WOTE TECHNICAL TRAINING INSTITUTE

BUSINESS PLAN TITTLE : OKOA CAPITAL SOLUTIONS LIMITED

NAME OF THE OWNER: MUSANGO JUSTUS MUTUNGA

INDEX NUMBER : 3071010125

COURSE : CRAFT CERTIFICATE IN FOOD AND BEVARAGE

DEPARTMENT : HOSPITALITY AND TOURISM

SUPERVISOR : MADAM FRIDAH

EXAM SERIES : NOVEMBER/DECEMBER SERIES /2024

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PRESENTED TO : THE KENYA NATIONAL EXAMINATIONS COUNCIL IN
PARTIAL FULFIIMENT OF THE AWARD OF CRAFT CERTIFICATE IN FOOD AND
BEVARAGE AT WOTE TECHNICAL TRAINING INSTITUTE.

DECLARATION

I hereby declare that the business plan is my original work and it has not been presented to
Kenya National Examination Council for purpose of evaluation.

STUDENT’S NAME: MUSANGO JUSTUS MUTUNGA

SIGN:………:…………………………………DATE…………………………………

This project has been submitted for review with my approval as college Supervisor.
SUPERVISOR’S NAME: MADAM FRIDAH
SIGN:……………… ……………………… DATE:……………………………

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DEDICATION

I dedicate this business plan to my lovely parents for their financial support during the
production of the plan. I would also like to thank Madam Fridah the best supplier in our
institution for his encouragement on working smart on the business project.

iii
ACKNOWLEDGEMENT

I would like to congratulate all those who have contributed to the success of the business project.
First of all, I thank the almighty God for enabling me to do this work, secondly I thank my
supervisor Madam Fridah who assisted in correcting errors in the business project and also on
how to make it more presentable. I would also like to thank my fellow students and my lovely
parents who played an important role in making the plan successful. Glory to God.

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EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

This summary is important for the entire chapter. The name of the business will be Okoa Capital
Solution limited which will be situated at Kericho 2 nd floor Masai Ongata Rongai near
Chepkoton girls’ secondary school. This business will be in a partnership.

The business will be dealing with selling electronic instruments and giving loans to our clients.

2.0 MARKETING PLAN

Our business will categorize our customers in the following groups

a. Institutional customers
b. Individual customers
c. Pass by customers

Our business will follow the following channel

Supervisor

Deputy supervisor

Reception officer

Employees

Customers

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3.0 ORGANIZATIONAL AND MANAGEMENT PLAN

Okoa Capital Solutions company operates under partnership form of business ownership.

The topic also consists of the organizational structure headed by the director. The duties of the
management team are highlighted further in this topic. It also consists of the processes used for
recruitment, management team, training, promotion, incentives and remuneration, legal
requirements and other support services.

4.0 PRODUCTION PROCESS

For our business to operate smoothly and efficiently production facilities will be required. This
will mainly include equipment, tools and machines required for making work easier to the
employees producing quality products, pricing, customers’ relation and motivations. Also
government rules and regulations are discussed in this topic such as insurance cover, taxation
and licensing. Distribution strategy is also explained further for example retailers.

5.0 FINANCIAL PLAN

Working capital can be calculated as pre operational cost will be dedicated from the initial
capital as the balance will be used as an opening balance for the balance for the first year cash
flow projection.it can be calculated as below.

Opening balance=initial capital-preoperational cost

=2000000-265000

=ksh1785000

Table of Contents

vi
 DECLARATION.....................................................................................................................................ii
DEDICATION........................................................................................................................................iii
ACKNOWLEDGEMENT......................................................................................................................iv
EXECUTIVE SUMMARY.....................................................................................................................v
CHAPTER ONE..........................................................................................................................................1
1.0 BUSINESS DESCRIPTION..............................................................................................................1
1.1BUSINESS NAME.............................................................................................................................1
1.2 BUSINESS LOCATION AND ADDRESS.......................................................................................1
1.3 FORMS OF BUSINESS OWNERSHIP............................................................................................2
1.4TYPES OF THE BUSINESS.............................................................................................................2
1.5PRODUCT AND SERVICE..............................................................................................................3
1.6 JUSTIFICATION OF THE BUSINESS OPPORTUNITY................................................................3
1.7 THE INDUSTRY..............................................................................................................................4
1.8 GOAL OF THE BUSINESS/ OBJECTIVES....................................................................................4
CHAPTER TWO.........................................................................................................................................5
2.O MARKETING PLAN.......................................................................................................................5
2.2. MARKET SHARE...........................................................................................................................7
2.3COMPETITION.................................................................................................................................7
2.4METHODS OF PROMOTION AND ADVERTISEMENT...............................................................8
2.5PRICING STRATEGY......................................................................................................................8
2.6 SALES TACTICS.............................................................................................................................8
2.7DISTRIBUTION STRATEGY...........................................................................................................9
CHAPTER THREE...................................................................................................................................10
3.0 ORGANIZATION AND MANAGEMENT PLAN........................................................................10
3.1ORGANIZATION OBJECTIVES....................................................................................................10
3.2.1MANAGEMENT TEAM..............................................................................................................11
3.2.2PROCESS OF RECRUITMENT...................................................................................................12
3.2.3 TRAINING...................................................................................................................................13
3.2.4 PROMOTION..............................................................................................................................13
3.2.5REMUNERATION AND INCENTIVES......................................................................................13
3.3 LEGAL REQUIREMENTS AND SUPPORT SERVICES............................................................14
3.3.3OTHER SUPPORT SERVICES....................................................................................................15

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CHAPTER FOUR.....................................................................................................................................16
4.0 PRODUCTION PLAN....................................................................................................................16
4.1 Production Process..........................................................................................................................17
4.2 PRODUCTION STRATEGY..........................................................................................................17
4.3GOVERNMENT RULES AND REGULATIONS...........................................................................18
4.3.1Insurance cover..............................................................................................................................18
4.3.2 Licensing......................................................................................................................................18
4.3.3. Taxation.......................................................................................................................................18
4.4 Distribution strategy........................................................................................................................18
CHAPTER FIVE.......................................................................................................................................19
FINANCIAL PLANNING........................................................................................................................19
5.1 PRE OPERATIONAL COSTS............................................................................................................19
5.2 WORKING CAPITAL........................................................................................................................20
5.3 PREPARATION OF PROFORMA INCOME STATEMENT AND BALANCE SHEET..................21
5.3.1 PROJECTED INCOME STATEMENT...........................................................................................21
5.3.2 PRO FORMA BALANCE SHEET..................................................................................................22
5.4 CALCULATION OF BREAK EVEN POINT....................................................................................23
5.5 CALCULATION OF PROFITABILITY RATIOS.............................................................................23
5.6 DESIRED FINANCING.....................................................................................................................24

viii
CHAPTER ONE

1.0 BUSINESS DESCRIPTION

About us!

We are a financial institution that provides access to financial services for underserved and
unbanked businesses. We offer a range of financial products and services designed to meet the
needs of business communities. Our team is dedicated to finding personalized solutions for our
clients and we are mostly committed to help them achieve their financial goals.

1.1BUSINESS NAME

OKOA CAPITAL SOLUTIONS LIMITED.

The name Okoa is obtained from Swahili word that means to help. The reason of selecting this
business name is to help the community as the name of the business means.

1.2 BUSINESS LOCATION AND ADDRESS.

Our business is located at kericho, 2nd floor Maasai, Ongata-Rogai near Chepkoton Girls'
Secondary School. Our business has many branches scattered everywhere in our country. For
example, at Makueni. It's located at Joyland Villa Lodge, opposite Gaza Bar and Restaurant. In
Machakos, our business is located at Kola Market, opposite Kola Polytechnic , at Nairobi our
business is located at South C, behind Evergreen House Building. At Kitui, our business is at
Ikutha opposite Kitui University, and so on.

Clients can reach us through the following email and contact 0742 80 94 14, 0792 90 76 99 , info
@ okoacapital.africa

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1.3 FORMS OF BUSINESS OWNERSHIP.

PARTNERSHIP.

This is an association where four people were, or we came together with a common interest to
carry on a business with a view of making a profit. The agreement that we made here indicated
as follows.

1. Effective date of partnership.

2. Business name of the partnership.
3. Contribution of capital by each partner.
4. How the business losses and the profit will be shared.
5. How a partner may withdraw from a partnership.
6. How a business assets and liabilities will be shared in the dates of the solution.
7. Profit will be shared according to the amount of capital each partner contributes.

We usually get income from friends, loans, and partnerships.

1.4TYPES OF THE BUSINESS.

FINANCIAL BUSINESS.

We offer the following services.

I. Mobile platform- Upon registration, we offer immediate loan and we rely on local
mobile operators to provide services to our clients.
II. We train and dedicate employees. We have a pool of skilled team who are committed to
serving our clients.
III. We offer a range of financial products and services designed to meet the needs of
business communities.
IV. We offer business loans, which are flexible, weekly repayment options to ensure that
repayment does not disrupt our customers' regular operation. Customers can choose to
repay their loans over four, five, six, eight, or ten weeks. We give loans which will be
repaid with 8% interest.

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1.5PRODUCT AND SERVICE.

Our business offers electronic devices which the customer can pay deposit and obtain the device,
and E, or she will be paying every day by amount that will be indicated in the platform. The
products that we offer are as follows.

PRODUCT DEPOSIT CHARGES PER TOTAL AMOUNT

DAY
Cell phones SH.3,000. SH.50. SH12,000
Smart watches SH.1,000 SH.20 SH52,000
Solar pannels SH 5500 SH 100 SH 18000
Electric torches Sh 100 Sh 30 SH 1200
Motor bikes Sh 20,000 Sh.400 Sh. 120,000
Woofer Sh 15,000 Sh. 70 Sh. 7000
Gas cooker Sh 2000 Sh 45 Sh .8800
Juice blender Sh. 1800 Sh 80 Sh .8100

As customers order the product we usually offer door to door service with no charges . when
customer fails to redeem his or her loan there are charges accompanying that cas.

The service that we offer we have explained further in Topic 1.4. In case of death of a customer
before completion of repayment of the loan, we usually write-off. We do not charge their
relatives.

1.6 JUSTIFICATION OF THE BUSINESS OPPORTUNITY.

I. Reason to start this form of ownership is to help customers with quick cash injection for rapid
business expansion and short-term flow needs.

II. We also create more capacity for more capital to the local business entrepreneurs.

III. We also make it easy for local entrepreneurs to start and run their small business enterprises
efficiently

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IV. To earn profit

V.To raise more business enterprise.

1.7 THE INDUSTRY.

BANKS

Our business lies in financial management because we majorly prefer giving loans mostly rather
than selling products.

1.8 GOAL OF THE BUSINESS/ OBJECTIVES.

We have two goals of the business.

I. long-term goals
II. short-term goals.

Long-term goals.

We offer financial facilities to raise small business enterprise to obtain what he or she does not
have, and run and control his or her business efficiently with the flow of the money to raise low
income.

Short-term goals

 To obtain profit
 To utilize available resources,
 To provide goods and services
 To the society,
 To make goods more used,
 To maximize the maximum.

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CHAPTER TWO

2.O MARKETING PLAN.

We as OKOA CAPITAL SOLUTIONS LIMITED, we work in the day time for 12 hours. Our
business does not operate at night. We have skills and potential employees. Our business offers
door-to-door services. We have prices settled aside for each and every product and service we
offer. As we have discussed in Chapter 1.5, Product and Service, we do offer promotions to the
active members. For example, for our electronic products, when you buy three items, we give the
customer one for free. Our employees work under management. We have hierarchy of leadership
in our business.

supervisor

deputy
supervisor
Supervisor

Reception officer

Employees,

Customers.

DUTIES OVER SUPERVISOR.

1.Budgeting- He is responsible for preparing budgets for the business. He ensures each outlet in
the department achieves the estimated profit margin.

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2. Quality control- He ensures that all the products bought for the sale are of good standard. 3.
3.Manpower development- he is responsible for recruitment, promotion, transfers, and dismissals
in the business. He should hold regular meetings to ensure that both projects of the business go
on as planned. He should also analyze the shortcoming of the activities and ensure improvement.
4. Implementation of agreed policies.

5. Formulates plans and overseas control system by monitoring cost, sales, and profit margin.

6. Organizes training, motivation, and effective controlling staff.

IMPORTANCE OF MARKETING PLAN TO OUR BUSINESS.

1) To create awareness of existing products to potential customers.

2) To ensure availability of goods and services.
3) To maximize the goods and services.
4) To make some goods more useful.
5) To promote trade by satisfying customers need.

2.1. THE CUSTOMERS.

In this stage we have people who are potential who are normally buy or our commodities. They
usually boost our business hence we have a profit margin. We categorize them as individual
customers.

Individual customers.

These are customers who come one-in-one for the purchase of products or for the loan. For the
loans we usually consider the following.

i. Period of payment.
ii. Occupation.
iii. Amount of money needed
iv. the age of the customer.
v. Nationality.

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2.2. MARKET SHARE.

We buy our products as a wholesale hence selling them at affordable prices which majority are
played in daily basis but in affordable price. As a business we do prefer using pie charts. This is
because it is simple to read and understand.

2.3COMPETITION.

We are located in places where there is stiff competition, but we have tactics that we normally
use to attract customers. The competitors have strengths as well as weaknesses.

STRENGTHS OF COMPETITORS.

1) They have more suppliers,

2) They operate under one roof
3) They work for long hours, for example, 24 hours.

WEAKNESS OF COMPETITORS

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 1. They don't offer door-to-door services as our business does
2. They operate under one roof Since they are not scattered all over.
3. They have more interest rates to their products.
4. They don't offer promotions to their goods
5. They work for long hours, 24 hours, making employees become inattentive due to lack of
sleep.
6. They don't prefer employing a skilled employee, hence the decision-making rate is lower.

2.4METHODS OF PROMOTION AND ADVERTISEMENT.

We have many ways of creating awareness of our business and the products sold in our
business. We still do promotions as the customers buy many products from our business and
we offer free transport. We have the following channels of advertisement.

a. Televisions,
b. Billboards
c. Posters
d. Radios
e. Newspapers.

2.5PRICING STRATEGY.

Our business has methods we use to sell goods in business so as to increase the level of our
business. The price list we have discussed in topic 1.5, product and service. We have prices
which even low income earners can afford. We still have products which our customers can pay
just commission and we offer the product to the customers as he or she pays from, pays the
product in daily basis.

2.6 SALES TACTICS.

1. Our business offers representable packages for the products that we sell for our
customers, so as to attract them and buy the goods.
2. We usually sell our goods in affordable price, hence attracting more customers.
3. We usually offer after-sales services.

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 4. We usually do door-to-door services so that we can reach the customers who are unable
to reach us at the time.
5. We usually order our goods from one supplier to ensure that all goods are of good
quality.
6. We have a rule that says buy many products and get them at lower price, which means
the more you buy lots of goods; the more you get them in low prices.
7. Our prices are not fixed, hence we allow negotiation.
8. We have skilled employees who portray good conduct to their customers and help them
when necessary.

2.7DISTRIBUTION STRATEGY.

Our business has ways of distributing goods to reach the customers at the right time and at the
right place. Our customers have the following ways of distribution.

1. Processing,
2. Packaging,
3. Transportation,
4. Selling of goods and services to the customer.

We still have channels of distribution. Foreign distributors, wholesalers, retailers, combined

customers.

Foreign Distributor –retailer –company-customers

Wholesalers- retailer-company –customers

Wholesalers –agent –local distributor-company –customer

Whole seller-company-customer .

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CHAPTER THREE

3.0 ORGANIZATION AND MANAGEMENT PLAN

Okoa Capital Solutions Limited has the Chain of Leadership. The chain of leadership are as
follows: Managers, supervisor, Deputy suprvisor, Cashier, ReceptionOfficer, Cleaners, Drivers,
Watchmen, Loan Distributor, Personnel and Customers

3.1ORGANIZATION OBJECTIVES

I. To enhance continuity of small business

II. To raise standards of living to low-income earners
III. To make customers to have what they desire to have

ORGANIZATIONAL STRUCTURE

Okoa Capital Solutions Limited has the hierarchy of leadership Which are as follows:

MANAGERS

SUPERVISOR

DEPUTIES SUPERVISOR

CASHIER,

RECEPTION OFFICER,

Cleaners, Drivers, Watchmen, Loan Distributor Personnel, and Customers

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3.2.1MANAGEMENT TEAM

Our business entails management team and their roles.

Manager

Duties

 Directing and controlling all activities in the establishment

 Paying wages and salaries to the employees

Supervisor

Roles

 Supervision of the staff

Deputy supervisor

Role

 Should play the role of seniors supervisor in his/ her absence

Cashier

Role

 Collecting and banking of cash.

Cleaners

Role

 Will be in charge of general cleaning of the enterprise

Drivers

Role

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  Transportation of sales equipment
 Transportation of the employees to their working areas

3.2.2PROCESS OF RECRUITMENT

Our business usually has the dates which the recruitment process will take placed.

Those dates are then hanged to the posters. Those individuals who qualify will be given personal
details, and they will finally attach the required documents. A deadline date will be given for
submission of documents. During the recruitment, manager will pick out randomly the best of
the best that will be fully qualified for the job.

QUALIFICATIONS

For instance, drivers should have 3 years of work experience,

 They should be aged above 30 years,

 Should be a non-drunkard person,
 Should have a license.

Cleaners

Should have a certificate of good conduct and a KCPE certificate.

Cashiers

 Should have a certificate in business management.

 Should have a certificate of good conduct.
 Should be well skilled with management principles.
 Should have an experience of 2 or more years of work.

Deputy supervisor

 Should have a diploma certificate in business management,

 should have a certificate of good conduct.

Supervisor

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Should have a diploma in business management.

Deputy supervisor

Should have a work experience of 3 years, should have a diploma in business management, and
should be above 20 years.

Manager

 Should have a bachelor in science management,

 Should be aged above 30 years, should have a working experience of above 3 years.

3.2.3 TRAINING

Our business offers training to the employees so as to familiarize the workers with the job and
will give them all basic skills like communicating in public and some technical skills of products
and maintain available facilities.

It will also enable them to

 Have confidence when dealing with customers,

 Use competitors as their lever,
 Borrow ideas from other establishments,
 Learn from competitors instead.

3.2.4 PROMOTION

The active employees will be promoted to higher level of work and the dormant employees will
be fired out from the work.

3.2.5REMUNERATION AND INCENTIVES

Okoa capital solution, limited we do pay our workers their salaries and it will depend with the
level of work.

Renumeration table
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status No of employees Monthly pay Allowance Total
manager 1 80,000 5000 85,000
Supervisor 1 70,000 4000 74000
Deputy 1 60,000 4000 64000
supervisor
Cashier 1 50,000 3000 53000
Cleaners 5 20,000 1000 55000
Drivers 5 30,000 1000 155000
Loan distributers 10 40000 1000 420000
watchmen 2 15000 1000 32000

INCENTIVES.

The business will venture into many incentives to ensure that workers will be much motivated.
For instance, the workers will be taken for trips to expand their skills and recreate themselves for
free. Sometimes, if the product is advertised and best-sold, will be paid a commission. Overtime
working hours will be paid. Lunch and breakfast will be offered for free.

3.3 LEGAL REQUIREMENTS AND SUPPORT SERVICES.

Our business has registered itself legal to avoid much inconvenience. The following and the legal
formalities that our business has registered to enable it to run efficiently.

Permits.

This will be issued by Kericho Town Council with a fixed charge of registration form of ksh
1000.

Insurance.

Our business has insurance cover in case of theft or outbreak of fire accident which cause a loss
of loss for it to be compensated for. For example, the year's insurance cover will ensure the
business will pick up to supply the products that will be insured. In case of accident, the
establishment will be compensated for the loss which cost 10,000 shillings.

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3.3.3OTHER SUPPORT SERVICES.

License.

The director of business will be required acquire license for the trading business before the start
of the business operation to ensure smooth running of the firm. Because it will be legally known
and registered by the government, it cost 4,000 shillings.

By-laws.

The business will use the following steps during its operation to ensure smooth running of the
business.

Install alarms for security, especially against theft.

Ensure good ventilation.

Install fire extinguishers to cater for end-fire outbreak.

BANKING SERVICES.

Okoa Capital Solutions Limited. Use Kenya Commercial Bank, KCB, water engine. The
business should have a giant account for financial business through loans for savings and even
payment transactions.

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CHAPTER FOUR

4.0 PRODUCTION PLAN

Okoa capital solution limited uses production techniques to come up with the final
products. For instance our business operates majorly in giving loans and selling of
electronic devices . our business shall follow the following criteria .

 Determining the product market within a market research will be conducted .

 Determining the importance of products in the area.
 Presenting those attributes in a configuration perceived by the customers
 Developing a model relating to customers preference and tastes
 Identifying the potential customers

The following personnel will do this development. The following personnel will do this
development in different hours using different equipment in order to achieve the business goal
and suit the markets shown below.

Equipment Personnel Task Time

Motorbike Loan distributors For transporting the 10 hours
employees to field of
work
For distributing the
electronic equipments
to the potential
customers
Vehicles director For determining 10 hours
market for the
product market
research
Pens / papers for Directors For identifying 4 hours
quoting important attributes
in a configuration

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Charts Directors Perceived by the 5 hours
customers
Present product
qualities in
configuration
perceived by the
customers

4.1 Production Process

Okoa Capital Solutions Limited works under already manufactured products like money. Our
business does not convert the products used to finished products. Hence, uses already
manufactured products to achieve their goal. Hence, make profit to the business. The following
is the procedure that our business uses to give out loans to individuals.

i. The customer should have a national identity

ii. The customer should be a Kenyan citizen.
iii. The customer should be able to pay back the loan within the time that is indicated in the
loan form.
iv. When the customer fails to pay the loan within the agreed period of time, that would be
penalties.
v. In case of any inconvenience, the customer is allowed to raise it to the director for more
clarification.

4.2 PRODUCTION STRATEGY

Our business uses different methods to produce the product to the potential customers. For
instance, our business manager gets loans from KCB, Kenya Commercial Bank, where we
manage them and bring it to the potential customer for them to obtain loans from us and raise
their small business and raise their standard of living. We still have electronic devices where

17
 we usually sell them at lower prices and the customer is allowed to pick the product and pay
it in installments. Such products are discussed in Topic 1.5, Product and Service.

4.3GOVERNMENT RULES AND REGULATIONS

4.3.1Insurance cover

Our government has insured all the products in case of outbreak of fire or accident occurred and
a huge loss has occurred for them to be compensated by the insurance. For example, Jayez
Insurance cover will ensure the pickup to supply products that will be insured in case of accident.
The establishment will be compensated for the loss.

4.3.2 Licensing.

Our business has registered itself to the government to ensure legal operation of the business.
Then the business operation will be known by the government. This enables the government to
identify other businesses that are working illegally without a license.

4.3.3. Taxation.

In our business, we do file our taxation after every 10 months, in each and every year. This
enables the government to obtain finance. This finance makes the infrastructure to improve.

4.4 Distribution strategy.

Retailer.

Our business prefers retailers for distribution purposes. Where the goods are obtained from,
wholesalers then break them down from buy into small quantities. When customers get them,
then from retailer according to the customer's preferences. This enables the customers to get their
services quickly, during the times that they need service. It enables quick access of products. It
also reduces transport costs, as one will not move from one geographical area. Reason being, our
business offers door-to-door service.

18
CHAPTER FIVE

FINANCIAL PLANNING

5.1 PRE OPERATIONAL COSTS

The business will incur initial costs before its operations. The cost will be tabulated as below:

ITEM AMOUNT
LICENCE 5000
FURNITURE AND FEELINGS 50000
INSUARANCE 15000
ELECTRICAL INSTALLATION 30000
TELEPHONE INSTALLATION 10000
ADVERTISEMENT 12000
AGES AND SALARIES 60000
WATER INSTALLATION 5000
RENT 15000
KITCHEN WAVE 20000
OFFICE STATIONARY 30000
INTERNET CONNECTION 10000
MISCELLANEOUS 3000
TOTAL 265,000

From the above statement, working capital can be calculated as pre operational cost will be
dedicated from the initial capital as the balance will be used as an opening balance for the
balance for the first year cash flow projection.it can be calculated as below.

Opening balance=initial capital-preoperational cost

=2000000-265000

=ksh1785000

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5.2 WORKING CAPITAL

Working capital=current assets-current liabilities

The following table shows the current assets and liabilities in the business

ITEM Y1 Y2 Y3
CURRENT ASSETS AMOUNT AMOUNT AMOUNT
STOCK 200000 150000 100000
CASH IN HAND 800000 700000 500000
CASH IN BANK 400000 300000 200000
DEBTORS 400000 200000 100000
TOTAL 180000 200000 900000
CURRENT AMOUNT AMOUNT AMOUNT
LIABILITIES
OCCURRED 150000 100000 50000
+EXPENSES
BANK 400000 200000 90000
OVERDRAFT
TOTAL 950000 600000 390000

Working capital Y1=180000-650000=1150000

Y2=1350000-600000=750000

Y3=900000-390000=510000

Total working capital

1150000+750000+510000=2410000

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5.3 PREPARATION OF PROFORMA INCOME STATEMENT AND BALANCE SHEET

5.3.1 PROJECTED INCOME STATEMENT

This shows profit and loss made by best bakery bakers and suppliers during the financial year.
This is by deducting total expenses.

ITEM FIRST YEAR SECOND YEAR THIRD YEAR

AMOUNT AMOUNT AMOUNT
CASH SALES 1650000 165000 1218000
DEBTORS 400000 0 496000
TOTALS 2050000 13650000 1713000
LESS PURCHASES 420000 900000 1790000
GROSS PROFIT 1630000 465000 77000
LESS EXPENSES
LICENCES 40000 22000 7200
FURNITURE AND 82000 180000 56000
FITTINGS
INSUARANCE 120000 192000 192000
ELECTRICAL 92000 135000 78000
INSTALLATION
TELEPHONE 53000 72000 0
INSTALLATION
ADVERTISEMENT 72000 46000 55000
WAGES AND 720000 780000 90000
SALARIES
WATER 51000 46000 540000
INSTALLATION
RENT 180000 26000 45000
KITCHEN WARE 55000 113000 216000
TOTAL 1465000 182000 1762000
NET PROFIT (165000) (136100) (1839000)

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5.3.2 PRO FORMA BALANCE SHEET

A balance sheet shows the assets, liabilities and capital of the business. Wote best bakers
suppliers as at 31st Dec 2015

WOTE BEST BAKERS SUPPLIES

BALANCE SHEET AS AT 31ST DEC 2015

FIXED ASSETS COST.KSH LIABILITIES COST.KSH

CURRENT
LIABILITIES
FURNITURE& TRADE 260000
CREDITORS
FITTINGS 50000 TAX 400000
KITCHENWORK 20000 660000
OFFICE 30000 CURRENT
LIABILITIES
STATIONARY SHARE CAPITAL 400000
100000 PROFIT AND LOSS 200000
CURRENT ASSETS BANK LOAN 500000
RAW MATERIALS 42000
CASH 1650000
DEBTOR 400000
2092000 1100000
CAPITAL 2192000 1760000
EMPLOYED

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5.4 CALCULATION OF BREAK EVEN POINT

This point total cost will be equal to the sales operation is below break point to losses while
above lead to a profit

Break-even point =fixed cost/contribution per limit

Break-even point in (selling)=total fixed cost/distribution*total sales

=95000/1978000*2050000

=9845800

Target profit=total fixed cost/ total distribution*total sales

195000+95000+978000*2050000

=263,458.

5.5 CALCULATION OF PROFITABILITY RATIOS

1.Gross profit sales percentage =gross profit/sales*100%

=1630000*100/1650000=98.79%

2.Net profit sales percentage =net profit/sales*100=10%

3.Net profit of the total assets * 100

=net profit/total investment *100

=165000/1650*100

=10%

4.Return on investment =profit after tax/shared capital reserve *100

=165000(500,000*100

=20.6%

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5.6 DESIRED FINANCING

ITEM YEAR 1 YEAR 2 YEAR 3

DESCRIPTION
PREOPENING COST 265000 350000 400000
WORKING 1150000 400000 45000
CAPITAL
FIXED ASSETS
FURNITURE AND 50000 51000 55000
FITTINGS

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KITCHEN WARE 20000 22000 24000
OFFICE 30000 33000 35000
STATIONARY
TOTAL FIXED 100000 110000 120000
ASSETS
TOTAL 16150000 966000 895000

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