BUSINESS PLAN

OUTSPAN PRECAST CONCRETE PRODUCTS,

P.O BOX 351,
KABARNET.

BY:
ALFAYO K AYABEI
 INDEX NUMBER: 552105-2631

THIS BUSINESS PLAN IS PRESENTED TO KENYA NATIONAL

EXAMINATION COUNCIL IN PARTIAL FULFILMENT FOR THE
AWARD OF A DIPLOMA BUILDING TECHNOLOGY IN
RIFT VALLEY INSTITUTE OF SCIENCE AND TECHNOLOGY,
P.O BOX 7182-20100,
NAKURU.
EXAMINATION SERIES: JULY 2023.

1|Page
DECLARATION
DECLARATION BY THE CANDIDATE
As appertains to the rules and regulations of the KENYA NATIONAL EXAMINATIONS
COUNCIL, I ALFAYO K AYABEI , present this business plan as a true writing emanating
from the knowledge I acquired during my studies at RIFT VALLEY INSTITUTE OF
SCIENCE AND TECHNOLOGY and has never been presented for the award of a DIPLOMA
IN BUILDING TECHNOLOGY in any other institution of higher learning.
SIGNATURE…………………….. DATE………………………….
NAME OF CANDIDATE: ALFAYO K AYABEI INDEX NO: 552105-2631

SUPERVISOR
NAME: MICHAEL CHERUIYOT
SINATURE: ………
DATE: ………………………………………

2|Page
 II
DEDICATION
I dedicate this work to my beloved brother together with the entire family for the moral support

throughout the period I have been compiling this work and the academic pursuit at RIFT

VALLEY INSTITUTE OF SCIENCE AND TECHNOLOGY (RVIST)

Thanks to the Almighty God for bringing me this far.

III

3|Page
ACKNOWLEDGEMENT
Congratulations to all whose efforts were employed for the successful writing of this business
plan especially my parents for financing my entire coursework and the production of this work.
I would like to extend my thanks to the part played by my subject supervisor MR. MICHAEL
CHERUIYOT for her efforts in guiding me throughout the period I have been compiling this
work. Special thanks to MR. PETER GICHARU the HEAD OF DEPARTMENT in charge of
BUILDING AND CIVIL ENGINEERING DEPARTMENT for the co-ordination between
lectures and students for successful completion of the course.
To you all may God bless you.

4|Page
EXECUTIVE SUMMARY
BUSINESS DESCRIPTION
This chapter shows the Name, location and Address of the business. This Chapter also explains
how customers will access my goods, activities carried out in the firm, business objectives entry
and growth.
OUTSPAN PRECAST CONCRETE PRODUCTS is a sole proprietorship type of business
whose work is to sell precast concrete products such as culverts, concrete blocks ,paver blocks,
concrete slabs and road kerbs.
MARKETING PLAN
This chapter explains the goals achieved in the business. It also shows how the business will
carry out marketing of precast units to customers and suppliers, sale tactics, employment
qualifications, market growth strategies and determine process of various precast units in the
firm.
The firm intends to sell precast units to individuals, institutions etc.
ORGANISATION AND MANAGEMENT PLAN
For any effective business, the organization and management plays a vital role. This chapter
shows the management team and other personnel, how recruitment is done and their roles in
general.
The business should build teamwork to maintain the business tactic.

MANAGER

ASSISTANT MANAGER

CASHIER

STORE KEEPER

5|Page
OPERATION/PRODUCTION PLAN
This chapter states the business objectives, expectations, how the firm will be run by the
manager and employees.

FINANCIAL PLAN
This include all financial activities involved in coming up with the business. It also shows the
source of financing to support and sustain the business which will be from owners savings;
amounting to ksh 650,000

6|Page
Contents
BUSINESS DESCRIPTION .............................................................................................................................. 10
1.1 BUSINESS NAME................................................................................................................................ 10
1.2 BUSINESS LOCATION AND ADDRESS ................................................................................................. 10
Figure 1: Business location...................................................................................................................... 11
1.3 FORM OF OWNERSHIP ...................................................................................................................... 11
1.4 TYPE OF BUSINESS............................................................................................................................. 11
1.5 PRODUCT AND SERVICES .................................................................................................................. 12
1.6 JUSTIFICATION OF THE OPPORTUNITY ............................................................................................. 12
1.7 INDUSTRY .......................................................................................................................................... 12
1.8 BUSINESS OBJECTIVES AND GOALS................................................................................................... 12
1.9 ENTRY AND GROWTH STRATEGY ...................................................................................................... 13
1.9.1 Entry strategy ............................................................................................................................. 13
1.9.2 Growth strategy ......................................................................................................................... 13
CHAPTER TWO: MARKETING PLAN ............................................................................................................. 14
2.1 CUSTOMERS ...................................................................................................................................... 14
2.1.1 Domestic customers .................................................................................................................. 14
2.1.2 Commercial customers .............................................................................................................. 14
2.1.3 Institutional customers .............................................................................................................. 14
2.2 MARKET SHARE ................................................................................................................................. 14
Outspan precast = 50000x 360 ........................................................................................................ 15
2.3 COMPETITORS ................................................................................................................................... 16
2.3.1 COMPETITORS SWOT ANALYSIS................................................................................................. 16
2.4 METHODS OF ADVERTISEMENT AND PROMOTION.......................................................................... 17
2.4.1 Advertisement............................................................................................................................ 17
2.4.2 Promotion .................................................................................................................................. 17
2.5 PRICING STRATEGY............................................................................................................................ 18
2.6 SALE TACTICS..................................................................................................................................... 18
2.7 DISTRIBUTION STRATEGY .................................................................................................................. 18
3.1 MANAGEMENT TEAM ....................................................................................................................... 19
3.2 MANAGEMENT PERSONNEL AND THEIR DUTIES .............................................................................. 19

7|Page
 3.3 RECRUITMENT, TRAINING AND PROMOTION................................................................................... 20
3.4 REMUNERATION AND INCENTIVES ................................................................................................... 20
3.5 LICENCE PERMITS AND BY- LAWS ..................................................................................................... 21
3.6 SUPPORT SERVICES ........................................................................................................................... 21
3.6.1 POSTAL SERVICES ....................................................................................................................... 21
3.6.2 Banking services ......................................................................................................................... 22
3.6.3 Insurance services ...................................................................................................................... 22
CHAPTER FOUR: PRODUCTION OPERATION PLAN..................................................................................... 23
4.1 PRODUCT / SERVICE DESIGN AND DEVELOPMENT ........................................................................... 23
4.2 PRODUCTION FACILITIES AND CAPACITY .......................................................................................... 23
4.2.1 Items requisition in the business ............................................................................................... 23
4.2.2 Equipment required (items) ....................................................................................................... 23
4.2.3 REPAIR AND MAINTENANCE ...................................................................................................... 24
4.3 PRODUCTION / OPERATION STRATEGY ............................................................................................ 24
4.4 PRODUCTION PROCESS ..................................................................................................................... 25
4.5 REGULATIONS AFFECTING OPERATIONS; ......................................................................................... 25
All National Environmental Management Authority (NEMA) rules and regulations concerning
environment will be observed so as to ensure success running of the project. The business also
acquires permits and license to ensure that the business is legally operates........................................ 25
5.1 PRE –OPERATIONAL COST ............................................................................................................ 26
5.2 WORKING CAPITAL............................................................................................................................ 26
5.3 WEKOTIOUS PRECAST CONCRETE UNITS PROFORMA CASH FLOW PROJECTION FOR THE 1ST 12
MONTHS.................................................................................................................................................. 27
5.4WEKOTIOUS PRECAST CONCRETE UNITS PROFORMA INCOME STATEMENT PROJECTION FOR
THREE YEARS ........................................................................................................................................... 29
5.5 EXPECTED PROFITABILITY RATIO ...................................................................................................... 30
5.6 BREAK EVEN POINT ........................................................................................................................... 30
5.8 DESIRED FINANCING ......................................................................................................................... 32
5.9 PROPOSED CAPITALIZATION ............................................................................................................. 32

8|Page
9|Page
CHAPTER ONE

BUSINESS DESCRIPTION

1.1 BUSINESS NAME

The business name will be OUTSPAN PRECAST CONCRETE PRODUCTS, and it is derived
from my brother’s management under which I decided to put into practice and gain much
knowledge about precast molding so that I start the business and get cash for future use. The friend
being the precast units molder and supplier found it so passionate about molding and decided to
start the business. The business is to be opened officially in the year 2026, the month of January
after collecting all the equipment used in molding the precast and finding the customer for the
buying and selling the products for the people.

1.2 BUSINESS LOCATION AND ADDRESS

The business will be located at Baringo County, Kabarnet Sub-County . I choose the business to
be located at Kabarnet Sub-County due to availability of the requirements needed like raw
materials, security, labor and also land for the business. The business will be along Nakuru-
Kabarnet highway and it will have a big poster to show where the business is located.

The business address will be;

OUTSPAN PRECAST CONCRETE PRODUCTS,

P.O BOX 351,

KABARNET.

The business will be dealing with molding of precast units that will be used in construction of
houses and roads by the people around and Baringo County at large, the business also will be in
good co-operation with other sole-proprietorship making the goods. Kabarnet Sub-county being
an area rich with sandy soil that is used to carry out molding, and has enough space to carry out
molding activities, the business decided to start working on the precast after the research which
was carried around the area for good improvement and development of the area.

Due to availability of water, enough space for molding activities and good road network to
satisfaction of the customers to access the business anytime they want the bricks.
10 | P a g e
Figure 1: Business location

FROM NAKURU TO KABBARNET

OUTSPAN PRECAST CONCRETE

P

EMINING STONES

1.3 FORM OF OWNERSHIP

The business is a sole proprietorship type of business which is found to be more advantageous and
the advantages include;

 The owner enjoys the profit made from the business alone
 Decision making is easy as the owner can decide on what activity to do in the business and
on the flexibility
 The owner of the business is the boss and no one is to control the owner on how to operate
the business
 Owners bears all the losses
 Illness and death may close down the business
 Owner may lack skill and abilities to run the business

1.4 TYPE OF BUSINESS

The following is how the capital will be raised to start the business

 Sources Contributions Percentage

Owner 600,000 52%
Family 250,000 22%
Friends 105,000 9%
Community 200,000 17%
Total 1,115,000 100%

11 | P a g e
1.5 PRODUCT AND SERVICES
The products found in the business are bricks, cabros, culverts, footings, beams, slabs, walls,
staircases and landings balconies and are being molded in different sizes to increase the customers
and make the business to be attractive on what are supposed to be bought by the customers, the
products from the business will encourage buying and selling of the products in high quality like
to the high population found in the country and the demand of the products, the services will be
available on working hours 7am to 6pm from Monday to Sunday and it will be full time, Sunday
the business will be up to 2pm.

1.6 JUSTIFICATION OF THE OPPORTUNITY

The business opportunity is already available in area and the country at large, due to high
population in the county of Kabarnet, the production of precast units in the county are less and not
enough making the supply of the products to be insufficient and making the shortage in supply of
the product. The demand of products is high due to the population growth of the area and the
country at large. The business that already exists in the area produce their products in small
quantity which made the people suffer in search for products.

1.7 INDUSTRY
The business is under the Construction Industry. The business engages in both production and
services industry eg. Transport and installation, for strength to customers enjoy and find the
products readily available for them, customers will also be able to find ready made products easily
to avoid straining much on search for the products. The infrastructure will also attract many
customers for the business to promote the income and contribution in building more comfort zone
for the customers. The business will capture almost 60% of the entire population due to insufficient
product of the entire population due to insufficient product production by the existing industry in
the area.

1.8 BUSINESS OBJECTIVES AND GOALS

OUTSPAN PRECAST CONCRETE PRODUCTS goals to be obtained during the business
opportunity to be started, they include;

 To offer the quality product and services

 To offer variety of the products to the market and meet their demand for customers

12 | P a g e
  To create job opportunity within the area
 To open up and grow several outlets beyond the
 To ensure there is steady supply of building material

1.9 ENTRY AND GROWTH STRATEGY

1.9.1 Entry strategy

Due to my research of the business is that there are many business dealing with the same products
within the county to produce the good and services needed, the business will be using posters and
direction marks to inform the customers where the business is located and services offered in this
business.

1.9.2 Growth strategy

The advertisement of the business can be through local radio stations and television and use of
newspapers and magazines and offering of after sales services such as free transportation to nearby
clients and offering of discounts to regular clients.

13 | P a g e
CHAPTER TWO: MARKETING PLAN

2.1 CUSTOMERS
They are the main buyers of the products from the business. The business targeted customers from
around the Baringo County and around the area hence improving the growth and development of
the area where the business is situated. The business is situated where it can be easily accessed by
the customers and it is open 24 hours improving the growth and development of the area.

Customers targeted are as follows;

 Institution
 Domestic
 Commercial

2.1.1 Domestic customers

They are customers who will buy the products from the business and supplies it to customers for
their development and the spread of the name of the business through the products that he/she
supplies to customers.

2.1.2 Commercial customers

These are customers buying the products directly from the business in bulk and being delivered to
them by the business.

2.1.3 Institutional customers

These are customers from the institutions buying the bricks direct from around business and being
used to build schools, churches for the developing of the business and growth of the area, they also
purchase them in bulky and use them to build structures.

2.2 MARKET SHARE

The population at Kabarnet is around 200,000 people and where the business is situated the
population is 90,000 due to the population census of 2019 with overall growth of 20% according
to the statistic taken, the market will be growing at a very high rate due to the research I made
myself and done by the business from other counties and due to the demand of the products to the

14 | P a g e
people. Since approximate number of the potential customers is 80000 and the business intends to
serve 60% of the population which translate to50000 people.

100% = 80000

60% = 80000×60 ÷100 = 48,000 people

Competitors unit

Emining stones 18750 = 25%

Royal concrete 11250 = 15%

The research carried out by the proprietor revealed the actual distribution as shown below

Emining stones = 18750×360

80000

=850

Royal concrete = 11250×360

80000

= 510

Outspan precast = 50000x 360

80000

= 224˚

15 | P a g e
 Sales

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

2.3 COMPETITORS
Due to the research carried out around the area there is only one major competitor, although it has
been existing for around 5 years ago but the market coverage was lower due to the situation of the
business and the products were available in small quantity. According to the research most
domestic customers poses new modern products in terms of modified goods and services and they
offer varying competition to OUTSPAN PRECAST PRODUCTS this competitor are situated
away from the area. As a sole proprietor business, the boss will always have the direct contact with
the customers, this will allow the boss to know on needs of the customers as they will be buying
their products and employing other staff to help in the service of the business. The business shall
have two competitors who are EMINING STONES and ROYAL CONCRETE

2.3.1 COMPETITORS SWOT ANALYSIS

Competitor Strength Weakness Opportunities Threat
EMINING Qualified Less working Population Shift in
STONES employees hours increase population
Good experience High prices
Many customers
ROYAL Qualified No trade Well equipped Low supply of
CONCRETE employees discount with machine product

16 | P a g e
 Customer loyalty Unfriendly
Good experience person
OUTSPAN Offer discount Has modern High turnout of Competition
PRECAST after buying equipment customers from other firms
PRODUCTS goods Has good Offer quality
Goal oriented customer product
Experienced and relation
skilled

2.4 METHODS OF ADVERTISEMENT AND PROMOTION

2.4.1 Advertisement
I came to understand the procedure that mainly be used to advertise the business, we find that
some of our people from the area are less educated and they cannot read and know what is going
on in the business, I sat down with staff and just gave out the procedure that can be used to pass
the information to the people and get right thing to be done and follow the instruction, the business
information was to be passed through posters whereby a paper is written is pinned in the electric
post to pass the information and some contact on it to direct the customers, we also looked at
passing the information through the drown or use of sign board showing direction where the
business is located and also through newspapers, magazines, radio stations, land marks and
journals.

2.4.2 Promotion
The business will be promoting the worker in different ways and also through the customers that
buys the goods in bulky, the business also will give discounts allowances to their customers who
buy or purchases products in large quantity. At times the business can promote the customers with
the reflectors, gumboots, and identified by the business and regulate the customers and allow them
to take good credit. Also the business will be offering after sell services like transporting units to
nearby customers using business Lorries.

17 | P a g e
2.5 PRICING STRATEGY
The business will price the products economy frame work of market forces of demand and supply,
the price of competitors will also affect the price of the commodity and services of the business to
ensure perfect competition. The price will also be determined by calculating the expense plus the
labour cost to determine the cost price.

Selling price = price + profit +expense

2.6 SALE TACTICS

At the sale tactics the business will employ the trained sales person to deal with the sale tactics
with customer relation to enable the business gets more customers and retain them, the business
will be getting orders from the customers over the business telephone number, email and will be
due to meet the demand of the customers from the region and beyond.

2.7 DISTRIBUTION STRATEGY

Distribution of the products is one way of making the business to be known and promoting the
name of the business due to good quality and quantity product from the business, the distribution
will be done through the lorries from the business to distribute the products in the area and besides
the area creating awareness of the business name and productions. The distribution channel will
be as follows;

PRODUCER

SURPPLIER

CUSTOMERS

18 | P a g e
CHAPTER THREE

ORGANIZATIONAL PLAN

3.1 MANAGEMENT TEAM

Manager

Assistant manager

Cashier

Store keeper

3.2 MANAGEMENT PERSONNEL AND THEIR DUTIES

Manager

The owner of the business.

Duties

 Recruitment of workers
 Allocating duties and responsibilities to workers
 Laying rules and regulations to govern the business
 Supervise employees
 Give personal attention to employees
 Making policies and decision of the business
 Providing all finances for the business.
Assistant manager

19 | P a g e
The second owner of the business can be a family member.

Duties

 Assisting the manager in decision making

 Give advice to manager and staff
Cashier

Should be at the cashier receiving the customer and taking the cash from the customers.

Duties

 Preparing a bill to the manager

 Receiving payments
 Maintaining cash flows
 Producing sales summaries
Store keeper

A person who takes care of the store and keeping the records of the bricks being molded.

Duties

 Arranging store
 Keeping store records

3.3 RECRUITMENT, TRAINING AND PROMOTION

Title Recruitment Training Promotion
Manager Director Diploma in building Director
and civil engineering.
Cashier Manager Diploma in accounts Manager
Store keeper Manager Certificate in Manager
construction
management

3.4 REMUNERATION AND INCENTIVES

Title No Remuneration Incentive
Director 1 100,000  Communication allowance

20 | P a g e
  House allowance
 Medical allowance
Manager 1 30,000  House allowance
 Medical allowance
 Sitting allowance
Cashier 2 35,000  House allowance
 Medical allowance
Store keeper 2 32,000  House allowance
 Medical allowance

3.5 LICENCE PERMITS AND BY- LAWS

OUTSPAN PRECAST CONCRETE PRODUCTS shall make sure that the planning human
resource shall be done within the legal frame work, the manager should equip himself with the
legal requirement touching on human resource in the firm and they include:

SMALL BUSINESS PERMIT

This is the permit that allows a business to operate within the region; this permit shall be given by
the municipality revenue office.

TRADE LICENCE

The business shall acquire the trade license from the ministry of trade and industry at the office of
county revenue authority in Kabarnet town at a cost of 10,000 annually.

HEALTH PERMIT

This is the permit that allows trade to use water smoothly without polluting the rivers since it will
be located along the river Gucha.

3.6 SUPPORT SERVICES

3.6.1 POSTAL SERVICES

The business shall have postal address for which customer can help in touch inquire and make
orders, it shall also be used by customer and other business correspondences, and the business can

21 | P a g e
make payment or receive payment through the post office through money order. These services
shall be provided by the postal corporation of Kenya.

3.6.2 Banking services

The firm shall require banking services which shall be used for paying creditors by cheques and
receiving payment from debtors. The business shall have a bank account for making deposits; the
bank account shall also be required when the business shall be seeking for business loans for
expansion. The service shall be offered by co-operative bank in Kabarnet.

3.6.3 Insurance services

Insurance services shall also be required; this shall cover the business against any misfortune that
might befall it like flood, theft etc. The insurance cover shall be able to carry on with its operations
without much hindrance.

22 | P a g e
 CHAPTER FOUR: PRODUCTION OPERATION PLAN
4.1 PRODUCT / SERVICE DESIGN AND DEVELOPMENT
WEKOTIOUS PRECAST UNITS will be selling precast products to all customers who will be
coming for them in the firm and by doing so will attract more customers and this will reduce the
cost of transport.

4.2 PRODUCTION FACILITIES AND CAPACITY

4.2.1 Items requisition in the business

Due to the production of goods in the business I discovered that the business will be producing a
lot during working hours, the business will be operating 8 hours from Monday to Saturday while
Sunday will be a resting day for the business preparing for the next day.

4.2.2 Equipment required (items)

The items named are needed to make the business to be effective and perform a smooth running
of the business.

ITEM AMOUNT METHOD OF PRICE USE

NEEDED ACQUISITION
Wheelbarrow 4 Buying @3000 Transport aggregates to mixing site
Steel bars Buying D8@670 Reinforcing the units
D10@970
D12@1270
D16@1670
D20@2050
Screed 7 Buying @1000 Smoothening of wet concrete

23 | P a g e
Molding box Buying Constructed at Setting concrete to desired shape
workshop
Shovel 5 Buying @500 Scooping ingredients while mixing
Safety gear Buying Gloves @550 Protecting body from minor injuries
Helmet@1200
overall@900
safety boots @3400
Vibrators 2 Buying 30,000 Compaction
Water Plenty Pumping from Ingredients of concrete and curing
river
Cement 2tonnes Buying @13400per tonne Ingredients of concrete
Sand 4tonnes Buying @1300 per tonne Ingredients of concrete
Ballast 3tonnes Buying @1100 per tonne Ingredients of concrete

These are the items required and their cost for making effective running of the business making
higher production of goods hence increasing the customers rate, this encourages the income
generation hence increasing the development of the business and also making it to be known with
other developing countries and promoting the OUTSPAN PRECAST CONCRETE PRODUCTS
to be known all over the country due to good quality products.

4.2.3 REPAIR AND MAINTENANCE

The business has created days for repair and maintenance of the machine for the molding of the
units. The business takes all the operation system to be repaired after 2 months whereby the
business will be shut down for one week for doing maintenance and repair to avoid damage and
poor quality of the products, the business to be in a good operation for the good development and
increasing of the quality of the products making the business to be known and well operated for
the good promotion.

4.3 PRODUCTION / OPERATION STRATEGY

The business will be using modern technology in the production of products, the equipment used
in the business is a modern technology which promotes the production of the products at high rate
due to the production strategy of the business, I found to be ecological for the good production of

24 | P a g e
good quality products and making a lot of customers, during the production strategy the business
require good communication technology which will provide the business with a lot of customers
and knowledge on how to handle and protect the security to the customers. Due to the technology
used the business will be avoiding time wastage providing high production of good and product,
this also increases the production system in the business and the business producing a lot in a
shorter time possible.

4.4 PRODUCTION PROCESS

The precast units will be produced through the following process

 Mixing the aggregates in correct ratio

 Pace the reinforcement
 Place the mixture in a moulding gauge and compact using vibrator
 Give the compacted mixture time to drain water.
 Dry it in the sunshine for a a period of 1-week.
 Place them in store ready for sell

4.5 REGULATIONS AFFECTING OPERATIONS;

All National Environmental Management Authority (NEMA) rules and regulations

concerning environment will be observed so as to ensure success running of the project. The
business also acquires permits and license to ensure that the business is legally operates.
Permit / license Source Cost
Single business permit County council of Baringo 3,000
Trade license Kabarnet central district trade office 2,000
Health permit Baringo ministry of health 2,000
Electricity and water permit Kenya power and lightening company 1,500

25 | P a g e
CHAPTER FIVE: FINANCIAL PLAN

5.1 PRE –OPERATIONAL COST

ITEM AMOUNT
Working site 30,000
Advertisement 1,500
Marketing 1,500
Transport 2,000
Fuel 9,000
Insurance 17,000
Recruitment 5,000
Promotion 2,000
Total 68,000

5.2 WORKING CAPITAL

Current assets Amount
Stock 2, 678,000
Operation 360,000
Sales 150,000
Profit 555,000
Banks 300,000
TOTAL 4,043,000

Currents liabilities Amount

Expenditure 400,000
Short term loan 950,000
Creditors 120,000
Total liabilities 1,470,000

Working capital =- CA-CL

26 | P a g e
 =4,043,000-147,000

=2,573,000

5.3 WEKOTIOUS PRECAST CONCRETE UNITS PROFORMA CASH FLOW

PROJECTION FOR THE 1ST 12 MONTHS
Partic Jan Feb Ma Apr Ma Jun Jul Au Sep oct No Dec Tota
ulars rch il y e y g v l
Cash
flow
Balanc 150, 167, 144, 120 355 930, 103 730, 967, 129 221 4019
e b/f 000 100 900 ,20 ,00 000 ,30 580 300 ,90 500 680
0 0 0 0
Sale 235 850, 950 970 700 550 604 512 805 720 517 800 8213
000 000 000 000 000 000 000 000 000 000 000 000 000
Debtor 740 200 9400
s 000 000 00
Loan 100 257 500 4070
000 000 00 00
Equity 800 8000
000 00
Total 113 100 111 137 820 905 227 665 153 168 646 122 1437
flow 500 000 710 190 200 000 400 300 558 730 900 150 9680
0 0 0 0 0 0 0 0
Cash
out
flow
Purcha 780, 900 1680
se 000 000 000
Salary 119 119 119 119 119 119 119 119 119 119 119 119 1428
000 000 000 000 000 000 000 000 000 000 000 000 000

27 | P a g e
 Electri 200 200 200 200 200 200 200 200 200 200 200 200 2400
city 0 0 0 0 0 0 0 0 0 0 0 0 0
Teleph 100 100 100 100 100 100 100 100 100 100 100 100 1200
one 0 0 0 0 0 0 0 0 0 0 0 0 0
Adverti 500 500 500 500 2000
sement 0 0 0 0 0
Insura 100 1000
nce 000 00
Station 150 150 3000
ery 00 00 0
Repair 400 4000
00 0
Transp 500 500 500 500 500 500 500 500 500 500 500 500 6000
ort 00 0 0 0 0 0 0 0 0 0 0 0 0
Medic 500 500 300 1800
al 0 0 0 0
Licens 250 2500
e 00 0
Credit 150 500 100 2100
ors 000 00 00 00
Gener 200 200 200 200 200 200 200 200 200 200 200 200 2400
al 0 0 0 0 0 0 0 0 0 0 0 0 0
office
Loan 100 500 100 102 101 101 5540
repay 000 00 000 000 000 00 00
ment
Total 103 129 129 284 134 139 229 184 229 231 233 235 3195
out 900 000 000 000 000 000 000 000 000 000 000 000 000
flow 0

28 | P a g e
 A-B 960 871 988 108 686 766 204 481 130 145 413 986 1118
00 000 100 790 200 000 500 300 658 630 900 500 4680
0 0 0 0

5.4WEKOTIOUS PRECAST CONCRETE UNITS PROFORMA INCOME

STATEMENT PROJECTION FOR THREE YEARS
Item Year 1 Year 2 Year 3
Sales 8,213,000 9,290,000 10,800,0000
Purchases 1,680,0000 2,530,0000 3,600,000
Gross profit 6,533,000 6,760,000 7,200,000
Expenses
Salaries 119,000 119,000 119,000
Rent 180,000 180,000 180,000
Water 12,000 12,000 12,000
Telephone 12,000 24,000 27,000
Taxes 28,000 28,000 28,000
Transport cost 60,000 60,000 60,000
Repair and maintenance 40,000 40,000 40,000
Insurance 100,000 120,000 150,000
Advertisement 20,000 20,000 20,000
Electricity 24,000 24,000 24,000
Total expenses 595,000 627,000 660,000
Net profit before tax 5,938,000 6,133,000 6,540,000
Provision for tax 72,000 72,500 83,000
Net profit after tax 5,866,000 6,060,500 6,457,000

29 | P a g e
5.5 EXPECTED PROFITABILITY RATIO
Gross profit percentage = gross profit x 100%

Sales

Net profit ratio = N.P x100

Sales

= 5,866,000 x 100

8,213,000 = 71.4%

5.6 BREAK EVEN POINT

Beak even point is activity level where sales revenue is exactly equal to cost of operation

BEP =fixed cost /contribution

1964000-682000 /19400×100

1282000 /1964000

= 65%

Fixed cost Amount

Salaries/wages 119,000
Licenses 100,000
Repaired 40,000
Electricity 24,000
Advertisement 20,000
Total 303,000

30 | P a g e
 BEP = 65/100×303,000

= 196,950

2ND year

Contribution margin =sales –variable cost /sales ×100

196,950-59,000 ×100%

303,000

= 45.5%

Fixed cost Amount

Salary 119,000
License 25,000
Insurance 100,000
Medical 18,000
Electricity 24,000
Advertisement 20,000
Total 306,000

306,000 / 45.5% ×100

= 139,230

3rd year

Contribution margin =sales –variable cost /sales

306,000-69,000/306,000×100

=75%

Fixed cost Amount

Salary 119,000
License 25,000

31 | P a g e
Insurance 100,000
Medical 18,000
Electricity / water 24,000
Advertisement 20,000
Total 306,000

5.8 DESIRED FINANCING

Source Amount Interest Repayment Repayment Gross Collateral
period method period
Co-bank 1,508,000 10% 10yrs Months Title
Mkulima 50000 1% 2yrs Monthly Group
Sacco guarantors

5.9 PROPOSED CAPITALIZATION

Source Amount

Personal saving 750000

Co-op bank 1500000
Property sale 200000
Mkulima Sacco 50000

32 | P a g e