MOONLIGHT BAKERY

NMAE : WASIKE N. DORCUS

INDEX NUMBER : 5031110981

COURSE CODE : 1819/205

COURSE : CRAFT IN CATERING AND ACCOMODATION

INSTITUTION : KITALE NATIONAL POLYTECHNIC

CENTER CODE : 503111

SUPERVISOR : MADAM SALOME

SUMMITTED TO : KENYA NATIONAL EXAMINATION COUNCIL

FOR THE PARTIAL AND FULFILMENT FOR

THE AWARD OF CERTIFICATE IN CATERING

AND ACCOMODATION

EXAM SERIES : JUNE-JULY 2022

i
DECLARATION
This is my original work and has not represented on any study programme in by other institution

NAME : WASIKE N. DORCUS

SIGNATURE :____________________

DATE :_____________________

Supervisor declaration

NAME :______________________

SIGNATURE :______________________

DATE :______________________

ii
DEDICATION
I dedicate this business plan to my beloved parents who gave moral and financial support and

humble time

God bless you

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ACKNOWLEDGEMENT
I wish to acknowledge the work of my supervisor Mrs. Salome for her unconditional advice and

support that remain a constant encouragement throughout my business plan writing period my

gratitude also goes to the entire department of hospitality may God bless you all

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Table of Contents
DECLARATION........................................................................................................................i
DEDICATION...........................................................................................................................ii
ACKNOWLEDGEMENT.......................................................................................................iii
EXECUTIVE SUMMARY................................................................................................................................vi
CHAPTER ONE........................................................................................................................1
1:0 BUSINESS DESCRIPTION...............................................................................................1
1:1 BUSINESS NAME..............................................................................................................1
1:2 BUSINESS LOCATION AND ADDRESS........................................................................1
1.3 FORM OF OWNERSHIP...................................................................................................1
1.4 TYPE OF BUSINESS..........................................................................................................1
1.5 BUSINESS PRODUCTS AND SERVICES......................................................................2
1.6 JUSTIFICATION OF BUSINESS OPPORTUNITIES...................................................2
1.7 INDUSTRY..........................................................................................................................2
1.8 BUSINESS GOALS.............................................................................................................3
1.9 BUSINESS ENTRY AND GROWTH STRATEGY........................................................3
1.9.1 Business entry.....................................................................................................................................3
1.9.2 Business growth strategies.................................................................................................................3
CHAPTER TWO.............................................................................................................................................5
2.0 MARKETING PLAN..................................................................................................................................5
2.1 POTENTIAL CUSTOMERS........................................................................................................................5
2.2. MARKET SHARE.....................................................................................................................................6
2.3. COMPETITORS......................................................................................................................................7
2.4. METHODS OF PROMOTIONS AND ADVERTISING..................................................................................7
2.4.1. ADVERTISING.....................................................................................................................................7
2.4.2. PROMOTION......................................................................................................................................7
2.5. FINANCIAL STRATEGY...........................................................................................................................7
2.6. SALES TACTICS......................................................................................................................................8
2.7. DISTRIBUTION CHANNEL......................................................................................................................8
CHAPTER THREE..........................................................................................................................................9
3.0. ORGANIZATIONAL AND MANAGEMET PLAN........................................................................................9
3.1. ORGANIZATION STRUCTURE.................................................................................................................9
3.1.1. MANAGING DIRECTOR.......................................................................................................................9

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3.2.0. KEY MANAGEMENT PERSONNEL.....................................................................................................10
3.3.0. RECRUITMENT TRAININNG AND PROMOTION................................................................................11
3.3.2. TRAINING.........................................................................................................................................11
3.3.3. PROMOTION....................................................................................................................................11
3.4.0. RENUMERATION AND INCENTIVES..................................................................................................11
3.4.1. RENUMERATION..............................................................................................................................11
3.4.2. INCENTIVES......................................................................................................................................12
3.5.1. LICENCE PERMIT AND BY- LAWS......................................................................................................12
3.5.1. LICENSE............................................................................................................................................12
3.5.2. BY- LAWS.........................................................................................................................................13
3.6. SUPPORTIVE SERVICE.........................................................................................................................13
3.6.1. BANKING..........................................................................................................................................13
3.6.2. INSURANCE......................................................................................................................................13
CHAPTER FOUR..........................................................................................................................................14
4.0 OPERATIONAL/ PRODUCTION PLAN....................................................................................................14
4.1 PRODUCTION DESIGN AND DEVELOPMENT........................................................................................14
4.2. PRODUCTS FACILITIES AND CAPACITY................................................................................................15
4.3. production strategy............................................................................................................................17
The cost of production..............................................................................................................................18
4.4 OPERATION/ PRODUCTION PROCESS..................................................................................................18
Chapter five...............................................................................................................................................20
5.0 financial plan.......................................................................................................................................20
5.1 pre-operational cost............................................................................................................................20
5.2 working capital requirements..............................................................................................................21
5.3 projected cash flow statement for the year 2022................................................................................22
5.4 pro-forma income statement..............................................................................................................23
5.5 break- even analysis............................................................................................................................23
5.6. PRO-forma balance sheet as at 28thfebruary 2023............................................................................25
5.7. Profitability ratio.................................................................................................................................25
5.8. Desired financing................................................................................................................................26
5.9. proposed capitalization......................................................................................................................26

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EXECUTIVE SUMMARY
BUSINESS DESCRIPTION
In this chapter is the business name, its location address also included is the form of ownership
and type of business.
In this chapter, there is description in a justification of the opportunity, industry it belong and
achievable goals of the business. Also include is entry and growth strategy.
MARKETING PLAN
In this chapter are types of customers transaction business with them. They include domestic
customers, commercial customers and institutional customers and immediate customers
Also in this chapter is the market share within the locality of the business and competitors
operating the same business and competition operating the same business. Completion between
similar businesses strength and weakness of each competitor is in this chapter. Method of
promotion and advertising, pricing strategy, sales tactics and distribution strategy are also in this
chapter.
ORGANIZATIONAL AND MANAGEMENT
In this chapter it shows the organization, qualification of each employee, structure of the
organization, qualification of each employee and duties done by each
It also includes recruitment, training and promotion of employees for betterment of services.
Remuneration and incentives, license, permits and by laws pertaining the business and support
services are included in this chapter
OPERATIONAL PLAN
This chapter entails production facilities and capacity that are used for efficient operational in the
business, repair and maintenance and the loyalty of the enterprises. Production strategy which
include monthly materials, monthly expenses and the cost of production required
It also includes production process, dairy routine practice and regulation affecting operation of
the business.
FINANCIAL PLAN
This chapter constitutes all the financial transactions taking place in the business It gives an
outline on whether the business will be operating on a loss or profit .This section has the
following operational pre-operation costs, working capital requirements, pro-forma income
statements, pro-forma balance sheet, projected cash desired financing, proposed capitalization
and the expected profitability ratio.

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 CHAPTER ONE
1:0 BUSINESS DESCRIPTION
1:1 BUSINESS NAME
The business name will be Moonlight bakery. The reason for selection of the name is because
it’s the name of a famous author who has written the stories. The business will deal majorly with
baking cakes, breads and other foods and also I will be providing processed products and
offering qualified services to customer’s satisfaction

1:2 BUSINESS LOCATION AND ADDRESS

1:2:1 business location
The business will be situated in Nairobi County along Pangani Street. It will be located within
Quickmart supermarket at Waumini plaza second floor

1.2.2 Business address

MOONLIGHT BAKERY
P.O BOX 222
Email dorcuswasike65@yahoo.com

1.3 FORM OF OWNERSHIP

The proposed business will be sole proprietorship. I will be dealing with the company all by
myself. I have great leadership and independent skills to take on the huge responsibility of
opening my own business on my own.

1.4 TYPE OF BUSINESS

The proposed business will be a food manufacturing industry and will operate as a wholesale
type of business.
The business will be selling its production in term of wholesale whereby products will be sold in
large quantities of customers like commercial ones. However as it will be a startup business and
newly established the growth will not be righty but it will depend on the customers turnover and
demand. The business image will come up as a result of employing hospitable environment for

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all their customers that is customers satisfaction through quality service and ensuring that
customers’ needs are realized and products of high quality.

1.5 BUSINESS PRODUCTS AND SERVICES

The business will offer high products for instance for as queen cakes wedding cakes and birthday
cakes. Assorted such as mandazi will also be available. The size of products will be medium in
size, attractive in colour and various shapes and also they will be of good texture. The material
used for packing will be of good hygiene and of good quality where by the product will be safe
for human consumption. The service will be of standard and the proprietor will employ
hospitable staff. She also intends to offer home delivery services inform of take away for their
potential customers in the vicinity. The pricing will be fair to all and 10% discount will be given
to every organization. The unique factors about the products are that they will be of good
hygiene fair prices and of good quality. Also there major landmarks that pose an added
advantage for failure expansion.

1.6 JUSTIFICATION OF BUSINESS OPPORTUNITIES

The business is set to satisfy the local demand for cake. This is because it aims at giving high
quality product and services that meet the required standards and customers expectation. The
area has good transport and communication network which will enable good communication
between customers and management more efficiently. The business will offer employment
opportunities thus helps eradication of employment problems. Business will strive to strike a
good balance between quality and favorable price by proper utilization of the local resources.

1.7 INDUSTRY
Moonlight bakery is a medium enterprise and belongs to food industry. The size of the firm will
be medium in size hence labour intensive as their will be employee in charge of production and
the service delivery. The business intends to use modern technology.
The average number of employees will be seven people in the firm. The business will needs ksh
900000 to start operating. The owner expects high level of sales in the future after having won
the customers, drought the community and also the owner expects high profit because it will
have stiff competition in the field operation. The business experience seasonal factor in a way

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that there are high sales of cakes during November –December hence low expenditure and also
high profit making due to various occupations done during those months.

1.8 BUSINESS GOALS

1.8.1 Business long term goals
The business will expand a field of construction and that of business it will also have sub
branches through towns and areas of access to improve work in the business. The business will
also operate on a large scale to improve profits gained.

1.8.2 Short term business

The short term business will be increasing advertising budget each month for the next three
months. Building and nurturing customer’s relationship making sales and marketing a priority
and collaborating with my team to brain storm new ideas

1.9 BUSINESS ENTRY AND GROWTH STRATEGY

1.9.1 Business entry

Developing a business entry strategy involves thorough analysis of potential competitors and
possible customers relevant factor that must be considered when deciding the viability of entry
into a particular market include trade barriers, localized knowledge, price localization
competition and export subdues
Market entry and trade some of the risks incurred when entering a new market and start domestic
or internal trade include systematic risk is the risk inherent to the entire market

1.9.2 Business growth strategies

One growth strategy in business will be marketing penetration strategy. When it decides to
market existing products within the same market it has been using.
The only way to grow using existing products and market is to increase market share according
to small business expert.

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Market expansion strategy - the competition may be such that there is no room for growth within
the current market if the business does not find new market if the business does not find new
markets for its product it cannot increase sales or profit
Diversification –the business will invest in a variety of security in order to their prices
Product development-the business is yearning on which products goes faster and brought more
investments

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CHAPTER TWO
2.0 MARKETING PLAN
Moonlight baker is a business entry like other moonlight baker is a business for this reason if
must have strategy to cop the needs of the customers. The business shall plan itself in such a
way that customers are able to access its services and products without any inconvenience.
Moonlight plans to capture customers and compete with other firms in the industry making into
consideration the rules of business game.

2.1 POTENTIAL CUSTOMERS

The potential customers will classify into three categories,
i. COMMERCIAL
This will include small bakers in the village which will buy large scale of and small
ii. INSTITUTIONAL CUSTOMERS
These are institutional such as college, high school,uniiversities and government
institutions
The performance will always be high and also economic due to some products such
as cakes will be convenient since its time saving compared to those that are urgently
needed and can be produced comfortable and the products will be safe for human
consumption and also durable, they will be offered daily from 6.00 am to 8.00 Pm
and qualities produced will depend on customers demands and the mode of payment
as the money received will be used to purchase the materials for production.

iii. INDIVIDUAL CUSTOMERS

iv. Those are local people within the locality of the business who buy from the business
in small quantities for their own consumption the bakery will offer free delivery for
the customers living within a range of 1 km radius from the business location upon
their request for delivery and payment shall bemade upon delivery.

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2.2. MARKET SHARE
The numbers of customers who will require products or services are ore than those of
competitors . the business is aiming at obtaining 50% of the market share written the first year of
operation
The following market share will be as follows.

BUSINESS PERCENTAGE

Moonlight bakery 50%

Balozi bakers 30%

Mallow bakery 20%

Total 100%

Sales

mallow
20%

moon light
50%

balozi
30%

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2.3. COMPETITORS
Many competitors will be competing with the following bakeries
- Balozi
- Mallow
The competitors are located about 12 km and 9km respectively and gives moonlight advantage as
it will be newly established and located within its potential customers and the size of potential
competitors are small business size.
The business intends to carry out visibility study that involves customers in designing the
products so as to compete well in the market that will cover on Ares.

2.4. METHODS OF PROMOTIONS AND ADVERTISING

2.4.1. ADVERTISING
The business will be advertising through posters because it is cheapest method and more
customers are acquired faster.
The business will also be advertised through media magazines to attract the customers all over
the country

2.4.2. PROMOTION
The business will be offering credit to frequent customers
The business will highly embarrassed the products promotion to ensure that all new products
reach the market and well received.

2.5. FINANCIAL STRATEGY

Goods will be arranged according to how they are branded packed and quality. Their prices will
vary according to weather, transportation cost. If they are of high quality examples cakes prices
of one packet will be sh 120. Variation according to transportation cost.
It will be reasonable standards to avoid exploiting the price of selling price will vary the market
and economy of the country. When raw materials prices rises there will be increase in the selling
of the products, when raw materials goes down there will be decrease in selling of the products.

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2.6. SALES TACTICS
The business will employ the tactics of selling indirectly to the customers through the supplier.
This is because industry aimed or easing congestion at the factory be sold at the industry
restaurants will be beverage and coffee

2.7. DISTRIBUTION CHANNEL

The manger for business is to bring their products or services to the market and make it available
for consumers. The business will be use indirect distribution channels. All the products will be
delivered the workers of the suppliers and some be by will get their products on time.

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CHAPTER THREE
3.0. ORGANIZATIONAL AND MANAGEMET PLAN
For any business to succeed or achieve the up goals good organization plan is required. It also
involves planning organizing goal.

3.1. ORGANIZATION STRUCTURE

MANAGING DIRECTOR

ASS. MANAGING DIRECTOR

SALES MAN ACCOUNTS GUARDS DISTRIBUTI

ON

3.1.1. MANAGING DIRECTOR

The managing director must have studied higher diploma in management studies. The manager
should perform the following duties
- Ensure supervisor in the office and staff
- Ensure there is order in the work places
- Recruitment of employees
- Formulating of policies and procedures
- Calculating wages and salaries of employees

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3.2.0. KEY MANAGEMENT PERSONNEL
The business will be a sole proprietorship. It will employ workers across the country through
advertisement and it will ensure clear strict observation is enhanced to ensures employees are in
good position to handle the job.
They should attain a certain qualification for them to qualify for certain position of jobs
categories in moonlight bakery.
Manager
Duties
Employ workers
To plan and control the activities of the organization

Qualification
Kenya citizen between age of 25-35 years.
Creates and able to take initiative
Holder of certificate in goods and beverage

3.2.1. OTHER PERSONNEL

SALESMAN
DUTIES
- In charge of handling records
- Keeping accent of business in terms stock and total sales
Qualification
- Diploma certificate in sales and marketing
- Have at least 2 years experience in related fields
- Have well working personality e.g. trustworth,hardworking and obedient.
- WATCHMAN
- - be age 30-45 years
- Willing to work unsupervised
- Should be physically fit
- Have at least KCPE certificate and above
CLEANERS

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Maintaining general cleanliness of the premises
Qualification
- Must have KCPE certificate
- Must be able to speak kiswahili and English

3.3.0. RECRUITMENT TRAININNG AND PROMOTION

The business will be done by manager in conducive with the other management staff. This is
done by taking letters to the proprietors using posters media e.g. radio and local churches for first
announcement purpose then recruitment followed by interview to ensure good selection of
workers.

3.3.2. TRAINING
The business will be offering training vacancies to people who will train to join others in the
company and ensure proper training is on process to educate more and encourage more people
who be in need of the job. The business will hire a land to train other employees so that they can
be in contact with others.

3.3.3. PROMOTION
The business will be offering training free offer to employees who are hardworking and
commitment to their work and that will discouraging business and failure to be out of work
places. Also hardworking employees will be given a promotion or a transfer to other part of the
given a promotion or a transfer to other part of the country either to be a manager or ass
manager.

3.4.0. RENUMERATION AND INCENTIVES

3.4.1. RENUMERATION
Ass. Manager will be supervising the work and the committed work will be motivated by
receiving more shares compared to less active workers who might be driven out of work places
to discourage laziness

xviii
Workers will also be encouraged by organization trips to places where they could enjoy
themselves by viewing physical.
Features and interacting with people them moreover they will be visiting companies with the
same business to learn more.
TITLE NO MONTHLY PAY ALLOWANCES AND TOTAL
BENEFIT
Cashier 3 12000 9000 21000

Cleaner 2 9000 5000 14000

s
Security 3 6000 3000 9000
officer
Totals 8 27000 17000 44000

3.4.2. INCENTIVES
The business will be giving employees allowances to motivation to work hard. That
is siting allowance will be 5000 and transport allowances will be kshs. 1000 per day.
This will make many people to admire being workers in the business and encourage
more others.

3.5.1. LICENCE PERMIT AND BY- LAWS

3.5.1. LICENSE
The business will acquire trading license from the county council being paid
annually to avoid misunderstanding between the business manager and the county
manager which way bring conflicts. The license will also help the business to soil any
type of goods and solves they would like to offer to their customers.

xix
3.5.2. BY- LAWS
The business will ensure there is complete must between management and employees
for the sustainability of the operations taking place in the organization and to
improves unity among workers.
- Business application kshs.20000.
- Trading license kshs.15000
- Service charge kshs.2500
- Public health kshs.500

3.6. SUPPORTIVE SERVICE

3.6.1. BANKING
- The business will have KCB account number 37199466 Nairobi. The business
will be fully supported by the bank to ensure goods are in order and amount of
cash to support the firm is available.

3.6.2. INSURANCE
- Similarly the business will ensure that every employees will have insurance in
case of accident like fire and loss of life. Whereby the insurer in consideration of
premium undertakes to compensate the insured for the loss or damage suffered
due to fire. The premium is payable in single installation.

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CHAPTER FOUR

4.0 OPERATIONAL/ PRODUCTION PLAN

It implies manufacture of goods and provision of services. The products of Moonlight will
provide various forms in order to meet the desires of consumers. The products will be sold
within the premises and others distributed to potential customers.
However the firm will ensure high quality products, the pricing and distribution strategy are
efficiently and effectively taken into considering since the customers will be focusing on product
reliability and firm attendance

4.1 PRODUCTION DESIGN AND DEVELOPMENT

The business will deal with cakes, breads, snacks and the rest.
All items/materials used here will be already processed at ones.
The production will be identified because workers or employees and customers will have
opinions with the name and the logo of the business enterprise.
The products will be arranged in shelves with their price tags below them.
This design will also organize for promotion i.e. the workers attending services exhibition shows
to acquire more knowledge through training.

xxi
4.2. PRODUCTS FACILITIES AND CAPACITY
The bakery requires the following tools and equipment for its smooth operation

ITEM QUALITY TOTAL

Oven large 1 60000

Brat pans 1 10000
Kitchen tables 3 7500
Gas ovens 1 10000
Perforated spoons 2 100
Deep flying pan 2 100
Whist deep pan 3 100
Basket 2 100
Rolling stick 2 600
Lang set 5 500
Cake boards 2 3000
Cake stands 2 200
Lang nozzles 2 140
Basin 3 500
Cooking pans 5 500
Mixing bowl 1 800
Office chairs 4 8000
Total 115510

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Office layout

Secretary Manager
office Officer

Cookers
Maintenance
store Sales man

Sales
Accounts Area
office

Sales
area
Security
officer

xxiii
4.3. Production strategy
a). monthly material requirements

Items Total cost

Sugar 35000

Baking powder 8000

Wheat flour 122000

Soaps 2000

Packing materials 10000

Eggs 90000
match box 4560
Total 25600

b) Monthly labor requirements

POSITION AMOUNT

a. Manager 25000
b. Accountant
23000
c. Security officer
d. Sales person 18000
e. Chefs
15000

Total 91000

c. Monthly production expenses

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ITEMS AMOUNT

Electricity bill 200

License and permit 6,000

Repair and maintenance 3,000

Advertising 300

Insurance 8,000

Postage 1,000

TOTAL 18,500

The cost of production

Cost of production = monthly material required+ monthly labour required+ monthly production
expenses
= 25600+91000+18500= 135100shs

4.4 OPERATION/ PRODUCTION PROCESS

The business will operate within the laid down rules and regulations by the business. It will
operate within and outside town. The business will strictly operate only during week days
between 8:00am to 5:00pm others for right shift will start from 8:00pm to 5:00am
Purchasing
The management will determine the quality of material required to prepare purchase
specification engages suppliers for rate and select the best supplies and contract different
purchasing method will be used for different breeds and distribution of the confectionery.
Receiving
Purchasing manager will receive suppliers and check the against the quality as given in
purchasing specification of materials

xxv
Storing
This ensures safe and good management so that to maintain the product.
Also for the safety of theft should be kept in a well safe palace at the same time purchasing
manager will be taking record of products
The stock will be issued first to avoid deterioration specific issues in the course of the day for
updating stock records

4.5 GOVERNMENT REGULATIONS AFFECTING OPERATIONS

i. Public health license

This will be obtained from the public health office at a cost of kshs 1200 per month.
ii. Government license
The document will be obtained from the district commissioner office at a cost of kshs
2000 per year.
iii. Local county council license
This will be obtained from Nakurucounty council at a cost of 1400shs per year.

xxvi
Chapter five

5.0 financial plan

This chapter entails of information on pre-operation cost, working capital requirement, projected
cash flow statement, pro-forma incomes statement for 3 years balance sheet, breakeven point,
and calculation of profitability ratios and desire of financing and proposed capitalization.

CHESS bakers intend in the following ways the initial capital invested to purchase assets and
paying all pre-operational expenses.

5.1 pre-operational cost

This refers to the mandatory expenses that business will hair before it can comfortably and
officially open doors.

Particulars Amount (Kshs)

Premises partitioning and fixtures 35000

Telephone installation 6000

Rent pre-payment 5000

License and permits 2500

Business name registration 500

Business van 115510

Stationer 200000

Miscellaneous and stock of ethics 3000

xxvii
5.2 working capital requirements
This is the excess of current liabilities. It is used to measure the solvency of the business. It helps
the business the owner knows whether all assets at the economy utilized to avoid under
employment.

Current asset Amount in Kshs

Cash in hand 100000

Cash at bank 25000

Rent pre-payment 5000

Stock 10000

Total 455000

CURRENT LIABILITIES
Short term loan
The working capital will be:

Working capital=current assets- current liabilities

=455000-200000
=225000

xxviii
 5.3 projected cash flow statement for the year 2022
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Cash in flow kshs kshs kshs kshs kshs kshs kshs Kshs Kshs Kshs Kshs Kshs
Cash sale 1000,00 150,00 200,00 270,00 350,00 400,00 450,00 500,00 550,00 580,000 600,000 650,00 4,780,00
0 0 0 0 0 0 0 0 0 0 0
Debtors 30,000 30,000 35,000 35,000 35,000 40,000 40,000 40,000 45,000 45,000 375,000
Total cash 1000,00 150,00 230,00 300,00 385,00 435,00 485,00 540,00 570-,0 620,000 645,000 695,00 5,155,00
inflow 0 0 0 0 0 0 0 0 00 0 0
Cash out flow 100,000 50,000 50,000 50,000 50,000 50,000 100,00 50,000 100,00 50,000 100,000 50,000 800,000
0 0
Rent 5,000 5,000 5,000 5,000 5000 5000 5000 5000 5000 5000 5000 5000 60,000
Creditors 0 0 50,000 5000 5000 5000 5000 5000 5000 5000 5000 5000 50,000
Salaries 119,600 119,60 119,60 119,60 119,60 119,60 119,60 119,60 119,60 119,600 119,600 119,60 1435200
0 0 0 0 0 0 0 0 0 0
Telephone 2000 2000 2000 20000 2000 2000 2000 2000 2000 2000 2000 2000 2400
Electricity 900 1000 900 950 1100 1150 1000 900 850 980 1000 1100 11930
Water 500 700 750 800 800 890 850 0 1000 890 800 870 9600
Advertising 1500 1200 0 0 1150 1200 0 5700 5500 1250 0 1200 8850
Transport 4000 4700 5000 5000 5500 5850 5850 3000 3500 5600 5600 5600 63900
Insurance 2000 2000 3000 3000 2000 2500 3000 3000 3500 3500 3500 3500 34500
Maintenance 0 0 0 0 0 5000 0 0 0 2000 0 0 7000
Loan payment 500 100 100 1000 500 500 1000 1000 500 500 100 500 6300
license 200 200 200 200 200 200 200 200 200 200 200 200 2400
Loan payments 1000 500 1500 1000 500 500 1000 1000 500 1000 500 1000 10000
License 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Loan interest 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 24000
10%
Miscellaneous 800 800 800 800 800 4000 4000 4000 4000 4000 4000 4000 32000
Taxes 10% 1500 1500 2000 2200 2500 2500 2700 3000 3000 3500 3000 3000 30600
Total cash 260300 208500 214050 239300 240800 249690 293950 243800 295430 247790 295000 246370 3035080
inflow

29
Net cash 16930 58500 15900 60650 144200 185310 191050 296200 274570 372210 349950 246370 2119920
Accumulatedcas 16030 21880 202850 142200 2000 18730 378360 674560 949130 132134 167129 448630
h 0 0

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5.4 pro-forma income statement
The pro-forma income statement for the year ending 28th February 2021
Item 28th February 2021 28th February 2022
Sales 4730000 10895000
Add collection from debtors 375000 705000

Opening stock 1500000 1200000

Add purchase 1630000 4780000
1780000 4900000
Add creditors 1850000 450000
1965000 5350000
Less closing stock 120000 140000
Cost of goods sold 184500 5210000
Gross profit 3260000 6390000
Expenses
Salary 1435200 14700000
Telephone 3970 4000
Electricity 11930 12000
Water 96000 10000
Insurance 34500 35000
Repair and maintenance 70000 75000
Rent 60000 60000
Loan interest 36000
Advertising 8850 900
License 28000
Stationeries 9600 5000
Miscellaneous expenses 98000
transport 63900 70500
Total expenses 1680550 1695600
Net profit before tax 15795500 4694400
less tax 10% 15794.50 4694400
Net profit after tax 1563655.50 4224960

5.5 break- even analysis

Particulars Amounts
Fixed cost
Salaries 1435000
Rent 60000
Miscellaneous 9600
Loan interest 3600

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Total fixed cost 1540800
Variable cost
Insurance 34500
Promotion and advertisement 88500
Electricity 11930
Water 9600
Transport 63900
Telephone 3970
Maintenance 7000
Total variable cost 132750

Total contribution margin = total sales-total variable cost

=5105-132750

=Ksh 4972250

Contribution margin % = total contribution margin/ sales x 100

= 4972250/510500 x 100
=97.399%
Breakeven level =Fixed cost/ contribution margin x 100
=1656000/97.4 x100
=1700205

5.6. PRO-forma balance sheet as at 28thfebruary 2023

Current assets
Cash at hand 100000 200000

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Cash at bank 300000 550000
Stock 100000 120000
Rent 5000
Debtors 375000
Total current assets 5050000 1245000
Fixed assets
Tools and equipment 1155100 115100
Fixtures 350000 35000
Accumulated depreciation 2800
Book value 30000 32200
Business 200000 200000
Total fixed assets 3535100 385510
Liabilities
Current liabilities
Creditors 185000
Short term bank loan 200000
Total current liabilities 200000 185000
Total liabilities 940400 107500

5.7. Profitability ratio

They are ratio with the issue of how much a firm made profit in relation to some date, element
representing what effort was made.

Gross profit ratio

Also called gross profit margin and used to check the stability of market condition for the only
two factors, sales and cost of sales .it is expressed as a percentage of sales.
It is expressed as a percentage of sales and calculated as follows:
Gross profit ratio =gross profit /sales ×100
3260000/5105000×100
=6396%

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Net profit ratio
It shows the profit generated by sales and calculated
Net profit %= 1339150/5105000×100
=36%

5.8. Desired financing

The table shows the desired financing that will be required when starting a business.
Item Amount in Ksh

Pre-operational cost 656,000

working capital 425,000

Total desired financing 1,081,000

5.9. proposed capitalization

Item Amount Kshs

Totalinvestment 400000
Owners contribution 300000
Borrowed funds 200000
Friends and relatives 10000
Total 1,000,000

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