THIKA TECHNICAL TRAINING INSTITUTE

BUSINESS NAME : TEREKI PETROL STATION

BUSINESS LOGO:

EMAIL ADDRESS :

PRESENTED BY:

INDEX NO: 2070011109

SUPERVISOR:

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL IN PARTIAL

FULFILMENT FOR THE AWARD OF

EXAM SERIES: NOVEMBER 2023

DECLARATION

I declare that this is my own business plan, written out of my own capacity and ideas which
whatsoever has never been presented to The Kenya National Examination Council for the
award of any academic certificate. This will be though first time for it to be submitted.

Student name:

Sign ……………………………………………………….

Date ………………………………………………………

Supervisor name:

Sign ………………………………………………………………

Date………………………………………………………………

2
ACKNOWLEDGEMENT

I would first like to thank The Almighty for enabling me to have the idea, strength and
guidance to complete my business plan.

I would also like to thank my supervisor for guiding me throughout my business plan.

I also give special thanks to my Family and Friends for being with me and encouraging me
throughout the process of completing my business plan.

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DEDICATION

I would like to dedicate this business plan my Father who took part in guiding me and
encouraged me as I was compiling my business plan.

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TABLE OF CONTENTS

DECLARATION.......................................................................................................................ii
ACKNOWLEDGEMENT........................................................................................................iii
DEDICATION..........................................................................................................................iv
EXECUTIVE SUMMARY....................................................................................................viii
1.0 BUSINESS DESCRIPTION.........................................................................................viii
2.0 MARKET PLAN..........................................................................................................viii
3.0 MANAGEMENT PLAN..............................................................................................viii
4.0 PRODUCTION PLAN...................................................................................................ix
5.0 FINANCIAL PLAN........................................................................................................ix
CHAPTER ONE......................................................................................................................10
1.0 BUSINESS DESCRIPTION..............................................................................................10
1.1 BUSINESS NAME........................................................................................................10
1.2 BUSINESS LOCATION AND ADDRESS...................................................................10
1.2.1BUSINESS ADDRESS services..................................................................................11
1.3 OWNERS PROFILE AND ADDRESS.........................................................................12
1.4 form OF OWNERSHIP..................................................................................................12
1.5 TYPE OF THE BUSINESS...........................................................................................12
1.6 PRODUCTS OR SERVICES........................................................................................12
1.7 INDUSTRY....................................................................................................................13
1.8 BUSINESS GOALS AND OBJECTIVES..................................................................13
1.8.1 SHORT TERM GOALS.........................................................................................13
1.8.2. MEDIUM TERM GOALS.....................................................................................14
1.8.3. LONG TERM GOALS..........................................................................................14
CHAPTER TWO.....................................................................................................................15
2.0 MARKETING PLAN......................................................................................................15
2.1 POTENTIAL CUSTOMERS......................................................................................15
2.2 MARKET SHARE.......................................................................................................15
2.3 COMPETITORS..........................................................................................................16
2.4 METHODS OF PROMOTION AND ADVERTISING...........................................17
2.4.1 ADVERTISEMENT...............................................................................................17
2.4.2 PROMOTION.........................................................................................................17
2.5 PRICING STRATEGY..................................................................................................17
2.6 SALES TACTICS..........................................................................................................18

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 2.7DISTRIBUTION STRATEGY.......................................................................................18
CHAPTER THREE..................................................................................................................19
3.0 ORGANIZATIONAL /MANAGEMENT PLAN..........................................................19
3.1 ORGANISATION STRUCTURE.................................................................................19
3.3 OTHER BUSINESS PERSONNEL............................................................................20
3.4 RECRUITMENT, TRAINING AND PROMOTION RECRUITMENT...............20
3.4.1 RECRUITMENT..................................................................................................20
3.4.2 TRAINING............................................................................................................21
3.4.3 PROMOTION.......................................................................................................21
3.5 RENUMERATION AND INCENTIVES..................................................................21
3.6 LICENSES, PERMITS & BY-LAWS........................................................................21
CHAPTER Four.......................................................................................................................24
4.0 PRODUCTION PLAN...................................................................................................24
4.1 PRODUCTION FACILITIES........................................................................................24
4.2 PRODUCTION STRATEGY........................................................................................24
4.3 PRODUCTION PROCESS............................................................................................25
BUYING OF STOCK..............................................................................................................25
INSPECTION OF THE PRODUCTS......................................................................................25
STORAGE OF THE PRODUCTS...........................................................................................25
DISPLAYING OF PRODUCTS IN METAL CAGES............................................................26
ELLING TO CUSTOMERS....................................................................................................26
4.4 REGULATIONS AFFECTING PRODUCTION..............................................................28
BUSINESS PERMIT...............................................................................................................28
INSURANCE...........................................................................................................................28
HEALTH REGULATIONS.....................................................................................................28
Chapter five..............................................................................................................................29
5.0 FINANCIAL PLAN...........................................................................................................29
5.1 Pre-operational costs......................................................................................................29
5.2 estimation of working capital.........................................................................................29
5.3 pre-operational cash flow projection..............................................................................30
5.3.2 preparation of cash flow projection yearly..............................................................32
5.4 preparation of pro-forma income statement...................................................................33
5.4.1 preparation of pro-forma income statement presented monthly.............................33
5.4.2 preparation of pro-forma income statement presented yearly...................................1
5.5 preparation of pro-forma balance sheet............................................................................1

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 5.5.1 pro-forma balance sheet as at start of the business...................................................1
5.5.2 pro-forma balance sheet............................................................................................1
5.6 calculation of break-even point........................................................................................2
5.7 calculation of profitability ratios......................................................................................2
5.7.1 percentage gross profit..............................................................................................2
5.7.2 return on equity.........................................................................................................2
5.8 working capital.................................................................................................................3
5.9 proposed capitalization.....................................................................................................3

7
EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

The business name will be Tereki Petrol station. The main reason for choosing that name for
the business is because from the it shows the customers that the products of the business are
here for them. The name also enables one to have an idea of what the business

Our basic services and products offering to our highly esteemed customers as a standard
Petro station are retailing of petrololine (petrol), diesel and lubricants for motor vehicles. We
will make sure that we give our consumers nothing short of the very best. We will also run a
convenience store, car wash, vulcanizing services, wheel balancing services, wheel alignment
services and other related automobile repair services.

We are quite aware that in order to become the number one choice for automobile owners
who play the route where our petrol stations will be located, we must continue to make our
Petro station welcoming, easy to operate and that is exactly what we will do.

We are open to the use of latest technology in the petrol station industry. No doubt our
excellent customer service and the range of additional complementary services we offer will
position us to become one of the most preferred petrol stations in Kiambu.

2.0 MARKET PLAN

As the business starts, it will be targeting the residents around its area of operation within a
radius of 10-15kms max. The potential customers will be the residents, hospitals that will
need petrol for their impatient and the hotels around the area of operations. The business will
have a market share of 7.5% when it starts operation. The owner intends to advertise the
business through placing stickers on the petrol cylinders. The products will be sold directly to
customers. This is to ensure that the owner can interact with the customers and know the
customers’ views and feeling about the products sold.

3.0 MANAGEMENT PLAN

The business will have a management team and subordinate member with the right
qualifications that suits their roles around the business area. The team will comprise of a
manager, account officer, two security officer and a laborer. The business will recruit its
employees and afterward they will be trained to expand their knowledge and experience
around their area of work. Employees who perform well in their duties will be promoted as

8
the business expands. The salaries and other privileges of the employees will also be
highlighted in this chapter.

4.0 PRODUCTION PLAN

The business will have operational facilities such as offices which will be highlighted in this
chapter. The business strategy which consists of the acquiring of facilities, market research,
stocking up of products, acquiring qualified personnel and selling of products will all be
explained into details in this chapter. The whole production strategy is also outlined in the
chapter. It also explains the regulation that may affect the business production.

5.0 FINANCIAL PLAN

The business finances are all outlined here from the pre-operational cost. The business will
have a starting capital of Shs.500000 acquired through personal savings. The projected cash
flow and the Proforma income statement are well outlined in this chapter. Then afterwards
the statement of financial position of the business and the breakeven point are well
highlighted together with the profitability ratios.

9
CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The business name will be Tereki Petrol station. The main reason for choosing that name for
the business is because from the it shows the customers that the products of the business are
here for them. The name also enables one to have an idea of what the business

Our basic services and products offering to our highly esteemed customers as a standard
Petro station are retailing of petroleum (petrol), diesel and lubricants for motor vehicles. We
will make sure that we give our consumers nothing short of the very best. We will also run a
convenience store, car wash, vulcanizing services, wheel balancing services, wheel alignment
services and other related automobile repair services.

1.2 BUSINESS LOCATION AND ADDRESS

The business will be located at Thika shopping center on ground floor next to Jordan college.
The reasons for my business location are:

 Availability of market
 Availability of room for expansion
 Good infrastructure
 Availability of security

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A SKETCH MAP LEADING TO THE BUSINESS LOCATION

TEREKI
PETROL JORDAN COLLEGE
SERVICES

D
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E
I
BIN AGIL N
Safaricom shop
CATERING
R
D

1.2.1BUSINESS ADDRESS SERVICES

Tereki Petrol station

P.O BOX 17

KIAMBU

TELEPHONE 0710828603

EMAIL: [email protected]

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1.3 OWNERS PROFILE AND ADDRESS

The owner of the business will be who is 20 years old and lives in Thika Kiambu
county. He is a student at THIKA TECHNICAL TRAINING INSTITUTE (TTTI) where he
is pursuing a diploma in

1.4 FORM OF OWNERSHIP

The business will be conducted as a sole proprietorship. This is because it has many benefits
some of them being:

a) The owner can make quick decisions concerning the business.

b) Profits are entirely on the hands of the owner.
c) The owner has control over the business secrets.
d) It is easy to start since only a license is required.
e) The owner has freedom to take action at any time.

The business will be registered under Energy Act regulations on December 14th 2020.

1.5 TYPE OF THE BUSINESS

Tereki Petrol station is a fully registered and licensed standard Petrol station that is
positioned in the Petrol station industry in Kenya to maximize profits. Aside from the
point that we will be retailing petrololine and diesel, we will also engage in other
complimentary services that will help us maximize profits.

1.6 PRODUCTS OR SERVICES

We have designed products and services that will not only help to meet the demands of the
people, but also to put good money in our pockets. These are the products and services that
will be made available to our customers;

Petrol ( premium )

Petrol

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 Diesel

Automotive services (e.g. repairs, car washes and general parts)

Nonautomotive fuel

Retailing automotive fuels (e.g. diesel fuel and

petrololine) Selling automotive-related goods

Providing automotive-repair services

Providing Wheel Alignment, Wheel Balancing and Vulcanizing

Services Retailing of Groceries and soft drinks et al

1.7 INDUSTRY

The business falls under the Petrol station industry. The energy industry is a big and
profitable industry as it has a wide range of market, for example petroleum energy is used in
our day-to-day activities and also industrial machineries and cars depend on if. Petroleum
energy has been a lucrative sector as it has grown rapidly over

Petroleum energy has been a lucrative sector as it has grown rapidly over the past decade
attracting many investors from different parts of the world

The industry has a bright future as renewable sources of energy in form of biofuels will be
available and commonly used across the world as it is an environmentally friendly fuel, thus
having a large market. For example, Bio LPG which is a renewable energy source, will be
preferred over LPG in years to come.

1.8 BUSINESS GOALS AND OBJECTIVES

1.8.1 SHORT TERM GOALS

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In a years’ time the business should be able to depend on itself and have a website where
customers should be able to know the products sold by the business.

1.8.2. MEDIUM TERM GOALS

In 5-10 years’, time the owner should have two more Petrol station in the large Kiambu
county.

1.8.3. LONG TERM GOALS

In 20-25 years’ the owner should be able to have a retail Petrol station, where he will buy
huge amounts of petrol products, store it in tanks and sell it to individuals that will use it for
domestic use as well as industries that require large quantities of petrol.

1.9 ENTRY AND GROWTH STRATEGY

The business will fully depend on its capital which will only be acquired through personal
savings and a family fund raising. It should not acquire any loan as it might bring serious
consequences to the business if not paid in time.

As the business grows, it should have 5 employees who would be helping in around in
packing and removing the petrol cylinders in their steal cages. The business will gradually
expand its customer targets to the whole of the constituency and eventually to the whole of
Kiambu County. The business should also be able to adapt to the changes in the future
market.

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CHAPTER TWO

2.0 MARKETING PLAN

2.1 POTENTIAL CUSTOMERS

RESIDENTS

As the owner starts the business, it will be targeting the Thika residents within a radius of 10-
15kms max. As the business expands and the 2 more retail shops for petrol begin operation,
both Kenol constituency residents will be targeted.

SCHOOLS

The business will also be supplying petrol to the hotels near its area of operations.

The schools will also be regular customers as they are constantly using the petrol to run their
standby generators.

HOSPITALS

Hospitals around the business will be in need of petrol. The petrol will be used to run standby
generators in case of electricity shortage or failure.

2.2 MARKET SHARE

The potential customers of the business will be around 400,000 in the Maragwa constituency.
This number represents customers of the business and other petrol retail shops, who are my
competitors. Kenol station will have 170,000, Total station will have 110,000, Baraka station
point will have 90,000, Engen station will have 30,000.

Kenol station 170,000/400,000=42.5%

Total station 110,000/400,000=27.5%

Baraka point 90,000/400,000=22.5%

Engen station 30,000/400,000=7.5%

15
 ur+Table1[[#Headers],[Market share]]

7.50%

22.50%
42.50%

27.50%

Kenol station Total station Baraka point Engen station

2.3 COMPETITORS

TYPES Kenol station Total station Baraka point Tereki Petrol

station
Finances Limited capital Unlimited Limited capital Limited capital
capital
Skills Inexperienced Availability of Availability of Availability of
workers skilled workers skilled and skilled workers.
experienced
workers.

16
 Customer care Poor customer Charges on Does not deliver Free delivery of
relations delivery to products to products to
customers and customers. customers and
helps first time helps first time
users with users with
connecting the connecting the
petrol regulators petrol regulators
and petrol pipes and petrol pipes
to the petrol to the petrol.
Operations Opens from Opened 24hrs a Opens from Opens from
6am – 6pm day 6am – 6pm 6am – 10 pm
Location Along Chai Outside Thika Opposite Kithimani
Road town. Kithimani shopping centre.
heights.

2.4 METHODS OF PROMOTION AND ADVERTISING

2.4.1 ADVERTISEMENT

The business owner intends to use direct approach method since he will get the chance to
understand the customers and what they need. The business owner also intends to advertise
the business by placing stickers on the petrol cylinders and by giving out brochures to
customers. Through the customer calling the owner for services and addition of more
customers coming to his business the owner will be able to know people are listening his
advertisement.

2.4.2 PROMOTION

The business owner intends to deliver the petrol cylinder for free to customers within a radius
of 10-15 km maximum when the business starts as the business blows customers will be
given 25% discount on the total price whenever they buy a petrol cylinder and a petrol
regulator

2.5 PRICING STRATEGY

TEREKI PETROL STATION

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PRODUCT COST(KSH)
1 Liter (petrol) 130
5 litres 600
10 litres 1200

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2.6 SALES TACTICS

In order to conduct a smooth work flow of the business the owner will be deploy at direct
flow of sales tactics. direct selling will capture more attention of customers targeted by the
business. Direct selling will also create awareness to the people outside about the product that
the business will be selling .

2.7DISTRIBUTION STRATEGY

ZERO LEVEL CHANNEL

The owner intends to sell the product through direct selling .this because the owner sees a
major benefit of interacting to the customers and also getting to know the customer free about
the product.

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CHAPTER THREE

3.0 ORGANIZATIONAL /MANAGEMENT PLAN

3.1 ORGANISATION STRUCTURE

Manager

Accounting Sales
Officer Person

Security
Labourer
Officer

3.2 KEY MANAGEMENT PERSONNEL

3.2.1 MANAGER

QUALIFICATIONS OF A BUSINESS MANAGER

The manager of the business should have the following qualifications:

 Assertiveness. The manager should be assertive so as to confidently make bold

decisions and influence the employees in a positive way.
 Effective communication. The manager should be able to communicate properly to
the once below him and ensure that message is passed clearly. He should also be able
to hear and consider the ideas and complaints of the employees
 Risk taker. The manager should have the proper executing skills to take risks in
whatever way he sees a way to improve the business.

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FUNCTIONS OF A MANAGER

The manager of the business will perform the following functions:

 Coordinating. Ensuring that the employees are performing their duties in the right
way and there is a humble working environment around the business area.
 Planning. Come up with a plan on how to maximize profits and make future
adjustments in the business
 Staffing. The manager will bring in well skilled personnel that will ensure steady
management of the business.
 Controlling. The manager will control the business alone and take necessary measures
where need be.
MANAGER REMUNERATION

The monthly salary paid to the business will be 20,000 and a monthly allowance of Ksh 5000.
A total of Ksh 25,000.

3.3 OTHER BUSINESS PERSONNEL

Position Nos. Qualifications Duties Pay

Account 1 1. Should have basic computer Managing budgets 13,000

officer knowledge
2. Should have the knowledge of
book keeping.
Security 2 1. Should have two years’ Securing premises and 6,000
officer experience. personnel

Labourer 1 1. Should be disciplined and a Helping in the stocking of 5,000

hard worker. the products in the store.

3.4 RECRUITMENT, TRAINING AND PROMOTION RECRUITMENT

3.4.1 RECRUITMENT
The business will first advertise that it is searching for skilled personnel to apply for a job
through an application called LinkedIn. This is because LinkedIn is an application that one

21
can easily find skilled personnel in the specific area needed. The business will then interview
the shortlisted candidates and assess them to see if there are any sufficiently skilled and
qualified personnel to fill and perform existing job vacancies.

3.4.2 TRAINING
The business will conduct a job training for all the employees; job rotation which involves
movement of trainees from one job to another to gain knowledge and experience. This is to
enable the employee to acquire new skills, increase their contribution to the business and also
build their self-esteem.

3.4.3 PROMOTION
The business is to reward and promote the employees who perform well in their duties and
responsibilities assigned to them. Promotion of employees will be through increasing their
allowances.

3.5 RENUMERATION AND INCENTIVES

INCENTIVES

Apart from salary, the business will give extra benefits to its employees such as

 Free lunch
 End of year barbeque
 Mid-year team building
 Transport allowances
3.6 LICENSES, PERMITS & BY-LAWS

LICENSES

The license is to be applied in the head office of Kiambu County Council. The certificate is to
indicate that the business premises has been inspected and approved for operation.

INSURANCE
22
Insurance protects the business from suffering effects of particular risks such as fire
outbreaks. The business will be insured by Jubilee Insurance.

PERMIT

The business will acquire permit from The Energy and Petroleum regulatory authority of
Kenya. The purpose of the permit is to facilitate a smooth running of the business and
business recognition.

3.7 SUPPORT SERVICES

BANKING SERVICES

The business will open a cooperative bank account since it offers low rates and high interests

INSURANCE SERVICES

The business will be insured by;

JUBILEE INSURANCE

P.O BOX 018, THIKA

TEL; 0708086134

DELIVERY SERVICES

The petrol cylinders will be delivered to the customers' households hence the business will
need help from a motorist.

SECURITY SERVICES

23
Kithimani Police Station will offer security to the business as it is nearer to the working
station.

24
CHAPTER FOUR

4.0 PRODUCTION PLAN

4.1 PRODUCTION FACILITIES

The business will require the following facilities and equipment in order to run effectively.
They include:

Item Amount (Ksh)

Electricity 500

Rent 4,000

Cage 1,500

Maintenance 1,500

Water 300

Furniture 15,000

Totals 22800

4.2 PRODUCTION STRATEGY

The owner intends to use different methods in producing his products. They include:

ACQUIRING A PRODUCTION FACILITY

The owner will first get a working area in Kiambu County at Thika Shopping Center. The
owner’s working area include the offices and stores. He also needs to buy 3 metal cages
which will help in the security of the products then they are put out for display. All this will
be rented monthly during the early age of the business.

ACQUIRING QUALIFIED PERSONNEL

25
The owner will need various experts to operate around the business premises. They include; a
manger, an account officer, sales person, security officer and a cleaner. The owner will
advertise that the business is searching for skilled personnel to apply for a job in their area of
specialization. After the application the qualified personnel will then be interviewed and
assessed before being placed to their respective posts.

ADVERTISEMENT AND SELLING

The business will then be advertised as also the selling of the products begins. The customers
are assured of quality products, honesty and their safety our number one priority.

4.3 PRODUCTION PROCESS

BUYING OF STOCK

The stock will comprise of:

 Petrol can
 Greasing products
 Low pressure regulators
 High pressure regulators
 Low pressure hosepipes
 High pressure hosepipes

They will all be bought at TOTAL pump station in Thika constituency. Thereafter they will
be transported to the area of the business operation.

INSPECTION OF THE PRODUCTS

Thereafter with the help of the employees the products will be inspected to ensure that they
are of the desired quality ordered has being delivered.

STORAGE OF THE PRODUCTS

The products bought will then be stored in the store first. This is to cross-check the products
to ensure that we have the desired amount of products that we had planned for. The storage

26
facility will be safe and secure for the safety of the products and also for detection of any
leakage of petrol around the area.

DISPLAYING OF PRODUCTS IN METAL CAGES

The required amount needed to be placed on display will be put in the metal cages outside the
business facilities for the customers to see. The metal cages will be locked up and also a
security guard will be placed the for extra security purposes.

ELLING TO CUSTOMERS

Once the customers see the goods, they can make enquires of their desired product and when
interested they can purchase them. The business will have a registered M-PESA account to
enable easy payment by the customers.

27
 Production Flow Chat

Buying of Stock

Inspection of the products

Storage of the products

Displaying of products

Selling to customers

28
4.4 REGULATIONS AFFECTING PRODUCTION

BUSINESS PERMIT

The business will acquire a license and permit from The Kiambu City Council and also from
The Energy and Petroleum Regulatory Authority of Kenya. This is to ensure smooth running
of the business and business recognition.

INSURANCE

The business will acquire an insurance so as to protect the business from suffering effects of
particular risks such as fire outbreaks. The business will be insured by Jubilee Insurance.

HEALTH REGULATIONS

The employees in the business must he insured to protect them from suffering from illness or
injuries during working and non-working hours.

29
CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 PRE-OPERATIONAL COSTS

Item Amount (ksh)

Electricity 500

Rent 4,000

Cage 1,500

Maintenance 1,500

Water 300

Furniture 15,000

Totals 22800

5.2 ESTIMATION OF WORKING CAPITAL

Working capital = initial capital – pre-operational cost

= 500,000 – 22,000

= 478,000

30
5.3 PRE-OPERATIONAL CASH FLOW PROJECTION

Items Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Beginning 478000 478100 478200 478300 478400 478500 478600 478700 478800 478900 479000 479100 574260
Capital 0
Sales 347000 347100 347200 347300 347400 347500 347600 347700 347800 347900 348000 348100 417060
0
Cash Inflow 825000 825200 825400 825600 825800 826000 826200 826400 826600 826800 827000 827200 991320
0
Cash Outflow
Purchases 120400 120300 120200 120100 120000 120100 120050 120060 120040 120030 120020 120000 144130
0
Electricity 500 500 500 500 500 500 500 500 500 500 500 500 6000
Salaries 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000
Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000
Cage 1500 1500 1500 1200 900 700 500 600 550 400 300 350 10000
Maintenance 1500 900 1500 900 700 800 600 500 400 300 500 250 8850
Water 300 150 100 120 130 140 100 90 70 120 100 90 1510
Furniture 15000 900 700 800 700 600 800 800 700 400 600 300 22300
Miscellaneous 2000 100 900 3000
Total Cash 155200 138250 138600 137620 136930 136840 136550 136550 136260 136650 136020 135490 166096
Flow 0
Net Cash 669800 686950 686800 687980 688870 689160 689650 689850 690340 690150 690980 691710 825224
31
 0

32
5.3.2 PREPARATION OF CASH FLOW PROJECTION YEARLY

Items 2023 2024 2025 Total

Beginning Capital 5742600 5742700 5742800

Sales 3857000 385900 385800

Purchase 9601623 6130624 6130625

Electricity 6000 6000 6000 18000

Salaries 120000 120000 120000 360000

Cage 10000 10000 10000 30000

Maintenance 22450 20000 18000 60450

Water 1510 500 300 2310

Furniture 2200 1500 1000 4700

Total Expenses 1566265 201850 198300 630110

Net Profit 2094214 13131550 13134900 28360664

Net Profit 0 2094214 15225764 17319798

33
5.4 PREPARATION OF PRO-FORMA INCOME STATEMENT

5.4.1 PREPARATION OF PRO-FORMA INCOME STATEMENT PRESENTED MONTHLY

Items Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales 347000 347100 347200 347300 347400 347500 347600 347700 347800 347900 348000 348100 4170600

Purchases 120400 120300 120200 120100 120000 120100 120050 120060 120040 120030 120020 120000 1441300

Gross Profit 226600 226800 227000 227200 227400 227400 227550 227640 227760 227870 227980 228100 2729300

Electricity 500 500 500 500 500 500 500 500 500 500 500 500 6000

Salaries 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 120000

Rent 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000

Cage 1500 1500 1500 1200 900 700 500 600 550 400 300 350 10000

Maintenance 15000 900 1500 900 700 800 600 500 400 300 500 250 22350

Water 300 150 100 120 130 140 100 90 70 120 100 90 1510

Furniture 15000 900 700 800 700 600 800 800 700 400 600 300 22300

Total Expenses 46300 17950 18300 17520 16930 16740 16500 16490 16220 15720 16000 15490 230160

Net Profit B/D 0 46300 64250 82550 100070 117000 133740 150240 166730 182950 198670 214670 15490

Net Profit C/D 46300 64250 82550 100070 117000 133740 150240 166730 182950 198670 214670 15490

34
5.4.2 PREPARATION OF PRO-FORMA INCOME STATEMENT PRESENTED
YEARLY

Items 2023 2024 2025 Total

Sales 3857400 3857500 3857600 11572500
Purchase 1333305 18333100 13333200 27999605
GROSS PROFIT 2320304 17190600 17180800 36691704
Electricity 6000 500 400 6900
Salaries 120000 120000 120000 360000
RENT 48000 48000 48000 144000
Cage 10000 8000 5000 23000
Maintenance 22450 22450 22450 67300
Water 1510 500 300 2310
Furniture 22000 2000 1800 25800
Total Expenses 1566265 201850 198300 630110
Net Profit 2094214 13131550 13134900 28360664
Net Profit 0 2094214 15225764 17319798

5.5 PREPARATION OF PRO-FORMA BALANCE SHEET

5.5.1 PRO-FORMA BALANCE SHEET AS AT START OF THE BUSINESS

Assets Amount Liabilities Amount (ksh)

(ksh)
Purchases 16500
Cash at hand 5000 Rent 4000
Electricity 1000
Salaries 10000
Water 1000
Cage 5500
Total assets 21500 Total liabilities 21500

5.5.2 PRO-FORMA BALANCE SHEET

Assets Amount Liabilities Amount (ksh)

1
 (ksh)
Purchases 185000
Cash at hand 5510 Rent 48000
Electricity 6000
Salaries 120000
Water 1510
Cage 10000
Total assets 185510 Total liabilities 185510

5.6 CALCULATION OF BREAK-EVEN POINT

¿ cost
Break even = × 100
contribution

Total margin contribution = sales – total variables

= 347000 – 22000

325000
= × 100
347000

= 93.6%

22000
Breakeven = × 100
93.6

= 23,504

5.7 CALCULATION OF PROFITABILITY RATIOS

5.7.1 PERCENTAGE GROSS PROFIT

gross profit
= × 100
sales

226600
= × 100
3470000

= 6.53%

5.7.2 RETURN ON EQUITY

2
 net profit
Return on equity = × 100
capital employed

150000
× 100
500000

30%

5.8 WORKING CAPITAL

Preoperational cost 22,000

Working capital 478,000

Total 500,000

5.9 PROPOSED CAPITALIZATION

Owner 300000

Family 200000

Total 500,000