BUSINESS PLAN FOR

SHARBEL ROAD CONSTRUCTION COMPANY

P.O BOX 74 LESSOS, KENYA.

INSTITUTION KIPKABUS TECHNICAL AND VOCATIONAL

COLLEGE

PRESENTED BY: SHARBEL CHERUIYOT KOECH

INDEX NO: 5341230076

COURSE CODE: 2707

COURSE NAME: DIPLOMA IN CIVIL ENGINEERING

DEPARTMENT: BUILDING AND CIVIL ENGINEERING

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN

PARTIAL FULFILMENT FOR THE AWARD OF

DIPLOMA IN CIVIL ENINEERING

SUPERVISOR: MR LEBALIA

EXAM SERIES MARCH, 2025

i
DECLARATION
I hereby declare that the business plan is my original work and that it has not been presented for the
award of diploma to any institution.
STUDENT
Name: Sharbel Cheruiyot Koech
Signature:______________________________Date:___________________________

SUPERVISOR:
Name: Mr. Labalia
Signature:______________________________Date:___________________________

ii
DEDICATION
I take this opportunity to give my father Henry Tanui and my mum Margaret Tanui special dedication
and all well wishes who have work hard to bring light in to my life.

iii
ACKNOWLEGMENT
First and foremost, I would like to extend my sincere and heart felt gratitude to my parents for all their
effort to meet and care my financial needs towards the upcoming business plan. Above all for
sponsoring my entire course. May the almighty God bless them. I greatly appreciate the press of advice,
encouragement and comfort from my brothers and sisters who contributed to my success during this
business plan, I would also wish to thank the building and civil engineering department at large. My
special thanks go to my supervisor Mr Lebalia for his close supervision and corrections throughout my
work.

iv
TABLE OF CONTENTS

Contents
DECLARATION .................................................................................................................................................. ii
TABLE OF CONTENTS ..................................................................................................................................... v
EXECUTIVE SUMMARY ................................................................................................................................ vii
CHAPTER ONE ................................................................................................................................................... 1
1.1 BUSINESS DESCRIPTION .......................................................................................................................... 1
1.2 BACKGROUND OF THE OWNER ............................................................................................................. 1
1.3 BUSINESS NAME.......................................................................................................................................... 1
1.4 BUSINESS LOCATION AND ADDRESS ................................................................................................... 1
1.5 FORM OF BUSINESS OWNERSHIP .......................................................................................................... 2
1.6 PRODUCTS AND SERVICES ...................................................................................................................... 2
Services of road construction............................................................................................................................... 3
Road construction............................................................................................................................................. 3
1.7 JUSTIFICATION ......................................................................................................................................... 6
1.8 GOALS .......................................................................................................................................................... 6
1.9 ENTRY AND GROWTH STRATEGY ........................................................................................................ 6
CHAPTER TWO.................................................................................................................................................. 7
2.1 MARKETING PLAN ..................................................................................................................................... 7
2.2INTRODUCTION ........................................................................................................................................... 7
2.3 POTENTIAL CUSTOMERS....................................................................................................................... 7
2.5 COMPETITION ............................................................................................................................................. 7
2.6 METHODS OF PROMOTION AND ADVERTISEMENT ........................................................................ 8
2.7 DISTRIBUTION OF STRATEGIES .......................................................................................................... 8
CHAPTER THREE ........................................................................................................................................... 10
3.0 ORGANIZATION, MANAGEMENT PLAN,............................................................................................ 10
3.1 MANAGEMENT .......................................................................................................................................... 10
3.2 OTHER MEMBERS OF STAFF ................................................................................................................ 10
3.3 other persons ................................................................................................................................................. 10
3.4 ORGANIZATIONAL CHART ................................................................................................................... 11
3.5 RECRUITMENT, TRAINING AND PROMOTION ................................................................................ 11
3.5.1 TRAINING ................................................................................................................................................ 11
3.5.2 PROMOTION ........................................................................................................................................... 11
3.6 REMUNERATION ...................................................................................................................................... 12
3.7 LICENSE AND PERMITS BY LAW ......................................................................................................... 12
3.8 SUPPORT SERVICES................................................................................................................................. 12

v
CHAPTER FOUR ..................................................................................................................................................... 13
4.0 PRODUCTION AND OPERATIONAL PLAN ......................................................................................... 13
4.1 INTRODUCTION ........................................................................................................................................ 13
4.2 PRODUCTION FACILITIES AND CAPACITY ...................................................................................... 13
4.3 PRODUCTION STRATEGY ...................................................................................................................... 13
4.4 PRODUCTION AFFECTING OPERATION ............................................................................................ 14
4.5 ENVIRONMENTAL REGULATIONS ...................................................................................................... 14
5.0 FINANCIAL PLAN...................................................................................................................................... 15
5.1 INTRODUCTION ........................................................................................................................................ 15
5.4 WORKING CAPITAL................................................................................................................................. 17
5.5 CASH FLOW PROJECTION FOR THE YEAR 2025 ............................................................................. 18
5.4PROJECTED CASH FLOW .................................................................................................................... 19
5.7 BREAK EVEN ANALYSIS ......................................................................................................................... 22
5.8 DISIRED FINANCING ............................................................................................................................... 22
5.9 CAPITALIZATION ..................................................................................................................................... 22

vi
EXECUTIVE SUMMARY
The proposed business will be identified by the name Sharbel Road Construction Company The business will be
a sole proprietorship managed and run by Sharbel Cheruiyot Koech
The business will be viable since it’s located near the road, retail shops and near homes which require the
product and services of the business. The key personnel to run and organize the business at the initial stage will
be a qualified manager, the cashier and qualified sales people. The manager will be responsible for purchasing of
raw materials, planning and organizing programmes for the staff and also controlling the business.
The service will be offered according to the customers' preference. The manager will be in charge of the
personnel and will attend to both employees and the customers' needs. The necessary tools and equipments will
be bought before the operation of the business. All the regulations affecting the business shall be abided to.
The Travelers Fruit Shop will require a minimum of two hundred thousand shillings.

vii
CHAPTER ONE
1.1 BUSINESS DESCRIPTION
1.2 BACKGROUND OF THE OWNER
The business name SHARBEL Road Construction Company” is a sole proprietorship form of
business owned by SHARBEL CHERUIYOT KOECH. The business owner is married with one kid.
The business shall get assistance from the family members. The company will be highly valued on the
market due to its good road maintenance and may bring in more profit in the business since many use
road transportation, for the efficient safe and fast of goods and services in the areas.
1.3 BUSINESS NAME
✓ The proposed business intends to create more value in the business because of its location
at business transportation services
1.4 BUSINESS LOCATION AND ADDRESS
The business location is important since it determines the performance that is the success or failure of
the business. Business intends to be located Lessos centre along Kesses Lessos highway. It has a good
transport and communication network that is also good marketing for road construction and
maintenance in Lessos Public work. The shop address will be as follows:

SHARBEL ROAD CONSTRUCTION COMPANY MAP

P.O BOX 74
LESSOS

KESSES
KESSES TO LESSOS HIGHWAY LESSOS

SHARBEL ROAD CONSTRUCTION COMPANY

1
1.5 FORM OF BUSINESS OWNERSHIP
The business is going to run under a sole proprietor and is to be owned by SHARBEL CHERUIYOT
KOECH. The sole proprietor may be easy due to:
The business requires small amount of capital to start.
1. The owner is the boss of the business.
2. There is faster decision making
3. Lease skilled manpower required to start operating the business.
4. The owner enjoys all profit a lone

1.6 PRODUCTS AND SERVICES

The business will offer the following products:
• Earth road and gravel roads.
• Soil stabilized roads.
• Water bound macadam road.
• Bituminous or black top road.
• Cement concrete road.
Materials use for road construction
• Asphalt.
• Concrete.
• Composite pavement.
• Recycling.
• Bituminous surface.
• Gravel surface.
• Other surfaces.
• Acoustical implications.

2
Services of road construction
Road construction
✓ The natural earth track cannot withstand modern heavy traffic loads very satisfactorily because
it lacks in strength and good riding surface. It is therefore, important to construct some structure
in the form of pavements on the top of natural surface to enable it to support wheel load safety
and to provide a good riding surface for a longer period.
✓ So properly constructed and maintained roads reduce the wear and tear of vehicles and also
increase the speed of transportation. Therefore, the construction of roads should be done
properly according to the specification.
1. Construction of Earth Roads
• First of all, sub-grade is prepared all the road surface is brought to the required camber and gradient.
• Then the surface is rolled properly and well wetted with water.
• Then a layer of about 10 cm thickness of graded soil is spread evenly.
• This layer of soil is rolled at optimum moisture content first with suitable roller and then finished with
light roller.
• If a second layer is required to be laid, it should be laid in the same way as the first layer and rolled
properly.
• Finally finished surface is watered for about 5 days for curing and no traffic is allowed in these days.

2. Construction of Gravel Roads

Following steps are followed in the construction of gravel roads:
• First of all the sub-grade is prepared and the road surface is brought to the required camber
and gradient. This prepared surface is then properly compacted.
• After compaction of the sub-grade, the mixture of gravel and clay is spread with more
thickness at the center and less thickness towards the edges so that a required camber is
provided. Clay in the mix acts as binder for gravel and sand.
• The gravel mix so spread is then compacted to the required camber. The size of gravel
ranges between 6 mm to 35 mm. This surface is rolled with light roller till the required
compaction is achieved.
• This compacted surface is then watered for 4 to 5 days for curing. During this period of
curing traffic is not allowed to pass through the surface.
• After curing the road is opened to traffic but the water is sprinkled on the surface for
further 10 to 15 days.
• Proper maintenance of the road surface should be done to keep it in working conditions
for the traffic.

3
3. Construction of Water Bound Macadam Roads
The construction of water bound macadam roads we require course aggregates, screening and binding
materials if necessary. Screening is used for filling voids in the aggregates. It is the residue of the same
coarse aggregates. All these materials are stacked along the road side before its construction starts. The
quantity of screening required per 100 sq.m of road surface is 30 cubic meter.
The construction of water bound macadam roads is done in the following stages:

• Preparation of Sub-grade
After completing the earth work in embankment and cutting, the formation level is prepared. The Sub-
grade is generally in the form of a trench having a thickness equal to the thickness of finished pavement.
The sub-grade is prepared according to the camber and the grade of the road. It is then thoroughly
compacted with road roller of weight not less than 8 tones. Before rolling, water is sprinkled on the sub-
grade. Any low pot, if developed during rolling should be rectified and the surface brought to the required
grade. If the soil is clayey, a layer of granular material like natural sand, marrum, gravel, literate or
Kankar should be spread with 10 to 20 cm thickness. Earthen Krebs along the road edge of 15 cm depth
is also constructed to hold the road materials in proper position.

• Preparation of the Base Course of Foundation

The consists of 12 to 18 cm size boulder of broken pieces of stones, over burnt bricks, or brick soling.
Care should be taken to keep minimum possible voids in hand packing of boulders. Voids are filled with
small pieces of stones. The width of this course is kept 60 cm wider than the pavement width of road.
The surface is then compacted with 10 tone roller as the base course is laid with boulders.

4. Construction of Bituminous Roads

Following types of bituminous roads are generally constructed:
• Surface painting road
➢ Surface painting or surface dressing bituminous roads are used where traffic is small. For
the construction of these roads, first water bound macadam road is constructed as
described early. The surface is cleaned with wire brushes and brooms to make grooves in
the joints of the surface. Then a layer of hot charcoal or asphalt is sprinkled over the
surface. Over this layer, a layer of stone chippings is laid and rolled properly. This sets
the aggregate into the binder. The thickness of this layer is between 3 to 4 cm. This surface
dressing provides a thin, water proof and dustless surface of the road. About 3 kg of binder
per sq.m. Area of road surface is used and 1.8 to 2 cm of stone chipping are required per
150 sq.m. Of the surface.

4
In case of heavy traffic two layers or dressing are provided to the road surface. In second coat 1.5 kg of
bitumen or tar is provided per sq meter of road surface.

• Bituminous Macadam road

This type of road construction, the aggregates are spread in the prepared base. It is then rolled with roller
and then the bituminous binder is sprayed on the surface which is penetrates to full or part depth of the
compacted aggregate and thus binds them together.

• Bituminous Concrete roads

These types of roads are used for heavy and mixed traffic. The base of this road is also water bound
macadam. First of all the surface of water bound macadam is cleaned with wire brushes. Side Krebs of
soil is formed to support the bituminous surfacing.
The road metal of size of 6.3 mm is heated to a temperature of 180°. Then coarse sand of 1.3 mm size is
also mixed in the road metal in the ratio of 1:2. Then bitumen or tar is heated at the same temperature as
road metal mixed with road metal in a mixing plant. This hot mixture is spread on the cleaned surface of
water bound macadam evenly and properly between the Kerbs in a thickness of 5 to 10 cm. This surface
is then rolled with roller to proper camber and grade. Over this a sealing coat of coarse sand and bitumen
is applied on this surface and surface is again rolled. This type of road surface provides a smooth surface
and pleasant looking finish.

Sheet Asphalt road

✓ Sheet asphalt provides a better type of surface. This type of road surface is applied to
water bound macadam base or concrete base. It consists of 60 mm thick layer of asphaltic
concrete over which 20 to 40 mm thick carpet of sand-bitumen-mix is laid.

5. Construction of Cement Concrete Roads

✓ The cement concrete roads pavements may be constructed with or without sub-base. The
concrete road slab performs the function of base course as well as wearing surface. The
thickness of road slab varies between 15 to 20 cm depending upon the traffic load. For
much heavy traffic loads reinforcement may be provided in the concrete road slab.
✓ Before laying the concrete slab, the sub-grade is prepared as usual. Then the cement
concrete mix is laid in alternate panels, which are marked before laying the concrete. The
panels may be kept 2.5 m to 3.5 m square. The completed surface of concrete slab is cured
for 10 to 15 days before it is opened to traffic.

5
1.7 JUSTIFICATION
✓ The business will be successful because there is high demand of road construction and
maintenance store or shop for supplying of road construction and maintenance to
different towns for its consumption hence customers will be required to come and buy
road construction and maintenance as they transport them to their relevant destinations.
✓ The proves to operate profitability in existing market and counters with completion. The
location captures all the potential customers around the town and other regions.

1.8 GOALS
LONG TERM GOAL
a. Earn more branches at major towns of the same kind
b. Road construction and maintenance

SHORT TERM GOALS

a. Offering quality road construction and maintenance at low price.
b. Creating employments to people.
c. Be having reduced revenue of the owner.

1.9 ENTRY AND GROWTH STRATEGY

The entry into the business is important for trying and not to be told. The entry may occur due to:
1. Reducing the price of products
2. Efficiency of distribution
3. Offer immediate feedback the business plans to expand its sales to various parts c by
opening new branches in the growth strategy. The proprietor capture many customers that results
to operation in wide area.

6
CHAPTER TWO
2.1 MARKETING PLAN
2.2INTRODUCTION
➢ It gives a clear image how the business will be conducted. The business shall maximize
on the sales as well as building long term policy customers.
2.3 POTENTIAL CUSTOMERS
The business will have their potential customers such as
Members of public general such as individuals, retailers and households.
Manfacturing company such as SHIVA CONSTRUCTION COMPANY.

2.4 MARKET SHARE OR SIZE

Sincerely, the market has three players already operating on the market share with different
percentages.

29% 31% free

wema
wesy
35%

2.5 COMPETITION
There is already existing similar business within KISII town offering same products. The business has
been therefore long term due to increasing number of customers. All their needs have been met.
Some of major parts that carryout are:
a. Wesy road construction and maintenance shop
b. Wema road construction and maintenance shop
c. free road construction and maintenance farm

Including weekends
✓ Employers may face merits on working network.

7
2.6 METHODS OF PROMOTION AND ADVERTISEMENT
The main means of advertising and promotional media is radio channel.
The business intends to use printed posters that will be attached at every comer of the street within
Lessos center.
The promotion strategies may be through:
a. sales promotion
b. personal selling
c. advertisement

2.7 DISTRIBUTION OF STRATEGIES

Orders made by the customers are honored and conducted efficiently.
The proposed business will have a store in town where all the stock will be kept.
The road transport by vehicle is the best mode of distribution
The goods will be sold to sales person and will also be sold over the counter.
(a) WESY road construction and maintenance shop
It is situated along Kesses Lessos highway t about 12 kilometers. Their major strengths are:
1. Large in size
2. Market leading
3. Having active sales

WEAKNESS
a. They do not pay employees on time
b. They sell only road construction and maintenance that are row
c. They are located away from the town

(b) Wema road construction and maintenance shop

It is located along Kesses Lessos highway. It is about 36 meters from Koisagat road.
Their strengths are as follows:
a. They operate throughout including weekends.
b. Their area location is near school compound.
c. Their price is lower.

8
Weaknesses
a. It has poor services
b. Has low distribution market
c. Poor management

(c) Free road construction and maintenance farm

It’s located along Kesses Road. It has been working for the last two years and their major strengths are:
a. Located in densely production farm area
b. Good distribution strategy
c. Low pricing market
Weakness
a) Does not sell products at one price.
b) The farmers may not have resting time due to working.

9
CHAPTER THREE
3.0 ORGANIZATION, MANAGEMENT PLAN,
3.1 MANAGEMENT
The structure of the business is going to be vertical because the command will be delegated from the
management.
This team is as follows:
a) Manager
b) Sales person

3.2 OTHER MEMBERS OF STAFF

c) Driver
a) Manager
Qualification
▪ Diploma in business management
▪ Self-motivated
▪ Must at least have experience position

Duties of the manager

▪ Chairing the meeting
▪ Supervising sales person
▪ Making sure that business runs well
▪ Distribution of goods

b) Sales person
Ensure that plans are made for management by passing of information and reporting to them.
Qualification
▪ Certificate in sales and marketing
▪ Must have experience in the past years
3.3 other persons
C . driver
They serve for transportation of products at specific customer’s market. They will be in charge of all
distributions.

10
Qualifications
▪ Must have experience in the similar field
▪ Should have personal driving license that is active

3.4 ORGANIZATIONAL CHART

Manager Sales person Driver Management director

manager

Financial driver Sales person

3.5 RECRUITMENT, TRAINING AND PROMOTION

The application forms shall be sent to business people by advertising. The management that will meet
requirements the special interview will be carried out. The interviewers whom have succeeded will be
given the vacant position.

3.5.1 TRAINING
The business will offer workers with production skills through.
Sending some workers for research study so that they can collect all the necessary information and
practices in business activities
By giving the employees opportunity to go for their professional courses offered by agricultural centre.
3.5.2 PROMOTION
• It will be motivated employees through encouraging them in some ways.
• Treating employees through correcting them politely and not harassing them.
• Enabling employees to work under good condition.
• Enabling the employees not to work during holidays and weekends.

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3.6 REMUNERATION
Position House allowance Transport allowance Medical Total
Manager 4,000 2,000 1,500 7,500
Sales person 3,000 2,000 1,200 6,200
Driver 900 600 840 2,340

3.7 LICENSE AND PERMITS BY LAW

The business operations will consider the following conditions:
• Obtaining the license from local authority
• Acquiring transport license for its vehicles and insurances

3.8 SUPPORT SERVICES

The support services that benefit the business are:
BANKING
✓ The bank will help to keep the business money got from the sells of products. The bank
also will help in borrowing loans for the expansion of the business.

2. INSURANCE SERVICES
The insurance will insure that there is study trading activities because it will take part in competition in
case of any lose or risk occurs. Hence it may take place during process of business operations. The
business will seek the services from Kiminini Insurance Company Limited.

3. CONSULTING SERVICES
• The business will be needed to outfit its financial books in each year to know whether it’s
making loss at the end of each year or not and will take place for every three months.

4 LEGAL SERVICES
The business will serve good connection on the market with its customers only when road transport is
good. The business shall be one track and 2 pickups that shall be used in transportation of goods to
customers premises.

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CHAPTER FOUR
4.0 PRODUCTION AND OPERATIONAL PLAN
4.1 INTRODUCTION
✓ The business intends to acquire suitable and quality materials and products for its
operations.

4.2 PRODUCTION FACILITIES AND CAPACITY

✓ The business proposed to use many types of production materials available to minimize
wastage. The owner owns the land at the trading area and this has reduced the idea of
hiring the house for trading activities.

The cost of purchasing intended equipments is as follows:

Item quality cost capacity
Shelve and fitting 10 rows 50,000 4 parts
Receipt book 4 6,000 2 for customers
Telephone 1 1,000 Nokia
Electricity 2phase 20,000 1000kw
Furniture 4 1,800 3 for sales person

4.3 PRODUCTION STRATEGY

The proposed business intends to sell road construction and maintenance of all kinds and shall be
taking place at Kiminini town. It also aims to sell other fruits such as oranges, bananas and pawpaw
around the county.

1. TECHNOLOGY
✓ The business intends to use modern technology because it’s faster transition of
information and efficiency in the market research of customers. The business will buy
and sell their expected goods for 2 hours of work.

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Monthly labour required
TITLE SALARIES
Manager 15,600
Sales person 8,800
Driver 5,500
Total 29,900

3 PRODUCTION PROCESS
At the beginning of the introduction of the business, the proposed business will be offering the products
that are free from harmful and due to its natural in nature hence will be valued by many customers
desire to buy them at large.

4.4 PRODUCTION AFFECTING OPERATION

(a) Health requirement
The business will ensure that its goods are at safe destinations before distribution.
The business will make sure that the employees are physically healthy to perform their duties well. The
business shall have all its members’ medical certificate from National Hospital in Insurance Fund
(NHIF)

(b) Safety
The business workers do have licensing for its vehicles and jackets that will protect them from injuries.
The owner will come up with strategies encountered during competition have been forecasted.

4.5 ENVIRONMENTAL REGULATIONS

The environment the proprietor will operate is going to operate is conducive because;
It is located to the areas where there is easily transportation of goods on the market. And due to town
being an agricultural centre in the country. There will be different customers from different parts in the
country and outsiders coming to acquire for new and fresh goods on the market to the.

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CHAPTER FIVE
5.0 FINANCIAL PLAN
5.1 INTRODUCTION
It shall determine the financial transactions took place during business venture
5.2 PRE-OPERATIONAL COSTS
ITEM COST
Transport 3,000
Market Research 25,000
Photocopying papers 500
Advertisement 5,000
Utility bills 4,000
TOTAL 37,500

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5.3 PRO-FORMA BALANCE SHEET AS AT START 21ST DECEMBER 2025

ITEM AMOUNT
ASSETS
FIXED ASSETS
Vehicle 3,000
Furniture and fitting 4,300
Machinery 5,000
Other fixed assets 3,000
TOTAL FIXED ASSETS 15,000

CURRENT ASSETS
Total material cost 8,000
Debtors 2,500
Stock of products 5,500
Cash 13,000
TOTAL CURRENT ASSETS 29,000
TOTAL ASSETS 43,000
Less CURRENT LIABILITIES
Creditors 21,000
Bank overdraft 38,000
TOTAL 60,000

WORKING CAPITAL
Financed by;
Opening Capital 490,000
Add Net Profit 2,000
Less Drawings 16,000
Closing Capital 467,000
Loans 20,000
TOTAL LIABILITIES 704,000

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5.4 WORKING CAPITAL
CURRENT ASSETS AMOUNT ( Ksh )
Cash at hand 80,000
Cash at bank 46,000
Debtors 22,500
Stock 140,000
TOTAL 288,500
Less CURRENT LIABILITIES
Creditors 30,000
Bank Overdraft 48,800
Accruals 50,000
TOTAL 128,800
WORKING CAPITAL 159,700

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5.5 CASH FLOW PROJECTION FOR THE YEAR 2025
ITEM JAN FEB MAR APRI MAY JUNE JULY AUG SEPT OCT NOV DEC
L
Receipts
Sales 45,000 48,000 53,000 61,000 65,000 75,000 79,500 81,000 85,600 88,900 93,000 95,000
Debtors 69,000 - 4,500 8,000 3,500 2,000 4,000 7,000 5,000 9,000 5,500 2,500
Discount Received 20,000 30,000 25,000 16,000 20,000 25,000 23,000 21,000 20,000 19,000 22,000 24,000
TOTAL PAYMENTS 71,000 78,000 82,500 85,000 88,500 102,000 106,000 109,000 110,600 116,900 120,500 121,500
Purchase 15,000 10,000 9,000 7,000 7,000 8,500 9,500 9,500 10,000 10,000 10,000 10,000
Salaries 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500
Transport 2,000 2,000 2,000 2,000 2,000 2,000 2,000 1,500 1,500 1,500 1,500 1,500
Licensing 500 500 500 500 500 500 500 500 500 500 500 500
Advertising 150 - - - - 150 - - - - - -
TOTAL 30,150 25,000 22,000 22,000 22,000 23,650 24,500 24,000 24,500 24,500 24,500 24,500
Net Cash Flow 40,850 53,000 60,500 63,000 66,500 78,350 82,000 84,500 86,100 92,400 96,000 97,000

18
 5.4PROJECTED CASH FLOW
A) PROJECTED CASH FLOW FOR THE YEAR 1 2026

Items Jan Feb March April May June July August September October November Dec Total
Cash from capital 900000 1202690 1522820 1841464 2135035 2435719 2708361 3099958 3475020 3855096 4251101 4603866
Cash sales 500000 517000 516000 505122 511000 506012 612132 600000 606012 610000 570000 580000
Total inflow 1400000 17196790 2038820 2346586 2646035 2941731 3320493 3699958 4081032 4465096 4821101 5183866
Cash outflow
Salaries 21000 21000 21000 21000 21000 21000 21000 21000 21000 21000 21000 21000
Purchases 100000 100500 101000 110000 105100 127120 116105 120012 120000 110000 113000 115000
Repairs and aintenance 5000 5060 5020 5021 4770 4000 3000 3060 3126 3000 3050 4008
Water and electricity 10000 1100 11000 11000 11006 12012 13120 13430 13500 13600 13800 15000
Service charge 90 90 90 90 90 90 90 90 90 90 90 90
Transport 50000 50000 50000 55000 57000 60000 58000 58012 57000 57085 57100 60000
Promotion 2000 2000 - 2000 - - 2000
Loan repayment 4620 4620 4620 4620 4620 4620 4620 4620 4620 4620 4620 4620
Loan interest 4200 4200 4226 4320 4130 3956 4000 4106 4000 4000 3970 4120
Sundry expenses 400 400 400 500 600 572 600 608 600 600 605 700
Total outflow 197310 196870 197356 211551 210316 233370 220535 224938 225936 213995 217235 226538
Net cash flow 1202690 1522820 1841464 2135035 2435719 2708361 3099958 3475020 3855096 4251101 4603866 497328

19
 5.5 PROJECTED CASH FLOW FOR YEAR 2027

tems Jan Feb. Mar April May Jun July Aug sept Oct Nov Dec Total
Cash b/f 4957328 5400005 5908801 6419530 6909316 7373142 78787998 8383544 8882358 9353845 9865528 10350078 91,68273

Cash sales 800000 810000 810000 790000 800070 810721 810890 800226 802772 812077 787767 790721 9625244
Debtors 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 30000
Total inflow 5759828 621505 6721301 7212030 7711866 816363 8692188 9186270 9687630 10168422 10655795 11143299 101337517
Cash outflow
Salaries 29904 29904 29904 29904 29904 29904 29904 29904 29904 29904 29904 299004 358848
Purchases 200000 198000 196000 197000 200000 200000 202000 197000 197020 197000 199000 202020 2386040
Repairs$maintai 4000 4060 4100 4000 3900 3970 3999 4102 4111 4080 4000 3962 48284
nance
Water and 10000 10000 10000 11000 12000 11750 11226 10050 10070 11023 11270 129389
electricity
Service charge 120 120 120 120 120 120 120 120 120 120 120 120 1440
Transport 42000 42000 42000 42000 42000 42000 4200 42000 42000 42000 42000 42000 504000
Insurance 25000 - - - - - - - - - - - 25000
Promotion 30000 - - - 30000 - - - 31000 - - 31500 122500
Rent 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 12000
Loan repayment 4620 4620 4620 4620 4620 4620 4620 4620 4620 4620 4620 4620 55440
Loan interest 3179 4000 4027 3070 4200 4201 4001 3940 3960 4100 4050 4100 46828
Sundry expenses 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
Total outflow 359823 303704 301771 302714 338744 307565 308644 303912 333785 302894 305717 340496 3809769
Net cashflow 5400005 5908801 6419530 6909316 7373142 7878798 838544 882358 935845 9865528 10350078 11080900 97805845

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5.6 MEMBER ROAD CONSTRUCTION COMPANY
PRO-FORMA INCOME STATEMENT
Pro-forma income statement (trading, profit and loss account)
Item 1 YEAR 2 year
3 year
Sales 560,000 580,000
620,000
Cost of goods sold 236,000 256,000
296,000
Total variable 236,000 256,000
296,000
Gross profit bld 324,000 324,000
324, 00
Expenses
Salaries and wages 89,000 104,000
189,000
Water 6,000 6,000
6,000
Telephone 800 1,200
1,500
Electricity 1000 900
Advertising 12,000 3,000
1,300
Transport 10,000 1,500
850
Repairs 2,000 2,800
3,700
Total expenses 121,000 119,000
103, 250
Net profit before tax 203,000 205,000
221, 750

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Taxation (%) 5,600 5,000
6,200
Net profit after tax 197,400 199,200
214,550

5.7 BREAK EVEN ANALYSIS

a) Contribution= selling price- marginal/ or variable cost
= 620,000- 296,000
=324,000
b) Breakeven point in (sh) value= fixed cost x selling price
Contribution
= 324,000 x 100%
620,000
=52.26%
5.8 DISIRED FINANCING
ITEM AMOUNT
Pre-operational cost 35,000
Working capital 159,000
Fixed assets 14,000
209,200

5.9 CAPITALIZATION
ITEM AMOUNT
Owner capital 400,000
Bank 300,000
Friends and relatives 200,000
Total 900,000

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 5.9.1 (i) profitability ratios
a) Gross profit ratio= Gp x 100%
Sales

= 324,000 x 100%
560,000
=57.86
b) Net profit ratio = N.P x 100%
Sales
= 197,000 x 100%
620,000
=31.84%

c) Liquidity ratio = current assets

Current liabilities
=43.000
59,000
=0.7288

KESSES KAPLELACH ROAD KOSAGAT

CENTRE

PETROL STATION

SHARBEL ROAD CONSTRUCTION COMPANY

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