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Certificate in Community Development and Social Work. (Eldoret National Polytechnic)

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BUSINESS PLAN
DAMARIS’ DELI BAKERY

DAMARIS’ DELI BAKERY

CANDIDATES NAME: DAMARIS KWAMBOKA

INDEX NO. : 5780011218

ADM NO. : 2021P11458

INSTITUTION : THE ELDORET NATIONAL

POLYTECHNIC

DEPARTMENT : BUSINESS

COURSE : BANKING AND FINANCE

LEVEL : DIPLOMA

SUPERVISOR : MADAM RACHAEL JEMUTAI

SUBMITTED TO: KENYA NATIONAL EXAMINATION COUNCIL

FOR PARTIAL FULFILLMENT OF THE AWARD OF CERTIFICATE
IN SOCIAL WORK AND COMMUNITY DEVELOPMENT
SERIES: NOVEMBER 2023

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DECLARATION
I hereby declare that this project is purely the true copy of my original research work and that
no part of it has been copied from elsewhere. This work is presented to the Kenya national
examination as part of the requirements for the award of certificate in food and beverage
production and service.

NAME: DAMARIS KWAMBOKA

SIGNATURE……………………………….... Date…………………………….

The business plan has been submitted to the Kenya examination council (KNEC) with my
approval as the supervisor

NAME: MADAM RACHAEL JEMUTAI SIGNATURE……………………………

DATE…………………………

DEDICATION

I would like to dedicate this project to my loving and caring Mum who gave me financial as well
as moral support throughout my course.

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Special thanks to my brothers, sisters, classmates and my friends for their support. May God
bless you in every good work. Amen

ACKNOWLEDGEMENT

I gratefully acknowledge the guidance and encouragement accorded in the preparation and
final production of this project by my friends and college

My particular thanks go to my supervisor Madam Rachael Jemutai, my college mates

all of whom offered contribution and invaluable advice and criticism

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To the library staff who tirelessly arranged books in orders thereby making access to books at
time of need, I express my gratitude to you all. To all those and others who helped me in one
way or the other during my preparation and final production of these business plan. I express
my gratitude.

TABLE OF CONTENT

DECLARATION.............................................................................................................................................................i
DEDICATION...............................................................................................................................................................ii
ACKNOWLEDGEMENT.............................................................................................................................................iii
EXECUTIVE SUMMARY............................................................................................................................................v
CHAPTER ONE.............................................................................................................................................................1
1.0 BUSINESS DESCRIPTION....................................................................................................................................1

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1.1 BUSINESS NAME...................................................................................................................................................1

1.2 BUSINESS LOCATION..........................................................................................................................................1
1.3 FORM OF OWNERSHIP.........................................................................................................................................2
1.4 TYPE OF BUSINESS..............................................................................................................................................3
1.5 PRODUCT AND SERVICES..................................................................................................................................3
1.6 JUSTIFICATION OF OPPORTUNITIES...............................................................................................................3
1.7 THE INDUSTRY.....................................................................................................................................................4
1.8 GOALS OF THE BUSINESS..................................................................................................................................4
1.9 GROWTH AND STRATEGY.................................................................................................................................4
CHAPTER TWO............................................................................................................................................................6
2.0 MARKETING PLAN...............................................................................................................................................6
2.1 POTENTIAL CUSTOMERS...................................................................................................................................6
2.2 MARKET SHARE...................................................................................................................................................6
2.3 COMPETITORS.......................................................................................................................................................7
2.4 ADVERTISING AND PROMOTION STRATEGY...............................................................................................8
2.5PRICING STRATEGY.............................................................................................................................................8
2.6 SALES TACTICS..................................................................................................................................................10
2.7 DISTRIBUTION STRATEGY..............................................................................................................................10
CHAPTER THREE......................................................................................................................................................12
3.0 ORGANIZATION AND MANAGEMENT..........................................................................................................12
3.1 ORGANIZATIONAL STRUCTURE....................................................................................................................12
3.2 KEY MANAGEMENT PERSONEL.............................................................................................................12
3.3 OTHER PERSONELL...........................................................................................................................................13
3.4 RECRUITMENT TRAINING AND PROMOTION.............................................................................................14
3.5 RENUMERATION AND INCENTIVES..............................................................................................................14
3.6 LEGAL REQUIREMENTS...................................................................................................................................15
CHAPTER FOUR........................................................................................................................................................17
4.0 PRODUCTION AND OPERATIONAL PLAN....................................................................................................17
4.1 PRODUCTION TOOLS AND EQUIPMENTS.....................................................................................................17
4.2 REPAIRS AND MANTAINANCE.....................................................................................................................xvii
4.3 PREMISES...............................................................................................................................................................ii
4.4 PRODUCTION STRATEGY..................................................................................................................................ii
4.5 PRODUCTION PROCESS......................................................................................................................................v
CHAPTER FIVE...........................................................................................................................................................vi
5.0 FINANCIAL PLAN................................................................................................................................................vi

5.1 PRE-OPERATIONAL COST.................................................................................................................................vi

5.2 WORKING CAPITAL COMPUTATION..............................................................................................................vi
5.4 PROFORMA INCOME STATEMENT....................................................................................................................i
5.5 BALANCE SHEET.................................................................................................................................................iii

5.6 BREAK EVEN POINT ANALYSIS......................................................................................................................iii

5.7 PROFITABILITY RATIOS.....................................................................................................................................ii
5.8 DESIRED FINANCING.........................................................................................................................................iii
5.9 PROPOSED CAPITALIZATION..........................................................................................................................iii

EXECUTIVE SUMMARY

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Business description

Damaris’ Deli bakery is a sole proprietor business which intends to commence on January
2024. It will be a bakery offering high quality products and economical services to its present
and potential customers. The location of this business will be prominent therefore for most
customers who will need to be supplied with goods. The bakery will be fully equipped with
all necessary tools and equipment of which is an opportunity to reach goals of profit. The
trained staff will also contribute towards the achievement of customer’s needs and
satisfaction.

Marketing plan

In order to run this business one should be in apposition to have at least 1000 customers per
day therefore importance of market for fleet owners. Due to presence of open market the
approach intents to be very tactical and essential. The main aim will be to have at least 40%
of the market around and area of operation which will be considered to be about 100
kilometers in radius from the location. The reasonable cost and pricing strategy will be
considered to compete with competitors by utilizing the promotion plans and salesmanship
with the help of trained staff.

Organization and marketing plan

The manager of Damaris’ Deli bakery will be a trained and qualified person holding a
diploma in food and beverage management and technical knowledge. There will be 10
employees. Salary increment will be done yearly depending on the performance of the
business. The required trade license and county council lows will be adhered to. The
supportive service like the suppliers, financial institution will be considered first therefore the
business relationship will be kept on move by move by setting them regularly.

Production plan

Damaris’ Deli bakery will be equipped with all the required essentials, equipment and other
food stuff that will provide facilities of a well of bakery with the making of all backed
products like cakes, scones, cakes and burns. To ensure this sufficient equipment for use will
be purchased in advance and operation will ensure that the customers are not exploited and
services are provided at the required time

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Financial plan

The business should be able to work within the budget set an aim of the target. The initial
capital is intended to be ksh 460,000. Bank loan will be ksh 200,000 whereas donations lead
to ksh 260,000. The organization will depend on financial account which will be mainly a
provision of financial feedback information to the management foe decision making costs and
income statement the cash flow projections, profit and loss account (showing assets and
liabilities as at the end of trading period, balance sheet.) this highlights performance of the
business and guides for the various sales item purchased and sold during the years of
operation

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CHAPTER ONE
1.0 Business description

1.1 Business name

The name of the proposed business will be Damaris’ Deli bakery at the attorney

general chamber under the registration of business names act (cap 486) it will operate

under the address

DAMARIS’ DELI BAKERY

PO BOX 101
ELDORET
TEL. +254700482091

The desired finance is ksh 460,000 contributed as

Details kshs

Personal savings 100000

Loan from bank 300000
Family and friends 60000
Total 460000

1.2 Business location

Damaris’ Deli bakery will be located 4 km away from Eldoret town towards Moi university
along Eldoret –Nairobi. The location is ideal because of the following :

a) The place has good infrastructure like road, electricity

b) Assured security due to availability of moi university police post which is 100 meters
away
c) Strategic due to presence of institution like moi university and other schools

d) Presence of wheat from nearby farmers like flax , kapng’etung and kipkabus

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1.3 Business location

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Damaris’ Deli
bakery

1.3 Form of ownership

It will operate as a sole proprietorship type of business. The owner is 22 in age. Currently
pursuing a Certificate in Social Work and Community Development at The Eldoret National
Polytechnic

I will be a sole owner to enjoy all profits alone.

1.4 Type of business

i. The business will be a manufacturing type of business the major characteristics are

ii. To transform row materials into finished consumable goods iii. Transform raw
materials into intermediate products i.e. milling wheat into flour.

The main business undertaken will be baking and packaging of cakes

The business will operate on a daily basis starting daily at 8.00AM in the morning and
closing at 5.00PM in the evening. There will also be a night shift starting at 6.00 pm in the
evening and a closure at 12am (midnight)

1.5 Product and services

The main products of Damaris’ Deli bakery will be cakes of different sizes and different
characteristics; The cake will be produced in different sizes ranging from 250g , 500g , 800g
and 1kg depending on the customer’s specifications by weight some will be sliced and some
will not . The prices will depend on the sizes of cake In addition to cake smaller products like
scones, doughnuts will be produced. It will also offer transportation services to schools,
hospitals, kiosks and shops

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1.6 Justification of opportunities

The following factors justify my choice of business opportunity and growth:

a) Unsatisfied demand for cakes by local residents and community

b) Source of employment for the area residents
c) Availability of potential customers and row materials
d) Good infrastructure i.e. roads and roads
e) To capitalize on the lack of reliable bakery dealer.

The available competitors are Paul’s bakery in Eldoret kings’ bakery, makatiat ltd in kabarnet
who are far away. Generators should be available to supplement electricity in case of power
rationing. I will also encourage the use of sawdust to produce heat for baking to minimize
the cost of electricity and other justification is that the area is densely populated so it will
enjoy full market. The population will provide market for the products. Better transport
services also increase edge over competitors as it will have two vans delivering bread.

1.7 The industry

The business will fall under food processing industry due to presence of other industries. It
will enjoy the labor with high technology in various parts. It will need high capital investment
to start; Damaris’ Deli bakery will employ a maximum of 20 employees in the industry.

The basic capital requirement for the entry into the business is:

a. Buildings should be large

b. Two vans

It will have considerable profit margin, seasonal factors like poor weather may hamper
distribution of products. Sales will vary from time to time. When people have money they
will buy more and when people run short of money, the sales will decrease. In cases where
people don’t have money the company will produce small products like scones and cakes in
large quantities more than cakes because they cost less.

1.8 Goals of the business

1.8.1 Short term goals

a. Get a profit of 20-30% in the first year

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b. Sell at least 5000 loaves daily

c. Ensure customer satisfaction by adding value to their products
d. Bring quality products and services closer to the people.

1.8.2 Long term goals

1. Try to possess a market share of 70% in three years

2. Expand and open more bakeries after 3-4 years after its inception.
3. Offer industrial attachment to students who want to specialize in bakery
4. Offer scholarships and bursaries to students from poor family

1.9 Growth and strategy

Before commencement of the bakery in 2011, management will try to attract and win
customers by doing the following:

1.9.1 Advertising

Will advertise through media stations like radio citizen-FM, Kass FM, and other popular
stations in the area for it will reach larger number of customers, the location of the bakery
will be stated clearly to enhance convenience.

1.9.2 Posters and notices

This will be placed in major centers small centers and villages within the district and beyond
to other districts like uasin gishu Baringo and Koibatek.

1.9.3 Sign posts and bill posts

This will be placed at road junctions’ highways and major trading centers. The bill boards
should be of large size, small sizes to be distributed throughout keiyo and other neighboring
districts.

1.9.4 Promotional campaign

Here the vans mounted with bakeries logo, image will go around the district and neighboring
towns for a period of time where the public relations officer will explain about the bakeries
motto and its intentions towards satisfying

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Customer’s .it will also consider factors like packaging quality goods and delivering better
services like transportation as opportunities for growth.

Damaris’ Deli bakery will also open a room where customers will rest as they wait to be
served.

CHAPTER TWO
2.0 Marketing plan

2.1 Potential customers

The customers of Damaris’ Deli bakery will be both primary and secondary schools and
residents of Kesses area community

(a) Institutional customers

This will include colleges and hospitals like Moi university high school, Moi university
health center and Kesses district hospital, it will also access customer’s creditworthiness as
the time goes by.

(b) Commercial customers

This will include supermarkets and wholesalers like Eldoret wholesalers and retailers. The
examples are; feel at home self-selection, shops and kiosks.

(c) individual/local customers

This will include people in the locality like travelers and distant buyers, whatever the quantity
they buy; they will not be discriminated. Local consumers will benefit due to its availability.
Purchasing power is expected to be high at the end of the month when people get salaries.

2.2 Market share

The marketing will cut across all ages genders and religions. The price will be fairer than that
of the competitors in order to penetrate into the market. Initially it will strive to control 20%
of the total market share within the district. Prices at the retail level will be labeled on the
packaging papers to be displayed in the supermarket. After a period of 5 years it will be

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serving 60% of the total market share while the rest of the suppliers will be supplying 20%
of the total market share. Quality products and increased promotion will facilitate this. The
population of Uasin Gishu district is projected to be about 28000 people.

2.3 Competitors

Damaris’ Deli bakery is going to face competitors who have been dominating the market.
They established a long time ago therefore posing great challenge of undoing them. Health
competition is desirable for a new venture however too much competition is risk as it may
lead to collapse of the business. It will identify its potential customers and competitors.

(a) Paul’s bakery

It has been there for long and its well established sector in food processing industry in rift
valley province. Contact address;

Strengths

It’s situated in a strategic place near main road where it can easily be seen. It has a space for
expansion has large production like confectioneries, milk products and soft drinks. its
packaging of cakes is good and has good transport services.

Weaknesses

Although it’s well experienced and big, it’s situated 50 km away. Demand for cakes is
high and they can’t be able to satisfy increasing consumer demand.

(b) Kings bakery

Strengths

It’s a medium sized bakery which produces sweet bread, cakes, well established with good
transport system and good packaging.

Weaknesses

It’s situated far away from main road=Uganda road and it’s not easier to trace. their
advertisement and promotion is poor though it has there for long

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2.4 Advertising and promotion strategy

The business will set aside kshs 10,000 to cater for advertising and promotion. Advertising
and promotion will create awareness of the existence business to the people residing in
kamwosor and its environs. The bakery will use the following forum to promote and
advertise is products.

2.4.1 Posters

They will be placed throughout kamwosor Eldama ravine at the road junction, main centers,
hotels and shops where they can be read by many people. They will be designed attractively
so as to win attention of many.

2.4.2 Sign posts

The bakery will ensure they will strategically locate. They will have the business name, logo,
address and telephone number. Working days and hours clearly and colorfully printed on
them, will also indicate the direction and distance of the premises from the location.

3.4.3 Promotions

Proper promotions of the company will be put in place. Promotion methods will include
competitive prices aimed at convincing customers that Damaris’ Deli bakery is the most
economical place to buy foodstuff

2.4.4 Quality packaging

The bread, cakes doughnuts will be packed in highly hygiene beautiful and convenient
packaging material well labeled to outdo competition.

2.5 Pricing strategy

Prices charged on products will depend upon

(a) Cost of input (raw materials)

The cost of input will vary proportionately to the price of the product.

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(b) Competitive prices

Damaris’ Deli bakery will ensure the most ideal prices are put in place, ensuring that prices of
competitors are slightly higher in order to win a large market.

(C) Seasons

In festive seasons i.e. Christ mass holidays the bakery will take advantage to higher prices in
order to maximize profits. It will also offer credit facilities to those who are creditworthy and
those who buy in large quantities. Discounts also are given to those buyers who buy in large
quantities.

Price list

Product and its description price in ksh

White cakes 400g 300

900g 650

Brown cakes 400g 290

900g 640

Queen cakes 6packets 200

12 packets 400

Policy to get credit

i. Those who buy regularly from the company ii. Those who buy in large
quantities (bulk and are creditworthy and those who pay in recommended period)

2.6 Sales tactics

Damaris’ Deli bakery manufactures its products and sells them to its customers, directly for
consumption. However, some are sold to shops, retailers, supermarkets, wholesalers so as to
be sold to customers in the rural.

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Personal sellers are appointed to sell products. A sales force will be recruited selected and
retained.

Motivating agents and distributors by lowering the products

The products of Damaris’ Deli bakery will serve a wide geographical area in the whole of
kesses area.

2.7 DISTRIBUTION STRATEGY

Manufacturer consumers

Manufacturer wholesaler’s consumers

Manufacturer wholesaler retailer’s consumers

The transport cost per month is projected to be kshs 4000. Damaris’ Deli bakery will use its
three vans to distribute its products. The above are channels through which products reach the
customers. The other means of transport used are the individual people who buy goods
directly for consumption. The vans also transport cakes and cakes to wholesalers who then
sell to customers.

Anticipated distribution problems

a. Poor roads in the area i.e. presence of potholes in the road disrupt the transportation of
products.
b. Damages in transit e.g. during rains, products won’t move quickly to the market
c. Congestion in the road because of the busyness of the road.

Solutions to combat above inconveniencies

I. Urging the government to construct and repair existing roads

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II. Damages in transit can be avoided by ensuring proper planning of items in cartons
III. In case of congestion, transport goods during odd hours when the road is not busy

CHAPTER THREE
3.0 Organization and management 3.1 Organizational
structure

MANAGER

SUPERVISOR

BAKER CASHIER SALES ATTENDANTS

3.2 Key management personnel

3.2.1 MANAGER AND SUPERVISOR

Qualification

a) academic- diploma holder in purchase and supplies management

b) age-above 23 years
c) have good communication skills and industrious relations

Duties and responsibilities

a. ensure that the companies targets are achieved

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b. ensure that hygienic conditions are maintained in baking room

c. ensure items in the store are properly managed to avoid losses and theft

d. ensure efficient and timely supply of materials required for baking to avoid
disruptions and delays in productions
e. package
f. he/she will earn a salary of kshs 9,000 in the first year,kshs11,00 in the second year
and kshs 13,000 in the third operational year of the bakery,

3.3 Other personnel

3.3.1 Bakers

Bakers will be three in number each having the qualification as follows

I. Academic- form four

II. Profession-certificate in catering and at least six months experience

Duties

(a) Enrich products and package

(b) Ensuring cleanliness in baking room is maintained

Packages and salaries

They will earn a monthly salary of kshs 5,000 each

3.3.2 Sales attendants

It will employ two sales attendants with the qualification; at least form four or experience
in sales and marketing

Duties and responsibilities

(a) Attend customers at the counter

(b) Display products well
(c) Ensure proper packaging

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Salary

Each will earn a salary of kshs 3000 per month or even more depending on the state of
economy.

3.4 Recruitment training and promotion

3.4.1 Recruitment

Posts will be established by the manager in conjunction with the supervisor. The posts
established will be advertised through posters citizen radio Kass fm all over kesses area far as
Eldoret town.

In the posts, qualification will be indicated; Interviews will be conducted for those meeting
qualifications, followed by final selection and employment of the qualified and best
applicants finally.

3.4.2 Training

I. Damaris’ Deli bakery will offer training under the following circumstances;
II. Upon promotion to the higher level of in future running of the bakery
III. Upon introduction of new equipment for use in the premise
IV. Upon recognition of the hardworking nature of the respective employee

V. V. Upon introduction of new technology

3.4.3 Promotion

Promotions will be based on training experience and hard work. Strategies will be put in
place to do this. Interviews, merit rating will only be given to those deserving i.e.
hardworking employees

Promotion will be done in the event that a position falls vacant and the growth of the
enterprise leading to creation of posts/opportunities.

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3.5 Remunerations and incentives

The table below outlines remuneration of Damaris’ Deli bakery from year 1 to year 3 of its
operations;
Job description Monthly salary year 1 Monthly salary year2 Monthly salary year 3
in kshs in kshs in kshs

Manager 9000 11000 13000

Supervisor 8000 8500 10000
Baker 1 5000 5800 6200
2 5000 5800 6200
3 5000 5800 6200
Sales attendant 1 3000 3500 4000
3000 3500 4000
2 38000
total 43900 49600

I will consider workers during sickness to allow them sick offs provided the employee is
genuinely sick The workers will thereafter be granted permission to go for treatment and
thereafter produce documents as proof that they were treated in certain hospital.

10.00 am snacks and tea will be provided, lunch will also be provided. Uniforms and safety
clothes will be providing by the enterprise.

3.6 Legal requirements

The business will acquire a trading license from the Uasin Gishu county council. It’s
estimated that it will cost kshs 2000.the license will be displayed at a convenient place. It
will also acquire health permit which will be acquired from referral hospital in Eldoret, which
will cost an estimate of ksh 2500.the portrait of the current president will be displayed as its
required by law. (a) A bank account will be opened with Kenya commercial bank Eldoret
branch since the bank will grant the proprietor a loan at the start of the business, their interest
on the loan and the repayment pattern are also convenient. Their address is

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KENYA COMMERCIAL BANK - ELDORET BRANCH PO

BOX 4830-20109 ELDORET

(b) Postal services

A post office box will be acquired at kamwosor post office to help in administration of the
business and customers consultancy

(c)Legal services

Will be acquired from;

KIMARU KIPLAGAT AND CO. ADVOCATES PO

BOX 1502-2010 ELDORET (d) Insurance services

The firm will be insured against theft and fire risks. The insurance cover will be obtained
from the African merchant insurance company; their address is;

AFRICAN MERCHANT INSURANCE COMPANY PO

BOX 3149-20603 ELDORET

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CHAPTER FOUR
4.0 Production and operational plan

The intended production is to be of standard requirement .the business is to spend less in

transportations and no or minimum loss are incurred in transporting by packaging the
products nicely to attract customers

4.1 Production tools and equipment’s

The machines and equipment’s include the following;

(a) oven-
majorly for producing heat for baking to supplement electricity

(B) mixing through-used to mix flour and the ingredients (C)

Packing grades-packing loaves before transportation

(d) Weighing scale-for weighing the products

(E) Baking trays-packing the cakes before being placed in the oven so as to help give it shape

The table below shows the facilities and their prices and where they will be supplied from
equipment supplier quantity Unit price Total price
Oven a.o electronics 2 4000 8000
Baking tray jua kali karibu 30 40 1200
hardware kitmat
Weighing scale hardware uchuzi 1 1200 1200
Mixing through agents pyramid 5 100 500
agents k.k
Knives 5 20 100
furniture
Packing general motors 50 150 7500
crates Tables 4 500 2000
vans
2 200000 400000

4.2 Repairs and maintenance

For effective working and running of the business repairs and maintenance of the equipment
is of paramount importance. To achieve the firm will carry out inspection every month. The
repair will be done by hiring experts to maintain and repair items when damaged. The

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vehicles will be serviced every month. The carpenters mechanics and contractors will be paid
after doing the job.

4.3 Premises

The premises is to be operated in the owners premises .It consists of three rooms and the cost
involved in building the rooms is approximately kshs 20,000.the first room is the reception by
production, advertisement manager, to the left of reception is the manager’s office and to the
extreme left there will be a corridor leading to the processing unit located opposite the store

4.4 Production strategy

Production strategy that may be used to ensure quality assurance standards are kept in
required standards include

Water used for mixing and making dough should be boiled first to avoid outbreak of diseases
i.e. cholera and typhoid.

The materials bought should of high quality, natural and fresh eggs and milk low operation
cost will ensure high sales due to cost reduction. The firm will operate for 12 hours daily.
Tenders will be awarded to potential suppliers. In handling the products the workers should
have public health certificate

4.4.1 Production design and development

Damaris’ Deli bakery is to involve itself in labeling appropriate logo on their

products .package’s good way of good design e.g. ‘Damaris’ Deli bakery for quality
and sweet cakes ‘

This will enable the product to be easily identified in the market without confusion. This
eliminates fraud from competitors

4.4.2 Technology

The business will achieve its objectives within the shortest time possible by use of modern
electronic oven for baking cakes .it will also computerize its financial records and use
internet to place orders. It will also hire qualified personnel that are supervisor’s bakers with
minimum of certificate or diploma in catering.

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4.4.3 Monthly material requirement

The following materials may be in use for the month as shown

Item Quality Amount in kshs
Flour 50bagsx90kgs 100000
Sugar 360bagsx50kgs 14000
Salt 20bundlesx20kgs 5000
Acetic acid 50kgs 1500
Eggs 5trays 1000
Milk 30litres 1000
Yeast 10kgs 300
Baking powder 50kgs 500
Vegetable fat 20jerry cansx20litres 20000

Total 143300

4.4.4 Monthly production estimates

items quantity
Bread 15000
Cakes 12000
Scones 10000
total 37000

4.4.5 Monthly production expenses

These include expenses on labor

Expenses amount
Postal services 1000
Wages for 100000
workers electricity 10000
Water bills 500
Motor vehicle maintenance 5000
Fuel 5000
Totals 121500

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4.4.6 Monthly labor requirement

Damaris’ Deli bakery intents to maintain the work force unless during higher production
period or during high demand

Its labor requirements is as tabled below

Personnel Payment in kshs
The manager 10000
Supervisor 8500
Accountant 5000
Bakers 3000
Watchman 1000
Salesman 3500
Total 31000
4.4.7 Total production cost

This includes total expenses and total labor force

Production cost in total Cost in kshs

Postal services 1000
Wages for workers 100000
Electricity bill 10000
Water bill 500
Vehicle maintenance 5000
Fuel 5000
Manager 10000
Supervisor 8500
Accountant 5000
Bakery bakers 3000
Watchman 10000
Salesman 3500
Total 152000

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4.5 Production process

Damaris’ Deli bakery intents to produce cakes season scones and cakes. The production of
cakes (baking) undergoes the stages below;

CAKES

Measure and mix ingredients for every bag of 90kgs of wheat flour, 10kgs of cooking fat,
70litres of water where 40litres are warm and 30litres are cold, 150gms of yeast, 3bags of
salt, one litre of glacial acetic acid (used as a preservative) is used.al above are then put into a
mixing unit for a maximum of 40minutes depending of the speed used. The dough is then
placed on a table where cutting and cutting is done. The measured dough is put in plates and
placed in a proffer for about 10hours ,its then retrieved and arranged in an oven for curing for
about 25 minutes at a temperature of 250c.when the golden coat is formed they are then
removed and allowed to cool. Air fans may be used to increase the cooling and are then
sliced. The baked cakes will be Queen cakes (small and medium size) and special cakes i.e.
wedding cake birthday and farewell cakes The bakery classify them as ‘ordinary’ or ‘special
‘cakes and are made on request

4.6 Legal requirements

For smooth operation the firm is to abide by the law by following legal laws as follows;

4.6.1 Public health regulation

Any person handling food has to be physically fit; all workers are examined and issued with
health certificate from a doctor. The company also should ensure clean working environment
as required by (NEMA) and public health act.

4.6.2 Building law and trading license

As the government policy the government gets a small fee for land ownership and is paid
through the county council of keiyo. License will be obtained from the county council of
keiyo. The firm will be insured against insurable risks i.e. fire and theft. The workers will be
registered under the national social security fund (NSSF).The firm is adequately protected
under the protection act from the ministry of labor.

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CHAPTER FIVE
5.0 Financial plan

This indicates the financial position of the firm. It will include the financial ratio analysis,
profit planning, financial forecasting and budgeting.

5.1 Pre-operational cost

These are costs incurred before starting a business

Formation expenses Amount in kshs
Business registration 5000
Legal fees 4000
Water bill 3000
Electricity 4000
Advertisement and promotion 5000
Furniture and fittings 10000
Telephone installation 1000
Baking tins 2000
Weighing machines 2000
Machine and equipment 65000
Crates 3000
Totals 104000

5.2 Working capital computation

Current assets Amount in kshs Amount in kshs
Cash Stock 80,000
debtors 60,000
110,000
Current liabilities 250,000

Creditors 100,000

Working capital 150,000

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5.3.1 Projected cash flow for damaris’ deli bakery for the year
2024
Month JAN FEB MAR APRIL MAY JUNE JULY AUGUST SEPT OCT NOV DEC TOTAL
CASH INFLOW KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS
Cash sales 87000 11000 72520 61250 69950 72000 73550 48050 75000 783460 76000 92300 866080
Discount received 2800 1232 636 760 475 673 1278 430 980 1170 750 1385 12570
Credit sales 9550 6200 5550 3400 8540 9200 6200 3150 10250 9860 12250 9300 93400
Total cash inflow 99350 18432 78706 65410 78965 81873 81028 51630 86230 84490 89000 10298 972050
Cash purchases 56000 2050 24650 72730 251400

Credit purchases 2500 3600 6500 668800

Salaries& wages 28560 28560 28560 28560 28560 28560 28560 28560 28560 28560 28560 28560 342720
Electricity 1000 1000 1500 1200 11440

License 1500 1500

Rent 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 26400
Water 100 100 100 100 100 100 100 100 100 100 100 100 1200
Interest on loan 2500 2500

Insurance 1800 1800 1800 5400

Maintenance 150 560 250 150 400 1510

Cleaning 150 130 540 160 230 180 120 1510

Bank charges 250 650 300 700 1900

Stationery 800 800

Postage 72 54 215 21 74 115 48 205 118 74 375 256 1628

Telephone 304 550 450 300 700 650 950 600 350 600 780 6480

Fuel 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 30000
Packaging 800 1000 1000 1500 750 1500 1500 1500 1500 1500 1500 1500 15550
Advertising 400 1500 1000 2500 1400 650 400 900 500 850 450 500 11050
Transportation 500 1500 1500 750 1500 1500 1500 1500 1500 1500 1500 1500 16250
Totals 98282 67900 58055 61721 545504 60636 71468 49445 69368 74655 60145 71396 7933378
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Net cash 568 10528 20601 3689 23461 21237 9560 2185 16862 16345 23855 37859 1786475
Balance b/f 271799 272337 282896 309496 307185 330646 351883 361443 363628 380490 396027 418852 378595
Balance c/d 271799 272367 303496 307185 330640 351883 361443 363628 380490 396835 418882 450470 4219475

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5.3.2 Projected cash flow for damaris’ deli bakery for the year
2025
Month JAN FEB MAR APRIL MAY JUNE JULY AUGUST SEPT OCT NOV DEC TOTAL
CASH INFLOW KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS
Cash sales 91000 89830 666420 61050 86750 83000 80520 75160 76280 79840 82520 188200 996590
Discount received 2050 2150 364 707 1578 2100 1933 1170 1378 7600 2431 11250 46000
Credit sales 11250 460 5200 7250 1250 6500 8540 3140 4860 580 1100 2450 11520
Total cash inflow 104300 92440 71984 69007 89578 91600 96993 79470 82518 88020 95951 201900 1085832
Cash purchases 41000 43000 18200 14150 31580 42000 38670 17670 23400 27500 32000 48620 377800
Credit purchases 14500 2500 13000 1800 10650 4500 6000 11460 5500 9800 10000 11200 100910
Salaries& wages 29988 29988 29988 29988 29988 29988 29988 29988 29988 29988 29988 29988 359865
Electricity 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
License 1500 1500

Rent 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 26400
Water 100 100 100 100 100 100 100 100 100 100 100 100 1200
Interest on loan 2500 2500

Insurance 1800 1800 1800 5400

Maintenance 300 950 650 760 960 3620

Cleaning 100 700 2500 1000 500 4800

Bank charges 250 500 370 1200 620 900 450 850 5140

Stationery 600 600

Postage 21 75 48 148 178 98 124 145 218 86 104 78 1289

Telephone 250 900 550 1210 675 1600 650 550 1100 750 600 1750 10585
Fuel 2800 2500 2500 3300 2500 2650 3840 2300 2500 2900 2750 3200 33740
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Packaging 600 200 300 1000 2500 1600 900 1000 2600 1600 900 1050 16250
Advertising 400 500 650 400 850 600 450 900 1500 1950 500 550 9350
Transportation 500 1250 1500 1000 1500 1500 1500 1500 1500 1500 1500 1500 16250
Totals 98309 87513 71606 58920 86501 92536 88292 76683 75406 81644 81992 105696 1001090
Net cash 5991 4947 378 4095 6327 1104 3301 10507 2832 896 3406 38054 84742
Balance B/f 425471 431462 436409 436787 440882 449209 450313 433615 464112 466954 467850 471259 997513
Balance c/d 431462 436409 436787 440882 449209 450313 4336156 464112 466954 467850 471259 510213 547982

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5.3.3 Projected cash flow for damaris’ deli bakery for the year
2026
Month JAN FEB MAR APRIL MAY JUNE JULY AUGUST SEPT OCT NOV DEC TOTAL
CASH INFLOW KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS KSHS
Cash sales 85000 65000 15000 40400 69300 67600 62500 43100 65850 64000 61750 69000 751500
Capital introduced 250000 250000

Discount received 14000 2175 1250 812 1550 1175 900 410 875 1227 950 1175 26500
Credit sales 23000 2600 18250 11250 16500 1800 9250 60200 10200 8600 9600 6500 154230
Total cash inflow 372000 93175 77500 52462 87350 77570 725650 49710 77005 73827 72300 76675 1182230
Cash purchases 8300 43500 25000 16250 41000 23500 19800 8200 17500 24550 19000 23500 334000
Credit purchases 30300 9800 7000 2500 12000 8500 6500 3600 5400 9000 4670 7730 107000
Salaries& wages 27200 27200 27200 27200 27200 27200 27200 27200 27200 27200 27200 27200 326400
Electricity 1500 700 700 900 850 950 800 700 950 800 750 900 10500
License 1500 1500

Rent 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 26400
Water 100 100 100 100 100 100 100 100 100 100 100 100 1200
interest on loan 2500 2500

Insurance 1800 1800 1800 5400

Maintenance 200 500 350 500 1550

Cleaning 500 250 150 750 220 150 200 250 100 150 220 250 2620
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Bank charges 540 250 500 750 2040

Stationery 1000 1000

Postage 125 75 96 114 60 72 125 50 48 128 72 114 1079

Telephone 700 550 720 570 860 518 700 700 623 8332

Fuel 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 30000
Packaging 1000 1000 800 800 1000 1400 900 1000 800 900 1000 1000 11600
Advertising 1000 1200 2300 1000 2500 2500 2500 2500 2500 2500 2500 2500 25500
Transportation 1500 500 300 200 1200 1200 850 950 1050 250 1500 1500 11000
Totals 156665 89575 609170 54794 84050 70992 62192 50960 62660 70798 62912 73367 9013219
Net cash 215335 3600 8330 2331 3300 6583 8458 1250 14339 2849 9388 3308 271909
Balance B/f 215335 218935 227265 224933 228233 234817 243274 242024 256363 259213 268601 271909 2890908
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5.4 Proforma income statement

5.4.1 Damaris’ deli bakery profomer profit and loss Statement for the year ending
31st december 2024
Sales 318280 11750 959480
Less: cost of sales (23400)
Opening stock 294880
Less closing stock
Gross profit
Add discount received

Less expenses
Salary 342720
Electricity 11440
Water and rent 27600
Packaging 12810
Insurance 5400
Interest on loan 2500
Repair & maintenance 1500
Cleaning materials 1510
Bank charges 19000
Fuel 30000
Telephone & postage 8108
Stationery 800
Transportation 16250
Wages 25000
Advertising 11050
Provision for depreciation
Motor vehicle 3087
Furniture & fittings 560
Machines & equipments 4468 8116 508214
Profit before tax 157205

Provision for 15% tax 23580

Net profit after tax 133624

5.4.2 Damaris’ deli bakery profomer profit and loss statement for the year ending
31st december 2025
Sales 167180 1057120 18344
Less: cost of sales 23500
Opening stock 478710
Add : purchases (28400) 450310
Less closing stock
Gross profit

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Add discount received 601654

Less expenses
Salary 259856
Electricity 24000
Water and rent 27600
Packaging 16250
Insurance 5400
Interest on loan 1250
Repair & maintenance 1500
Cleaning materials 3620
Bank charges 4800
Fuel 5140
Telephone & postage 33740
Stationery 11874
Transportation 600
Wages 16250
Advertising 25000
Provision for depreciation
Motor vehicle 2933
Furniture & fittings 532
Machines & equipments 4245 7710 444590
Profit before tax 157064

Provision for 15% tax (8559)

Net profit after tax 148505

5.4.3 Damaris’ deli bakery profomer profit and loss statement for the year ending
31st december 2026
Sales 1058730
Less: cost of sales
Opening stock
Add : purchases 441800
Less closing stock (11750)
Gross profit 26500
Add discount received

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Less expenses
Salary 326400
Electricity 10500
Water and rent 27600
Packaging 11600
Insurance 5400
Interest on loan 2500
Repair & maintenance 1500
Cleaning materials 1550
Bank charges 2620
Fuel 2040
Telephone & postage 30000
Stationery 9321
Transportation 1000
Wages 11100
Advertising 25500
Provision for depreciation
Motor vehicle 3250
Furniture & fittings 590
Machines & equipments 4703 8543 477174
Profit before tax 178006

Provision for 15% tax 3750

Net profit after tax 174256

5.5 Balance sheet

5.5.1 Damaris’ deli bakery December 2024

FIXED ASSETS COST DEPRECIATION NET BOOK
VALUE
Tools and equipments 65000 3250 61750
Furniture and fittings 11800 590 11210
Machinery 4703 89372
8543 162332
Current assets
Cash in hand 15000
Cash at bank 34945
Stock 29750
Debtors 154230 368925
Less: current liabilities
Creditors (107000)
Long term liabilities
Owners equity 50000
Bank loan 50000

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Contributions from friends 50000 424256

Family contributions

Net profit 174256

NB: provision for depreciation is 5% on reducing balance methods on all fixed assets.

5.5.3 Damaris’ deli bakery december 2025

FIXED ASSETS COST DEPRECIATION NET BOOK
VALUE
Tools and equipments 61750 3087 58602
Furniture and fittings 11210 590 10649
Machinery 89372 4468 89902
162331 4116 154214
Current assets
Cash in hand 49000
Cash at bank 155488
Stock 23400
Debtors 93400 321289
Less: current liabilities
Creditors 66880
Loan 25000 (91880) 383624
Long term liabilities
Owners equity 50000
Bank loan 50000
Contributions from friends 50000
Family contributions 100000
250000
Net profit 133624 383624

5.5.3 Balance sheet

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5.5.2 Bamaris’ deli bakery december 2024

FIXED ASSETS COST DEPRECIATION NET BOOK
VALUE
Tools and equipments 58662 2933 55729
Furniture and fittings 10649 532 10117
Machinery 84902 4245 80657
154213 7710 146503
Current assets
Cash in hand 24500
Cash at bank 164479
Stock 28400
Debtors 60530 277909
Less: current liabilities
Creditors 100910
Loan 25000 125910 1519999
Long term liabilities
Owners equity 50000
Bank loan 50000
Contributions from friends 50000
Family contributions 100000
250000
Net profit 148503 298503

5.6 Breakeven point analysis

Break even point = fixed cost x 100

Cost of sales ratio

Break even level of sales =fixed cost x 100

contribution = (sales –variable cost)

Contribution

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BES =190800x100 = 36.8%

518152

Year 2010 = 959480-756034

=203446

Year 2011 =1057120-942170

=114950

Year 2012 =1058730-858974

=197756

Contribution margin percentage

=518152x100 =16.8%

3075330

5.7 Profitability ratios

Financial ratio 2010 = G.PX100

Gross profit margin Sales

652850x100

959480

=68%

Gross profit margin 2011=G.PX100

Sales

=583310x100 =55.1%

1057120

Gross profit margin 2012=G.PX100 =628680x100 = 59.3%

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Sales 1058730

Return on capital employed (ROCE)

ROCE =profit before tax and interestx100

Capital employed

2010 2024 2025

190800x100 190800x100 190800x100
518152 518152 515281
=62.8% =62.8% =71.2%

5.8 Desired financing

Financial requirement Kshs
Pre-operational cost 104000
Working capital 250000
Total 354000

5.9 Proposed capitalization

ITEMS AMOUNT IN KSHS
Owners’ equity & Family contribution 100000
Contribution from friends 60000
Bank loan 300000

Total 460000

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