The document is a business plan for Adam's Pizza Inn shop. It includes details about the business name and logo, location in Molo town, products and services which will include baking pizza and other pastry products. It will be a sole proprietorship owned by Mwachizingwa Adams. The marketing plan discusses targeting residents of Molo town, competitors in the area, and advertising through posters, newspapers and social media. The management plan outlines the owner as manager and roles for an assistant manager, cashier and baker. Financial projections include startup costs, three-year cash flows, income statements and balance sheets. The operational plan discusses production facilities and processes.
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adams_pizza_inn final.docx
1. BUSINESS NAME: ADAM’S PIZZA INN
PRESENTED BY : MWACHIZINGWA ADAMS
INDEX NUMBER :
CENTRE : NAIROBI TECHNICAL TRAINING INSTITUTE
CENTRE CODE : 403104
COURSE CODE :
PRESENTED TO : KENYA NATIONAL EXAMINATION COUNCIL
IN PARTIAL FULFILMENT OF CERTIFICATE IN CATERING AND
ACCOMMODATION.
SUPERVISOR :
SERIES : NOVEMBER/DECEMBER 2022
2. ii
DECLARATION
Student’s declaration
I declare that this business plan entitled is my true work and has never been submitted anywhere for the
KNEC awards.
Name: MWACHIZINGWA ADAMS
Sign……………………... Date……………………
Supervisor’s declaration
Supervisor:
Sign……………….. Date……………………….
3. iii
ACKNOWLEDGEMENT
I would love to thank the almighty God for good health and wisdom, my parents for the financial and moral
support, my lecture for the guidance and my friends for helping me to come up with this business plan.
Thank you all
4. iv
DEDICATION
May I dedicate this wonderful business plan to the almighty God, my lovely parents and my friends who
have made me to achieve this plan and may the lord reward you all abundantly.
5. v
TABLE OF CONTENTS
DECLARATION.............................................................................................................................................ii
ACKNOWLEDGEMENT..............................................................................................................................iii
DEDICATION ............................................................................................................................................... iv
TABLE OF CONTENTS ................................................................................................................................ v
EXECUTIVE SUMMARY.......................................................................................................................vii
1.0 BUSINESS DESCRIPTION. ..............................................................................................................vii
2.0 MARKETING PLAN..........................................................................................................................vii
3.0 MANAGEMENT AND ORGANIZATIONAL PLAN. .....................................................................vii
CHAPTER ONE.............................................................................................................................................. 1
1.0 BUSINESS DESCRIPTION ................................................................................................................. 1
1.1 BUSINESS NAME ............................................................................................................................... 1
1.1.1 BUSINESS LOGO............................................................................................................................. 1
1.2 BUSINESS LOCATION AND ADDRESS.......................................................................................... 1
1.2.1 Business address................................................................................................................................. 1
1.2.2 Business location................................................................................................................................ 1
1.3 BUSINESS OWNERSHIP.................................................................................................................... 2
1.4 PRODUCTS AND SERVICES............................................................................................................. 3
1.5 THE INDUSTRY.................................................................................................................................. 3
1.6 JUSTIFICATION OF THE BUSINESS ............................................................................................... 3
1.7 GOAL OF THE BUSINESS ................................................................................................................. 4
1.7.1 Long term goals.................................................................................................................................. 4
1.7.2 Short term goals.................................................................................................................................. 4
1.8 ENTRY AND GROWTH STRATEGY................................................................................................ 4
1.8.1 Entry strategy ..................................................................................................................................... 4
1.8.2 Growth strategy.................................................................................................................................. 4
CHAPTER TWO............................................................................................................................................. 5
2.0 MARKETING PLAN............................................................................................................................ 5
2.1 POTENTIAL CUSTOMERS................................................................................................................ 5
2.2 COMPETITORS ................................................................................................................................... 5
2.2 MARKET SHARE................................................................................................................................ 5
2.4 METHOD OF ADVERTISING AND PROMOTION ......................................................................... 6
2.4.1 ADVERTISING ................................................................................................................................. 6
2.4.2 PROMOTION ................................................................................................................................................6
2.5 PRICING STRATEGY ......................................................................................................................... 6
2.6 SALES TACTICS ................................................................................................................................. 7
2.7 DISTRIBUTION STRATEGY ............................................................................................................. 7
CHAPTER THREE......................................................................................................................................... 8
3.0 ORGANISATION AND MANAGEMENT PLAN.............................................................................. 8
6. vi
3.1 ORGANISATION STRUCTURE ........................................................................................................ 8
3.2 MANAGEMENT TEAM...................................................................................................................... 8
3.3 OTHER PERSONNEL.......................................................................................................................... 9
3.4 RECRUITMENT TRAINING AND PROMOTION............................................................................ 9
3.4.1 RECRUITMENT............................................................................................................................................9
3.4.2 TRAINING.................................................................................................................................................. 10
3.3.3 PROMOTION ............................................................................................................................................. 10
3.4 REMUNARTION AND INCENTIVES ............................................................................................. 10
3.4.1 SALARIES OF THE BUSINESS EMPLOYEES............................................................................ 10
3.4.2. INCENTIVES ................................................................................................................................. 11
3.5 LICENSE, PERMITS AND BY-LAWS............................................................................................. 11
3.5.1. LICENSE......................................................................................................................................... 11
3.5.2. PERMITS ........................................................................................................................................ 11
3.5.3. BY-LAWS....................................................................................................................................... 11
3.6 SUPPORT STAFF AND SERVICES................................................................................................. 11
CHAPTERFOUR .......................................................................................................................................... 12
4.0 PRODUCTION / OPERATIONAL PLAN......................................................................................... 12
4.1 PRODUCTION FACILITIES AND CAPACITY .............................................................................. 12
4.1.1 Repairs and maintenance.................................................................................................................. 13
4.2 Production design and development.................................................................................................... 13
4.3 PRODUCTION STRATEGY ............................................................................................................. 14
4.3 PRODUCTION PROCESS................................................................................................................. 15
4.4 REGULATION AFFECTING OPERATIONS .................................................................................. 15
CHAPTER FIVE........................................................................................................................................... 16
5.0 FINANCIAL PLAN............................................................................................................................ 16
5.1 Pre-operational costs ........................................................................................................................... 16
5.2 working capital.................................................................................................................................... 17
5.3 Projected cash flow Ban snack bakers for the year 2023.................................................................... 19
5.3.1 Projected cash flow for ban snack bakers for the year 2024.......................................................... 20
5.3.2 Projected cash flow for ban snack Bakers for the year 2025 ........................................................... 21
5.4 profoma income statement for three year 2023, 2024 and 2025......................................................... 22
5.5 Proforma balance for the three years 2023, 2024 and 2025................................................................ 23
5.6 Breakeven point for the three years..................................................................................................... 24
5.7 DESIRED FINANCING ................................................................................................................ 25
5.8 PROPOSED CAPITALIZATION.................................................................................................. 25
5.9 PROFITABILITY RATIO.................................................................................................................. 25
7. vii
EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION.
The name of the business shall be PIZZA RESTAURANT. I choose the name because it will portray the
type of business that I will engage in making of pizza and other pastry products.Which applies my business
will be a comfortable place for my potential customers to enter and enjoy themselves.The research was
conducted and the proposed business was agreed to be located in Molo approximately 10km from Molo
town, along Molo-Olenguruone Road there is a junction about 7km from town then from the junction.. The
place was chosen due tothe contacts of my business will be as follows:
ADAM’SO PIZZA INN,
P. O BOX 177,
MOLO.
EMAIL: Adam’spizzainn @gmail.com.
2.0 MARKETING PLAN
The potential customers to this proposed business will be the residence of molo town that form 50% of the
customers.
Others will be institutions who forms 30% plus other hotels that form 20% will be my competitors around
there. I will apply the following methods to make sure I get more customers to my business.
a) I will be offering credit services to the potential customers.
b) I will be employing qualified waiters employees.
c) I will be employing qualified safeguards to ensure that there is enough security.
d) I will make sure that goods and services are of high quality to maintain customer’s goodwill.
3.0 MANAGEMENT AND ORGANIZATIONAL PLAN.
Since this business will be a sole proprietorship form of business the key personnel will be as follows:
i. The manager.
ii. Assistant manager.
iii. Cashier.
iv. partisier.
v. Watchmens
4.0 OPERATIONAL /PLAN
8. viii
The product plan is the business will be acquired though purchasing from farmers, directly and my own
farm. The transportation will be done by my own pickup which will collect from farmers.
The business will serve the residence of Molo town and the institutions around. This business will be a sole
proprietorship owned by myself and the family. I’ll be the manager. The business will commence next year
when I will apply for a loan from the bank, relatives and personal savings.
Personal savings= 300,000
From relatives and friends=150,000
From the bank loan= 200,000
Total= 650,000
5.0 FINANCIAL PLAN
This business will have to incur some expenses before commencing its operations. It shows records in
details i.e. financial analysis and estimation of the working capital required therefore the preoperational
expenses projected cash flow is prepared follow by the Profoma income statement and balance sheet for the
first and second years, calculations of the break even, point profitability rations and finally desired
financing and capitalization, this will possible since the owner intense to borrow a loan from the bank,
friends and relatives.
9. 1
CHAPTER ONE
1.0 BUSINESS DESCRIPTION
This chapter majorly highlights; business name, its location, form of ownership, types its specific
services and its goals and strategies (entry and growth).
1.1 BUSINESS NAME
The name of the business will be ADAM’S PIZZA INN shop, the owner decided to choose the name since
its easy to pronounce and recall. It also states what the business will be dealing with in general. The
business is going to produce quality products which will be liked by many.
1.1.1 BUSINESS LOGO
The business will operate using the following logo;
1.2 BUSINESS LOCATION AND ADDRESS
1.2.1 Business address
The target customers are university students, lecture, primary and secondary students and also the residents
of Self-selection. The cold weather of Molo will facilitate intake of hot drinks and therefore GBJ will offer
quality coffee. There is also availability of electricity and water, so this will help the business to undertake
its operations with ease and maintain cleanliness.
The business will use the following address;
ADAM’SO PIZZA INN,
P. O BOX 177,
MOLO.
CONTACTS: 07
EMAIL: Adam’spizzainn @gmail.com.
1.2.2 Business location
Adam’s pizza inn shop will be located in Molo approximately 10km from Molo town, along Molo-
Olenguruone Road there is a junction about 7km from town then from the junction. The business will be
10. 2
constructed just next to Self-selection supermarket, directly opposite Fanaka house. The research on the
site chosen showed a lot of advantage. The area is easily accessible by road, so transportation of raw
materials to the firm and finished products to the market will be easy.
BUSINESS MAP
KEY
Building
Road
Arrow direction
1.3 BUSINESS OWNERSHIP
The business will be operated under sole proprietorship. I will be the owner of the business and therefore
the manager too. This kind of business is easy to manage and can be started with low capital, controlling of
the few employees will be easy and all profits will be enjoyed by the owner.
ADAM’S
PIZZA
FANAKA HOUSE
Shell petrol
station
Waiyaki
plaza
Self selection
supermarket.
Raiya
supermarket
11. 3
The business has to have a license which will be got from the local government officer in Molo town. It
will be registered under registration of business name act. The business will also be registered with
ministry of health, ministry of commerce for taxation purpose. This procedure of registration may take
approximately Ksh. 5,000
1.4 PRODUCTS AND SERVICES
The business will be dealing with baking of different kind PIZZA products for example pizza, different
types of cakes, cookies, rolls, scones, donuts e.t.c The products will be packed in polythene bags showing
the label of the business name and logo, name of the products, net weight of the products, ingredients used
and the manufacturing date will also be legally showed. The business will offer services such as door to
door delivery and many others after sales services depending with the terms and conditions of the business.
1.5 THE INDUSTRY
The business can be classified under production and service industry. The PIZZA and other PIZZA
products will be produced and serviced in the shop while others will be transported using a motorcycle.
The industry keeps changing in terms of the technology being used on day to day activity. This creates the
game in quality and the quantity of the good being delivered.
There are many competitors in the area thus the business will initiate new strategies in order to outdo the
already existing competitors in the market. By this strategies being put in place, the scales are bounded to
be increasing yearly and at first rate.
1.6 JUSTIFICATION OF THE BUSINESS
The business is going to be variable because the area has fewer suppliers of PIZZA products i.e cakes thus
leading to low competition and survival of the business. Availability of ready market evident by high
population in the area will help the business to sell its products efficiently and effectively. The area has
good security system hence the business will be safer and there is also availability of power which will be a
main tool for the business.
The infrastructure of the location of the business is good therefore movement of the finished products to
the market and raw materials to the business will be easy and convenient.
Having gained entrepreneurship skills, the manager will be able to run the business professionally and
ensuring that goals are achieved.
12. 4
1.7 GOAL OF THE BUSINESS
1.7.1 Long term goals.
i. Making profit
ii. Increasing the number of products
iii. Creating more job opportunities
1.7.2 Short term goals.
i. Maintaining cleanliness
ii. Providing uniforms for the staff
iii. Making quality products i.e pizza
1.8 ENTRY AND GROWTH STRATEGY
1.8.1 Entry strategy
The business will start its operation immediately after undergoing the government legalities such as buying
license that will ensure that I own and have right to established any form of business. The firm will be
organize in a way in which the product and services will be transported in and out of the firm as a way of
earning net profit. Adjustment promotion and discount of product will be used.
1.8.2 Growth strategy
The highly populated area sounds demands of certain product preserve of security. Well tarmac road and
space for examination promote the growth of the business. Apart from the above opportunities, then firm
will be also offering credit and discount to customers and quality personnel will also be employed. The
plans for the firm's expansion will be set aside as there will be extension of building.
13. 5
CHAPTER TWO
2.0 MARKETING PLAN
2.1 POTENTIAL CUSTOMERS
The potential customers for the proposed business will be the residents of eldoret town. This business will
be easily accessible because it is just close to the eldoret business district hence closer to the customers.
This will help the business to provide its products and services effectively and efficiently.
2.2 COMPETITORS
Competitors in a business is normal and healthy practice where two or more compete for customers. There
are two competitors for the business. One is blessed pastry and the other os advanced pastry.
Competitor Weakness
Blessed pastry Offers only pastry products
Lack of trained staff
Advanced pastry Located 3 km away
Very expensive
Advantage of ADAMS PIZZASHOP compared to its competitors, is that ADAMS PIZZASHOP is located
just within the potential customers residential areas and is also providing both pastry products with coffee.
ADAMS PIZZASHOP will also offer products of an affordable price compared to its competitors. My
business will be runned by trained manager down to the housekeeper. The business will also provide
incentives to the staff to give or boost their morale for work
2.2 MARKET SHARE
Since the capital for starting the business is a high and business will provide high quality products and
services compared to the competitors, ADAMS PIZZA SHOP will get a market share of 60%. Adams pizza
competitive edge is relatively low in the area because the competitors are abit far from the business and this
will be an advantage. The business target is to serve the people living gin the area and later on opening
more branches in order to increase the market share.
14. 6
2.4 METHOD OF ADVERTISING AND PROMOTION
Adams pizza shop will use an innovative strategy to advertise and promote its goods to the customers and
attract them for quality products.
2.4.1 ADVERTISING
The business will use posters, newspaper, television, public functions and internet platforms like Facebook,
twitter, instagram and others. This will make the business to trap many customers.
The business will use at least ksh. 3000 per month for advertisement at the beginning. The advertisement
record will be kept and audited every month to ensure progress in practice.
2.4.2 PROMOTION
The proposed business will offer gifts like cookies, T-shirts, balls caps and scarfs to the people for
attraction. This will be done during road shows and during official opening day for the business. At the
beginning the proprietor will use a total amount of ksh. 1000 per year for promotion expenses. The cost
will vary depending on the sales level and the business progress. The promotion will be effective for it will
help the business more and more customers as time goes by.
2.5 PRICING STRATEGY
The proposed business will set prices of its products at lower than the prices set by its competitors so as to
attract sold within shortest time possible. The business will also look into the production expenses and
government taxes for it to determine its products prices. It will be friendly and affordable prices that will
45%
35%
20%
0
market share
Adam's pizza blessed advanced
15. 7
vary according to the quality required by the customers. The business will also sell on credit to those
frequent customers and those that buy goods in large quantities like the institutions.
2.6 SALES TACTICS
The business will use both direct and indirect selling methods to its customers depending on the quantity of
products that will be required by the customer’s frequency and their ways of paying debts. Staff member
will be recruited depending on their qualifications which will be advertised for the various positions that
will be required by the pastry. Distribution will be motivated by right payments of salaries, allowances with
good communications from the management’s team. The geographical area intended to be served will be
Uasin Gishu County.
2.7 DISTRIBUTION STRATEGY
The business will be distributing its products to individuals, hotels institutions and groups of people that
will require our products. Distribution of products will be done according to the amount of goods that will
be required hence the goods will be transported for the customers to their destiny if there is need for it and
therefore ksh. 1000 will be used cater for the transportation cost per month. Anticipated distribution
problems like delay in payments of debts will be solved by having certain amount set aside to serve the
business and keep it moving as it waits for debts to be settled.
16. 8
CHAPTER THREE
3.0 ORGANISATION AND MANAGEMENT PLAN
3.1 ORGANISATION STRUCTURE
This an essential structure where a chain of command is followed. This will ensure smooth running of
business since orders will be given from higher authority to the lowest. Subordinate will receive orders and
delegations from their superiors.
The chart shows the hierarchy of command;
3.2 MANAGEMENT TEAM
POSITION QUALIFIFICATIONS DUTIES RESPONSIBLITIES
MANAGER Diploma in food and
beverage sales and
management
Good public relations
Planning and
organizing duties for
staff
Training of staff
Compiling policies
ACCOUNTANT Certificate in business Costing Conduct research
THE MANAGER
ACCOUNTANT
PASTRY
CHEF
WAITER SALES AND
MARKETTING
PERSONNEL
17. 9
management
Good public relations
budgeting and budgeting
Filling out income
statement
PASTRY CHEF A certificate in food
and beverage
production and sales
Production of pastry
products
Preparing and
submitting a budget
Researching and
recipe
Ordering ingredients
HEAD WAITER A certificate in food
production and service
Have a good human
relation
Preparation of coffee
Setting of the area
Service and selling
of the products
Dealing with checks
and bills
SALES AND
MANAGEMENT
PERSONNEL
A certificate in sales
and marketting
Receiving cash and
submiiting to the
account
Conducting
advertisement and
promotion
3.3 OTHER PERSONNEL
POSITION QUALIFICATION DUTIES RESPONSIBILITIES
STEWARS A form four
certificate
A responsible and a
reliable person
Cleaning the
utensils, the room
and the compound
Maintain cleanliness
of the premises
SECURITY
PERSONNEL
K.C.P. E certificate
Honest and
courageous
Permitting entry
surveillance
equipments
Secure premises and
personnel
3.4 RECRUITMENT TRAINING AND PROMOTION
The business will succeed its anticipated undertakings. A well outlined structure for staffing the business
will be put in place. The staff will undergo practical test before being choosen so as to know the skill and
knowledge of an individual.
3.4.1 RECRUITMENT
Recruitment will be in the organization when all the staff will have applied for the job.
18. 10
There will be addition of more staff due to raised demand and also to replace those who will have left. The
business will obtain its staff by advertising its vaccines on the local radios, television, newspaper, internet,
magazines and transits. The interest and qualified individual will be all welcomed to apply for the job.
3.4.2 TRAINING
The proposed business will be employing qualified knowledgeable and experienced staff. Therefore there
will be training when assessment will be done and it confirms its need so as to maintain the high standard
of production offered by the employees.
Training will be done when
The business introduces new technology
The business creates new jobs.
The staff member is promoted to a higher level than the previous level.
3.3.3 PROMOTION
Promotion is advance cement in rank of position of the staff in the business. Promotion in the proposed
business will depend on the following factors.
Staff advancement in his or her education.
Staff working for long period of time and staff is experienced and dedicated
When one as proved to be discipline and always adhering to the business regulations.
3.4 REMUNARTION AND INCENTIVES
The business will get good environment to motivate and encourage the business staffs.
ADAMS PIZZASHOP will offer its members with medical allowances free working uniform and free
transport every day.
The staff will have two trips annually for exposure to places with relevant services of pastry in Kenya.
Kshs. 10,000 will be spare for that annually.
3.4.1 SALARIES OF THE BUSINESS EMPLOYEES
POSITION SALARY (KSHS.) ALLOWANCES
MEDICAL
HOUSE
19. 11
Manager 15,000 200 700
Accountant 10,000 200 700
Pastry chef 8,500 150 650
Sales and marketing
personnel
7,500 150 650
Waiter 6,000 100 600
Steward 4,500 100 600
Security 3,000 100 600
total 54,000 1,000 4,500
3.4.2. INCENTIVES
This is the additional benefits given to employees onto the salaries. It will include medical allowances,
rewards, transport and holding parties and by doing all these, it will motivate employees to co-operate at
work through
3.5 LICENSE, PERMITS AND BY-LAWS
3.5.1. LICENSE
It will be given by the county government. It will help the government to collect its revenue from the
business and S.’S poultry will have to pay Ksh. 3000 per year.
3.5.2. PERMITS
It will be given by the county government of Nakuru. The nature of the business is quite acceptable as it
does not have any pollution to the environment or people around.
3.5.3. BY-LAWS
The business complies with the law for it does not have any negative effect to the surrounding residents
and the environment
3.6 SUPPORT STAFF AND SERVICES
The pastry will depend on staff support and service for quality production. The business will require
support from other business and organization which will help the pastry to operate effectively. The
business will also be banking from equity bank in Eldoret branch.
20. 12
CHAPTERFOUR
4.0 PRODUCTION / OPERATIONAL PLAN
The intended business will engage in the provision of the quality services in order to meet customer’s
needs. It will focus on quick service, reasonable and carefully handling of customers as they are the most
important contribution to the success of the business.
The proposed business objectives will be;
To utilize appropriate technology in the provision of standard and quality service to its
customers.
To acquire high quality materials for the production process so as to ensure high quality
services.
4.1 PRODUCTION FACILITIES AND CAPACITY
The proposed business will require a premise to operate form. It will require the following equipment for
its operation
Equipment quantity Cost @ ksh Total ksh Supplies
Oven
Blender
Cooking racks
Muffin tins
Baking trays
Weighing scale
Display trays
Deep fryer
Freezer
Icing seta
Oven gloves
Cutters ( varying size and shapes)
Other kitchen accessories
2
1
3
5
5
1
10
1
1
1
2 pairs
4
variety
25000
1500
200
200
200
5000
100
3000
20000
1000
100
100
1000
50000
1500
600
1000
1000
5000
1000
3000
20000
1000
200
400
4000
Patel
Nakumatt
Patel
Patel
Nakumatt
88,700
21. 13
Furniture & fittings Quantity Cost @ Total Shs Suppliers
Display cupboard
Kitchen table
Office desk
Bench
Chairs
3 (large)
3
5
2
10
3000
2000
1000
300
400
9000
6000
5000
600
4000
LG
Motal furniture
Motal furniture
Motal furniture
Motal furniture
Total 24600
The business will also require a premise which will be build with a cost of shs 100000 .
The land on which the building shall be build will be bought at shs 70000.
4.1.1 Repairs and maintenance.
The equipment and machinery will be serviced annually by a technician regularly as they can be used for a
long time without any breakdown.
4.2 Production design and development.
For the purpose of designing and developing the products the following ingredients are essential each
single product. The production supervisor will ensure that the designed recipe for each product is strictly
followed for quality production. The busniness designe development will be as follows;
22. 14
4.3 PRODUCTION STRATEGY
Initially in the first phase of establishment and growth of the enterprise, It is expected that the production
will be like the one shown in the table below. However the production is anticipated to increase with time.
PRODUCTION
Product Per day Per month Per year
Bread
Doughnuts
Cakes
Scones and buns
Queen cakes or
muffins
500 kgs
600 kgs
300 kgs
400 kgs
200 kgs
15000 kgs
18000 kgs
9000 kgs
12000 kgs
6000 kgs
180000 kgs
216000 kgs
108000 kgs
144000 kgs
72000 kgs
Total 60000 kgs 720000 kgs
The business will transport its materials to its premises by hiring a van to deliver the materials to its
premises at a cost of Kshs 2000.
Wash rooms
Production and
selling point
Managers
office
accounts
stores
Parking area
security
23. 15
The monthly production overheads for the proposed business will be as follows;
Electricity Bills Kshs 1400
Telephone Bills Kshs 800
Office expenses Kshs 5000
Total Kshs 7200
4.3 PRODUCTION PROCESS
In the production process, Manpower skills and essential knowledge of the procedure to be followed are
the at most importance.Therefore correct procedure for production of each product will be; first the raw
materials will be imported from our main suppliers then to our business center where the goods will be
made from there. The made goods will be packed according to their sizes then be sold to our potential
customers who are the final consumer.
The proposed business will face the following internal and external problems.
Scarcity of raw materials _The proposed business will face scarcity of resources which will
push up the costs of acquiring them and delays in production.
Steady rise in prices _it will be faced by rise in electricity expenses and office expenses which
will lower the profit margin.
Dishonest employee’s _It will face losses resulting from employees who are dishonest.
4.4 REGULATION AFFECTING OPERATIONS
All workers will have to obtain medical examination certificates before they are allowed to work in the
business which in fact is basically food producing enterprise.
High standards of hygiene should be maintained labour laws shall be followed strictly to ensure that
workers have good working conditions.
The enterprise of the logo: CB
The design of the logo has been developed by using the initials of the name of the enterprise itself Ban
snack bakers.
Since the government requires that any business before commencing its operations must acquire a trading
license, health certificate and permits .The business will have to acquire such documents from municipal
council.
24. 16
CHAPTER FIVE
5.0 FINANCIAL PLAN
This chapter class with the financial management of the proposed business. It will give a comprehensive
and in depth analysis of the revenue and expenditure to portray the future financial potentiality of the
proposed business. It will use balance sheets, income statement and cash flow statements the fundamental
objectives of the proposed business will be to make profitable decisions leading to business growth. The
key objectives to guide the financial management will include;
The business will repay the borrowed loan from the Kenya commercial bank in full by the end of second
year.the management will also ensure that the business keep up to date financial records of all transactions
.This is a legal requirement by the government to use for taxation and other purposes . The record will
further be used for future decisions by the management.
Surplus funds will be ploughed back into the business so as to ensure growth and expansion.
To ensure that finances are handled by the right staff in terms of qualifications, experience and personal
qualities as to reduce cases of financial mismanaging.
To seek professional advice whenever necessary before making substantial investments so as to reduce
risks of failure.
5.1 Pre-operational costs
Before the proposed business commence operation, adequate operation will be necessary in terms of
acquisitions of basis facilities, tools and equipment.
This will enable the business to have successful start, leading to ultimate of achieving goals.
Table showing pre-operational cost for the proposed business
Particulars Costs(kshs)
Business license/permits
Post office box rental
Telephone/mobile phone connections
Water meter account
Advertisement and promotions
Equipment and tools
Stock
Rent
Electricity meter
6300
1500
5000
5000
3200
110000
300000
2000
5000
25. 17
miscellaneous 9000
TOTALS 448000
5.2 working capital
The proposed business estimates working capital for the three years on the assumptions bellow will be as
shown;
Assumptions
Bank interest of 10% to be paid.
The bank loan and any other source made available in appropriate time Business world be as projected or
better, this will enable business gain stability faster hence profitability.
5.1 Table showing working capital for the business for the first three years
2022 2023 2024
CURRENT
ASSETS
Cash on hand
Cash at bank
debtors
stock
35790
10000
29210
4%
37221.6
10400
30378.4
6%
38710.46
32201.1
TOTALS 75000 78000 82000
CURRENT
LIABILITIES
Creditors
Bank loan
225000 265200 281112
30. 22
5.4 profoma income statement for three year 2023, 2024 and 2025
particulars Year 2022 Year 2023 Year 2022
Sales
Less purchases
Gross profit
Expenses
Salaries and
wages
Rent
License and
permits
Electricity
Telephone
Postage
Stationery
Security
Interest on loan
Water
Creditors
Miscellaneous
Total expenses
Net profit before
tax less 15% tax
Net profit
4,511.250
979,050
3,532,200
120,000
119,500
24,000
5,500
25,000
12,500
12,000
4,500
60,000
12,000
4,400
60,000
35,000
1,024,700
2,507,507,
376,125
2,131,375
9,408,900
1,492,000
8,916,900
119,500
24,000
5,500
25,000
19400
12,000
22,000
60,000
8,500
4,800
65,000
49,000
2,032,200
6,884,700
1,032,705
5,851,995
14,060,100
1,945,000
12,115,100
119,500
24,000
5,500
25,000
24,000
18,000
44,000
60,000
44,000
6,000
42,500
16,500
1,050,000
11,065,100
1,659,765
4,405,335
31. 23
5.5 Proforma balance for the three years 2023, 2024 and 2025
particulars Year 2023 Year 2024 Year 2025
Assets
Fixed assets
Machinery &equipment
Furniture and fittings
Total fixed assets
Current assets
Cash in hand
Cash at bank
Debtors
Total current assets
Total assets
Liabilities
Current liabilities
Creditors
Total current assets
Long term liabilities
Bank loan
Equity
Net profit
Total liabilities
140,000
60,00
200,000
58,250
300,000
60,500
3,429,000
3,629,000
60,000
60,000
90,500
1,337,975
2,031,075
3,629,050
140,000
60,000
200,000
51,551
730,000
48,000
8,334,200
8,334,200
60,000
60,000
90,500
2,494,130
5,775,070
8,534,200
140,000
60,000
200,000
58,050
950,000
211,000
13,221,600
13,421,600
60,000
60,000
3,773,765
9,405,333
13,421,600
33. 25
5.7 DESIRED FINANCING
Item Amount
Pre operation costs 448000
Working capital 100 700
Fixed assets
Equipment 38650
Furniture and fittings 20 000
Premises 50 000
Total financial requirements 649 750
5.8 PROPOSED CAPITALIZATION
Items Amount
Owners contributions 500 000
Loan from bank 225000
Total Investment 725, 000
5.9 PROFITABILITY RATIO
Profitability Working formula Year 2023 Year 2024 Year 2025
Gross ratio
Return on
Gross profit X 100
Total sales
2532200 X 100
4511250
= 78.3%
8916900 X 100
9408900
=94.8%
3532200 X100
4511250
=86.1%
34. 26
investment
Return on
investment
Net profit X100
Owner’s equity
Net profit X 100
Total investments
2031075 X 100
1337975
=151.8%
2031075 X 100
3629050
=55.97%
5775070 X 100
2494130
=231.5%
5776070 X 100
85342000
=67.67%
9405335 X 100
3773765
=249.2%
9405335 X 100
133421600
=70.08%
