BUSINESS PLAN

BUSINESS NAME: NGEGEZ GUEST HOUSE

PRESENTED BY: ODHIAMBO MARY LAWRYNE AKINYI

INDEX NUMBER: 6191010436

COURSE NAME: DIPLOMA IN CATERING AND ACCOMODATION MANAGEMENT

COURSE CODE: 2819

PAPER CODE: 306

SUBMITTED TO: THE KENYAN NATIONAL EXAMINATION COUNCIL AS

PARTIAL FULLFILMENT FOR THE AWARD OF DIPLOMA CERTIFICATE IN CATERING AND
ACCOMMODATION MANAGEMENT

INSTITUTION NAME: FRIENDS COLLEGE KAIMOSI

INSTITUTION CODE: 619101

SUPERVISOR: MADAM TERRY WESONGA

SERIES: NOVEMBER 2024

DECLARATION
DECLARATION BY STUDENT
I Odhiambo Mary Lawryne Akinyi declare the is my original work and it has never been submitted for
award of certificate to any examining body.
Odhiambo Mary Lawryne Akinyi
Date

DECLARATION BY SUPERVISOR
I declare that this work has been submitted for examination with my approval as institution supervisor.

Name
Signature
Date

i
DEDICATION
I dedicate this work to my family who has supported both emotionally and financially towards the
completion of my business plan.

ii
ACKNOWLEDGEMENT
My appreciation goes to God for providing me with strength and knowledge to do this work. I also thank
the Friends College Kaimosi for providing me with materials and knowledge to make the work successful
and am also grateful to my family members and my supervisor for their moral support and encouragement
during the research.

iii
EXECUTIVE SUMMER

BUSINESSES DESCRIPTION

The name of the business will be Ndegez Guest House. It will be located in Kisumu town along Busia,
Bondo road opposite Kisumu International Airport 200 meters from Kisumu market

Ndegez Guest House

P. O. BOX 141-40101

Kisumu

Telephone 0794910061

E-mail: [email protected]

Ndegez Guest House will be a sole proprietorship form of business. It will be offerings quality and
reliable service to its customers in order to improve their live hood

MARKETING PLANS

The proposed business will use good strategy to get its targeted customers. The targeted customers will be
people within the town, business personals and tourist from other cities. Students from the institute are
also considered potential customers. To overcome competition the business will ensure that the services
offered are of quality and reliable. The business will offer its services at slightly lower price to attract
customers but ensure that profit margin is considered

iv
ORGANIZATION AND MANAGEMENT

The proposed business will be runed by are a team of competent staff leaded by the managing director.
Apart from leading the business the managing director will be in charge of receiving complaints,
implementation and appropriate intervention that meet the client need and standard.

OPERATION PLAN

The business shall ensure that all required facilities are in place at every time. This will ensure smooth
delivery of product and services to the customers. For the success of the business there shall be
convenience and liberty between the employer and employees in the business. And any other incurred for
the run of the business. This shall enable the business calculate its profit during annual preparation of the
financial plan

FINANCIAL PLAN

The estimate amount of the money that the business will require will be 800,000/=. The sources of income
will be from my personal savings 250,000/= and own donation from friends and relatives will be
150,000/= and bank and saving will be 450,000/= and the estimated operational money is ksh 850,000/=

v
Table of Contents
DECLARATION .......................................................................................................................................... i
DEDICATION ............................................................................................................................................ ii
ACKNOWLEDGEMENT ............................................................................................................................ iii
EXECUTIVE SUMMER .............................................................................................................................. iv
ORGANIZATION AND MANAGEMENT ...................................................................................................... v
CHAPTER 1 .............................................................................................................................................. 1
1.0 BUSINESS DESCRIPTION ................................................................................................................. 1
1.1 Background of the owner .............................................................................................................. 1
1.2 BUSINESS NAME ............................................................................................................................ 1
1.3 BUSINESS LOCATION AND ADDRESS............................................................................................... 1
1.4 BUSINESS OWNERSHIP .................................................................................................................. 2
1.5 TYPE OF THE BUSINESS .................................................................................................................. 2
1.6 PRODUCT AND SERVICE ................................................................................................................. 2
1.7 JUSTIFICATION OF OPPORTUNITY .................................................................................................. 2
1.8 INDUSTRY ...................................................................................................................................... 2
1.9 GOALS OF BUSINESS/ OBJECTIVES ................................................................................................. 2
1.1.9 GOALS ........................................................................................................................................ 2
1.2.9 OBJECTIVES................................................................................................................................. 2
1.3.9 ENTRY AND STRATEGIES ............................................................................................................. 2
1.4 ENTRY PLAN................................................................................................................................... 2
1.5 FINANCIAL PLAN ............................................................................................................................ 3
CHAPTER 2 .............................................................................................................................................. 4
2.0 MARKETING PLANS ........................................................................................................................ 4
2.1 POTENTIAL CUSTOMERS ................................................................................................................ 4
2.2 BUSINESS COMPETITORS ............................................................................................................... 4
2.3 MARKET SHARES............................................................................................................................ 5
2.4 METHOD OF PROMOTION AND ADVERTISEMENT .......................................................................... 5
2.4.1 MEDIA ........................................................................................................................................ 5
2.4.2 SIGNBOARD ................................................................................................................................ 5
2.4.3 PRICING STRATEGY ..................................................................................................................... 6
2.5 SALES TACTICS ............................................................................................................................... 7
2.6 DISTRIBUTION STRATEGY ............................................................................................................... 7
CHAPTER 3 .............................................................................................................................................. 8
3.0 ORGANIZATION STRUCTURE .......................................................................................................... 8
CHAPTER 4 ........................................................................................................................................ 11
vi
 4.0 OPERATIONAL PLAN .................................................................................................................... 11
4.1 REPAIR AND MAINTENANCES ...................................................................................................... 11
4.2 PRODUCTION STRATEGY .............................................................................................................. 11
4.2.1 PRODUCT DESIGN DEVELOPMENT ............................................................................................ 12
4.3 PRODUCT DEVELOPMENT ............................................................................................................ 12
4.3.1 Total monthly requirement ....................................................................................................... 12
4.3.2 WORKING SCHEDULE ................................................................................................................ 12
4.4 REGULATION AFFECTING OPERATION .......................................................................................... 13
4.4.1 Safety regulation ...................................................................................................................... 13
4.4.2 Rules and Regulations ............................................................................................................... 13
4.4.3 working condition ..................................................................................................................... 13
4.4.4 Government policy ................................................................................................................... 13
CHAPTER 5 ............................................................................................................................................ 14
5.0 FINANCIAL PLAN .......................................................................................................................... 14
5.1 PRE - OPERATIONAL COST ............................................................................................................ 14
5.2 Pre – operational cost for the business ........................................................................................ 14
5.3 WORKING CAPITAL ...................................................................................................................... 14
1.3 WORKING CAPITAL ...................................................................................................................... 15
5.4 CASH FLOW ................................................................................................................................. 15
5.5 PAYMENT/OUTFLOW ................................................................................................................... 15
5. 6 PROFORMER INCOME STATEMENT ............................................................................................. 16
5.7 BREAK EVEN ANALYSIS ................................................................................................................. 16
5.8 DESIRED FINANCING .................................................................................................................... 17
5.9 CAPITALIZATION .......................................................................................................................... 18
APPENDIXES .......................................................................................................................................... 19

vii
viii
CHAPTER 1

1.0 BUSINESS DESCRIPTION

1.1 Background of the owner
The owner of the business will be Adhiambo Mary Lawryne Akinyi currently a student at Friends
College Kaimosi pursuing Diploma in catering and accommodation management aged 23years l decided
to choose guest house due to the love and passion I have in accommodation operation and it will also
provide affordable rooms for travelers who need comfortable room.

NDEGEZ GUEST HOUSE

P.O.BOX 810 - 81
KISUMU
TEL 0115915416
E. MAIL ADDRESS: ndegezgueszthouse@gmail .com

1.2 BUSINESS NAME

The business will be named NDEGEZ GUEST HOUSE. The name was derived from the proposers name
Mary and after my grandfather’s name Ndegez Aluru who has been a role model since childhood that
he’s a person that makes someone less angry or to make something less sever and that is the main aim of
the business to make guest comfortable and to offer affordable rooms.

1.3 BUSINESS LOCATION AND ADDRESS

The business will be located in Kisumu town along Busia road, Bondo road opposite Kisumu
international airport 200 meters from Kisumu market.

NDEGEZ GUEST HOUSE

P.O.BOX 141 – 40101
KISUMU
Telephone 0794910061
E. mail address [email protected]

1
1.4 BUSINESS OWNERSHIP
Ndegez guest house shall be a sole proprietorship form of business and will be owned by Mary Adhiambo
I’ll gather the necessary resources required that is labour and capital to start the business. I choose sole
proprietorship form of business because of the following, all profit will be enjoyed by me, decision
making will be easier, I’ll require limited liabilities, and I’ll easily manage industry

1.5 TYPE OF THE BUSINESS

This business will be a brand-new business which is planned to start in two years’ time. The main activity
will be accommodation and providing some necessary items that a guest may require when staying in the
rooms

1.6 PRODUCT AND SERVICE

Ndegez guest house will provide beddings, bathing towel, slippers soap and drinking water for each guest
in the room. Beds will be 4 by 6, they will be comfortable for one person and the hygiene will be highly
maintained in sheets, duvet covers, pillow cases and nets in the room to ensure that no infections. The
guest who visit Ndegez guest house will be able to enjoy the following, the rooms will be affordable, the
rooms will always be clean and fresh and also peaceful environment and secure.

1.7 JUSTIFICATION OF OPPORTUNITY

The owner has come up with the proposed business because of the following reasons, to provide better
service to the client, to enjoy bigger saving, to satisfy my career as a housekeeper. I’ll ensure good
security that’s the reason why it will be conducted near police station and modern technology will also be
used like CCTV and computers.

1.8 INDUSTRY
The industry shall fall under hospitality industry. It shall employ both skilled and non-skilled workers to
reduce work load and to save time. According to research the business is marketable and does not require
too much capital to start the industry growing is stable.

1.9 GOALS OF BUSINESS/ OBJECTIVES

1.1.9 GOALS
Business goal will aim at the following.
• To create job opportunity.
• Provide quality service to customers.
• To fill guest, need like resting

1.2.9 OBJECTIVES
The business will achieve the following Objectives.

• Increase sales.
• Maximize profit.
• Minimize cost.
• To expand my industry by advertising in radios, television, magazines, newspaper and also media
as well

1.3.9 ENTRY AND STRATEGIES

1.4 ENTRY PLAN

The Ndegez guest house will have
2
 • Market penetration i.e. increasing market share.
• Include more services in the rooms

GROWTH PLANS

To ensure business growth the following will be considered.

• Creating good contact with customers.

• Offering high quality service.
• Giving discount to frequent customers.
• Offering gifts to customers.
The above-mentioned tactics will help attract customers and retain them. The business will be
handled with skilled personal to ensure high productivity and this will lead to business
expansion. It will also help in customer retention.

1.5 FINANCIAL PLAN

The estimated amount of the money that business will require will be 800,000/= . The sources of
income will be from my personal savings 250,000/= and own donation from friends and relatives
will be 150,000/= and bank and savings will be 450,000/= and the estimated operational money
is ksh 850,000/=

3
 CHAPTER 2

2.0 MARKETING PLANS

2.1 POTENTIAL CUSTOMERS
The industry targeted customers will be people within the town business personals and tourists from other
cities. The industry will sell the rooms at relatively cheap price. It will consider it’s potential customers
by providing rooms on credit more so to the most trusted customer by providing rooms an credit more so
to the trusted customers. The mean of payment of service will be

• Pay bill
• Cash
• Credit card

2.2 BUSINESS COMPETITORS

My business competitors that are Caro’s guest house and back yard guest house also conduct the same
service that I am planning to offer. Backyard guest house started is business 2 years ago that is she has
stayed in the business for 2 years and the distance between backyard guest house andNdegez guest house
is only 2 kilometers. Caro’s guest house was started a year ago still adapting to market and is 4 kilometers
away from Ndegez guest house.

STRENGTH, WEAKNESS, OPPORTUNITY AND THREATS ANALYSIS TABLE

BUSINESS STRENGTH WEAKNESS OPPORTUNITY THREATS

NAME
MOLLIFY • Hardworking • New • Availability Theft
GUEST • Well managed market • Training
HOUSE • Training • Few institution
personal Customers • High use of
• High profit • High technology
margin price
• Lack of
funds

BACKYAR • Has another • Poor Availability • Poor

D GUEST branch training of high use of allocation
HOUSE • Hard working • Poor technology • Theft cases
• Gained recoding
experience system

CARO’S • New • High • Availability • Insecurity

GUEST technology price • Use of • Poor
HOUSE • Well managed • Poor technology allocation
recoding • Theft cases

4
2.3 MARKET SHARES

Due to research conducted by the owner of the business, Kisumu town has at least 50,000 people with
whom the business is expected. The market is also growing due to improved technologies which gives the
owner a positive attitude since there will be more people trading in the area since the business has two
competitors, the customers will be shared by three business as researched by the owner after two years of
running the business the customers increase from 1,000 to 12,500

Market share

20% Key
40% Ndegez quest house
Backyard guest house
Caros

40%

2.4 METHOD OF PROMOTION AND ADVERTISEMENT

The business owner will use the following types of advertisement in order to create awareness to the
customers.

2.4.1 MEDIA
The business will use media such as television and radios to create awareness to the customers

2.4.2 SIGNBOARD
The entrepreneur will use three signboards to show the business location one of the wills be on the
junction, the other one will be in the market, the other will be near the police station.
5
Cost of signboard 2000

2000×3=6,000

By sticking posters on walls of the streets and posts. Customers will be able to find out location of the
Ndegez guest house.

Cost of printing one poster =40

Cost of photocopying one copy=3
Required copies=10

10 × 3=30
30 + 40=70

PROMOTION STRATEGY
The proposed business enterprise will use many ways to ensure that the service have been promoted.

• Offering training to employees. This will help improving skills and knowledge on how to
operate the business.
• Offering discount for first time guest to encourage them.
• Personal selling. This is where the staff is sent in the field to market the service offered
by the establishment

2.4.3 PRICING STRATEGY

Cost of products
The proposed business will consider the following factor when pricing for product and services.
• Customers attitude
• Competitors price
• Required profit
• Overhead cost
Will also use the following strategy
Economy price
Value based pricing
Pricing for market penetration
Competitive pricing

6
2.5 SALES TACTICS
The proposed business Will sell to customers directly will also have agent who will inform people from
different places. It will also have customer cares service done through direct phone calls and short
messages service to ensure the satisfaction of customers. The business will employ the following tactics
to ensure good public relations in the business.
Building good relationship with members of the community where the business is located.

2.6 DISTRIBUTION STRATEGY

The industry will offer the service directly to customers for the customers who will be far from the town
they will be persuaded to try Ndegez guest house and they will be informed of the benefit they will be
offered.

7
 CHAPTER 3

The proper management of business activities in order to attain the enterprise goals and objectives is
called organization. The manager will be general lead of the business activities. Subordinate staff will be
managed and supervised by the supervisor so as to achieve seriousness and respect within the business

3.0 ORGANIZATION STRUCTURE

Security officer Manager Accountant

Assistant house keeper

Room attendant Receptionist Sales and marketing officer

DUTIES AND RESPONSIBILITIES OF EMPLOYEED STAFFS
NAME QUALIFICATION DUTIES AND RESPONSIBILITIES
Manager  Be a diploma personal • Keep business records
 Have 4 years’ experience • Duty to act upon complains from subordinates
 Be computer literate • Monitor, maintain and control all departments
 Have good etiquette
 Be of sound mind
Assistant house • Have diploma certificate • Preparation of work schedule and rotes.
keeper • Be a Kenyan citizen • Reporting and checking of maintenance
• Be of good characters and required
honest • Control of gardening and maintenance staff.
• Should be of sound mind • Provision of advice and report on staffing and
finance.

Receptionist • Be a craft or Diploma • Welcoming guest

personal • Making reservation for guest
• Be computer literate. • In charge of checking in and out of guest.
• Be a Kenyan citizen. • Work together with room attendants.
• Be aged between 20 – 30
Years.

8
Sales and • Have diploma in sales and • Make decision on product and services.
marketing marketing • Duty to control sale department and
officer • Be of sound mind. maintaining.
• Be a Kenyan citizen. • Make schedule on advertisement
• Be computer literate.
• Be loyal and honest.

Accountant • Have certificate on • Forwarding cheques and vouchers.

officer accounting. • Giving out money to employees as per finance
• Be of sound mind. office
• Be a Kenyan citizen. • Receiving Cash authorized by receptionist.
• Be computer literate.
Security officer • Be craft personal Be • Ensure the security of the organization and
loyal. staffs.
• Be a man. • In charge of checking in and out staffs.
• Be ready to defend the • Report any unique action or activity to the
organization. manager.
Room attendant • Have certificate on • Ensure the rooms are clean and well
housekeeping. maintained.
• Be courteous. • Inform assistant house keeper on stock to be
• Able to anticipate need of added.
others • Ensure that all rooms are under good condition.
• Be neat in appearance.

RECRUITMENT, TRAINING AND PROMOTION

RECRUITMENT
NEGEZ GUEST HOUSE will be conducting its recruitment in search for the employees who are
qualified and who will be able to provide the best service to the customers. Whenever there will be any
vacancies. It will be published through advertisement by the business management throughout the year.
Those who would have qualified will be clearly handed out so as to limit the cases of complains.
Interviews may also be done to qualified applicants on their field experience according to the various
posts that was posted.

TRAINING
For new recruits before they start working, they will be given one-month training before they start
working. The training will be on the job training method since they will be training on how to carry out
their day to day duties.
The main purpose for the study is for them to get used to new environment and changes in the
establishment. This will ensure improve provision of services.

PROMOTION
The proposed business will have to motivate the workers in different ways the techniques will be
increasing the wages and salaries following certain protocols at the end of the year. Factors will be.

9
 • All employees who have increased their level of education will have to stand a
chance of being promoted.
• The most hard-working employee will be taken to next level. Experienced
employees will be promoted.
REMUNERATION TABLE ANALYSIS
The table below shows how the employees will be paid their salaries at the end of each month.
Job title Number Basic Allowance Monthly
salary salary
Manager 1 35,000 8,000 43,000
Assistant
housekeeper 1 15,000 5,000 20,000
Security
officer 1 10,000 2,000 12,000
Accountant 1 13,000 2,000 15,000
Room
attendant 1 8,000 1,000 9,000
Receptionist 1 8,000 1,000 9,000
Sales and
marketing 1 10,000 3,000 13,000
officer
Total 7 99,000 22,000 103,000

INCENTIVES
The proposed business will provide good working environment to its workers. Any overtime work will be
paid by the management.
LICENSE, PERMIT AND BY LAWS

LICENSE
The business license will be acquired from Nairobi City. It will be a single business permit falling under
category 595 and will cost ksh 1000 only.
PERMIT
There will be a health permit for attendant and housekeeper valid for one year.

10
 CHAPTER 4

4.0 OPERATIONAL PLAN

The business shall ensure that all required facilities in place each and every time. This will ensure smooth
service to customers. For the success of the business there shall be convenience and liberty between the
employer and the employees in the enterprise. The business will have to know the total expenditure on
facilities cost and any other incurred for the run of the business. This shall enable the business calculate
its profit during the annual preparation of the financial plan.
Item Quantity Unit cost Total
Bed 5 4,000 20,000
Table 5 1,500 7,500
Chair 5 800 4,000
Basins 6 150 900
Buckets 6 200 1,200
Bathing soap 500
500
Towels 7 300 2,100
Door mats 1,750
7 150
Pillow 6pairs 1,500
250
Pillow cases 700
12 100
Duvet 6 500 9,000
Duvet cover 2,800
7 400
Flower vase 1,200
6 200
Cleaning materials 500
500
Total 53,650

4.1 REPAIR AND MAINTENANCES

Assistant house keeper will ensure that there is proper care for tools and equipment. Will also ensure that
all work out tools and equipment are well maintained and are in good working condition. If there is need
for repair housekeeper will inform manager to take immediate action.

4.2 PRODUCTION STRATEGY

Ndegez Guest House will offer the best services to the customers. The owner will Carry out bench
marking with its competitors to know were there should be adjustment. The business will then decide
either to allow some discount or not. Or offer the service on credit in order to attract more customers.
The business will offer best quality products to the potential customers in their rooms. This will help in
customer retention. Employees shall be given some allowance and promotion for motivation in order to
increase productivity of enterprise.

11
4.2.1 PRODUCT DESIGN DEVELOPMENT
The proposed business intense to offer quality service to customers in their rooms. To maintain the
quality of service the employed staffs should ensure proper utilization of available resources and proper
storage after. Use.

4.3 PRODUCT DEVELOPMENT

The business will come up with the changing technology due to modern technology of acquiring modern
machines that deal deals with registration of guest the management came up with the idea to ease service
and to ensure fair competition with competitors.
OVERHEAD COST
Item Cost per month
Repair done 9,000
Water supplied 8,000
Fuel used 3,000
Rent 15,000
Electricity 3,000
Total 38,000

4.3.1 Total monthly requirement

The table below shows the total monthly requirement of Ndegez guest house.
Item Cost
Labour cost 103,000
Overhead expenses 8,000
Material expenses 15,000
Total amount 126,000

4.3.2 WORKING SCHEDULE

The table below shows the working schedule for Ndegez guest house.
Days Time

Monday - Reporting time 7:00am to 8:00am

Friday Work commence at 8:00am to 10:00 am
Breakfast 10:00am to 10:30am

2nd working session 10:30am to 12:30pm

Lunch 12:30pm to 2:00pm
3rd working session 2:00pm to 4:00pm

Closing time 4:30 pm.

Saturday Reporting time 7:00am to 8:00am

Work commence at 8:00am to 10:00am

Breakfast 10:00am to 10:30am

2nd working session 10:30am to 1:00pm

12
 Lunch 1:30 pm to 2:00pm

Closing 2:00pm

4.4 REGULATION AFFECTING OPERATION

The business is to follow regulation stipulated by the government these regulations include

4.4.1 Safety regulation

The building promise is to be well ventilated; fire precautions is to be ensured by provision of fire
extinguisher at strategic point at the promise

4.4.2 Rules and Regulations

Ndegez guest house will ensure proper coordination among the employees. Receptionist will check email
and if there is a reservation, they will record down and inform the manager to ensure that there is smooth
flow of work in the enterprise

4.4.3 working condition

Ndegez Guest House will ensure that working environment is conducive and safety needs are given to
employees in a priority in the business.

4.4.4 Government policy

I. Working compensation Act
Section 16 prevent employees from insisting legal action in count for recovery of damages for
injuries of disease. Section 23 society dispute section that give director of occupation safety and
health services the power to decide any claim or liability.

II. Trade mark Act 9 CAP 506

Cap 506 of the law’s industrial property act and the responsible officer in Kenya industrial property.
It grants original industrial property right.
It screens technology transfer agreement and license.
Promoting innovativement and incentives in Kenya.
III. Working with benefit of act 2007
Its intents insurance cover and ensure adequate compensation for injury and work-related
diseases regardless of employee’s solvency.
IV. Employment Act 20076
It ensures that workers whose employers does not contribute to provident funds don’t lose their
benefit for years. Worked safety guards’ workers due to in the event of the employee solvency.
V. The labour act 2007
It promotes protection of the freedom association for the employees and the employers minimize
room for interference with workers to go on strike by setting out clear guidelines on protected strike
and lock outs.

13
CHAPTER 5

5.0 FINANCIAL PLAN

The main reason of preparing a business plan is to receive finance. The financial plan comprises,
analyzing financial requirement or business and developing financial plan.

5.1 PRE - OPERATIONAL COST

They are cost that is in curved by the business before the staff operation. Pre – operational cost for
the business will be as follows

5.2 Pre – operational cost for the business

Item Cost
Research 6,000
License 12,000
Advertisement 10,000
Recruitment cost. 6,079
Professional fee 4,000
Installation cost 5,000
Rent deposit 5,000
Utility bill 15,000
Miscellaneous 38,000
Equipment and material 2,000
Total 156,720

5.3 WORKING CAPITAL

It is the amount that keeps the business running.
Non – current Capital 850,000
assets
Furniture 31,500 Less drownings 400,00
Fixture & 15,000 450,000
fittings
Total non - 46,500 Non – current liability
current assets
Current assets

Stock 326,000 Current liability

Cash at hand 100,00 Loan 100,00
Cash at bank 50,000 Creditors 2,500
Debtors 30,000 Total current liability 102 ,500
Total current 506,000
assets
Total assets 552,500
552,500 552,500

14
1.3 WORKING CAPITAL
Obtained subtracting current assets for current liability.
WC= C.A -C. L

506,000 – 102,500= 403,500

5.4 CASH FLOW

Cash flow Jan Feb Mar

Opening cash 40,000 35,650 38,000
Cash sales 20,000 25,000 15,250
Credit sales 12,500 15,550 13,500
Other income 15,650 8,500 10,000
Total receipt 88,150 84,700 76,750

5.5 PAYMENT/OUTFLOW
Items Jan Feb Mar
Cash purchase 180,000 120,000 20,900
Credit 20,000 14,560 10,000
purchase
Salaries and 103,000 140,000 170,550
wages
Rent & rates 15,000 17,500 17,500
Property tasks 53,650 53,750 57,700
Power 3,000 3,500 3,590
Insurance 3,000 3,000 300
Maintenance 9,000 10,000 15,000
Leasing 500 650 1000
payment
Drawings 400,000 200,000 100,000
Interest 500 700 1,000
charges
Capital 4,400 5,650 67,580
expenditures
Telephone 900 1,500 1,500
cells
Stationary 2,000 2,700 2,965
Postage 1,000 700 1,000
Transport 2,000 2,800 2,955

15
5. 6 PROFORMER INCOME STATEMENT

Items

Sales 350,060

Less cost sale 290,750

Gross profit 59,310

Add any other income 25,430

Total 84,430

Expenses

Salaries and wages 103,000

Telephone and postage 15,000

Transport 2,000

Electricity 3,000

Total 124,500

Net profit = total expenses – gross profit

124,500 - 59310= 65,190

5.7 BREAK EVEN ANALYSIS

B.E.P = contribution/total fixed asset × 100
Contribution margin= total cash sales – total variables
Total cash sales year one
Salary (103,000× 12) = 1,200, 000
Loan repayment (100,000 × 12) = 72,840
Advertisement (6070 × 12) = 72,840
Electricity (3,000 × 12) = 36,000
License (10,000)
Total variable 2,554,840
Total contribution margin 87, 5000
% contribution margin= contribution margin/sales × 100

16
 87, 5000/40,500 × 100 = 216.049
Break-even point= % contribution/total fixed assets
216.049/68= 3.177
3.18%
Gross profit ratio = GDP/sales × 100

16,000/40,500×100= 0.395
0.4 %
Net profit ratio = Np/sales ×100
436,000/ 17, 0000× 100
= 38.99
= 40%
Return on equity =Np/capital × 100

= 3.85%

5.8 DESIRED FINANCING

Item

Pre – operational 156,720

cost

Working capital 403,500

Fixed asset 156,000

Desired financial 716,200

cost

17
5.9 CAPITALIZATION
Items Amount

Owners contribution 250,000

Borrowed funds 450,000

Money from friends 150,000

Total investment 850,000

18
 APPENDIXES
PROMISE LAYOUT

Guest rooms Reception Accountant office

Managers office
Resting area

Flower garden

19
 BUSINESS LOCATION
MARKET

NDEGEZ GUEST HOUSE

TTC

POLICE STATION

20