts 60 60 60 60 60 65 65 65 65 65 65 65
Loan 300 300 300 300 300 300 300 300 300 300 300 300
payments
Electricit 50 50 50 50 50 50 50 50 50 50 50 50
y
Equipme 100 100 100 100 100 100 100 100 100 100 100
nts
Insurance 120 120 120 120 120 120 120 120 120 120 120 120

Lunch 100 100 100 100 100 100 100 100 100 100 100 100

License 700

Water bill 500 550 600 700 800 900

Transpor 200 15 200 150 150 200 200 150 200 150 250 100
t
Renovati 200 200 200 200 200 200 200 200 200 200 200 200
on
Lunch 100 100 100 100 100 100 100 100 100 100 100 100

Bank a/c 600 600 600 600 600 600 600 600 600 600 600 600

Total 300 300 300 300 300 300 300 300 300 300 300 300
outflow
Totals 2287 2297 1973 3068 2701 2163 2793 2893 2985 2793 3088 3203
0 0 0 0 0 0 0 0 0 0 0 0

5.6 PROFORMA INCOME STATEMENT

Item Year 1 Year 2 Year 3

Total sales 2104660 2543880 2901360
Debtors 5000 9000 1100
Bank interest 1000 12000 12000
Cash sales 2110660 2564880 2924360
Inventory 65400 684000 70400
Purchases 1062760 1134960 1246960
Total cost of goods 1128160 1193360 1317360
Gross profit 982500 1171520 1607000
Expenses
Salaries 276000 276000 27600
Loan repayment 71225 6475
Transportation 29265 31000 32500
Rent payment 60000 60000 60000
Advertisement 6000 9000 12000
Bank account 500
Electricity bill 3670 4210 3910
Telephone bill 2070 2280 3260
Water bill 7550 8000 7880
License 3000 3000 3000
Stationary & furniture 10400

Miscellaneous 26000 41000 34000

Total expenses 495680 440965 432550

Net profit before tax 486820 930555 1174450

Tax at 16% 77892 148888.8 187912

Net profit after tax 479030.8 781666.8 986538

5.7 PRO-FORMA BALANCE SHEET FOR THE YEAR 1

Assets Amount Amount Liabilities Amount
Current assets Creditors 52000
Cash in hand 3500 Working 227700
Cash at bank 10000 capital
Stock of 6550
material
Total current 110550 279700
assets
Fixed assets Equity loan 300,000
Dust coats 1200 Acquired profit 40800
Gloves 200 Shares held 142600
Blooms 1000
Detergents

Total fixed 7400 483400

assets

5.7.1 PRO-FORMA BALANCE SHEET FOR THE YEAR 2

Assets Amount Amount Liabilities Amount
Current assets Creditors 52000
Cash in hand 3500 Working 227700
Cash at bank 10000 capital
Stock of material 6550
Total current assets 110550 279700
Fixed assets Equity loan 300,000
Dust coats 1200 Acquired profit 40800
Gloves 200 Shares held 142600
Blooms 1000
Detergents

Total fixed assets 7400 483400

5.7.2 PRO-FORMA BALANCE SHEET FOR THE YEAR 3

 Assets Amount Amount Liabilities Amount
Current assets Creditors 52000
Cash in hand 3500 Working 227700
Cash at bank 10000 capital
Stock of 6550
material
Total current 110550 279700
assets

Fixed assets Equity loan 300,000

Dust coats 1200 Acquired profit 40800
Gloves 200 Shares held 142600
Blooms 1000
Detergents

Total fixed 7400 483400

assets

5.8 BREAK EVEN ANALYSIS

FIXED EXPENSES AMOUNT VARIABLE EXPENSES AMOUNT KSH

purchases 264500 rent 24000
water bill 5830 salaries 72000
transport 3450 license 500
promotion 2000 insurance 4800
miscellaneous 300

TOTAL 276080 101300

Annual sales =

Gross margin sales=sales- variable

529500-276000

=1548100

Gross margin percentage =gross margin x 100

 Sales

253420 x 100

592400

=47.86%

Breakeven point

fixed cost x 100

gross margin percentage

= 101300

0.4786

=211.659

BREAK EVEN ANALYSIS FOR END OF YEAR TWO

FIXED EXPENSES AMOUNT VARIABLE EXPENSES AMOUNT KSH

purchases 384000 rent 24000
water bill 7200 salaries 96000
transport 5400 license -
promotion 8000 insurance 4800
miscellaneous 300

TOTAL 404600 114000

Annual sales =

Gross margin sales=sales- variable

774500-404600

=369900

Gross margin percentage =gross margin x 100

Sales
 369900 x 100

774500

=47.76%

Breakeven point

fixed cost x 100

gross margin percentage

= 11400

0.4786

=301.508

BREAK EVEN ANALYSIS FOR END OF YEAR THREE

FIXED EXPENSES AMOUNT VARIABLE EXPENSES AMOUNT KSH

purchases 445000 rent 30000
water bill 8400 salaries 12000
transport 13200 license -
promotion 14400 insurance 4800
miscellaneous -

TOTAL 481000 154800

Annual sales =

Gross margin sales=sales- variable

91000-481000

=429000

Gross margin percentage =gross margin x 100

Sales

429000 x 100
 910000

=47.14%

Breakeven point

fixed cost x 100

gross margin percentage

= 154800

0.4714

=328.364

PROFITABILITY RATIOS

YEAR 1

Gross margin percentage= gross margin x 100

Annual sales

265000 x 100

529500 =50%

YEAR 2

Gross margin percentage= gross margin x 100

Annual sales

467500 x 100

774500 =60%

YEAR 3

Gross margin percentage= gross margin x 100

Annual sales

465500 x 100

910000

=51%
 Chapter six

6.1 risks incidental in the business premise

Classic ladies enterprise might experience some challenging risks during it operation. Some of the risks
are:

 Theft
 Fire
 Floods

The risks experienced in a business may hinder its successful and fast growth and the business might
make some lose.

It is therefore prudent to provide or look for some solutions to prevent these risks from occurring.

6.2 solutions to risks

 Strategic solutions
The business will be located in a well leveled ground that is free from floods and other floods
related calamities
 Installations of fire fighting equipments
The business will install the modern automatic fire fighting equipment’s so as to curb the risk of
fire
 Ensuring round the clock security
Cctv’s camera’s will be installed all around the business to boost security
People entering the premise will be screened before being allowed to enter in
Only the authorized people in the premise will be allowed in the store room so as to improve
accountability
Guards will be employed to watch over the premises asset and also the activities going around
in and out of the premises
 Taking of insurance cover
The business will take up a insurance cover from the nearest insurance companies so as it can
be covered and be compensated incase of loss occurring .