BUSINESS PLAN

ALLIANCE HOTEL AND RESTAURANT

TEL NUMBER : +254745025798

EMAIL ADDRESS : [email protected]

PRESENTED BY : PAULINE EMEMWA

SUPERVISOR : MR. DAVID MADAGA

SCHOOL : SHAMBERERE TECHNICAL TRAINING

INSTITUTE

DATE OF SUBMISSION : SEPTEMBER 2023

ADDRESS : 146-50300, MARAGOLI

INDEX NUMBER :

ADM NUMBER : 9065

PRESENTED TO KENYA EXAMINATION COUNCIL FOR THE PARTIAL

FULFILMENT FOR AN AWARD OF CRAFT CERTIFICATE IN HUMAN

RESOURCE MANAGEMENT.
DEDICATION
I dedicate this job to the Almighty God my creator. My strong pillar, my source of

inspiration, wisdom, knowledge and understanding. He has been the source of my strength

throughout the program and to my beloved parents whom encouragement has made sure that

I give it all it takes to finish that which I have started. Thank you my beloved parents for you

can never be qualified. God bless you.

i
ACKNOWLEDGEMENT
I acknowledge this work to the entire department of business studies for the support and

guidance. I also acknowledge my family and friend and also my mentors for the moral and

material support.

ii
EXECUTIVE SUMMARY
This Section of analysis is a summary of various components of the business plan a business

description - marketing plan, organizational or management plan, production financial plan.

Chapter One

Goes to overview of the business including the name form of ownership, location, address,

capital investment, types of business product and services offered justification of opportunity

growth strategies as well as analysis of competition, strength and weakness, opportunity and

threats.

Chapter Two

It gives the overview of marketing of the lives of the business falls and goals and objective of

the business. Also it presents the entry and growth strategies as well as analysis of

competitors, strength, weaknesses, opportunities and threats.

Chapter Three

The proposed business plan presents the organizational and management plan will be

adopted. It presents the organization structure, the key management personnel with these

respective qualification experience, responsibility and remuneration given to them also

present the recruitment, training and promotion to be adopted together with the remuneration

and incentive to be given. Finally, it presents the licenses, permit and by-laws involved

during the business and any other supportive services available for easier operation of the

business.

Chapter Four

It presents the business production plan comprising of operation facilities and equipment

facilities. It also presents the production operation strategies and process and all regulations

and registration that are likely to affect production operation of the business.
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Chapter Five

The financial plan of the proposed business will show all the financial requirement of the

business venture. It will present the pre-operational costs incurred the working capital,

proforma balance sheet, proforma cash flow and proforma income statement. It will also

highlight the breakeven point analysis, desired financial proposed capitalization and

determined growth and progress of the business for experience of the future.

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Declaration
I hereby declare this business is original work and it has never been presented for any

academic award either in this institute or any institute of higher learning by any one for

publication or any other purpose.

Name : Pauline Ememwa

Signature:………………….. Date:……………………..

Name of Supervisor : Mr. David Madaga Signature:

………………….. Date:………………………..

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Table of Contents
DEDICATION..........................................................................................................................................i
ACKNOWLEDGEMENT.......................................................................................................................ii
EXECUTIVE SUMMARY....................................................................................................................iii
Declaration...............................................................................................................................................v
CHAPTER ONE......................................................................................................................................1
BUSINESS DESCRIPTION....................................................................................................................1
1.0 BUSINESS DESCRIPTION..............................................................................................................1
1.1 BACKGROUND OF THE OWNER.................................................................................................1
1.2 BUSINESS NAME AND LOGO......................................................................................................1
1.2.1 BUSINESS NAME.........................................................................................................................1
1.3 BUSINESS LOCATION AND ADDRESS......................................................................................1
1.3.1 BUSINESS LOCATION................................................................................................................1
MAP.........................................................................................................................................................2
1.3.2 BUSINESS ADDRESS..................................................................................................................2
1.4 FORM OF OWNERSHIP..................................................................................................................2
1.5 TYPE OF BUSINESS.......................................................................................................................3
1.6 PRODUCT AND SERVICES...........................................................................................................3
1.6.1 PRODUCTS....................................................................................................................................3
1.6.2. SERVICES.....................................................................................................................................3
1.7 JUSTIFICATION OF BUSINESS OPPORTUNITY........................................................................3
1.8 THE INDUSTRY..............................................................................................................................4
1.9 GOALS AND OBJECTIVES OF THE BUSINESS.........................................................................4
1.9.1 GOALS...........................................................................................................................................4
OBJECTIVES..........................................................................................................................................4
1.10 ENTRY AND GROWTH STRATEGY..........................................................................................5
1.10.1 ENTRY PLAN..............................................................................................................................5
1.10.2 GROWTH STRATEGY...............................................................................................................5
CHAPTER TWO.....................................................................................................................................6
2.0 MARKET PLAN...............................................................................................................................6
2.1 POTENTIAL CUSTOMER...............................................................................................................6
2.2 COMPETITORS................................................................................................................................6
2.3 MARKET SHARES AND SIZE.......................................................................................................7
2.4 METHODS OF PROMOTION AND ADVERTISEMENT.............................................................8
2.4.1 PROMOTIONS..............................................................................................................................8
2.4.2 ADVERTISEMENT.......................................................................................................................8
2.5 PRICING STRATEGIES..................................................................................................................8

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2.6 SALES TACTICS..............................................................................................................................8
2.7 DISTRIBUTION STRATEGY..........................................................................................................9
CHAPTER THREE...............................................................................................................................10
3.0 ORGANIZATION PLAN................................................................................................................10
3.1 ORGANIZATIONAL STRUCTURE.............................................................................................10
3.1.1. TOP MANAGEMENT................................................................................................................11
3.2 RECRUITMENT, TRAINING AND PROMOTION.....................................................................13
3.2.1 RECRUITMENT..........................................................................................................................13
3.2.2. TRAINING..................................................................................................................................13
3.2.3 PROMOTION...............................................................................................................................13
3.3 RENUMERATION AND INCENTIVES.......................................................................................13
3.3.1 RENUMERATION......................................................................................................................13
3.3.2 INCENTIVE.................................................................................................................................14
3.4 SUPPORT SERVICES....................................................................................................................14
3.4.1 INSURANCE COVER.................................................................................................................14
3.4.2 BANKING SERVICES................................................................................................................15
3.4.3 LEGAL SERVICES.....................................................................................................................15
CHAPTER FOUR..................................................................................................................................16
4.0 OPERATIONAL PLAN..................................................................................................................16
4.1 Production/ Operational Facilities and Capacity.............................................................................16
4.2 PRODUCTION STRATEGIES.......................................................................................................16
4.3 PRODUCTION PROCESS.............................................................................................................18
4.4 REGULATIONS AFECTING THE OPERATION........................................................................18
4.4.1 Health Regulations........................................................................................................................18
4.4.2 Safety Regulations........................................................................................................................18
4.4.3 Environmental Regulation............................................................................................................18
4.4.4. Laws Regulating Music...............................................................................................................18
CHAPTER FIVE...................................................................................................................................19
5.0 FINANCIAL PLAN........................................................................................................................19
5.1.1PRE OPERATIONAL COST........................................................................................................19
5.2 WORKING CAPITAL....................................................................................................................19
5.4 PRO FOMA BALANCE SHEET....................................................................................................20
5.5 BREAK-EVEN ANALYSIS...........................................................................................................23
5.6 EXPECTED PROFITABILITY RATIOS.......................................................................................23
5.6.1 Gross Profit Percentage................................................................................................................23
5.6.2 Return on equity............................................................................................................................23
5.6.3Return on investment.....................................................................................................................23

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5.6.4 Return on sales..............................................................................................................................23
5.7 DESIRED FINANCING..................................................................................................................24
5.8 PROPOSED CAPITALIZATION...................................................................................................24

viii
 CHAPTER ONE
BUSINESS DESCRIPTION
1.0 BUSINESS DESCRIPTION
1.1 BACKGROUND OF THE OWNER
The proposed business will be owned by Pauline Ememwa aged 20 years old, a Kenyan

nationality living in Vihiga County doing a Certificate Course in Human Resource

Management Year II at Shamberere Technical Training Institute. The business will start with

an initial Capital of 70,000. The occupation of the owner is business.

1.2 BUSINESS NAME AND LOGO

1.2.1 BUSINESS NAME

The business name is Alliance Hotel and Restaurant. The owner chose Alliance to signify

that the Hotel is of high maintenance. The name also presumed to have psychological impact

in the customer. They will be willing to experience the special services offered in this

venture.

1.3 BUSINESS LOCATION AND ADDRESS

1.3.1 BUSINESS LOCATION
Alliance Hotel and Restaurant will be located in Kakamega at Sigalagala National

Polytechnic along Kisumu – Kakamega Highway. The owner chose the location because it is

located near the College and Polytechnic of the town near the County Assembly

Headquarters. Thus the

employee of the County Assembly and the other casuals will be able to cross and get

something to eat and also will be easy for the student to get any type of food wherever they

want. In addition, the place has conducive environment and easy transport.

MAP

1.3.2 BUSINESS ADDRESS

Alliance Hotel and Restaurant

P.o Box 146- 50300

Kakamega Telephone number- 0745 025798

Email – [email protected]

1.4 FORM OF OWNERSHIP

The business will be a sole proprietorship type of business due to limited capital. Pauline

Ememwa will run the business as a Manager with the help of a supervisor and other

employees.

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The owner chose the type of business because there will be no profit sharing. This will enable

her to be able to mobilize enough capital resources to finance business expansion.

Quick decision- she can make quick decision because she is not supposed to consult anyone.

She can make decision in the time and control the situation more effectively.

Close supervision- She can supervise her business closely and she has direct connection with

the client and employees.

1.5 TYPE OF BUSINESS

The proposed business will be a start-up business starting capital estimated at Ksh. 70,000/-

and intended to start on 15th January 2026.

1.6 PRODUCT AND SERVICES

1.6.1 PRODUCTS
The business will be offering food, services and accommodation. This product will vary in

size and shape and will be of good quality. Various methods of packaging will be used to take

away services. The product will be offered in both cash and Mpesa form. The business will

cater for the clients including those from part of the Country will obtain their favorites food

that required skilled people to prepare at affordable price.

1.6.2. SERVICES
The business will provide conference facilities, standard economic rooms for

accommodation, free Wi-Fi interned facilities for customers who come to take their meals. It

will also provide television and newspapers so that customers can be updated.

1.7 JUSTIFICATION OF BUSINESS OPPORTUNITY

The owner of the business will be well trained in the business. So she has knowledge and

skills in dealing with the business. She also has enough capital to run the business. The

business is going to be successful and outweigh the competition because of the accessibility.

The business
3
is located centrally between the Kisumu- Kakamega Highway which will enable 90% of

many customers to access the size of the business.

Security- The security will be high since the business will be located near the Police station.

Location- Due to the central location of the business and exposure to the business and

exposure to the public in business has very high chances of making more services and

therefore is expected to run well.

1.8 THE INDUSTRY

The proposed business is under hospitality industry. It embraces economic undertaking which

aim to satisfy the demand for food, drinks and accommodation away from home.

1.9 GOALS AND OBJECTIVES OF THE BUSINESS

1.9.1 GOALS
The business will be set to attain the following short terms goals between 6 months to 1 year.

To advertise vacant job position in the newspaper and be able to recruit qualified position for

employment.

Modern technology to improve customer care services.

The business will be set to attain the following long term goals: -

- To aggressively market the business in order to attain 10% market share.

- To expand and open other branches.

OBJECTIVES
- To make profit.

- To ensure customer satisfaction.

- To utilize the available resources.

- To provide high quality of food and services.

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1.10 ENTRY AND GROWTH STRATEGY
1.10.1 ENTRY PLAN
The introduction of the business will be done through advertisement through the radio,

television and putting posters on the way. The posters will be written the services offered

and will offer products of low and affordable prices as compared to competitors.

1.10.2 GROWTH STRATEGY

Clients who come daily to consume the food are given a bottle of soda of 100ml as a

discount on every Friday at 11:00pm.

The business will employ qualified offers fair prices to consumers and also produce quality

foods and services. The business will be able to advertise their products online and posters

along Kisumu- Kakamega Highway.

5
 CHAPTER TWO
2.0 MARKET PLAN
Alliance Hotel and Restaurant will be identifying people’s needs and offering them services

with the aim of making profit. The business will be important because that is how they will

reach potential customers and get profit in return when products and services are offered to

customers.

2.1 POTENTIAL CUSTOMER

This are people in the market who come to buy your food or products and services in the

exchange of money or any other form of payment and service to wide range of people e.g.

institutions and hospitals, domestic customers and commercial customers.

2.2 COMPETITORS
Alliance Hotel and Restaurant will face still competition from the firms for the customers

available. The proposed business shall use the following strategies to ensure they overcome

the other competitors.

Business will recruit qualified personnel to ensure quality products.

Business products will be produced according to the current level of technology.

The presentation of competitors will be capitalizing on their weaknesses as shown below.

Competitors Strength Weakness Opportunities Threats

Broad Park Good site High prices Fair price Insecurity

Restaurant Operates 24 hours Insufficient staff

Well established No open air place

Amazon Well established Lack of modern machines Installed Insecurity

restaurant Good sites for operation modern

Operates 24 hours No open air place technology

6
 Alliance Proper packaging of foods Does not offer beans Fair prices on Insecurity

Hotel and High qualified staff items

Restaurant High level of hygiene Modernized

Modernized machines for operating

punching and taking machines

orders and booking.

2.3 MARKET SHARES AND SIZE

The restaurant will target consumers from within and all over the country. The business is

expecting to get a large percentage and large profit because of lack of stiff competition in and

around the Kisumu – Kakamega Highway.

Below is the presentation of market shares in form of a pie chart

Market shares
10%
15%

75%

Alliance Hotel & RestaurantBroad Park RestaurantAmazon restaurant

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2.4 METHODS OF PROMOTION AND ADVERTISEMENT
2.4.1 PROMOTIONS
Alliance Hotel and Restaurant will employ promotional technique in promoting the business.

These include free sample in order to promote sales. The food will be of high qualified and

offered at affordable prices.

2.4.2 ADVERTISEMENT
Advertising is a way of making potential customers to be aware of the product on offer in the

market.

Alliance Restaurant and Hotel will be advertised by the use of newspapers, radio, brochure

and social media. This will happen for a period of three months.

2.5 PRICING STRATEGIES

The pricing of any service depends on demand. The business will adopt the cost and pricing

strategy in determining the price of its products and service. Their prices will be as follows: -

fresh milk a cup Kshs 150/-. Tea cup will be costing Ksh 50 and many others. The price

setting may change due to the following factors: -

(i) Nature of competitors have high price

(ii) Level of income- The price will be fair in order to accommodate will be also

be offered to attract and retain potential customers.

2.6 SALES TACTICS

The proprietor will employ various selling tactics in order to reach the customers of their

products. The various tactics she will employ are direct or personal selling. This will enable

him to receive feedback directly from the customers and hence improve it. She will also be

able to know the needs of the customers directly using agents and distributors will enable the

proprietor to reach customers who are far away from the business.

8
2.7 DISTRIBUTION STRATEGY
The business will put in place various distribution strategies in for its products to reach its

customers. One of which will be produced through the agent to reach its customers. Although

it will emphasize direct contract and receive immediate feedback. The means of transport that

the business will use is road transport because the area where the business is located is well

fed with tarmac.

9
 CHAPTER THREE
3.0 ORGANIZATION PLAN
Alliance Hotel and restaurant will operate under the management being a sole proprietor

business. There shall be rooms which will be kept aside for keeping commodities which will

be headed by the store keeper. There will be waiters who will be making orders for customers

and making sure food is given to customers at a given time.

3.1 ORGANIZATIONAL STRUCTURE

ALLIANCE Hotel and Restaurant will have and be informed of the following organizational

structure.

MANAGER

SUPERVISOR

SECURITY GUARD WAITERS STOREKEEPER RECEPTIONIST CHEF

1
3.1.1. TOP MANAGEMENT
SUPERVISOR

Qualification

He should be of 25 years and above

Food handler certificate

Certificate in food and beverage

Certificate of good conduct

Duties

Delegating duties to waiters and chefs

Making duty roster for the staff

Help in recruiting staff

He makes sure that policies and regulations of food and beverage are implemented

MANAGER

Qualification

Should be 30 years and above.

Have certificate in Human resource management

Certificate of good conduct

Two years’ experience

Duties

Recruiting and selection of employees

1
In charge of wages and salaries of employees

Compensation non the salary with the employees

He is in charge of promotions.

3.1.2 OTHER PERSONNEL

TITLE NO REQUIRED QUALIFICATION DUTIES

Chefs 2 Food handler Production of food

certificate 1-year

experience

Certificate in food and beverage

sales production

Certificate of good conduct

Waiters 2 Certificate in food and beverage Services of food and

production sale drinks to customers

Food landler certificate Maintaining cleanliness

Certificate of good conduct Taking orders from

1 year experience guests

Store keeper 1 1-year experience in store keeping

Knowledge in food and beverage

25 years and above

Certificate of good conduct

Security 1 One-year experience Ensuring the

25 years and above company/business is

Certificate of Form Four safe

Certificate of good conduct

1
 Receptionist 1 1-year experience Welcoming of visitors

Certificate of good conduct and guests

Certificate of receptionist

25 years and above

3.2 RECRUITMENT, TRAINING AND PROMOTION

3.2.1 RECRUITMENT
The business management will recruit the personnel who will work with an aim of making

profit for the business. The recruitment will be done through the use of posters and

advertisement. This will indicate their qualification and vacant position in various

department.

3.2.2. TRAINING
Training of the new employees will be done through seminars for one week for them to

acquire the skills. The manager being the proprietor of the business will also attend seminars

also to help in training to improve the skills of the employee.

3.2.3 PROMOTION
The manager will consider the qualification factors to her employees. Individually for her

carry the promotion that they are going to be offered. The advantages of promotion will

encourage individuals to work hard towards attaining organizational goals.

3.3 RENUMERATION AND INCENTIVES

3.3.1 RENUMERATION
The main objective is to ensure that the business run smoothly. The business management

will offer a fair salary and incentives to its staff/ employees. This will vase on experience and

acquired educational background.

1
 Personnel Number Basic Salary Allowances Total

Manager 1 18000 8000 26000

Supervisor 1 16000 6000 22000

Chefs 2 10000 4000 14000

Waiters 2 9000 3000 12000

Store keeper 1 8000 2000 10000

Security 1 7000 1000 8000

Recruitment 1 14000 4000 18000

Total 110000

3.3.2 INCENTIVE
The incentive that will be given to employees for their hard work will be young part and

reward out so as to motivate them.

Each employee will be subjected to seven days leave.

In case of maternity leave overtime allowance will be provided to employees and offs will be

given to employees during holidays.

3.4 SUPPORT SERVICES

Alliance Hotel and Restaurant will have support from various established business to enable

it capitalize.

3.4.1 INSURANCE COVER

The business will carry insurance for various reasons.

Encourages savings

1
Ensures business stability

The business seeks insurance to cover the employees and theft.

3.4.2 BANKING SERVICES

The business will open an account with Kenya Commercial Bank at Kakamega and deposit

will be done on daily basis.

3.4.3 LEGAL SERVICES

The business will be conducting an advocate who will be in charge of the business proceedings.

1
 CHAPTER FOUR
4.0 OPERATIONAL PLAN
4.1 Production/ Operational Facilities and Capacity
Before purchasing the equipment, which are required in production sector will be

considered cost, maintenance cost and durability. This are illustrated in the table below: -

Items Quantity Cost Total

Cost

Cutlery 50 20 1000 Quickmart suppliers

Plates 70 20 1400 Naivas suppliers

Cups 70 50 3500 Naivas suppliers

Trays 15 150 2250 Selection suppliers

Water jugs 20 50 1000 Cash purchases

Sufuria 10 300 3000 Cash purchases

Blenders 2 3500 7000 Cash purchases

Cooker 4 4 burners 2000 Quickmart suppliers

Freezer 1 7000 7000 Naivas suppliers

Washing basins 10 30 300 Cash purchase

Packaging bags 200 10 200 Cash purchase

Parts 15 40 600 Cash purchase

Total Ksh. 92,250/-

4.2 PRODUCTION STRATEGIES

When dealing with products and services, the firm considers quality and standards of goods

and services. It is also place the priority in the taste and preference of the customers. Also

Alliance Hotel and Restaurant will be operating from 7:00am in the morning to 11:00pm in

1
the night during weekdays and from 7:00am to 10:00pm during weekends. It will also require

material in connection to operation as under the material include: -

Material Quantity Cost Total cost Suppliers

Sugar 90kg 150 per kg 13500 Mumias Company

Rice 90kg 150 per kg 13500 Naivas

Mangoes 1 sack 500 500 Farmer

Pineapples 1 sack 500 500 Farmer

Avocado 1 sack 400 400 Farmer

Potatoes 30l 900 900 Farmer

Salt 10 pcs 30 300 Khetias

Spices 2 crates 500 per crate 1000 Quick mart

Eggs 10 trays 300 per tray 3000 Farmer

Milk 50 litres 70 per l 3500 Kisumu bottlers

Onions 50 kgs 70 per kg 2000 Farmer

Whole meal 2 bundles 1200 per bundle 2400 Quick mart

Soda 25 crates 600 per crate 1500 Coca cola Supplies

Steel wool 10 pcs 20 200 Quick mart

Tomatoes ½ bags 2000 1000 Farmer

Wheat flour 2 bundles 850 per bundle 1700 Naivas

Soap 20l 100 per l 2000 Naivas

Beans 1 sack 3200 3200 Cereals

Cooking oil 10 kgs 100 100 Naivas

Total Kshs. 51,200/-

1
4.3 PRODUCTION PROCESS
The production process will follow the following procedures. The store keeper will be

receiving the materials from the farmers in the reception assistance by the waiter. Which the

hotel will be selling them to the customers based on the orders with the business.

The administration department ensures that work runs smoothly as expected. The

management pays the farmers who deliver goods to the business with respect to their

contract.

4.4 REGULATIONS AFECTING THE OPERATION

4.4.1 Health Regulations
The business will obtain a health license from the public center which is registered by the

Ministry of Health. The Ministry of Health will now license the after recommendations all

workers will be provided with safety boots and overalls to protect them.

If any worker will fall sick it will be the duty of the business to promote medication care to

the employee.

4.4.2 Safety Regulations

All workers in the Hotel will be allowed to wear flat shoes to avoid falling down. Chefs must

wear chef hat to prevent them reading head hence preventing blood circulation.

4.4.3 Environmental Regulation

The general cleanliness will be observed around the organization. The business will also

ensure that all workers maintain cleanliness because they are in charge of supplying food

to the workers.

4.4.4. Laws Regulating Music

According to the laws of the music its stipulating that the owner should not play loud music

unless the business has obtained a license from the copyright.

1
 CHAPTER FIVE
5.0 FINANCIAL PLAN
5.1.1PRE OPERATIONAL COST
These are costs which are incurred by the business before it becomes operational e.g.

professional fees, installation cost, and license permit e.t.c.

ITEMS AMOUNT(KSHS)

License and permits 20,000

Installation of electric supply 10,000

Advertisement and promotion 15,000

Stock 400,000

Rent

Transport 20,000

Market survey 20,000

Miscellaneous 10,000

Machine and equipment 236,500

TOTAL 731,500

5.2 WORKING CAPITAL

Summary of working capital;

ITEM YEAR 1 YEAR 2 YEAR 3

Stock of raw materials 700,000 75,000 800,000

Stock of row materials in 30,000 40,000 45,000

progress

Stock of finished equipment 10,000 20,000 30,000

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 Debtors 15,000 5,000 10,000

Cash in hand 10,000 15,000 10,000

Cash in bank 5,000 5,000 10,000

Creditors 10,000 10,000 10,000

TOTAL 150,000 170,000 195,000

5.4 PRO FOMA BALANCE SHEET

This is the pro forma balance sheet at the start to end of first year

ITEM OPENING DATE END OF YEAR DATE

ASSETS

Current assets 60,050 28,000

Cash at hand + bank 70,000 158,600

Debtors 10,000 10,000

Stock of finished good 20,000 19,000

Stock of work in progress 15,000 14,000

Stock of raw materials 17,000 7,000

TOTAL CURRENT 192,050 136,600

ASSETS

FIXED ASSETS

Machinery and equipment 16,000 15,680

Accumulated depreciation 5,650 5,563

Others(specify) 10,000 12,000

TOTAL FIXED ASSETS 31,650 33,217

TOTAL ASSETS 258,500 169,817

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LIABILITIES

Current liabilities 50,000 20,000

Creditors 70,000 40,000

Others(specify) 76,000 50,000

TOTAL LIABILITIES 196,000 126,000

Long term liabilities 30,000 46,000

Bank loan capital employed 20,000 6,000

Profit 10,000 12,000

Others(specify) 7,000 8,000

TOTAL LONG TERM 67,000 72,000

LIABILITIES

TOTAL LIABILITIES 263,000 198,000

2
MONTHS
JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC TOTAL
ITEMS

Balance BF 696,000 685,000 671,300 662,800 667,350 643,700 640,050 619,950 611,450 610,050 625,050 616,150 7,748,850
Cash sale 70000 77000 25000 70000 40000 60000 30000 60000 55000 80000 65000
40000 672000
Loan 5000 15000 5000 20000 5000 50000
Debtors 10,000 15000 100005000 20000 5000
10000 5000 10000 90000
Others 3000 5000 4000 5000 5000 22000
Total Received 746,000 758,000 711,300 717,800 687,350 688,700 675,050 654,950 651,450 674,050 650,050 641,150
Cash
outflow
Cash purchase 32,000 36,450 25,000 32,000 25,000 25,000 36,450 25,000 25,000 30,000 10,000 10,000 291,900
Creditors 15,000 5,000 10,000 5,000 5,000 10,000 5,000 5,000 3,000 5,000 10,000 5,000 83,000
Salaries 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 42,000
Rent 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 42,000
Telephone 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Water 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Electricity 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Stationary 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Transport 700 800 700 500 700 700 700 700 700 700 700 700 8,300
Postage 300 300 300 300 300 300 300 300 300 300 300 300
Repair 3,600
Insurance 1,000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1150
Drawing 12,000
Interest 350 3500 350 350 350 350 350 350 350 350 350 350
Taxes 500 500 500 500 500 500 500 500 500 500 500 500 4200
Others 6,000

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5.5 BREAK-EVEN ANALYSIS
Gross Profit = Sales – Total direct cost

Sales = 700,100

Total direct cost= 700,100-589,500

= 110,600

Gross Profit Margin =110,600\700,100*100%

=15.80%

Breakeven level= 165,000/15.80 *100

=1,047,468.35shillings

5.6 EXPECTED PROFITABILITY RATIOS

5.6.1 Gross Profit Percentage = Gross Profit * 100\sales

110,000\700100*100

=15.80%

5.6.2 Return on equity = net profit after tax- owner equity

= 1,000,000- 589,500

=Kshs. 410,500

5.6.3Return on investment = net profit after\total investment *

100% 589,500/1,000,000*100

=58.95%

5.6.4 Return on sales = net profit after tax - net sale

= 784,850- 589,500

= 159,350

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5.7 DESIRED FINANCING
Determine the total amount of money required to start your business;

Total pre operational cost Kshs 1,200,000

Working capital Kshs 300,000

Fixed assets Kshs 500,000

Total start up finances Kshs 1,700000

5.8 PROPOSED CAPITALIZATION

The business will be starting to operate in JULY 2025

Bank loan Ksh 600,000

Savings Ksh.700,000

Donations Ksh.400,000

Total investment Ksh.1,700,000