TIITLE: BUSINESS PLAN

BUSINESS NAME: JOJO POULTRY FARM

BUSINESS ADDRESS: P.O BOX 808-30100 ELDORET

TELEPHONE NO: 0712000192/0793219879

BUSINESS LOGO:

PRESENTED BY: LUCY WAIRIMU KINYUA

INDEX NUMBER: 3042010709

INSTITUTION: MERU NATIONAL POLYTECHNIC

SUPERVISOR: MR. AMWAYI

PRESENTED TO: THE KENYA NATIONAL EXAMINATIONS

COUNCIL

COURSE: DIPLOMA IN HUMAN RESOURCE

MANAGEMENT

SERIES: JULY 2023

DECLARATION
I Lucy Kinyua declare that this Business Plan is my original work with my own effort, skills and
knowledge and it has never been presented to the Kenya National Examination Council.

Name: LUCY WAIRIMU KINYUA

Index No: 3042010709

Signature: _____________Date ____________

Supervisor's Name: MR. AMWAYI

Signature: _______________ Date_____________

i
ii
ACKNOWLEDGE
I am glad to express my gratitude to God for having guided me through the research period. I
thank my lecturer, Mr Amwayi, to for the endless advice and guidance. I thank my father,
Samuel, Mother, Faith, for the support throughout my research and also for their financial
support and moral support to the completion of my business plan. May God bless you all.

iii
DEDICATION
I Lucy hereby dedicate this piece of work to my family members, my parents, Mr & Mrs Kinyua.
My lecturer, Mr. Amwayi, my coursemates and my friends.

iv
Contents
DECLARATION...............................................................................................................................................i
ACKNOWLEDGE...........................................................................................................................................ii
DEDICATION................................................................................................................................................iii
EXECUTIVE SUMMARY..............................................................................................................................viii
CHAPTER ONE..............................................................................................................................................1
1.0 BUSINESS DESCRIPTION.....................................................................................................................1
1.1 BACKGROUND OF THE OWNER.........................................................................................................1
1.2 BUSINESS NAME................................................................................................................................1
1.3 BUSINESS LOCATION AND ADDRESS..................................................................................................2
1.4 FORM OF OWNERSHIP.......................................................................................................................2
1.5 TYPE OF BUSINESS.............................................................................................................................3
1.6 PRODUCTS AND SERVICES.................................................................................................................4
1.7 JUSTIFICATION OF OPPORTUNITY......................................................................................................4
1.8 INDUSTRY..........................................................................................................................................4
1.9 BUSINESS GOALS AND OBJECTIVES....................................................................................................5
1.9.1 BUSINESS GOALS.........................................................................................................................5
1.9.2 BUSINESS OBJECTIVES................................................................................................................5
1.10 ENTRY AND GROWTH STRATEGY.....................................................................................................5
1.10.1 ENTRY STRATEGY......................................................................................................................5
1.10.2 GROWTH STRATEGY.................................................................................................................6
CHAPTER TWO.............................................................................................................................................7
2.0 MARKETING PLAN..............................................................................................................................7
2.1 CUSTOMERS.......................................................................................................................................7
2.1.1 WHOLESALERS............................................................................................................................7
2.1.2 RETAILERS...................................................................................................................................7
2.1.3 INSTITUTIONS.............................................................................................................................7
2.1.4 INDIVIDUALS...............................................................................................................................8
2.2 MARKET SHARE..................................................................................................................................8

v
2.3 COMPETITION..................................................................................................................................10
2.4 METHODS OF PROMOTION AND ADVERTISEMENT.........................................................................12
2.4.1 METHODS OF PROMOTION......................................................................................................12
2.4.2 METHODS OF ADVERTISING.....................................................................................................13
2.5 PRICING STRATEGY..........................................................................................................................13
2.6 SALES TACTICS.................................................................................................................................13
2.7 DISTRIBUTION STRATEGY.................................................................................................................14
CHAPTER THREE........................................................................................................................................15
3.0 ORGANIZATION AND MANAGEMENT PLAN.....................................................................................15
3.1 MANAGEMENT TEAM......................................................................................................................15
3.1.1 MANAGING DIRECTOR..............................................................................................................15
3.1.2 FINANCING MANAGER..............................................................................................................15
3.1.3 FARM MANAGER......................................................................................................................16
3.2 OTHER PERSONNEL..........................................................................................................................16
3.3 RECRUITMENT, TRAINING AND MANAGEMENT..............................................................................18
3.3.1 RECRUITMENT..........................................................................................................................18
3.3.2 TRAINING..................................................................................................................................19
3.3.3 PROMOTION.............................................................................................................................19
3.4 REMUNERATION AND INCENTIVES..................................................................................................19
3.4.1 REMUNERATION.......................................................................................................................19
3.4.2 INCENTIVES...............................................................................................................................20
3.5 LEGAL REQUIREMENT......................................................................................................................21
3.5.1 LICENSES...................................................................................................................................21
3.5.2 PERMITS....................................................................................................................................21
3.5.3 BY- LAWS..................................................................................................................................21
3.6 SUPPORT SERVICES..........................................................................................................................22
3.6.1 BANKINK SERVICE.....................................................................................................................22
3.6.2 INSURANCE SERVICES...............................................................................................................23
3.6.3 CONSULTING SERVICE...............................................................................................................23
3.6.4 LEGAL SERVICES........................................................................................................................23
CHAPTER FOUR..........................................................................................................................................24
4.0 PRODUCTION/ OPERATION PLAN....................................................................................................24

vi
4.1 PRODUCTION FACILITIES AND CAPACITIES......................................................................................24
4.1.1 FIRM LAYOUT............................................................................................................................25
4.2 PRODUCTION STRATEGY..................................................................................................................25
4.2.1 PRODUCTION DEVELOPMENT DESCRIPTION............................................................................25
4.2.2 COST OF PRODUCTION PER MONTH.........................................................................................25
4.2.3 METHOD OF PRODUCTION.......................................................................................................27
4.2.4 CHANGES ANTICIPATED IN TECHNOLOGY.................................................................................27
4.2.5 MATERIAL REQUIREMENT........................................................................................................28
4.2.6 SKILLS REQUIREMENT...............................................................................................................28
4.2.7 PURCHASING AND STOCK CONTROL METHODS.......................................................................28
4.3 PRODUCTION PROCESS....................................................................................................................29
4.3.1 STAGES OF PRODUCTION..........................................................................................................29
4.3.2 ALL MATERIAL REQUIRED.........................................................................................................29
4.3.3 EXTERNAL FACTORS AFFECTING PRODUCTION PROCESS.........................................................30
4.3.4 WAYS OF MINIMIZING EXTERNAL EFFECTS...............................................................................30
4.4 REGULATIONS AFFECTING OPERATION...........................................................................................31
4.4.1 HEALTH REGULATIONS.............................................................................................................31
4.4.2 SAFETY REGULATIONS..............................................................................................................31
4.4.3 ENVIRONMENTAL REGULATIONS.............................................................................................31
CHAPTER FIVE............................................................................................................................................33
5.0 FINANCIAL PLAN..............................................................................................................................33
5.1 PRE- OPERATIONAL COST................................................................................................................33
5.2 PRO- FORMA BALANCE SHEET.........................................................................................................34
5.2.1 PRO- FORMA BALANCE SHEET FOR YEAR ONE..........................................................................34
5.2.2 PRO- FORMA BALANCE SHEET FOR YEAR TWO.........................................................................36
5.2.3 PRO- FORMA BALANCE SHEET FOR YEAR THREE......................................................................37
5.3 WORKING CAPITAL..........................................................................................................................38
5.4 CASH FLOW PROJECTION.................................................................................................................39
5.4.1 CASH FLOW PROJECTION FOR YEAR 2026................................................................................39
5.4.2 CASH FLOW PROJECTION FOR YEAR 2027................................................................................41
5.4.3 CASH FLOW PROJECTION FOR YEAR 2028................................................................................43
5.5 PRO-FORMA INCOME STATEMENT..................................................................................................44

vii
5.6 BREAK EVEN ANALYSIS.....................................................................................................................45
5.6.1 BREAK EVEN ANALYSIS FOR YEAR ONE.....................................................................................45
5.6.2 BREAK EVEN ANALYSIS FOR YEAR TWO....................................................................................46
5.6.3 BREAK EVEN ANALYSIS FOR YEAR THREE..................................................................................47
5.7 DESIRED FINANCING........................................................................................................................47
5.8 CAPITALIZATION..............................................................................................................................48
5.9 PROFITABILITY RATIOS.....................................................................................................................48

viii
ix
EXECUTIVE SUMMARY
1.0 BUSINESS DESCRIPTION

Jojo Poultry Farm is a Sole Proprietor form of ownership which will be run by Lucy Kinyua. The farm
plans to focus on production of poultry products example such as: eggs l, broilers, chicks and layers and
other subsidiary products such as incubation and hatchery. The Farm will be based Eldoret near St.
Teresa Catholic church and University of Eldoret in Uasin Gishu County. The will focus on providing
supplementary income, providing subsidiary employment, providing affordable animal protein and
providing high quality products.

2.0 MARKETING PLAN

The proposed business will fall under Trade industry which is fast growing. This growth will be
caused by affordable price of this products in the market coupled with trendy nature of the
target market. Eldoret was most suitable due to its favorable climate, large population and
nearness to the market. The potential customers of the business will be commercial customers.
The business will achieve its goal by becoming the most hygienic poultry farm business in the
area and by complying by the national standard for Food and Health Act.

3.0 ORGANIZATION/MANAGEMENT PLAN

The business will be controlled by a Managing Director and a farm manager and a financing
manager and other personnel’s in the business. The business will obtain it's licensing from the
District Health Officer, recruitment of its employees will be observed from their qualifications
and working experience of the job. Employees will be taken for seminars and workshops,
exchange programs and inviting experts to advise the employees. Use of modern technology
will help in better production.

4.0 PRODUCTION/OPERATION PLAN

This is a process which will show how the business will be involved to have high quality
products for their customers. The business will incur monthly expenses for production such as
labour cost, material cost and production on finished goods and distribution. Rules and

x
regulations that bind the business will be catered for to ensure maximization of sales of cost of
production. The employees will be treated fairly which will be fulfilled by observing
Environmental Act. and enhance equal distribution of duties.

5.0. FINANCIAL PLAN

The financial plan in the business helps to study the progress of the business. It is going to help
the business to know the growing trend of the business and to know the progress of the
business whether it's operation it's on profit or loss. The business will acquire terms loans,
equipment loans and trade credits which will be used to finance the business on daily
operation. The financial plan will tell whether the business will be able to pay the loan
borrowed and also which part of the business will need improvement. The opening capital of
the business will be Kshs.800,000/= which will be as follows:

Personal savings =Shs.200,000/=

Family contribution=Shs.350,000/=

Trade credits=Shs.70,000/=

Terms loans =Shs.100, 000/=

Equipment loans=Shs.80,000/=

=Kshs.800,000/=

xi
CHAPTER ONE
1.0 BUSINESS DESCRIPTION
Jojo Poultry Farm is a business which will deal in the sale of eggs, layers, Gillette, Broilers, chicks
and Manure. It is categorized in the trade industry. It will be a Sole Proprietor form of
ownership. The business proposed will be located in Eldoret near St. Terese Catholic church and
University of Eldoret. The business goals of the business will be: to provide supplementary
income, provide subsidiary employment, provide affordable animal protein, provide high
quality products.

1.1 BACKGROUND OF THE OWNER

Jojo Poultry Farm will be owned by a sole proprietor called Lucy Kinyua, who graduated with a
Diploma in Human resource management, aged between 20-24 years. She is still a single lady
who is more concerned in investing in the farming industry mostly the poultry farm. My
qualifications on this kind of job is when I used to feed our own chickens back at home. The
reason I chose to invest in this kind of business is because it is the most underrated job and
which pays well.

1.2 BUSINESS NAME

The name of the Company will be Jojo Poultry Farm. The word 'Jojo' is derived from my sister's
name 'Joyce'. The business will deal in selling manure, chicks, broilers, eggs, Gillette and layers.
The business will be located in Eldoret, Uasin Gishu County. The slogan of the business will be
"Think chicken? Think us".

Figure 1:

1
1.3 BUSINESS LOCATION AND ADDRESS
The business will be located in Eldoret near St Teresa Catholic church and University of Eldoret.
Also there are few churches, institutions and resorts around the business. The address and
telephone number of the business will be:

Mobile No: 0712000192/0793219879

Email Address: [email protected]

Web Address: https://www.jojopoultryfarm.co.ke/

The business favored this location due to the following factors:

 High population- this location has a large number of people.

 Climate condition- the location has a favorable climate which will favor the business
 Infrastructure - such as roads and communication are advanced in this area since there
is an Airstrip couple kilometers from the business.
 Nearness to the market - the area has customers who will be willing to buy our
products.

In due time the business will expand over other regions, countries and even cities.

Figure 2:

1.4 FORM OF OWNERSHIP

Jojo Poultry Farm will take the form of Sole Proprietorship. The reasons for choosing this type
of ownership is because:

a.) Profit- owner enjoys all the profit in the business.

b.) Decision- decision making is faster compared to partnership.

c.) Easy to start- the proposed business is easy to start because it does not require high capital.

d.) Ability to start- the owner of the business can be able to increase or divert the business to
another business if making many competitors.

2
e.) Capital- it needs little capital to start or operate.

Poultry farming has its advantages and disadvantages in the market sector. They are as follows:

Advantages.

a.) Meat for chicken is a good source of proteins in the diet.

b.) It improves living standard of people from money gotten from selling chicken.

c.) It boosts businesses in the area since it employs people living in farming area.

d.) Some poultry products are sold to other countries to earn the country foreign exchange.

Disadvantages

a.) Large numbers of poultry dies when there is an outbreak of a disease such as chicken flu
hence leading to loss.

b.) Poultry feeds, medicine are expensive and many farmers can't afford.

c.) Poorly developed roads in areas where poultry farming is practiced hence making it difficult
for farmers to earn good prices.

1.5 TYPE OF BUSINESS

The proposed business is a start-up, which will be a trade type of industry. Whereas products
such as egg and others will be sold to the potential customers of Eldoret. The poultry farm will
be doing the following activities during operation: a.) Feeding the chickens

b.) Monitoring the conditions inside the chickens houses including temperature, humidity and
air quality.

c.) Preparing the chickens house for arrival of the chicks.

d.) Monitoring the health of the chickens.

e.) Cleaning the chickens houses or coops.

3
f.) Collection of eggs.

g.) Loading chickens onto trucks for moving chicken plants (for meat chicken)

1.6 PRODUCTS AND SERVICES

Jojo Poultry Farm intends to produce different kind of products to its potential customers such
as: manure, chicks, broilers, eggs, layers and Gillette. Turkeys, geese, ducks, guineafowls and
quails these shall be sold to big hotels and resorts for tourists and also exported to foreign
countries. The business shall offer other services such as; after sales services, transportation
and packaging.

1.7 JUSTIFICATION OF OPPORTUNITY

The proprietor chose this type of business for the following reasons:

a.) Income and employment opportunities- unemployed educated youths can easily make a
great income by raising poultry commercially.

b.) Less capital- one needs only basic Capital to start raising poultry.

c.) High returns in short time period- poultry such as broiler chickens take shorter duration of
time to mature and generate profit.

d.) Huge Global demand- poultry give fresh and nutritious food. Hence, global consumers prefer
poultry products.

e.) Easy bank loans- almost all banks approve loans for those type of business venture.

f.) Easy marketing- there is established markets for poultry products in almost all places in the
world.

g.) High maintenance not required- one can minimize diseases and illness to poultry by
observing proper hygiene and care.

1.8 INDUSTRY
The business proposed falls under Trade industry whereby products like eggs will be sold to the
potential customers like students from university of Eldoret, hotels and customers.

4
Financial skill- the business will enable to generate income on purpose of more raw materials.

Entrepreneurial skill- the business is ready to take all the risks or is sell confident for future
oriented.

Technical skill- the business is able to have technical skill to produce quality products for it's
customers.

Capital- the business is able to obtain capital from various sources if well planned.

1.9 BUSINESS GOALS AND OBJECTIVES

1.9.1 BUSINESS GOALS
The business will provide the following goals in the market sector:

1.) To provide supplementary income.

2.) To provide subsidiary employment.

3.) To provide affordable animal protein.

4.) To provide high quality products.

1.9.2 BUSINESS OBJECTIVES

The business plans on fulfilling the following objectives of poultry farming when it starts:

1.) Making availability of quality chicks (low input technology)

2.) Diversification program emu, turkey, geese and guinea fowl.

3.) Strengthening of feed quality monitoring wing.

4.) Training programs.

5.) Quail selection and breeding program on meat type.

5
1.10 ENTRY AND GROWTH STRATEGY
1.10.1 ENTRY STRATEGY
The owner of the business intends to create an impact on the market so that people come and
be loyal customers in the business. This can be done through:

a.) Advertisement- the owner of the business advertised its business ad the products or services
they offer to customers through radios.

b.) Sign post- the owner of the business puts sign posts along the road where people or
customers can easily reach. This will make its business become popular.

c.) Sales promotion- for the business to become popular, the owner of the business should
make a lot of sales promotion for example usually uses agricultural shoes of Kenya. This will
give the business time to show people the type of poultry it kept and also create sales.

d.) Publicity- this is the other way of communicating to various public e.g customers.

1.10.2 GROWTH STRATEGY

Since the business is growing very fast and has the possibility to attract more customers. The
business intends to employ the following strategy:

a.) Good customer- this can be done through publicity. It can enhance good communication
between the customers and the owner of the business.

b.) Free sample- customers should be given free samples of our products to stimulate the trial
of a product to increase the sales volume.

c.) Staff development- the owner of the business should create staff development in that staff
should have good remuneration.

d.) Negotiation with customers- the owner of the business should know the taste and
preference of the customers so as not to bring conflict between them.

e.) Packaging- the owner of the business should pack its products in a good manner. Packaging
should be well designed.

6
CHAPTER TWO
2.0 MARKETING PLAN
The business which intends to be located in Eldoret, Uasin Gishu County shall have institutions,
individuals, retailers and wholesalers as their buyers of the products. The reason the owner
chose Eldoret as its location is because it has favorable climate and large population of people
also nearness to market. The business shall use different types of promotions such as radios,
internet, leaflets, signboards and posters.

2.1 CUSTOMERS
The business shall look into the following customers:

2.1.1 WHOLESALERS
This is customers who buy products in large quantities for resale: e.g. hotels. The advantage of
these customers is that there is more discount and allowance. This helps to reduce buying cost
and increasing profit, so they enjoy benefit of buying in large scale. The disadvantage of these
customers is that they require huge capital. Adequate level of stock should be maintained to
avoid shortage of products in the market.

2.1.2 RETAILERS
These are customers who buy products from the wholesalers in large quantities then go and sell
in small quantity to potential customers. The advantage of these customers is that they do not
require special skill. The disadvantage of these customers is that they require large spaces in
their stalls.

7
2.1.3 INSTITUTIONS
These are customers who buy in large quantities but not for resale e.g schools and hospital.
Advantage of these customers, they do not face any competition because the goods they buy
they do not sell. Disadvantage of these customers, they do not make any profit hence the goods
they buy is consumed by other customers.

2.1.4 INDIVIDUALS
These are customers who buy products in small quantity e.g. students, worker and drivers.
Advantage of these customers, they profit margin is fixed, they do not worry about any profit
because their products are for consuming. Disadvantage of these customers, they face
competition with the retailers and institutions because they may lack what they looking for due
to shortage.

2.2 MARKET SHARE

The business intends to grow over all over Uasin Gishu County and around Kenya at large and it
will have the possibility of attracting customers despite having competitors around. The
following are competitor’s addresses:

Ox Farm- 0706222888

Ridgeways, kigwa Road

[email protected]

P.O BOX 888-30100

Good Farm Ke- Pioneer, Eldoret

0113473763

[email protected]

P.O BOX 473-30100

8
Kennedy's Farm- Kapsaos, Eldoret

0710479433

[email protected]

P.O BOX 670-30100

Table 1: Before you penetrate in the market

Sales Ox Farm Good Farm Kennedy's Farm Total

50,000 30,000 20,000

Market share 50% 30% 20% 100%

180° 108° 72° 360°

Figure 3: Market share before penetration.

Market share

Ox Farm Good Farm Kennedy Farm

50×360÷100= 180°

30×360÷100= 108°

9
20×360÷100= 72°

Table 2: After penetration in the market

Sales Ox Farm Good Farm Kennedy's Jojo Poultry Total

Farm Farm
20,000 20,000
20,000 40,000

Market share 20% 20% 20% 40% 100%

72° 72° 72° 144° 360°

Figure 4: Market share after penetration

Market share

72

144

72

72

Ox Farm Good Farm Kennedy Farm Jojo Farm

20×360÷100= 72°

20×360÷100= 72°

20×360÷100= 72°

40×360÷100= 144°

10
2.3 COMPETITION
Table 3: Competition in the market

Serial Competi Location %age Strengths Weakness Strategy to

No. tor share compete with
s competitor

1 Ox Farm Ridge 20%  Offers  Pricing is  Lower

ways produc high products
kigwa ts of  Have few prices
road high no. of  Employmen
quality employees t skilled
 Well employees
known
in the
region

2 Good Pioneer N 20%  Offer  Have poor  Increase

Farm Eldoret fair manageme numbers of
prices nt employees
on  Products  Improve
produc are of low the
ts quality manageme
 Easily nt
accessi
ble

3 Kennedy' Kapsaos 20%  Offer  Have poor  Increase

s Farm Eldoret fair manageme their
prices manageme

11
on nt nt
produc  Have poor  Improve
ts hygiene hygiene
 Easily
accessi
ble

4 Jojo Eldoret 40%  Have  Poor  Improve on

Poultry Uasin fair market the market
Farm Gishu prices strategy strategy
on  Few  Increase
produc employees the number
ts  Few of
 Have equipments employees
improv  Increase
ed the number
technol of
ogy equipments
 Easily to be used
accessi
ble

2.4 METHODS OF PROMOTION AND ADVERTISEMENT

The business shall use different methods promotion such as internet, leaflets, radios,
signboards and posters. While advertising we use internet, television and calendars.

2.4.1 METHODS OF PROMOTION

The business will use the business appearance or decoration/writing inside or outside the
premises. Advertising is one of our promotion strategy which we rented a billboard, spreading
posters on electric poles and banners. This method is used to attract more customers from any

12
part of the town or even the country and make sure the business is well known by people.
Other than that, we also use social medias as another promotion strategy. This is one of the
easiest and effective method to reach the customers. By using the improved technology, the
business will spread effectively e.g. use of Instagram, Facebook and website.

2.4.2 METHODS OF ADVERTISING

The business plans to use calendars with business pictures, details and logo and sell it at a price
of shs.200. The business plans to use Royal Media services for television services at a price of
shs.40,000 for advertisements. The internet shall be managed by the proprietor hence no cost
incurred. These types of advertisement methods shall pass the following message to its
potential customers.

 The business shall offer products of high quality

 The business shall advisory and consultancy services.
 The business shall sell products at fair prices.

2.5 PRICING STRATEGY

The business intends to determine its pricing strategies in relation to the following:

Cost- the business intends to determine its cost of production in the relation to its prices.

Competitor- when the Competitors offer their goods at competitive prices, the business is to
also offer competitive prices but not that will lead the business to incur losses.

Government policies- the business intends to set its prices according to government
regulations.

2.6 SALES TACTICS

The business intends to increase gradually since it produces quality products. The business
intends to employ the following strategies in order to enhance its increment in sales.

Products - the business intends to produce quality products good packaging to its customers.

13
Price- the business should provide fair prices and affordable prices to its customers.

Promotion- the business should carry out several promotions e.g. trade fair exhibition to meet
with various customers.

Place- the business should be located where it is easily accessible to people.

2.7 DISTRIBUTION STRATEGY

Jojo Poultry Farm looks forward to sell directly and also use sales representative. The business
will use roads as mode of transport hence area allocation has a good transport network.

Salesmen- the business intends to use salesmen who can sell the business products in the
surrounding.

Promotion- the business intends to use promotion during the time sales have dropped to try to
maintain daily target.

Intermediaries- these are persons who come and buy products from the business and sell them
elsewhere. This is intended to make sure that the products and services reach even the people
who are far away from Eldoret.

Aftersales- the business will provide after sales services for its customers who buy in large
quantities.

Quality products- the business should provide quality products and affordable prices to its
customers.

14
CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT PLAN
Jojo Poultry Farm is a sole proprietorship type of business which ventures into the trade
industry. The business will be segmented into various departments and section which will be
steered by various professionals for the above the business will require a well-organized
structure to enhance the operation.

3.1 MANAGEMENT TEAM

The business shall have the following team in the business: managing director, financing
manager and farm manager.

3.1.1 MANAGING DIRECTOR

Duties and responsibilities

 Set business goals.

 Staff training
 Keep the business records
 Decision maker
 Evaluation business activities

Qualifications

 K.A.T.C final certificate

 Aged between 25-35 years

15
 Mean grade of B plan

3.1.2 FINANCING MANAGER

Duties and responsibilities

 Keep the financial records

 Plan the budget of the business
 Releases money paid to workers

Qualifications

 Degree in Business Procurement

 Experience of 2years
 Mean grade of B+

3.1.3 FARM MANAGER

Duties and responsibilities

 Maintain safe working practices

 Ensure welfare of livestock
 Ventilation management
 Production performance

Qualifications

 NVQ Level 3 in poultry production

 Ability to carry out manual duties
 Effective people management skills
 Proficient computer skills

3.2 OTHER PERSONNEL

Table 4: Subordinate workers in the company

Title Number Qualifications Duties

16
Supervisor 2 Certificate holder of public Assign duties to
relations juniors

O- Level education with means Ensure duties are

grade C- and above carried out as
expected
At least one year of experience
Ensure safety of
Aged between 20-28 years
property

Know the job himself

so as to be able to
train others workers

Sales persons 4 O- Level education with means Marketing business

grade of D+ and above products

Certificate holder in sales and Making the expected

marketing returns to the
management
At least one year experience
Be a good public
Aged 18 years and above
relations practitioner
Should be good communicator to the customers
both in English and Kiswahili
Arrange exhibition
and trade fair

Keep records of sales

Security 4 Able to read and write Keep the intruders

away
Able to communicate in English and

17
Kiswahili Maintain safety of the
property
Be strong and muscular
Maintain the general
Ready to work add hours
security of the
Should be aged between 23-45 premises
years
Report to the
management anyway
of improving the
premises security

3.3 RECRUITMENT, TRAINING AND MANAGEMENT

3.3.1 RECRUITMENT
This refers to a process by which Human resource management are introduced to the
organization, this is mainly done to ensure that the right people are recruited and selected for
the available post in the business. The business will follow procedure in order to recruit its
personnel.

 Job analysis- the business intends to recruit the following personnel for the available
vacancies e.g. salesman and security
 Job description- the above personnel will be performing the specific tasks and roles
which include salesman. Marketing the business products in various markets, arranging
exhibition and trade fairs and keeps record of sales.
 Persons specification- the business intends to employ various personnel but there are
required to meet certain qualifications.
 Job advertisement- advertisement for available vacancies is done through newspaper,
those interested are required to hand in their application.
 Application form- the business intend to require the application form with the following
e.g. name, logo, letterhead and place at recipient.

18
 Shortlisting of suitable candidates- the business intends to shortlist the qualified
candidates through advertisement in newspaper.
 Interview- the interview will be conducted by the manager of which the pre-qualified
candidate will be aware of the interview date, place and time. The interview will be face
to face interview.
 Selection- the business intends to choose the most qualified candidate who met all
requirements needed for the post.
 Notification for the successful candidate- the qualified candidates will be oriented after
which they will be told to report which will after one week from interview day.

3.3.2 TRAINING
Training of management staff and other employees is to be done so as to improve on the
employee performance. The business intends to organize seminars for both its managerial and
other staff of efficiency, which is geared to increase the level of accountability and reality.

3.3.3 PROMOTION
Promotion of workers is based on performance record, discipline, qualifications and hard work.
The following are what determine promotion:

 Competence- the most competent workers are to be promoted to the next level from
the position they hold at present.
 Long service and dedication- dedication and long service workers are to be promoted in
terms of salary increment.
 Education level- those who are to have high level of education are also to be promoted
to the next post.
 Discipline- the most discipline worker should also be promoted of being discipline.
 Hard work- the most hard work workers also should be promoted in terms of salary
increment.

3.4 REMUNERATION AND INCENTIVES

3.4.1 REMUNERATION
The business will do the following to ensure they retain their employees by:

19
 Providing fun social time- employees will be able to enjoy free time after work to
improve their working skills.
 Reward team- the business will hold team activities and reward the winning teams. This
ensures employees work together in the business section.
 Give bonuses and allowances- this encourages employees to give more contribution to
the business operations.
 Develop strong communication- it makes employees to be free in decision making and
feel part of the business management.
 Payments on time- this motivates employees to work more but delays reduced the
employee's motivation.

3.4.2 INCENTIVES
The business intends to motivate its workers either financially or non financially.

 Free gifts- the business intends to give free gifts during Christmas and new year to its
employees.
 Democratic work- this should be availed to the employees whereby they can express
they can express they can their views and feelings towards the business to the
management.
 Medical allowances- the business intends to be giving its employees medical cover
provided once per year.
 Loans- the business intends to be giving its workers an emergency loan that is to be paid
on monthly basis.
 Salary- the employees salaries are to be paid on time that's is by 30th of every month.

Table 5: Remuneration and incentives

Title Number Monthly pay Allowances Totals

Managing 1 40,000 20,000 60,000

director

Finance 1 35,000 15,000 50,000

20
manager

Farm manager 1 25,000 10,000 35,000

Supervisor 2 10,000 5,000 15,000

Salespersons 4 8,500 5,000 13,500

Security 4 7,000 2,500 9,500

Totals 13 125,500 56,500 183,000

3.5 LEGAL REQUIREMENT

The business will use the following steps to be a legal business in Kenya such as: licenses,
permits and by laws.

3.5.1 LICENSES
The business has to obtain legal requirements before starting its operation from district health
officer. The total amount for licensing is nineteen thousand four hundred shillings (ksh.19,400)
per year. This business licenses obtained helps the business to start and run freely to the public
and also it protects its employees and customers.

3.5.2 PERMITS
The business shall obtain a Trading License, fire clearance license, food hygiene certificate. The
importance of taking a permit is because: it is a legal and mandatory requirement for all
business, the government will be able to collect taxes. The business will be able to expand
especially when one intends to merge with other companies. It will get a permit from district
health officer for health permit municipal council on installation of meter for water
consumption and also Kenya power and lightning for electricity.

3.5.3 BY- LAWS

This is a legal document settings forth key rules and regulations government the corporations
day today operations. They include a heath license which is under the Heath Act Cap 242, which
involves ventilation clean environment clean toilets clean water for drinking and using.

21
Watchmen Compensation Act 237 that will ensure every employee is compensated when they
undertake work accidents occur while in the performance of their duties. The company will
ensure the BY- laws documents are kept up to date or renewed annually. The business intends
to set the following rules for its employees;

Contribution- each employee must contribute to NHIF for his/her benefits.

Time management- employees should keep time in order the business to run smoothly.

Honest- everyone should be honest to what he/she is assigned to do.

Price control- they will ensure standard pricing of products.

3.6 SUPPORT SERVICES

When running a business one needs a support service such as: banking, insurance, consultancy
and legal services.

3.6.1 BANKINK SERVICE

The business will open an account with cooperative Bank

Cooperative Bank

[email protected]

020-277-60-00/0703027000

Rieti house, next to kogo plaza, Eldoret town centre

The business will also open a savings account with KCB Bank

Kenya Commercial Bank

P.O BOX 5197-30100, Eldoret West

0202062258

https://www.kcbgroup.com

KCB building, along Kenyatta Street, Eldoret

22
Writing of telephone shall be done by the Kenya ports authority so that a good communication
network can exist between customers and workers in the business.

3.6.2 INSURANCE SERVICES

The business will need to cover for equipments, its employees and the business itself. The
insurance services will be offered UAP Insurance Co Ltd.

UAP insurance Co. Ltd

Imperial court, Malaba Rd , Eldoret

P.O BOX 707-30100, Eldoret

0532061437

3.6.3 CONSULTING SERVICE

The business will consult Co-operative Bank Manager for tips on how to ensure the business
finances does not drop down. Also, Option Education Agency, located on metro towers 7th,
Oginga Odinga Street, Eldoret.

[email protected]

+254701171665

3.6.4 LEGAL SERVICES

The business will require legal advisories as it will be dealing with different people with
different characters hence the need for a lawyer to represent the business in case of a suit
against or for the business. The services will be offered by Nyairo & Co Advocates.

Nyairo & Co Advocates

KVDA plaza, 5th floor Oloo st, Eldoret

+254-532032424/+254-532032427

P.O BOX 1051-30100, Eldoret

23
CHAPTER FOUR
4.0 PRODUCTION/ OPERATION PLAN
This is a process which shows how the business will involve to have high quality products for
the customers. The manager shall allocate duties to supportive staff to ensure they get enough
skills which will go along way in providing quality products and services. The business will
acquire a license from the district health office for Eldoret upon payment of the requisite fee.

4.1 PRODUCTION FACILITIES AND CAPACITIES

The business will require equipments to assist in production process. Examples of these
equipments are; incubator, egg trays, ventilation fan, laying nest, egg washer, feeder, waterpot,
heater, egg handling nest and brooder machines.

Table 6: production facilities and capacities

Items Quantity Cost Capacity Total cost

Incubator 5 10,000 For 7 persons 50,000

Egg trays 20 1,000 For 7 persons 20,000

Ventilation fan 4 2,500 For 7 persons 100,000

Laying nest 10 2,500 For 7 persons 250,000

Egg washer 3 4,000 For 7 persons 12,000

Feeder 10 1,000 For 7 persons 10,000

Waterpot 10 1,000 For 7 persons 10,000

Heater 5 3,000 For 7 persons 15,000

24
Egg handling 5 2,500 For 7 persons 125,000
nest

Brooder 5 4,000 For 7 persons 20,000

machines

Totals 31,500 612,000

4.1.1 FIRM LAYOUT

The business will have a small office plan floor. This helps create a positive team environment,
employees can do their tasks without wasting time and it's good collaboration and
communication between colleagues. When the business will have prospered in the near future
it shall expand it offices to other larger cities and town across the country.

Figure 5:

4.2 PRODUCTION STRATEGY

The proposed business will be offering various goods and services of high quality and right
pricing. The owner will ensure a consistent stock level is maintained throughout to be able to
compete with the rest of the market.

4.2.1 PRODUCTION DEVELOPMENT DESCRIPTION

The business will have different strategies to provide products. The poultry shall be fed to
ensure a maximum intake of energy for growth and fat production. High quality and well
balanced protein sources produce a maximum amount of muscles. The poultry shall be
monitored, the conditions inside the poultry houses including temperature, humidity and air
quality, clean poultry houses or coops, collect eggs, loading chickens or turkeys onto trucks for
moving to processing plants.

25
4.2.2 COST OF PRODUCTION PER MONTH
The business will use the following cost in the business:

Table 7: cost of production of assets

Assets Number Suppliers Cost Total cost

Chairs 15 Wachira Furnitures 2,000 30,000

Tables 10 Wachira Furnitures 2,000 20,000

Cabinets 5 Wachira Furnitures 10,000 15,000

Van 2 Sparks Motors 200,000 400,000

Land 1/4 acre Optiven enterprise ltd 900,000 225,000

Timber 200 piles Kongo Timberyard 10,000 2,000,000

Locks and nails 1,000 Billy Hardware 2,000 3,000

pieces

Stationary 50 Ereto bookshop 2,000 100,000

Table 8: materials required per month by the business

Materials Number Cost/unit Total Suppliers

Stationary 50 2,000 100,000 Ereto bookshop

Receipts books 5 500 2,500 Ereto bookshop

Ledger books 2 500 1,000 Ereto bookshop

Total 3,000 103,500

26
Table 9: preliminary expenses of the business

Items Cost/month

Electricity installation 8,000

Water deposit 2,000

Renovation 10,000

Rent deposit 15,000

Salaries and wages 125,000

Postage 2,000

Transport 8,000

Totals 155,500

The total cost of production in a month will be calculated as follows:

Total labor cost + preliminary cost + cost of materials bought during the month

612,000 + 170,000 + 103,000 + 3,693,000= shs.4,578,500

4.2.3 METHOD OF PRODUCTION

The business will use the flow production where identical standardized and high quality items
are produced on an assembly line. The aim of this type of production is to:

It will improve work and material flow.

It reduces need for labour skills.

It adds value/ completes work faster.

4.2.4 CHANGES ANTICIPATED IN TECHNOLOGY

The market sector has changed due to introduction of modern technology in the business. The
business will have different types of technology to help in the production of products. The

27
business will use remote sensing which will be used to streamline the data collection process
for both birds and workers, resulting in precision poultry production. Sensors can be used to
help estimate weight and measure crop uniformity. They can also help solve labour issues and
improve worker retention and food safety when used as a wearable sensor for employees.

4.2.5 MATERIAL REQUIREMENT

The business will acquire it's equipments from Marafiki Agrovet which will supply us with
incubators, egg trays, ventilation fan, laying nest, egg washer, feeder, waterpots, heater, egg
handling nest, brooder machines. Marafiki Agrovet will be the main supplier who will supply
monthly, they are more reliable and well known by other businesses in the market sectors.
Zaidika Agrovet will be our alterative supplies when the main supplier is out of reach. Materials
requirements such as stationaries, receipts books, ledger books, they will be supplied by Ereto
bookshop as for furnitures they will be supplied by Wachira Furnitures.

4.2.6 SKILLS REQUIREMENT

Jojo Poultry Farm requires its employees to have the following skills such as:

 Planning
 Negotiation and leadership ability
 Client management skills
 Accounting and financial management skills
 Marketing skills

These skills will help in the improvement of product production of high quality in due time.

4.2.7 PURCHASING AND STOCK CONTROL METHODS

The business will put into consideration the following methods when purchasing a poultry farm
such as:

 Start with online searches.

 Ask the locals.
 Consider the age of the poultry houses.
 Study the cash flow of the farm.

28
 Take a look at the location.

The business will use stock control for poultry processors and wholesalers in the following
ways:

 Raw materials- procurement intake and stock control all managed in real time.
 Work in progress- have complete visibility across production, know when orders change,
the adjustments to make.
 Finished goods- be in control to meet demand. Know the availability of whole birds and
portioned products as finished goods.
 Prevent stock out of date- shorting orders or even being destroyed.

4.3 PRODUCTION PROCESS

The business will be involved in producing products. It will offer after sell services such as
delivery of goods to consumers and also it will give free consultations to its potential
customers.

4.3.1 STAGES OF PRODUCTION

In the poultry farm, there is different phases of chicken production such as:

 Breeder flock- raised to maturity in grandparent growing and laying farms where fertile
eggs are produced.
 Pullet farm- from the fertile eggs and they are sent to breeder houses. They produce
fertile eggs which are sent to hatcheries.
 Hatchery- it is where eggs are left to hatch into chicks.
 Broiler farm- the chicks are sent to broiler farms. Contract farmers care for and raise the
chicks according to company standards.
 Processing/ further- processing broilers after they've reached the desired processing
weight they are caught and taken to processing plants.
 Distribution- the finished chickens products are sent to distribution centers then
transported to customers who sell the chicken to consumers.

29
4.3.2 ALL MATERIAL REQUIRED
In poultry farming the following materials will be used in production process such as:

 Incubator- used for hatching the birds egg in artificial ways.

 Egg tray- used for setting eggs.
 Ventilation fan- used for ensuring maximum ventilation in the poultry farm.
 Laying nest- used for helping birds for laying of eggs.
 Egg washer- used for washing the eggs before delivery.
 Feeder- used for feeding the poultry birds.
 Water pot- used for feeding the poultry birds with water.
 Heater- used to warm up the poultry cage.
 Egg handling nest- used for transporting eggs from one place to another.
 Brooder machines- provide warmth and lightning to the chicks.

4.3.3 EXTERNAL FACTORS AFFECTING PRODUCTION PROCESS

In poultry farming business they are factors which affect Poultry production process such as:

 Nutrition effects- feed is the most important input for intensive poultry production and
availability of low priced high quality feeds is critical for the expansion of the poultry
industry.
 Good hygiene- maintain clean sheds surroundings and equipment. It is important not
only for litter and manure management but also for bio security.
 Record keeping- this is a good management practices that allow the identification and
solution of problems.
 Stockpersonship- farmers and their staff play critical role in booking after the birds and
maximizing productivity.
 Breed effects- intense genetic selection for economically important traits have been
instrumental in increasing productivity and efficiency of the broiler industry.

4.3.4 WAYS OF MINIMIZING EXTERNAL EFFECTS

The business will ensure to know how to handle these external effects in production process.

30
 The business should ensure to maintain good hygiene in surroundings equipments and
sheds for the poultry birds.
 The business should ensure they keep good records for the business which will identify
and solve problems when they occur.
 The business should ensure the farmers and staff look after the birds and maximize
productivity.
 The business should ensure the poultry birds are fed accordingly for intensive poultry
production.

4.4 REGULATIONS AFFECTING OPERATION

The will have different regulations for effective running of the business. They will be discussed
below those regulations of the business.

4.4.1 HEALTH REGULATIONS

The business will acquire a Health permit from the District Health Officer. This Health Act
provides safety of the workers where by the staff should by physically fit and in good health
condition on handle good items. Finger like staff will require the good certificate. The business
will look into these three components: water hygiene, vaccination and bio security.

 Water hygiene- it is vital for better productivity in broiler farming. Water should be
clean properly sanitized and cold as it is a source of water born infections.
 Vaccination- effective vaccination depends on vaccine strain vaccination schedule and
birds immunity status. To get better response to vaccination, immunity status of bird
will play a crucial role.
 Bio- security- it is the set of management practices which when followed correctly
reduces the potential for introduction and spread of disease causing organisms onto and
between sites. There are three levels: conceptual, structural and operational bio-
security.

4.4.2 SAFETY REGULATIONS

The business shall ensure the safety of it's employees in the business. The Act of Health and
Safety ensures the safety of all employees. The business will place three first aid kits within the

31
business premises, four fire extinguishers in the premises and there will be protective clothes
and years for workers in good numbers.

4.4.3 ENVIRONMENTAL REGULATIONS

Under the Act of Environment and Management Coordination Act (EMCA) 1999 is the operative
law on matters concerning the environment.It's sets out general principles creates
administrative bodies layouts environmental quality standards and provides for the inspection
enforcement and punishment of environmental factors. It compliments other sectoral laws on
water, land, forest, mining and wildlife.

32
CHAPTER FIVE
5.0 FINANCIAL PLAN
The financial plan in the business helps to study the progress of the business. It is going to help
the business to know the growing trend of the business and to know the progress of the
business whether its operation is on profit or loss. The business will acquire term loans,
equipment loans and trade credits. This financial plan will tell whether the business will be able
to pay the loan borrowed and also which part of the business needs improvement. The opening
capital of the business will be shs.800,000 which will be as follows:

Personal savings= 200,000

Family contribution= 350,000

Trade credits= 70,000

Term loans= 100,000

Equipments loans= 80,000

Total = shs.800,000

5.1 PRE- OPERATIONAL COST

These are the initial cost that a business expects to incur at or before the commencement of it's
operations. They vary with the expenditure.

Table 10: pre- operational cost

Details Amount

Registration 19,392

Advertisement 40,000

Postal service 24,000

33
Telephone 11,550

Rent 180,000

Water 24,000

Banking 1,000

Insurance 17,064

Total 317,006

5.2 PRO- FORMA BALANCE SHEET

Working capital is the difference between the current asset and current liabilities of the
business. A good business should ensure that assets are higher than liabilities so as to get
reasonable profits as the business should show the ability to meet it's financial obligations.

5.2.1 PRO- FORMA BALANCE SHEET FOR YEAR ONE

Table 11: balance sheet year one

Jojo Poultry Farm

Balance sheet

As at 31st Dec 2026

Assets Kshs. Kshs.

Current assets

Cash at hand 500,000

Debtors 100,000

Stock 46,000

34
Cash at bank 100,000

Total Current assets 746,000

Fixed assets

Machinery & 898,000

equipment
65,000
Furniture
300,000
Land
454,800
Total fixed assets

Total assets 1,200,800

Liabilities

Creditors 15,000

Bank overdraft 184,400

Total current 199,000

liabilities

Bank loan 10,000

Capital employee 50,000

Total long term 60,000

liabilities

Total liabilities 1,200,000

35
5.2.2 PRO- FORMA BALANCE SHEET FOR YEAR TWO
Table 12: balance sheet year two

Jojo Poultry Farm

Balance sheet

As at 31st Dec 2027

Assets Kshs. Kshs.

Current assets

Cash at hand 700,000

Debtors 80,000

Stock 50,000

Cash at bank 50,000

Total current assets 880,000

Fixed assets

Machinery and equipment 90,000

Furniture 65,000

Land 300,000

Total fixed assets 455,000

Total assets 1,335,000

Liabilities

Creditors 100,000

36
Bank overdraft 135,000

Total creditors liabilities 235,000

Bank loan 150,000

Capital employees 60,000

Total long-term liabilities 210,000

Total liabilities 1,335,000

5.2.3 PRO- FORMA BALANCE SHEET FOR YEAR THREE

Table 13: balance sheet year three

Jojo Poultry Farm

Balance sheet

As at 31st Dec 2028

Assets Kshs. Kshs.

Current assets

Cash at hand 90,000

Debtors 90,000

Stock 65,000

Cash at bank 50,000

Total current assets 295,000

Fixed assets

37
Machinery and equipment 100,000

Furniture 65,000

Land 300,000

Total fixed assets 465,000

Total assets 760,000

Liabilities

Creditors 16,000

Bank overdraft 290,000

Total current liabilities 306,000

Bank loan 170,000

Capital employee 70,000

Total long-term liabilities 240,000

Total liabilities 760,000

5.3 WORKING CAPITAL

Working capital is current assets less current liabilities

W.C= C.A - C.L

Table 14: working capital

Jojo Poultry Farm

Current assets Year 2026 Year 2027 Year 2028

Cash at bank 100,000 50,000 50,000

38
Cash at hand 500,000 700,000 90,000

Debtors 100,000 80,000 90,000

Stock 46,0000 50,000 65,000

Total current assets 746,000 880,000 395,000

Less current liabilities

Bank overdraft 184,000 155,000 16,000

Creditors 15,000 100,000 290,000

Working capital 546,600 645,000 89,000

Totals 199,400 235,000 306,000

5.4 CASH FLOW PROJECTION

The financial plan shall give provide the business with cash flow for each year of business.

5.4.1 CASH FLOW PROJECTION FOR YEAR 2026

Table 15: cash flow for year 2026

Cash Jan Fe Mar Ap May Jun July Aug Sept Nov Dec Total
in b r e
receip
t

Loans 30,73 - 38,96 - 20,00 - 30,73 - 10,0 15,00 38,96 184,40

3 7 0 3 00 0 7 0

Sales 135,0 40, 60,00 50, 100,0 120 110,0 180, 130, 150,0 160,0 1,235,
00 00 0 00 00 ,00 00 000 000 00 00 000

39
0 0 0

Debto 50,00 50, - - - - - - - - - 100,00

rs 0 00 0
0

Disc. 5,000 5,0 5,000 5,0 5,000 5,0 5,000 5,00 5,00 5,000 5,000 55,000
receiv 00 00 00 0 0
ed

Paym 145,0 90, 120,0 10 14,46 125 115,0 191, 19,0 14,00 109,0 1,047,
ents 000 00 00 5,0 0 ,00 00 000 00 0 00 460
0 00 0

Purch 40,00 55, 40,00 60, 7,500 8,0 4,500 6,50 8,00 4,000 4,000 237,50
ases 0 00 0 00 00 0 0 0
0 0

Salari 183,0 18 183,0 18 183,0 183 183,0 183, 183, 183,0 183,0 2,013,
es & 00 3,0 00 3,0 00 ,00 00 000 000 00 00 000
wages 00 00 0

Credit 2,600 2,0 2,000 3,0 2,000 1,5 3,000 - - 2,000 1,500 19,600
ors 00 00 00

Disc. 2,000 1,0 1,000 80 1,000 1,0 1,000 1,00 1,00 1,000 1,000 10,800
Allow 00 0 00 0 0
ed

Cash 8,600 17 133,0 16 75,90 95, 103,5 26,5 79,0 60,00 49,50 978,30
flow 8,0 00 8,8 0 500 00 00 00 0 0 0
00 00

Bal 0 8,6 186,6 31 48,84 564 659,8 763, 789, 979,3 1,032 220,00

40
b/d 00 00 9,6 0 ,30 00 300 800 00 9,300 0
00 0

Bal 8,600 18 319,0 48 564,3 650 763,3 979, 979, 979,3 1,039, 220,00
c/d 6,6 00 8,0 00 9,8 00 800 300 00 300 0
00 00 00
0

5.4.2 CASH FLOW PROJECTION FOR YEAR 2027

Table 16: cash flow for year 2027

Cas Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
h
flo
w

Bal 684,00 685 705,00 720,50 779,50 825,00 837,00 828,5 839, 856 912, 958,0
b/d 0 , 0 0 0 0 0 00 500 ,00 500 00
000 0

Sale 90,000 100 110,00 130,00 150,00 100,00 90,000 110,0 100, 150 140, 160,0
s ,00 0 0 0 0 00 000 ,00 000 00
0 0

Deb - 20, 15,000 40,000 30,000 - 20,000 10,00 30,0 30, 30,0 30,00
tors 000 0 00 000 00 0

Ban 10,000 5,0 30,000 - 45,000 30,000 15,000 20,00 10,0 15, 15,0 40,00
k 00 0 00 000 00 0

Tot 784,00 810 860,00 890,50 1,004, 955,00 962,00 968,5 979, 1,0 1,09 1,188
al 0 ,00 0 0 500 0 0 00 500 51, 7,50 ,000
infl

41
ow 0 000 0

Elec 3,000 3,0 3,000 2,500 3,000 4,000 4,000 4,000 4,00 2,5 3,00 3,000
trici 00 0 00 0
ty

Wa 1,500 1,5 1,500 1,500 1,500 ,1500 1,500 1,500 1,50 1,5 1,50 ,1,50
ter 00 0 00 0 0

Sala 50,000 50, 50,000 50,000 50,000 50,000 50,000 50,00 50,0 50, 50,0 50,00
ry 000 0 00 000 00 0
&
wag
es

Tra 5,000 6,0 4,500 7,000 6,500 7,500 8,000 8,500 8,00 9,5 10,0 10,50
nsp 00 0 00 00 0
ort

Exp 40,000 45, 40,000 50,000 60,000 55,000 70,000 60,00 65,0 75, 75,0 80,00
ens 000 0 00 000 00 0
es

Tot 105 139,50 111,00 179,50 118,00 133,50 129,0 123, 138 139, 145,0
al 99,500 ,50 0 0 0 0 0 00 500 ,50 500 00
0 0

Net 685,00 705 720,50 779,50 825,00 837,00 828,50 839,5 856, 912 958, 1,043
flo 0 ,00 0 0 0 0 0 00 000 ,00 000 ,000
w 0 0

5.4.3 CASH FLOW PROJECTION FOR YEAR 2028

Table 17: cash flow for year 2028

42
Cash Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
flow

Bal 1,043 867, 625, 693, 766, 607, 607, 708, 833, 858,0 858, 897,0
b/d ,000 500 000 000 000 500 500 000 000 00 500 0

Sales 54,00 100, 110, 130, 120, 90,0 155, 170, 160, 120,0 140, 110,0
0 000 000 000 000 00 000 000 000 00 000 00

Debt - 40,0 30,0 10,0 30,0 30,0 30,0 30,0 30,0 30,00 20,0 30,00
ors 00 00 00 00 00 00 00 00 0 00 0

Bank 10,00 - 20,0 40,0 45,0 - 15,0 20,0 10,0 15,00 25,0 40,00
0 00 00 000 000 000 00 0 00 0

Total 979,0 727, 785, 873, 721, 727, 807, 898, 968, 1,043 998, 1,077
00 500 000 000 000 000 000 000 000 ,000 000 ,000

Electr 3,000 3,00 2,50 3,00 4,00 4,00 4,00 4,00 2,50 3,000 3,00 3,000
icity 0 0 0 0 0 0 0 00 0

Wate 1,500 1,50 1,50 1,50 1,50 1,50 1,50 1,50 1,50 1,500 1,50 1,500
r 0 0 0 0 0 0 0 0 0

Salary 50,00 50,0 50,0 50,0 50,0 50,0 50,0 50,0 50,0 50,00 50,0 50,00
& 0 00 00 00 00 000 00 00 00 0 00 0
wage
s

Trans 7,000 8,00 7,50 8,00 9,00 9,50 9,00 10,0 11,0 10,50 12,0 13,00
port 0 0 0 0 0 0 00 00 0 00 0

Expe 50,00 40,0 30,0 45,0 50,0 55,0 65,0 70,0 70,0 75,00 80,0 85,00
nses 0 00 00 00 00 00 00 00 00 0 00 0

Total 111,5 102, 92,0 107, 113, 120, 129, 135, 136, 139,5 146, 152,5

43
00 500 00 000 500 000 500 500 500 00 500 00

Net 867,5 625, 693, 766, 607, 678, 768, 833, 858, 897,0 924, 607,0
flow 00 000 000 000 000 000 000 000 500 00 500 00

5.5 PRO-FORMA INCOME STATEMENT

This income statement shows how much money the business will have earned during three
years of accounting period. It will show the profitability of the enterprise to the entrepreneur
potential customers and potential financiers. It will also act as a tool of monitoring the actual
performance of the enterprise against the projected performance. It is also called trading, profit
and loss account.

Table 18: pro forma income statement

Item Year 1 Year2 Year 3

Sales 1,235,000 165,700 201,600

Cost of sales 123,500 16,570 20,160

Gross profit c/d 1,111,500 149,130 181,440

Gross profit b/d 111,150 14,913 18,144

Expenses

Wages & salaries 1,506,000 1,506,000 1,506,000

Water 104,400 104,400 104,400

Electricity 96,000 96,000 96,000

Telephone 138,600 138,600 138,600

Advertisement 480,000 480,000 480,000

44
Rent 284,400 284,400 284,400

Total expenses 2,609,400 2,609,400 2,609,400

Net profit before tax 3,832,050 2,773,443 2,808,984

Tax 10% (383,205) (277,344) (280,898.4)

Net profit after tax 3,448,845 2,496,099 2,528,085.6

5.6 BREAK EVEN ANALYSIS

5.6.1 BREAK EVEN ANALYSIS FOR YEAR ONE
Table 19: break even analysis for year one

ITEM COST

Variable cost/ unit 10

Selling price/unit 30

Fixed cost 20,000

Total cost 347,000

a) BEP in units= fixed cost/contribution unit

20,000/10= 200 units
b) BEP in value= fixed cost/contribution unit *selling unit
20,000/10 * 30 = 60,000
c) Contribution sales ratio = contribution unit/ selling price * 100
10/30 * 100= 3.3%
d) Number of units for target profit = fixed cost+ target profit/ contribution unit
20,000+48,845/10= 6,884.5 units
e) Sales for target profits = fixed cost + target profit/contribution unit * selling price
20,000+48,845/10= 6,884.5

45
5.6.2 BREAK EVEN ANALYSIS FOR YEAR TWO
Table 20: break even analysis for year two

COST ITEM

Variable cost/unit 100

Selling price/unit 300

Fixed cost 30,000

a) BEP units= fixed cost/ contribution unit

30,000/10= 3000 units

b) BEP in value = fixed cost/ contribution unit * S.P unit

30,000/10 * 30= 90,000
c) Contribution/sales ratio= contribution unit/ SP * 100
10/30 * 100= 3.3%
d) Number of units for target profits= fixed cost +target profits/contribution unit
30,000 + 96,099/10= 12,609.9
e) Sales for target profit= fixed cost + target profits/contribution units * SP
30,000 + 96,099/10 * 30= 318,297

5.6.3 BREAK EVEN ANALYSIS FOR YEAR THREE

Table 21: break even analysis for year three

COST ITEMS

Variable cost/ unit 10

Selling price/ unit 30

46
Fixed cost 40,000

a) BEP in units= fixed cost/contribution unit

40,000/10= 4000 units
b) BEP in values= fixed cost/contribution unit * SP
40,000/10 * 30= 120,000
c) Contribution/sales ratio= contribution unit/selling price * 100
10/30 * 100= 33.3%
d) Number of units for target profit = fixed cost + target profit/contribution unit
40,000 + 28,085/10= 32,085
e) Sales for target profit= fixed cost +target profits/ contribution unit * Sp
40,000 + 28 085/ 10 * 30= 204, 255

5.7 DESIRED FINANCING

Table 22: desired financing

ITEMS AMOUNT

Pre- operational cost 317,006

Working capital 546,600

Fixed assets 454,800

Total 1,318,406

5.8 CAPITALIZATION
Table 23: capitalization

ITEMS AMOUNT

Owners contribution 200,000

Borrowed funds 250,000

47
Total 450,000

5.9 PROFITABILITY RATIOS

Table 24: profitability ratio

Formulae Year one Year two Year three

a) Gross profit 1,111,150/1,235,000 149,130/165,700 * 181,440/201,600 *

ratio= * 100= 90% 100= 90% 100= 90%
G.P/Sales*100

b) Net profit 3,448,845/1,235,000 2,496,099/165,700 * 2,528,086/201,600 *

ratio= * 100= 279.2 100= 1,506 100= 1,254
N.P/sales*100

c) Return on 3,448,845/4,064,445 2,496,099/3,161,099 2,528,086/3,328,086

equity= * 100= 85 * 100= 79 * 100= 76
N.P/owners
equity*100

d) Assets 1,235,000/1,200,800 165,700/1,335,000 201,600/760,000 =

turnover= = 1.028 =0.124 0.265
sales
revenue(total
sales) /
Assets(CA+FA)

e) Quick ratio= 746,000/199,400 * 880,000/235,000 * 295,000/306,000 *

currents 100=374.1 100= 374.5 100= 96.40
assets –
stock(C.S) /
current

48
liabilities

f) Liquidity 746,000/199,400= 3.7 880,000/235,000= 3.7 295,000/306,000=

ratio= current 0.96
assets/current
liabilities

49