BUSINESS NAME :OSANO ELECTRICAL WORK SHOP

ADDRESS : PO BOX 584_40222 OYUGIS

TELEPHONE NO :0741207173
EMAIL ADDRESS :obangefredrickokoth@gmail.com
PRESENTER : FREDRICK OKOTH
SUPERVISOR :MR ROBIN MOSE
INDEX NO : 703101/0408
DEPARTMENT : ELECTRICAL AND ELECTRONIC ENGINEERING
(POWER OPTION)
COURSE CODE :1601
CENTRE NAME : KISII NATIONAL POLYTECHNIC
PRESENTED TO :KENYA NATIONAL EXAMINATION COUNCIL
PURPOSE:FOR PARTIAL FULFILLMENT OF THE AWARD OF
CERTIFICATE IN ELECTRICAL AND ELECTRONICS ENGINEERING

DECLARATION
I declare that this is my original work and has not been submitted for a word of
degree or certificate in any college or institution for higher learning

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Name:FREDRICK OKOTH
Signature...........................
Date....................................

Name : ROBIN MOSE

Signature................................
Date........................................

DEDICATION
I dedicate this to my beloved family members, my lecturers and my fellow
students of the Kisii National Polytechnic for their endless support.
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ACKNOWLEDGEMENT
My sincere gratitude to family members especially my parents for supporting me
financially without you all, I could not make it.
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To my supervisor Mr.Robin Mose.Thanks for your guidance and making me
appreciate that success comes through effort
To my friends for their moral charisma and support
To my family members and my beloved friends who encouraged me so much
Thanks you all and God bless.

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EXECUTIVE SUMMARY
CHAPTER ONE
In this chapter, the entrepreneur decides to look for the name of the business,
the location, the owner of the business, registration of the business, products and
services, justification, industry and goals of the business
CHAPTER TWO
The entrepreneur in this chapter will look for the marketing objectives ,the
customers, market share and segment, competitions, pricing,
strategy ,advertisements and promotion strategies, distribution, sales tactics
CHAPTER THREE
The entrepreneur in this chapter will look the management and organisational,
management objectives, personnel, remuneration and supporters
CHAPTER FOUR
In this chapter the enterprise will work on production facilities and
capacity ,production strategy, the production process, regulation affecting
processes and regulations affecting production.
CHAPTER FIVE
In this chapter the entrepreneur will work on financial plans, perform a cash flow,
and income statements, perform a balance sheet the break event analysis, the
desired capitalization and expected profitability.

TABLE OF CONTENTS

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DECLARATION ......................................(i)
DEDICATION ..........................................(ii)
ACKNOWLEDGEMENT ...........................(iii)
EXECUTIVE SUMMARY............................(iv)
TABLE OF CONTENTS ............................(v)
CHAPTER ONE ...............................................(12)
1.0 BUSINESS DESCRIPTION
1.1 BUSINESS NAME
1.2 BUSINESS LOCATION AND ADDRESS
1.3 FORM OF OWNERSHIP
1.4 TYPE OF BUSINESS
1.5 PRODUCT/SERVICES
1.6 JUSTIFICATION OF OPPORTUNITY
INFRASTRUCTURE
MARKET SURVEY
1.7 BUSINESS OBJECTIVES
1.7.1 SHORT TERM OBJECTIVES
1.7.2 LONG TERM OBJECTIVES
1.8 ENTRY AND GROWTH STRATEGY
PUBLICATION
POSTERS
SIGN BOARDS
GROWTH
SALES PROMOTION

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1.9 MATURITY
CHAPTER TWO ..............................(17)
2.0 MARKETING PLAN
2.1 MARKETING OBJECTIVES
2.2 CUSTOMER
2.2.1 RESIDENTS
2.2.2 SCHOOLS
2.2.3 OFFICES
2.3 MARKET SHARE AND SEGMENTS
2.4 COMPETITORS
2.5 PRICING STRATEGY
2.6 PROMOTION STRATEGY
2.7 DISTRIBUTION STRATEGY
2.8 SALES TACTICS
CHAPTER THREE ........................(.23)
3.0 ORGANIZATION AND MANAGEMENT PLAN
3.1 MANAGEMENT TEAM
3.1.1 TECHNICIAN
3.2 ORGANIZATION CHAT
3.3 RECRUITMENT TRAINING AND PROMOTION
3.3.1 RECRUITMENT
3.4 RENUMERATION AND INCREMENT
3.5 MOTIVATION
3.6 LEGAL REQUIREMENTS

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 CHAPTER FOUR ..................................(29)
4.0 PRODUCTION AND OPERATIONS PLAN
4.1 FACILITIES AND CAPACITY
4.1.2 RAW MATERIALS (STOCK)
4.2FACITIES LAYOUT
4.3 PRODUCTION AND OPERATIONS STRATEGY
4.4 PRODUCTION/OPERATIONS PROCESS
4.5 OTHER EXPENSES
4.6 REGULATION AFFECTING OPERATIONS
4.6.1 ENVIRONMENTAL REGULATION
4.6.2 GOVERNMENT REGULATION
CHAPTER FIVE ..................................(33)
5.0 FINANCIAL PLAN
5.1 PRE OPERATIONAL COSTS
5.2 WORKING CAPITAL REQUIREMENT
5.3 CASH BUDGET
5.4 BALANCE SHEET
5.5 BREAK EVENT ANALYSIS
5.6 FINANCIAL RATIO
5.6.1 PROFITABILITY RATIO FOR YEAR 2019 AND 2020
5.7 TRADING, PROFITS AND LOSS ACOUNT
APPENDIX 1
BUSINESS LOGO

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CHAPTER ONE
1.0 BUSINESS DESCRIPTION
1.1 BUSINESS NAME
The name of the business will be OSANO ELECTRICAL AND ELECTRONICS SHOP.
The shop will be located in Homa Bay county,Oyugis Sub county 20km from Ringa
Town. The owner manager FREDRICK OKOTH OSANO as a sole proprietor will
operate it.The business enterprise will be in electrical and electronic equipment
such as accessories, radio and TV etc.
The major objectives of the business is to create employment opportunities to
owner manager and to ensure the capital invested is rewarding
The enterprise will use the most efficient form of advertisement among them
electronical projects such as exhibitions. The products will be sold at a reasonable
price which will be lower than the competitors around the area
1.2 BUSINESS LOCATION AND ADDRESS
The proposed business will be located in Homa Bay county, Kamuga sub location
which is 10km from Ringa Town along Oyugis Road 200km from Mawego
polyphonic.
The location is served with good infrastructure facilities such as Tarmac and
murram roads, network, electricity and tap water. The anticipated address of the
business will be
OSANO ELECTRICAL AND ELECTRONICS SHOP
PO BOX 5 40222
OYUGIS
TEL. 0741207173
MAP SHOWING THE LOCATION

KISUMU
TOWN

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 JUNCTION

RINGA MARKET
OYUGIS-KISUMU
HIGHWAY

KINDU JUCTION
OSANO
ELECTRICAL

KISII JUCTION

1.3 FORM OF OWNERSHIP

The proposed business will be owned and operated by OSANO FREDRICK OKOTH
as a sole proprietor. The age of the sole proprietor is 23 years ,currently pursuing
CERTIFICATE IN ELECTRICAL AND ELECTRONIC ENGINEERING and operating as an
electrician in installation of domestic wiring.
The owner has enough experience in all types of accessories .He will contribute
ksh400000 as a starting capital. The owner will carry all responsible tasks of the
business as manager. The owner will also employ some workers with certain skills
and experience interns of electrical equipment
The proposed business will be in electrical and electronic equipment. It will start
by selling the equipment to all consumers who are doing domestic installation
and also will establish some sales point after doing earnings where at will sell the
equipment’s to industry's and heavy commercial machines installation
1.4 TYPE OF BUSINESS
The business will be selling accessories for domestic installations

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The shop will also offer after sale services for those who buy the accessories in
large quantities
1.5 PRODUCTION/SERVICES
The aim of OSANO ELECTRICAL AND ELECTRONICS SHOP is to produce and sell
quality devices and accessories. The product will be packed in certain boxes with
the name tags as Osano.
1.6 JUSTIFICATION OF OPPORTUNITY
The success of the business will be due to knowledge and skills the owner
acquired during the installation of various equipment and accessories hence
knows the quality and price of the equipment. They will enable the owner to run
and manage the business successfully.
INFRASTRUCTURE
This is the base requirement for any business therefore OSANO ELECTRICAL is not
the exemption since it is situated where road is accessible. Other services like
electricity and water supply are available
MARKET SURVEY
The owner will carry out market survey in the area where he realised that
customers are lacking some equipment
1.7 BUSINESS OBJECTIVES
The business has both long and short term objectives.
1.7.1 SHORT TERM OBJECTIVES
 To stop exploitation of customer by the other sister business
 To reduce long distance travelled by customers in such of equipment and
devices
 To create employment opportunities to the community
1.7.2 LONG TERM OBJECTIVES
 To increase volume of sales by 50% in 3years time
 Clear loans

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  To open other shops in different towns like Waa Kombani and other
areas
1.8 ENTRY AND GROWTH STRATEGY
Since the business is new, the owner will use various ways to attract
customers that is:
PUBLICATION
Articles will be published and distributed to anyone to make them aware
of the upcoming electrical and electronic shop
POSTERS
Posters will be put in different places in town i.e public notice board and
the surrounding environment to enlighten customers
SIGN BOARDS
Since boards will be put outside the business and in strategic position to
alert the public. The business will begins its operations under rented
room. The permit will be obtained from local authority and trade license
GROWTH
For the growth of the business, the business will use the following ways
to win customers, :offering discounts to customers who buy frequently
from the business.
SALES PROMOTION
This will be held after every six months and tickets given to customers
when they buy frequently from the business
OFFERING AFTER SALES SERVICES
The shop will be opening from 8AM and closed at 6PM this is to ensure
customers have a wide range of time to purchase the item. Customers
who buy goods in large quantities will be provided with transport
1.9 MATURITY
The business will open many branches across the country. At this stage,
the business will be selling goods in large quantities also the
advertisement will be done daily through social media, news paper e.t.c

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 CHAPTER TWO

2.0 MARKETING PLAN

2.1 MARKETING OBJECTIVES
MARKETING objectives varies and they fall into primary and secondary. The
proposed business major marketing objectives will include
 Encouraging other successful entrepreneurs who are intersected in bringing
their products and services
 Ensuring customers are maintained for the success of the business
 Engaging more partners to the field of trade and industry, hence making
use of the running of business
2.2 CUSTOMER
The Major potential customer for the proposed business will be local people who
shall have benefited from the government share through the rural electrification.
Also schools residence and hospital, government offices they shall be the most
potential customers
2.2.1 RESIDENTS
Many people living within the town will provide direct market to the business
some of the people will be regular customers who will be buying equipments
from the workshop directly and other requiring services like installation, moter
rewinding, servicing among others regarding electrical and electronics

2.2.2 SCHOOLS
Mawego polyphonic,Ringa Boys high school and ST.Ann's Ojwando will be the
most potential customers to the business, therefore they will be treated with a lot
of honesty in order to maintain the wellbeing of the business and keep them
buying from the workshop the necessary equipment and services. Price shall be
slightly reduced due to their cooperation in buying goods
2.2.3 OFFICES

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 Due the government extension it has led to new offices therefore this will create a
direct link to business as the offices shall require electrical and electronically
equipment and services to be offered. These offices will require installation and
this shall be provided at affordable price
2.3 MARKET SHARE AND SEGMENT

Due to the fact that the proposed business is strategically located, the business is accessible by most of
the inhabitants this will make the business to realise a share of 40%of the market hence making the business to
realise huge profit.

Competitors Galaxy electrical Ukunda Electrical OSANO Zakacha electrical Total

shop ELECTRICAL
shop
Sales 20000 15000 30000 10000 75000
Market 15000×100/75000 30000×100/75000 10000×100/75000 100%
Share 20000/75000×100 20% =40% =13.33%
26.66%
Degree 26.66×360/100 20×360/100 40×360/100 13.33×360/100 360
=96 =72 =144 =48

Sales
4th Z
48%

3rd U
72%

2nd G 1st O
96% 144%

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2.4 COMPETITORS
The proposed business shall face strong opposition from its competitors .Although strong
opposition will be faced but the business will be servicing almost 50%as the remaining
percentage shall be shared among the competitors which are Galaxy electrical, Ukunda
Electrical and Zakacha electrical

Ukunda Galaxy Zakacha electrical OSANO

Electrical electrical ELECTRICAL AND
ELECTRONIC
SHOP

Strength Offers products at Sells high Have a large stock of Adequate stock,
cheap price. Security quality goods goods good customer
services is more and is centrally relations,
effective located Good
communication
and transport
services
networks
network
availability of
banking and
security services
Weakness Unqualified Overcharging Sells low quality Careless
personnel goods goods customers
Gloomy personnel Poor Poses analogue Long working
communication technology hours
skills Customers
Unqualified ignorance to
personnel move from
analogue to
digital

Opportunity Loans and grants Loans and Enjoy security Good transport
grants services and good system
banking system Enjoy security
services
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 Loans and grants
to
Reliable
creditors
Threat Competition Competition Competition Unhealthy
technology technology technology competition
technology and
security threats

2.5 PRICING STRATEGY

The proposed business will confirm to the following pricing strategies:
 Quality of goods
Products of high quality will be charged expensively than those of low quality
 Terms of payment
They shall allow payment to be made by both cash and credit .For the people buying on
credit will be charged a little higher than the normal pricing of the commodities in order to
discourage payment by credit thus encouraging payment by cash
 Demand of goods and services
The Prince of the commodities will be influenced by the demand of goods. If the demand
is high the prices will rise and if the demand is low then the prices will be subsidised
 Production cost
The prices of goods will be influenced by the cost of production such that the selling
price of a commodities will be little higher than thick production cost so as to generate
profit
2.6 PROMOTION STRATEGIES
The proposed business shall ensure that its products are well advertised to their customers by
advertising the business regularly on media placing of sign boards pertaining the bussines on
strategic points where customers can easily read and be aware of the business location
2.7 DISTRIBUTION STRATEGY
The business proposed shall offer packing facilities to its customers in order for building a good
relationship. The processing speed shall be short so as to be affective and efficient to the shortest
time possible. The business shall organise on the transport expenses depending on the sales made
by the customer in order to reduce the gap between clients and dealer.
Most of goods will be delivered to customers including the provision of after sale services to
customers hence encouraging them to buy goods from the enterprise now and then
2.8 SALES TACTICS
The Proposed business will employ the following tactics in order to increase the sales

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  The personnel that can give quality services as per the electrical engineering
requirements will be provided
 Provision of customer care's desk, this will promote and enhance the relationship with
customers since the customer will be bringing their suggestions complains and even
compliments that will be addressed to by the proposed business management
 Giving after sale services, after sale services will be a means of motivating all the
customers and also ensuring that all the time they make their purchase at the very
same enterprise
 Displaying of proprietor contacts, the proprietor will have to avail himself in person
at all times in the business selling goods to customers in assistance to enterprise
attendant he will be talking to them and also appreciating them this will motivate
them to come for the goods and services

CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT PLAN
MANAGEMENT OBJECTIVES
 The manager will be consulting the employees and together they will be making
decisions for the top management decisions of the business
 Business policies will be made by the management also due to the employees being
involved will full recogonize and hence this will enhance good working relationships
 Employees will be motivated also through salary increment, giving loans, house
allowance and also work will be fairly distributed among the employees without
overworking other
 The work shall be based done according to the employees qualification and work
experience
 Promotion will be based on merit that is performance qualifications and experience skills
and discipline based thus this will enable them give their best in work places
3.1 MANAGEMENT TEAM
3.1.1 THE MANAGER
The manager of the proposed business will be
QUALIFICATION

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The one holding at least a CERTIFICATE IN ELECTRICAL engineering and he will be using
the obtained knowledge to run the business
Two years experience
DUTIES
 Business representatives
 Marking decisions
 Coordinating and controlling all the activities of the firm
 Will be in charge of staffing training and motivating all staffs
3.1.2 ASSISTANT MANAGER
QUALIFICATIONS
 CERTIFICATE Holder in bussines administration
 Must be able to display business skills
 Should be of age between 26-38 YEARS
DUTIES
 Cater for the clients relationship and endure fulfillment
 Advice the maneger on how to improve the bussines
 Check the quality of the product purchased
 In charge of supervising all members of staff
 Sets business targets
 Acts as production manager
 Delegates duties to workers and ensure efficient communication system
3.1.3 TECHNICIAN
QUALIFICATIONS
 CERTIFICATE in electrical and electronic engineering
 Must have two years experience
DUTIES
 Services and maintenance of machines
 General House holding installation
 Advising customers on the best equipment
3.1.4 ACCOUNTANT
QUALIFICATION
 CERTIFICATE in business administration and accounts
 Three years experience

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  Age 24-34 years
DUTIES
 Marking and preparing all financial records of the business
 Recording all the sales each time they are made
 Marking all the purchases in the bussines both short term and fixed3
3.1.5 CLEANER
QUALIFICATIONS
 Should have a K.C.S.E certificate with minimum grade of D
 Should be responsible and of good characters
DUTIES
 Loads and off loads goods
 Ensure that bussines premises are neat and clean
 Arrange all machinery equipment and files in order

3.1.6 WATCHMAN
QUALIFICATION
 Holder of K.C.S.E certificate and a certificate of good conduct
 Age of 24-34 years
DUTIES
 Directing customers where necessary
 Taking care of the compound during the day and night
3.2 ORGANIZATION CHAT

MANAGER

ASSISTANT MANAGER

CLEANER TECHNICIAN
ACCOUNTANT

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 WATCHMAN

3.3 RECRUITMENT TRAINING AND PROMOTION

3.3.1 RECRUITMENT
The firm Will recruit members by advertising the vacant position through newspapers and local
radio stations
Application is to be done within one month with a non refundable fee of ksh 250 and they will be
selected by merits since the business needs qualified and professional personnel in the field
Those who shall have qualified, they will be given a letter of appointment indicating the
reporting date
3.3.3 TRAINING
The business will offer job training to employees
3.3.3 PROMOTION
As the business grows there shall be promotion to workers. The employees who have undergone
for further training will be promoted as per their work experience and qualifications
3.4.RENUMERATION AND INCREMENT
3.4.1 RENUMERATION
Salaries will be located to employees in accordance to their class they fall and work status
Position No of employees Salaries per month
Assistant manager 1 15000
Accountant 1 12000
Technician 1 10000
Cleaner 3 6000
Watchman 2 4000
Total 8 47000

3.5 MOTIVATION
In order to make the employees work to achieve the bussines goals, they shall be allowed to go
for a trip to come up with new ideas
They will be paid their salaries in advance to encourage them.Also overtime pay will be provided
depending on the production and other related out come.

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3.6 LEGAL REQUIREMENTS
As per the rules and regulation, the proposed business will acquire trading licences and work
permit from the country
Employees will also be reliable for compensation as far as insurance is concerned.
3.7 SUPPORTIVE SERVICES
For the business to achieve its goals and objectives, supportive services will be requrequired and
these will include
 Banking, the business will be supported by the equity bank Oyugis branch. This will
provide loans for the bussines
 Insurance, insurance for the bussines will be the heritage insurance company. This will
cater for the product in case of damage or danger of fire
 Business consultant, incase of any form of advice to the business regarding its growth Dr
Wasodi will be the consultant.
 Transport, a vehicle will be used to provide a means of transportation for the product to
be availed

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 CHAPTER FOUR

4.0 PRODUCTION AND OPERATIONS PLAN

The business will take into consideration the needs of customers towards the product and services it will
give both the supply and demand will be taken into consideration.

4.1 FACILITIES AND CAPACITY

For the start of the business, the business will need a number of items and furniture. These will include

4.1.1MACHINERY AND EQUIPMENTEQUIPMES

Equipment Description Suppliers Number Unit prices Total

Tool box Royal trader 3 1500 4500
Chairs Furniture Timber Ltd 1 1000 1000
Computer Electronic Hola Ltd 3 30000 90000
Bending Electronic Hola Ltd 5 600 3000
Machines

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 DRILING SECRETARY
FIRE EXIT SALES ROOM
MACHINE OFFICE

ENTRANCE
EXIT PRODUCTIO
PARKING
N
MMANAGER
GENTS
TOILET

UN
STORE PARKING MAN
ACCOUNTIN
RECEPTION
G
ASS.MANAG
ER

4.3 PRODUCTION AND OPERATIONS STRATEGY

ENTERPRISE will be supplying and selling out quality products and materials as per it's motto. To offer
good quality goods and satisfactory. This will also anable the enterprise to gain the customer trust in
quality supply of goods will be an added advantage.

4.4 PRODUCTION/OPERATIONS PROCESS

All customer are circular flow of order laid down by the business as shown below

CUSTOMER ARRIVAL CUSTOMER CARE DESK CASHIER ACCOUNTANT PAYMENT

RECEIVE PRODUCT LEAVES

4.5 OTHER EXPENSES

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Description Monthly Yearly
Water 600 7200
Transport 2500 30000
Stationary 2000 24000
Rent 6000 72000
Electricity 900 9600
Total 12000 142800

4.6 REGULATION AFFECTING OPERATIONS

4.6.1 SAFETY REGULATION

All employees will be required to wear dust coat that entails the name of the business, fire
extinguishers will be fitted along the strategic points which are accessible in case of fire break out

All the staff workers will be required to wear protective clothing while carrying out the activities in the
workshop

4.6.2 ENVIRONMENTAL REGULATION

The business will strictly enforce the environmental regulations in order to make the business
environmental friendly and to run smoothly. The business will be strict towards bad habits and will
campaign against by putting signs post around the business area such as, smoking drugs abuse, poor
waste disposal and proper ventilation s should be taken into account carefully

4.6.3 GOVERNMENT REGULATION

Accurate advertisement and fair trad practice will be taken into consideration. The business will also
renew its trading licences and insurance contract regularly in order to avoid inconveniences.

The business will be paying taxes in time as a result of patriotism. The business will also ensure fair
business competition.

The business will ensure fair trade activities and provide satisfied goods and services to its customers.

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 CHAPTER FIVE

5.0 FINANCIAL PLANS

This shows how money should be spent in running all the business activities. The business requires
ksh800000..This capital shall be obtained through personal savings, loans and borrowing from relatives
and friends. The money will be a starting capital and shall take things such as the operational facilities
such as opening the business, making payments on goods purchased

5.1 PRE-OPERATIONAL COSTS

This are the cost incurred before the start of the business

PARTICULARLY MACHINERIES AMOUNT (KSH)

Driving machine 8000
Bending machine 20000
Welding machine 30000
Electrical machines 25000
TOTAL 83000
Office desk 3000
Furniture 10000
Electricity 5000
Water 5000
Advertising 5000
Total 28000

TOTAL PRE-OPERATIONAL COSTS 111000

5.2 WORKING CAPITAL REQUIREMENT

The estimated capital is essential for the success running of the business

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Working capital =current assets _current liability

Debtor. 40000
Cash 120000
Bank 300000
Stock. 200000
Total 660000

Working capital =660000_210000

=ksh450000

ESTIMATION OF WORKING CAPITAL

This is the different between current assets and current liability

CURRENT ASSETS
Stock 159500
Debtors 130000
Cash at hand 20000
Cash at bank 180000
TOTAL 560000
CURRENT LIABILITY
Bank loans 150000
Creditors. 30000
Accrued expenses 25000
TOTAL 205000
5.3 CASH BUDGET

Cash flow projection for the year 2018

RECEIT JAN FEB MA APR MA JUN JUL AU SEP OCT NOV DEC TOTA

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 R Y G L

Openin 500 550 555 560 600 600 600 610 615 6200 6400 6500 7100

g stock 000 000 000 000 000 000 000 000 000 00 00 00 000

Loans 100 1000

000 _ _ _ _ _ _ _ _ _ _ _ 00

Debtor 100 150 160 170 180 180 180 185 190 2000 2100 2200 2012

000 000 000 000 000 000 000 000 000 00 00 00 000

Sales 500 600 700 800 900 100 110 120 130 1400 1500 1600 1260

00 00 00 00 00 000 000 000 000 00 00 00 000

Cash 400 410 420 430 440 450 450 460 470 4800 4900 5000 5009

000 000 000 000 000 000 000 000 000 00 00 00 000

Total

Payme
nt
Furnitu 200 200 200 300 400 500 600 700 800 8000 9000 1000 6600
re 00 00 00 00 00 00 00 00 00 0 0 00 00
Machi 100 1000
nery 00 0
Rent 600 600 600 600 600 600 600 600 600 6000 6000 6000 9600
00 00 00 00 00 00 00 00 00 0 0 0 0
Electric 400 400 400 400 400 400 400 400 400 4000 4000 4000 4800
ity 0 0 0 0 0 0 0 0 0 0
Water 100 100 100 100 100 100 100 100 100 1000 1000 1000 1200
0 0 0 0 0 0 0 0 0 00
Adverti 100 100 100 100 100 100 100 100 100 1000 1000 1000 1200
semen 000 000 000 000 000 000 000 000 000 00 00 00 000
t
Salarie 100 100 100 100 100 100 100 100 100 1000 1000 1000 1200

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s 000 000 000 000 000 000 000 000 000 00 00 00 000
Insura 700 700 700 700 700 700 700 700 700 7000 7000 7000 8400
nce 0 0 0 0 0 0 0 0 0 0
Credito 100 100 100 100 100 100 100 100 100 1000 1000 1000 1800
rs 000 000 000 000 000 000 000 000 000 0000 0000 0000 0000
0 0 0 0 0 0 0 0 0
Purcha 500 520 530 540 550 560 570 580 590 6000 6100 6200 6770
se 000 000 000 000 000 000 000 000 000 0 0 00 000
Cash 100 101 102 103 104 105 106 107 108 1090 1110 1200 1176
000 000 000 000 000 000 000 000 000 00 00 00 000
TOTAL 1939
300

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Cash flow for the year 2019

PARTICULAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Opening 30000 2900 1000 70000 10000 79000 76000 11000 80500 43000 20000 4300 116000

stock 0 0 0 0

Sales 40000 4000 4000 50000 4000 8022 8000 1000 15000 50000 40000 3000 2705500

0 0 00

TOTAL inflow 20000 1500 7400 81000 94000 104500 98500 12500 18000 15000 12000 1800 540000

0 0 0 0 0 0 0 0 0 0 0 00

EXPENSES
Salary 60000 6000 6000 60000 60000 60000 60000 60000 60000 60000 60000 6000 720000

0 0 0

Rent 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 96000

Transport 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000

Advertiseme 2000 1000 1000 500 1000 500 1500 2000 2000 2000 2000 2000 16500

nt
License 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Water 2000 600 750 700 680 600 370 400 420 410 400 380 6710
Furniture 1000 1000 4000 1000 4000 2000 2000 65000

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 0 0
Purchase 12000 1000 3000 7000 9000 7000 5000 8000 7000 6000 4000 5000 30000
0 0
Electricity 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Total out 87600 7850 7950 10000 8500 60000 80500 95500 65000 60500 60000 5500 800500
flow 0 0 0
Closing 29000 1000 7000 10000 79000 76000 11000 80500 43000 20000 43000 1820 27622050
balance 0 0 0 00

Cash flow projection for the year 2020

PARTICULAR JAN FEB MAR APR MAy JUN JUL AUG SEP OCT NOV DEC TOTAL

INFLOW
Cash sales 40000 6000 50000 8000 77836 90370 11804 65500 887200 60000 199240 213674 720000

0 0
Debtor 4000 3000 5000 6000 4000 6000 3000 7000 5000 4000 5000 8000 60000

Depreciation 800 1200 1000 1400 1500 1600 1800 2600 2200 2400 2800 3300 22000

Total inflow 44800 6420 56000 8740 55500 67600 54800 79000 57200 66400 57800 111300 802000

0 0
Expenses
Wages and 16000 1600 16000 1600 16000 16000 16000 16000 16000 16000 16000 16000 192000

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salary 0 0
Electricity 300 500 400 700 400 500 400 600 400 500 400 900 6000

Advertiseme 1200 600 900 800 700 600 500 500 500 500 500 500 8000
nt
Water 200 300 200 400 200 300 400 200 200 300 200 700 3600
Stationary 1400 600 500 900 700 600 700 600 400 650 300 200 600
Repair and 500 600 500 700 800 900 1000 100 1200 1500 600 800 12000
maintenanc
e
Loan 21666 2166 21666 2166 21666 21666 21666 21666 21666 21666 21666 21666 25999
repayment 6 6 2
Insurance 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Creditors 1000 1100 1000 1500 1000 1200 1400 1500 1100 1000 1000 200 15000
payment
Total Cash 4426 4316 42866 4426 44266 43166 43366 43366 43366 42865 43366 45566 52259
flow 6 6 2
Net cash 534 2103 13166 4311 44266 24434 11434 35434 14334 23034 14434 65734 27940
flow 4 8 34 8
Accumulate 60000 5000 80000 7783 90370 11804 65500 88720 60000 19924 21367 27940
d cash 0 0 6 0 0 4 8

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5.4 BALANCE SHEET AS AT 31ST DEC 2019

Fixed assets Ksh Current liability Ksh

Furniture 100000 Creditors 1000
Machines 150000 Bank overdraft 150000
Building 150000 Taxation 30000
Motor vehicle 100000

TOTAL 500000 TOTAL 190000

Current assets Long term liability
Stock 10000 Loans 30000
Debtor 8000 Capital 10000
Stationary 12000

TOTAL 30000 TOTAL 40000

NET PROFIT 300000

TOTAL 530000 TOTAL 5300

00

5.4.1BALANCE SHEET AS AT 31ST DEC 2020

Fixed assets Ksh Current liability Ksh

Building 500000 Creditors 50000
Machines 500000 Bank overdraft 200000
Furniture 200000 Taxation 200000
Motor vehicle 800000
Total 2000000 Tota 450000

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 Long term liability
Loans 100000
Capital 50000
Total 150000
NET PROFIT 14400000
TOTAL 2000000 TOTAL 2000000

5.5 BREAK EVEN POINT FOR THE YEAR 2017 AND 2020

Break event points is a point where a business is earning zero profit (expenses _revenue)

BREAK EVEN POINT

FIXED COSTS 2017(ksh) 2018(ksh)

Salaries 50000 55000
Rent 8000 8000
Licences 5000 6500
Insurance 5000 5000
Total 68000 74500
VARIABLE COSTS
Advertisement 10000 11000
Telephone 5000 500
Electricity 6000 12000
Stationary 50000 55000
Transport 10000 3000
Water 2000 55000
Total 83000 93000

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Break event points =fixed cost contributions rate

Contribution rate=(variable cost×100)÷(total sales _variable cost)

2017

(68000×180000)÷(180000_830000)

=ksh12315.80

2018

(74500×18000)÷ (180000_93000)

=ksh152559.95

5.6 PROFITABILITY RATIO FOR THE YEAR 2019 AND 2020

Gross profit =gross/sales ×100 1465700/1815500×100 22377800/1581300×100

=80.73 =150.37

Net profit margins =net 74322/181500×100 1423900/1581300×100

profit/sales ×100 =40.94 =9005

Return on equity =net 74322/350200×100 142390/300500×100

profit/ownersequity×100 =21.22 =45.38

5.6.1 SOURCES AND USES OF FUNDS

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Source Amount Description Amount
Personal savings 50000 Rent 30000
Borrowing from 3000 PRE-OPERATIONAL 50000
friends 10000 Labour 10000
Long term loans 40000 Advertisement 3000
Bank overdraft 30000 Materials 10000
Sales
TOTAL 103000 103000

5.7 NYAMBUNE TRADING, PROFITS AND LOSS ACOUNT AS AT 31ST DEC 2019

Cash purchase 15000

Credit 85000
Net purchase 15000
Closing stock 1500
TOTAL 265000
Gross profit
Net profit 180000
Cost of sales 15000
TOTAL 195000
Expenses
Electricity 200000
Insurance 65000
Salaries 42000
Rent 360000
General expenses 102000
TOTAL 306500

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NET PROFITS =(26500+19500)_2060500
=2535500

Credit sales 105000

Cash 180000
Net sales 185000
TOTAL 467000

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