NAME OF THE BUSINESS: GEOTECH SPARES AND

SERVICES

NAME OF THE DOCUMENT: BUSINESS PLAN

NAME OF THE PRESENTER: NYANDONGE GEORGE

CENTER NAME: KISII NATIONAL POLYTHECHNIC

COURSE NAME: ARTISAN CERTIFICATE IN MOTOR
VEHICLE MECHANICS

COURSE CODE:0103

INDEX NO: 7031011306

SUPERVISOR: MR MOGENDI

PRESEENTED TO: KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILMENT OF THE AWARD OF
ARTISAN CERTIFICATE IN MOTOR VEHICLE MECHANICS

SERIES: JULY 2020

i
ii
 DECLATION

I declare that this plan is my personal work and has never been presented to Kenya national examination
council by anybody.

NAME: NYANDONGE GEORGE

SINATURE:………………………………

Date………………………………………….

This plan was submitted to Kenya national examination council (KNEC) through Kisii National
Polytechnic for the award of certificate in automotive engineering.

NAME: MR MOGENDI……………..……………………………………………………………………

SIGNATURE:…………………………………………………………………………………………

DATE……………………………………………………………………………………………………….

iii
 Dedication
This is a special dedication to parents, guardians and also my cousins for their support of
educating me. I really thank them for their financial support which enabled me to sail through
this project smoothly. My sincere thanks goes to my brother for the conducive environment they
rendered during this crucial period. I also thank my friends and my fellow students for their
assistance in class.

iv
 ACKNOWLEDGEMENT
I sincerely acknowledge my entrepreneurship lecturer MR MOGENDI for his guidance in
writing this project. The acknowledgment goes to the following people who helped me,
encouraged and worked hard to ensure that the writing of this project was successful.
The entire family of Kisii National Polytechnic who assisted me in one way or other deserves the
recognition
Mr Mogendi and chief business teacher who gave us enough aid on how to carry the research
and complete the necessary report.

v
Table of Contents
DECLATION....................................................................................................................................iii
DEDICATION.....................................................................................Error! Bookmark not defined.
ACKNOWLEDGEMENT....................................................................................................................v
CHAPTER 1.......................................................................................Error! Bookmark not defined.
1.0 Business description.............................................................................................................2
1.1 Business name......................................................................................................................2
1.2 Business location..................................................................................................................2
1.3 Forms of business ownership...............................................................................................4
1.4 Type of the business.............................................................................................................4
1.5 Production and service.........................................................................................................4
1.6 Justification of the opportunity............................................................................................5
1.7 Industry................................................................................................................................ 5
1.8 Goals of the business........................................................................................................... 5
1.9 Entry and strategy................................................................................................................6
CHAPTER TWO............................................................................................................................... 7
2.0 Market plan..........................................................................................................................7
2.1 Customers............................................................................................................................ 7
2.2 Market shares...................................................................................................................... 7
2.3 Competition......................................................................................................................... 8
2.4 Advertising and promotion strategy.....................................................................................8
2.5 Pricing strategy.....................................................................................................................9
2.7 Distribution strategy............................................................................................................ 9
CHAPTER THREE...........................................................................................................................10
3.0 Organization and management..........................................................................................10
3.1 Organization chart..............................................................................................................10
3.2 Business manager and qualification...................................................................................10
3.2.1 Supervisor (age 24-34 years).......................................................................................11
3.2.2 Mechanics....................................................................................................................11
3.2,3 Salesman (aged 30-35 years).......................................................................................11
3.2.4 Secretary (age 23-28 years).........................................................................................12

vi
 3.2.5 Security officer (aged 26 and above)...........................................................................12
3.3 RECRUITMENT, TRAINING AND PROMOTION....................................................................12
3.3.1 Recruitment.................................................................................................................12
3.3.2 Training........................................................................................................................13
3.3.3 Promotion....................................................................................................................13
3.4 Remuneration and incentives............................................................................................ 13
3.5 LICENSES PERMIT AND BY-LAWS........................................................................................14
3.6 SUPPORT SERVICES............................................................................................................ 14
CHAPTER FOUR............................................................................................................................ 16
4.0 PRODUCTION AND OPERATION PLAN................................................................................16
4.1 Production designing and development.............................................................................16
4.2 PRODUCTION FACILITIES AND CAPACITY...........................................................................16
4.3 PRODUCTION STRATEGY....................................................................................................17
4.4 GENERAL LAYOUT (working layout)....................................................................................18
4.5 PRODUCTION PROCESS......................................................................................................19
4.6 REGULATIONS AFFECTING OPERATIONS............................................................................19
CHAPTER FIVE.............................................................................................................................. 20
5.0 Financial plan..................................................................................................................... 20
5.1 Pre- operation of costs.......................................................................................................20
5.2 WORKING CAPITAL.............................................................................................................20
5.3 GEOTECH SPARES AND SERVICES MART.............................................................................21
5.4 PROFORMA INCOME STATEMENT FOR THE YEAR ENDED 31ST DEC 2020..........................24
5.5GEOTECH SPARES AND SERVICES MART BALANCE SHEET AS AT 31 ST DEC 2020.................25
5.6 BREAK-EVEN POINT FOR 2020............................................................................................25
5.7 Profitability ratio for 2020..................................................................................................27
5.8 DESIRED FINANCING...........................................................................................................30
5.9 PROPOSED CAPITALIZATION.............................................................................................. 31

vii
 EXACATIVE SUMMARY
Chapter one
The name of the business will be.GEOTECH SPARES AND SERVICES will be located along
Nakuru -Eldoret road.
The firm will be dealing with repair of vehicles and selling of spare parts. This business will be
under sole proprietorship who will mainly be handling customer regardless of their status, race
and even tribe as well
CHAPTER TWO
The business will be handling customer, institutions, governmental organization, travelers and
other customers that will be available.
CHAPTER THREE
This part contains the managerial details and the qualifications of workers and their payment
CHAPTER FOUR
This part contains recruitment of workers and the qualifications of workers that are needed and
the training of work and stuff member
CHAPTER FIVE
It contains financial plan of the business and preparation cost of the business and working capital
for workers

1
 CHAPTER ONE
1.0 Business description
1.1 Business name
The business name wills be GEOTECH SPARES AND SERVICES..
I give it the above name since it shall be dealing with manual and modern vehicles which are
automatic and may easily repaired by old mechanics which are skilled.
1.2 Business location
The business shall be found along Nairobi -nature highway.it located in a strategic position
where by all prospective customers can view the building from the main road.It's found directly
opposite Narobi total filing station.

ADDRESS AND PHONE NUMBER GEOTECH SPARES AND SERVICESMARTT

P.O BOX 1144
NAIROBI

2
 MAP SHOWING THE BUSINESS LOCATION.

SHABAB

POST OFFICE
Total

NAROBI to NAKURU
LANGAT
STAGE
GEOTECH SPARES AND

HOUSES

Nairobi level
5 hospital

THE MAP SHOWS THE BUhhhhhhhSINESS LOCATION.

3
1.3 Forms of business ownership

The business will be of sole proprietorship,where by it will be managed by Nyandonge George

but it will get support from loans family and friends.
Since it is a sale proprietorship, it requires few legal informalities and also there is close
supervision and the owner is indigent for any plans to put it in business and its entitled for all
benefits and profits. Meanwhile there is direct contact with customers will be taken into
consideration than the business forms. Owning to skills acquired and acknowledgement during
training and attachment and one year’s working experience and help to boost good service of the
customers
1.4 Type of the business
The business will be of Geotech spares and services and large scale spares parts to serve in the
whole of Nairobi
region.
1.5 Production and service
(a) Products
 New piston
 New clutches
 New brakes shoes and linings
 Good capacitors and resistor
 Cylinder head
 Gaskets
 New stator motors
(b)Service
 Car washing services
 Wiring panel beating and spray painting
 Tyre repair and inflation
 Car painting space
 Battery charging services
 Assembling wheel balance and alignment
 Free refueling of vehicle and other after sales services after opening other garage
Geotech spares and services will ensure that the products are legal procured from the industry
that manufactures them. Professional clearance and advice will be given about valves repair and
vehicle servicing and maintenance. All services given is geared forward satisfaction of
customer’s needs.

4
1.6 Justification
The target population if 40% approximate potential customers are increasing in the area due to
urbanization needing products and services form garage which is and indicator of the business
busy every now and again.

The surrounding seems to have average income from civil servants like schools, teachers,
lectures, nurses and district officer. These motivates the business to continue offering
standardized services and spare parts ever been offered within the town area.

1.7 Industry
The business falls in the motor vehicle industry of which an entrepreneur has skills and man
power the under mentioned products and services offered are new

Modern kind of technology shall be employed in providing best products to customers and hence
this can only be achieved by using technical skills acquired. Many people are in this sector due to
the following reasons:

 Lack of government commitments to this sector.

 High production cost to poor infrastructure which results to unavailability of raw
materials
 Inadequate research and development skills and efforts in the economy to promote
innovation and developments new technology
 Abiding laws and regulations e.g. licensing taxation of commodities requiring
payment

The sector as an indication of improving in future, they can be achieved by keeping pace with
globalization of the profession and technology changes. Because of charging day to day
competition is increasing in automobile thus improving the quality of the product.

1.8 Goals of the business

The goals of the business are important since they are help in running and maintaining the
business progress and retaining clients to the business, this includes;
 To earn profits for my business
 To provide quality and excellent products to customers hence attracting more by lending
motor vehicle spare parts

5
  Creation of job opportunities
 To ignore the living standards of people
 Decentralization of goods and commodities to the local people

1.9 Entry and strategy

1. Entry strategy
During the survey it was noted that competitors have weakness of offering poor quality products
and service using simple skills acquired and outdated technology particularly machines
contributes to the problem. In so doing, they change exorbitant price which leads to downfall of
the business. Therefore GEOTECH SPARES AND SERVICES has weaknesses and start a
garage which complete and overcome the problem.
Through that ways have to put forward to minimize the problem are:
 Training of staff workers though vocational Centre for orientation on customer care
(public relation) cost management and business management.
 During the opening a ground ceremony shall be conducted to give a clear vision of what
to be offered in the garage is good quality.
 For the first month of opening, prices be reduced at a certain percentage for fairness to
customers. By doing these of offering better products at right price, customers shall be
attracted, thus maintain the business to good standard of performance.
2 Growth strategy
The business shall control its growth strategy in future through, increasing the number of
essential machines, tools and equipment, stock of spares parts and also increasing technical
skilled staff.
The business will expand its branches to enable it offer better service to other people elsewhere
and this will enable it to complete with other enterprises. However, the business will extensively
advertise its operations through mass media, billboards and posters along limuru -Nairobi route

6
 CHAPTER TWO
2.0 Market plan GEOTECH SPARES AND SERVICES been able to define the market
problems and opportunities by identifying anticipating and satisfying customers’
requirements.
2.1 Customers
The enterprises have identified potential customers who are able and willing within awendo area
area in so doing they are based on groups according to their knowledge and attitudes will range
from:
 Luxury car owners (commercial customers)
 Institutional customers e.g. schools, hospitals and churches
 Government agencies will also be targeted.
These potential customer’s majority are high earners due to professions they possess and they
range between 25 years and 40 years in age. this will enable business to benefit from them for a
long time. The business will sell both services and products to them and also advise them where
necessary. Since the customers are able, willing and needy for products they need more
attraction through
i. Fair price
ii. Offering quality products and service
iii. Delivery data should be adhered to.
The customers around the area are
2.2 Market shares
During the market survey carried out it was confirmed that, there is good business opportunity
in the market. The enterprises therefore, will occupy 30% of the approximated population in the
market shares in the process of interviewing the customers, the results were tabulated which
clearly shows the total targeted in the line of business including those in favor and estimated
market share.
Interviews Estimate In favor Not in favor Percentage of
Total shares total in market
favor
Institutional 3000 1000 2000 1000/3000*100
customer = 33.3%
Commercial 2000 800 1200 800/2000*100
customers =40%
Government 3400 570 1000 570/3400*100
agencies =17%

From the interview carried out it was Cleary that half 0f the total market population shall buy
from the business. This is due to the fact that offering the quality products at a reasonable price

7
than other existing business in the area. Therefore, the estimated market shares are realized to be
41.1% which generally a good start of an enterprise.
2.3 Competition
The potential competitions of the business are highly learned and experienced because they have
worked for a long time but they are specified to petrol vehicles only. They don’t offer training
facilities to mechanics and they use the old technology. They also don’t offer old technology in
rendering services and they sell [products of the old technology. They also don’t offer credit
services and due to lack of expertise they overcharge customers due to this their business is not
stable and customers keep on charging garages. Their garages have no enough places for parking
while being served or waiting to serve. The size of the proposed business is large enough to care
for its customers’ needs while the competitors’ business size is small.
2.4 Advertising and promotion strategy
Advertise
This the communication through mass i.e. radio, TV and should be done clearly in order to be
known everywhere in the country. There are also selected ways of advertising products and
services to the customers.
a) Bill-boards- it plays major role in advertising they will be placed where all customers can
view
b) posters should also be placed nearby shops, stations, roadside and be printed in strategic
points within and out of the area. this is an efficient method for infirmity to the public about the
business and the kinds of products being offered
c) signboard also will be placed just in front of the garage entrance to introduce customers to the
services being offered by modern workers.
Promotions
The proposed business will have a very potential complain to compete with other competitors
and attract more customer’s promotion method will be used by the b/s as a way of offering
products and services more appearing to customer’s free samples and services shall be given out
when products are brought they include: calendar buckets of omo and bar soaps. the following
techniques shall be used by
“modern work limited in promoting their business
i. Printed calendar – this company’s business name whereby business activities are started
thus promoting the business.
ii. Packaging – goods are packed in a presentable form to attract customers.
iii. After sale services – customers buying from the business are provided with transport
facilities when in need.

8
2.5 Pricing strategy
The management should employ certain policies to price the product and services to fit all
customers. The overheads and expenses will put into consideration during pricing. The expenses
which will be incurred in either purchases of products materials, labor, cost, transport, electricity
and rent will be considered.
The business will sell its products and services direct to customers and proper approach will be
encouraged to satisfy customers in the target.
2.7 Distribution strategy
The business will sell its products to customers in wholesale price when goods are bought in
large quality. this will be done to retain its customers and sell goods in time. The business will
offer services to customers and so vehicle repair will be carried out at the garage. Those vehicles
that collapses down or break down and cannot drive to the garage, there will a break down
vehicle that will be towing them to the garage for repairs. The business will adopt road to
transport goods from supplies where there is no any other way for transportation in the area.
There will be charges towing that vehicles.

9
 CHAPTER THREE
3.0 Organization and management
The organization shall employ the manager, supervisor, mechanics, salesman, security officer
and secretary who are experienced from relevant places.
3.1 Organization chart

manager

Supervisor

mechanics Salesman secretary Security officer

3.2 Business manager and qualification.

Business manager (will be carried out by the owner)
NYANDONGE GEORGE
P.O box 1144
NAIROBI
Duties
 Create mutual relationship between employees
 Licensing the business
 Giving out remunerations to all employees
 Organizing training to all employees
 Should plan on how make use of facilities available like manpower
 Handling the activities of the business by controlling the purchase of products in the
garage.
Experience
The business manager has experience form relevant firm particular FAW E.A motors co. ltd.
Nevertheless, gained knowledge from the institutional pertaining to enterprise.

10
 Qualities
The manager has a certificate in mechanical engineering from Kisii National Polytechnic
He has also done an entrepreneur skills and management
Has also a good relationship to its customers and the rest of the employees
3.2.1 Supervisor (age 24-34 years)
Duties
 Controlling overall standard of work
 Assist with technical problem and ways of solving matters where necessary
 Taking steps to ensure that current legal requirements are deserved
 Control garage discipline and details of working condition
Experience
Have an experience of more than one year relevant places pertaining to management of business
activities.
Qualification
 Age 24-34 years
 Hold a certificate level from a reorganized institution to be able to understand the
technical aspects of the job
 Familiarly with modern development in the field
3.2.2 Mechanics.
Duties
 Able to read both English and Kiswahili
 Repair and servicing the vehicle
 Ensuring efficient and effective of materials equipment’s and tools
Experience
Should have done the same job from different garage as well as attached from a relevant firm
Qualities
 Ability to work with minimum supervision
 Should offer services according to customer’s need
3.2,3 Salesman (aged 30-35 years)
Qualities
 Handling customers with courtesy
 Keep daily sales records
 Should meet these required by the organization

11
Experience
Should have experience in accounting to be able to balance business records
Qualifications
 Communicate both English and Kiswahili
 Should have a certificate from reorganized institution
 Honest as pertained book records
 good public relation
3.2.4 Secretary (age 23-28 years)
Duties
 Typing letters and other documents from the organization
 Keeping records for the organization
 Receiving calls for the organization
Experience
Should have experience of more than 1 year
Qualification
 well trained in secretarial and computer
 good communication skills
 honest to customers and the rest of staff
3.2.5 Security officer (aged 26 and above)
Duties
 ensure there is security at business premises
 take care of customer’s properties
Qualifications
 a Kenyan citizen
 courageous
 have an ‘o’ level certificate
 good communication skills
3.3 RECRUITMENT, TRAINING AND PROMOTION
3.3.1 Recruitment
The firm manager will be responsible for recruiting of employees and other personnel
The methods to be used are;
 advertisement through news media and chief Barraza’s
 publishing posters indicating all the requirements needed

12
  friends and relatives of present employees
The following needs to be filled: job tittle, work to be fit, job knowledge, qualifications and
experience then address

The manager,
GEOTECH SPARES AND SERVICES
p. o box 1144
NAIROBI

3.3.2 Training
The training programmer will be knowledge skills to employees to bring them to a standard
where they can carry out tasks effectively.
a) making arrangements with training institutes
b) Demonstration method – this will be employed to give employee to get manual skills which
will be permanent
c) Written instruction method – this will be used to give employees an information to be used
in future
d)attending shows when needs arises so as they can learn new technologies about the business
3.3.3 Promotion
It will be conducted on different bases and the criteria used to promote the staff will be
developed system. Lines of promotion should be clearly defined and real promotion policies
should be formulated.
However, bases for promotion from within will be decided by considering productivity of
employee’s skills, attendance and punctuality records, security and qualifications of employees.
3.4 Remuneration and incentives
The business shall pay its employees a good amount of money which will enable them to work
extra hard as pertained to jobs.
Organization Monthly salary Annual salary
Structure
Manager 10000 120000

Supervisor 8000 96000

Salesman 5000 60000

13
Mechanic 3200 38400

Secretary 3000 36000

Security officer 2500 30000

Total Kshs. 31,700 Kshs. 380,400

Salary scale
The business also shall give workers incentives to increase morale and motivating them in the
business.
Salary –good salaries will be given to workers to maintain attract and retain employees in the
firm.
Allowances will be given out to every worker to motivate them work hard in jobs.
Guidelines for establishing wages and salaries will be set by checking on jobs in industry.
3.5 LICENSES PERMIT AND BY-LAWS
Licenses
Will be obtained from the ministry of trade and industry at a cost Kshs. 2500 which shall be
renewed yearly
By- laws
The organization shall follow laws and acts as far as the as business is concerned.
Disposal of waste products and working conditions
Health act: workers given an off day when sick
worker’s compensation act: workers will be compensated increase of accidents
3.6 SUPPORT SERVICES
The business shall acquire services from professional bodies which will facilitate and guarantee
prosperity. These include receiving and borrowing money when need for expansion.
Insurance companies
Plan African insurance in Nakuru town, shall offer insurance services to ensure the business is
secure in terms of fire and theft.

14
15
 CHAPTER FOUR
4.0 PRODUCTION AND OPERATION PLAN
Geotech spares and services ensures that the is smooth and continuous production of
components which is as result of well experienced workers. It also ensures that there is adequate
stock of products, which can be done by having well suppliers them in need.
4.1 Production designing and development
Different types of equipment, materials, machines and tools shall be needed for effective
production. They are acquired from different suppliers chosen according to the prices trends
Machines Cost@ksh Suppliers Quantity Date of Capacity
Equipment acquisition
Material tools
Grindr 8000 Otieno 3 1 month
before start
Bench vice 4000 Kim 4 ” Holdings
suppliers
Files 200 Ben 8 ” Filing
Ball pen 500 Job supplier 4 ”
hammer
Gas cylinder 10000 Best 2 ” Joining
suppliers permanent
joints
Jack 15000 Jed 3 ” Lifting
vehicles

Items Quality cost@item Total cost

Pistons 4 1200 4800
Gaskets 6 200 1200
Windscreen 3 8000 24000
TOTAL 30,000

4.2 PRODUCTION FACILITIES AND CAPACITY

a) Building
This shall be a house of 30 fit by 50 fit in size which will be portioned to ensure the limited
space available is used economically. It contains: manager office, store, counter accountant
office and others
i. Counter

16
This will be room situated in front of which is reception where the iniquity shall be made from
customers
ii. Manager office
it is situated next to the counter since the manager is responsible for deciding the price of the
products and the service being offered.
iii. Accountant officer
This is a room which is centralized within the workshop where all office documents are kept.
iv. Workshop room
Production process is carried out in this area whereby all requirements by factory act are adhered
to. These contains enough ventilations, presence of gang ways, remote switches and good
drainage system. It’s also contains scrap yard where the scrap mental are damped ready for
collection.
v. Store room
Materials are tools will be stored in this area it can be arranged in amount in manner for easy
identification of materials and tools needed to avoid confusion
4.3 PRODUCTION STRATEGY
Customer complaints
These can be arranged through dialogue by their selected body. The opportunity to submit their
ideas on matter concerning to the business are given out, therefore their grievances are put in
suggestion box and then get the feedback with their matters being solved.
The qualification and experienced personnel shall be utilized by offering products and lending
services at their best which will encourage customer to the business
Meanwhile, the enterprise shall make arrangements with other garages. Some operations like
engine timing, value clearance, such garages are and within the area.

Storage
Due to the statistics of the output of sales to customers, the enterprise shall be expanded in terms
of business hence installing new and modern technology equipment’s and machines.
Materials will be stored in appropriate after inspection and stock evaluation done.

Products and services

17
A vital role should be played to ensure products and services are of the required quality. These
can be enforced by;
1. Using quality materials
2. Using proper tools and equipment’s
3. Use of experienced workers.
4.4 GENERAL LAYOUT (working layout)
For modern garage and auto spares co. ltd

18
4.5 PRODUCTION PROCESS
The enterprise shall perform different activities during the process. These include;
 Receiving order from customers who require products as by their wish. this enhances to
offer quality products hence attracting more customers to the business.
 Identification of products offered to customers. It can be done through suggestions from
different people within the area.
 Duration to route and costing
 Production process shall be adhered into since it is the basis of the business.
4.6 REGULATIONS AFFECTING OPERATIONS
They can be categorized as follows;
i. External regulations
ii. Internal regulations
External regulations
These covers;
a) Labor laws- these covers employees being denied their rights and freedom. For example,
being overworked, underpayment and fining.
b) Business name act- this controls and protects other business of the same from imitating
business name and trademark.
c) Safety and health regulation- the business shall provide air circulation fans to cool the
workshop room and other busy ones when hot.
Internal regulations
These are employed or imposed by the owner of the business to ensure it run smooth;
a) Working days and hours- the enterprise shall operate as from Monday to Friday and
therefore opening hours shall be 8: 00 am to 5: 00 p.m. tea break provided is 20 minutes and
lunch for 1 hour. Therefore, working hours are 9 hours when lunch is from 1:00 p.m. – 2:00 p.m.
b) General safety- the business ensures that workers are protected by giving them protective
clothes, shoes and goggles during grinding as well as gas welding.

19
 CHAPTER FIVE
5.0 Financial plan
The enterprise includes expected sales, expected expenses, expected cash at hand, source and
application of funds.
5.1 Pre- operation of costs
These are first expenses the business shall incur before it starts.
ITEMS KSHS
Rent deposit 14000
Permit/license 6500
Business registration 3000
Electrical installation 10000
Water supply 300
Tools and regulation 23550
Insurance 2000
Stationary 2500
Purchases 40000
Transport 4000
Furniture 9000
Machines 24000
Total 138,550

5.2 WORKING CAPITAL

working capital =current –current liability
=150,000 – 90,000
= kshs 60,000
Current assets – is what the firm owns i.e.
 Cash at hand
 Cash at bank
 Stock
 Work in progress
Current liabilities – are what the firm owes other through contractual terms and has to pay in
future.
They include;
 Water bills
 Salaries to be paid
 Creditors
 Electricity

20
 5.3 GEOTECH SPARES AND SERVICES MART
PROJECTED CASH FLOW STATEMENT FOR THE YEAR 2020
Particular Jan Feb March April May June July Aug Sept Oct Nov Dec Total
s
Cash at 50000 69720 83620 90320 78750 82850 87390 94600 10122 12027 13121 13959 112955
hand 0 5 5 5 5
sales 92020 98500 90230 80000 88500 94640 97330 10060 96350 10300 92400 99540 113311
0 0 0
debtors 10000 8000 6000 3000 2000 5000 3000 2500 4010 3000 8000 1500 56000
loan 50000 - - - - - - - - - - - 50000
Total 20202 17622 17985 17332 16925 18219 18772 19770 20157 22627 23161 24063 236866
cash 0 0 0 0 0 0 0 0 0 5 5 5 5
inflow
rent 14000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 36000
license 6500 - - - - - - - - - - - 6500
Business 5000 - - - - - - - - - -- - 5000
registratio
n
electricity 5000 400 380 480 440 435 410 450 435 500 480 410 14820
water 300 350 320 300 360 340 380 350 320 300 340 365 4025
Insurance 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
purchases 40000 42500 38350 46500 34300 39900 43250 46700 34000 43600 45300 38000 492400
0
stationary 2500 3000 2800 3200 2600 1500 2500 1800 2400 2000 1800 1500 27600
transport 4000 3000 2350 2800 2400 2600 2300 2800 1800 3200 2800 2300 32350
creditors 15000 10000 12000 8000 13000 17000 11000 11000 9000 12000 8000 6000 132000
salaries 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000 24000 288000
telephone 6000 350 330 290 300 325 280 380 340 460 300 280 9635
Loan 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
interest
Total 13230 92600 89530 94570 8640 95100 93120 96480 81295 95060 95060 81855 113033

21
cash 0 0
outflow
Net cash 69720 83620 90320 78750 82850 87390 94600 10122 12027 13721 13959 15878 123833
0 5 5 5 0 5

GEOTECH SPARES AND SERVICES MART

PROJECTED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DEC 2021
Particulars Jan Feb March April May June July Aug Sept Oct Nov Dec Total
Cash at 15878 89200 80070 83090 94360 9240 89915 75050 58950 62440 65350 69220 101883
hand 0 5 0
Sales 92020 98500 94640 90230 82850 8840 10060 10300 19000 11500 11620 11700 121744
0 0 0 0 0 0 0
Debtors 1oooo 8ooo 7500 6000 8000 3000 5000 10000 8900 10000 8000 7500 91900
Loan - - - - - - - - - - - - -
Total cash 26080 19570 18221 17932 18821 1838 19551 11805 18685 18744 18950 18372 232817
inflow 0 0 0 0 0 5 5 0 0 0 0 0
Rent 14000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 36000
License 6500 - - - - - - - - - - - -
Business 3000 - - - - - - - - - - - -
registratio
n
electricity 10000 4000 4000 6500 3000 5000 6200 4000 6700 6500 5900 3000 64800
Water 300 280 360 320 380 340 365 300 350 360 390 390 4135
Insurance 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
purchases 60000 52000 40000 38350 34300 3900 50000 60000 52000 50000 57000 52000 584950
0
stationary 2800 1000 3000 1500 1800 3200 2000 2600 2900 3000 3400 1000 28200
transport 5000 7000 6000 4000 5000 3800 4300 5000 6000 4000 7000 7000 64100
creditors 20000 13000 9000 9000 6000 5000 9300 9000 8000 10000 10000 5000 113000
Salaries 42000 30000 28300 30000 34000 2900 40000 40000 40000 40000 28300 42000 423600
0

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telephone 2000 350 460 290 325 250 300 200 460 230 340 460 5665
Loan - - - - - - - - - - - - -
interest
Total cash 17160 15630 99120 84960 92805 9389 12046 12910 12441 12209 12043 11885 139325
outflow 0 0 5 0 0 0 0 0 0
Net cash 89200 80070 83090 94360 92402 8991 75050 58950 62440 65350 69220 94870 934920
5

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5.4 PROFORMA INCOME STATEMENT FOR THE YEAR ENDED 31ST DEC 2020
Sales 1133110
Iess 20% of cost sales 226622
Gross profit 106488
Expenses 0
Rent 36000
Licenses 6500
Business registration 3000
Electricity 14820
Water 4025
Purchases 492400
Transport 32350
Salaries 28000
Insurance 24000
Creditors 132000
Telephone 9635
Total 1,070,330
Net profit = G.P-Expenses
=1070330-906488
=163842

Sales 1217440
Less 20% of cost sales 243488
Gross profit 973952
Expenses
Rent 36000
Licenses 6500
Business registration 3000
Electricity 64800
Water 4135
Purchases 584950
Transport 28200
Salaries 423600
Insurance 2400
Creditors 113300
Telephone 5665
Total 1,358,250

Net profit = G.P-Expenses

= 1,358,250-973,952

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 = 384,298
5.5 OTII ENGINEERING WORKSHOPS LTD BALANCE SHEET AS AT 31ST DEC 2020
ASSETS CAPITAL AND LIABILITIES
Fixed assets Capital 50,000
machines 100,000 Net profits 163,842
Tools and equipment 70,000 CURRENT LIABILITIES
Less depreciation 160,000 Creditors 30,000
CURRENT ASSETS Salaries 40,000
Debtors 50,000 Transport 10000
Cash 108,000 Water bills 5000
Electricity 15000
Rent 5000
318,842 318,842

GASHI AUTO SPARES LTD BALANCE SHEET AS AT 1ST JAN 2021

Assets Capital and liabilities
Fixed assets Capital 20,000
Products 24,000 Rent 14,000
Tools and equipment 10,000 Transport 4,000
Furniture 4000
38,000 38,000

5.6 BREAK-EVEN POINT FOR 2020

FIXED EXPENSES AMOUNT ( KSHS)
Rent 36000
Business registration 3000
Insurance 24000
License 6500
Salaries 288000
Total 357,500
Variable expenses
Telephone 9635
Electricity 14,820
Water 4025
Stationary 27600
Purchases 492,000
Total 548480
Total expenses 905980

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Break-even point = variable expenses / sales * 100
= 548480 / 1133110*100
=48.4%
Percentage difference (100-48.8 %)
=51.6%
Value of sales in ksh = fixed expenses /percentage difference
357,500/51.6
=6928
Break-even point for 2021
Fixed expenses amount (kshs)
Rent 36000
Business registration 3000
License 6300
Insurance 24000
Salaries 432000
Total 493,100
Variable expenses
Purchases 584000
Electricity 64,800
Water 4135
Telephone 5665
Stationary 28200
Total 687,750

i. Break even = variable expenses * 100% / sales

=687750/ 1271410 * 100
=56.6%

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 ii. Percentage difference (100-56.6%)
=43.5%

iii. Value of sales in kshs = fixed expenses / purchase different

=4931000/43.5
=11336
5.7 Profitability ratio for 2020
Fixed profit ratio

I. Return on sales = net profit/ total * 100

=163842/906488*100
=18.07%

II. Return on equity capital = net profit /total assets* 100

=163842/318842*100
=51.3%

III. Return on equity capital = N.P * 100/ capital + net profit

=163842/213842*100
=76.63%

LIQUIDITY TEST

Quick ratio = current account receivable/current liability *100

=83620/75000*100
=111.49%

Current ratio = current assets / current liability *100

=158842/75000*100

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 =211.789%

Acid test ratio = cash/ current liability*100

=66.67%

Activity or turn over ratio

Assets turn over ratio = sales/ total assets *100

=1133110/318842
=355.383%

Gross profit ratio = gross profit/total * 100

=906488/1133110*100
=80%

Stock turn over ratio = cost of goods sold/average stock

= 226622/2
=113311
PROFIT RATIOS FOR 2021

Fixed profit ratio

Return on sales = N.P/sales*100
=384,298/973,952*100
=39.5%

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Return on assets = N.P/assets * 100
= 384,298/38000*100
=1011%

Return on equity = N.P/capital + net profit *100

=163842/183842*100
=89.12%
LIQUIDITY TEST

Current ratio = C.A/C.L * 100

= 300680/113300*100
=265.384%

Quick ratio = cash + debtors /current liability *100

=280680/113300*100
=221.25%

Acid test ratio = cash /current liability*100

=158780/113300*100
=140.14%

STOCK TURN OVER RATIO

Cash of goods sold/ average stock = 243488/2

=121744

Gross profit ratio = G.P/ total sales*100

=973,952/243488*100

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 =4%

5.8 DESIRED FINANCING

Desired financing for modern garage is as follows:

ITEM AMOUNT (KSHS)

License 6500

Rent 14000

Insurance 2000

Water supply 300

Products 40000

Tools and equipment 23550

Business registration 3000

Grinder 2500

Transport 4000

Working capital 20000

Total 115,850

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5.9 PROPOSED CAPITALIZATION
This is a list of the various sources of funding for the proposed funding to boost OTII
engineering workshop
ITEMS AMOUNT (KSHS)
Own contribution 85000
Bank loan 20000
Self-help group 30000
Church organization 10000
Family members 20000
Insurance companies 40000
Total 205,000

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