MUSHROOM

ENTERPRISE

BUSINESS NAME: MUSHROOM ENTERPRISE

PRESENTER NAME: ANETI N WAMALWA

ADM NO: 19185

INSTITUTION NAME: THE BUNGOMA NATIONAL POLYTECHNIC

SUPERVISOR NAME: MR. WILLIAM TEMBU

SUBMITTED FOR: AWARD OF CRAFT CERTIFICATE IN

GENERAL AGRICULTURE

DATE: MARCH 2025

EMAIL ADDRESS: [email protected]

PHONE NO: 0113713040

DECLARATION
Declaration by Candidate:
I Aneti Wamalwa solemnly declare that the business plan presented is my original work and that
it has not been done anywhere by anybody nor presented to KNEC for the award of any diploma.

Signature…………………………………………………………..Date…………………………

Supervisor

Signature…………………………………………………………..Date…………………………

ii
 ACKNOWLEDGEMENT
Above all, I want to thank God who has enabled me to complete my business plan. Also I want
to thank my supervisor Mr. William Tembu for his enthusiastic support and advice throughout
my business plan. He approved the whole business plan from the beginning till the end. I want to
appreciate my fellow students at the polytechnic for their effort and advice that led to the
successful publication of this project.

iii
 EXECUTIVE SUMMARY

1.0 BUSINESS DESCRIPTION

The business initiator is called Aneti Wamalwa and she is 23 years old. She is a certificate holder
in general agriculture acquired in Bungoma national polytechnic. The name of the purposed
business is mushroom enterprise which located at Namable.

The business contributes to a local communities by improving living standards by employing

qualified personnel from the community. The business will take some time to gain stability and
with employed qualified personnel’s to market the product.

The Target Market

The business potential customers will be the general public, restaurants and the nearby
institutions. The target market share is 50%. The business has two competitors who will share
the remaining 50%. Effective methods of promotion and advertising are to be used by the
business to market its products as well as to capture a larger population in the market.

ORGANIZATIONAL AND MANAGEMENT PLAN

Mushroom enterprise will be managed by Aneti who is the owner of the business. The business
will require a startup staff member and every employee is expected to perform his/her work
diligently and to promote the name and goals of the business.
The recruitment of employees will be done fairly so as to get the best employees for the firm.
Remuneration and incentives for persons shall be awarded without failure. Training of
employees will also be done in the first two weeks of which will be done by the general
manager. Trading licenses and business permits will also be obtained to avoid any
inconveniences with the responsible authorities.

PRODUCTION/OPERATIONAL PLAN
The business will consist of two departments to facilitate its production and services. The
departments will work together to achieve the goals of the business. Production and marketing
management will determine production of higher demand. Several methods will also be used to
control the stock. For example the buffer stock control and the just in time method. The
production process of obtaining goods from the suppliers and selling them to customers will be
made faster and less cumbersome to avoid the situation of less stock. The business will also have
an operating timetable to guide the employees.

FINANCIAL PLAN
The company will require KES 450,000 to start off. The owner will contribute KES 200,000, the
loan amount will be KES 200,000 and the rest KES 50,000 will be sourced from family and
friends.

The financial information of the business is contained in proforma statements, balance sheets and
projected cash flows. The profits earned from the business will be used to expand the business.
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Table of Contents
DECLARATION.............................................................................................................................ii
ACKNOWLEDGEMENT......................................................................................................................iii
EXECUTIVE SUMMARY............................................................................................................iv
1.0 BUSINESS DESCRIPTION.......................................................................................................iv
The Target Market..................................................................................................................................iv
ORGANIZATIONAL AND MANAGEMENT PLAN...........................................................................iv
PRODUCTION/OPERATIONAL PLAN...............................................................................................iv
FINANCIAL PLAN...............................................................................................................................iv
CHAPTER ONE..............................................................................................................................1
1. 0 BUSINESS DESCRIPTION.................................................................................................1
1.1 Introduction.................................................................................................................................1
1.2 Business Description...................................................................................................................1
1.3 Background Information..............................................................................................................1
1.4 The Business Name.....................................................................................................................1
1.5 Background of the Owner............................................................................................................1
1.6 Location and Address..................................................................................................................2
1.7 Justification of the Business Location..........................................................................................2
1.9 Form of the Business Ownership.......................................................................................................2
1.9.1 Entry Strategy.................................................................................................................................3
1.9.2 Growth Strategy..............................................................................................................................3
1.9.3 The Business Industry.....................................................................................................................3
1.9.4 The Goals of the Business..............................................................................................................3
1.9.5 The Anticipated Problems That May Hinder the Business Operations...........................................4
1.9.6 Solutions to Anticipated Problems...........................................................................................4
CHAPTER TWO.............................................................................................................................4
2.0 MARKETING PLAN................................................................................................................4
1.8 Introduction.................................................................................................................................4
1.9 Customers....................................................................................................................................4
1.10 Competitors.................................................................................................................................5
2.3.1 SWOT analysis table for Competitors.....................................................................................5

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 2.4 Market Shares..............................................................................................................................5
2.5 Pricing Strategy.......................................................................................................................5
2.6 Promotion and Advertising..........................................................................................................5
2.7 Sales Tactics................................................................................................................................5
2.8 The Product.................................................................................................................................6
CHAPTER THREE.........................................................................................................................6
3.0 ORGANIZATION AND MANAGEMENT PLAN...................................................................6
3.1 The Organization Chart...............................................................................................................6
3.2 Management Team......................................................................................................................7
3.2.1 General Manager............................................................................................................................7
3.2.2 Marketing Officer....................................................................................................................7
3.2.3 Farm Manager..........................................................................................................................8
3.2.4 Sales Person.............................................................................................................................8
3.2.5 Accounts Person......................................................................................................................8
3.2.6 Office Messenger.....................................................................................................................9
3.3 Selection and Recruitment of the Staff........................................................................................9
3.4 Staff Training and Development..................................................................................................9
3.5 Staff Remuneration......................................................................................................................9
3.6 Staff Motivation and Promotions Policy......................................................................................9
3.7 Legal Requirements for the Business.........................................................................................10
3.8 The Business Support Services..................................................................................................10
CHAPTER FOUR.........................................................................................................................10
4.0 Production Plan / Operational Plan..........................................................................................10
4.1 Production Process..........................................................................................................................11
4.2 Production Facilities and Equipment...............................................................................................11
4.3 Government Policies Affecting the Business Operation............................................................11
4.4 Production Strategy...................................................................................................................11
4.4.1 Methods to be used to Control the Stock............................................................................11
4.5 Operational Timetable...............................................................................................................12
CHAPTER FIVE...........................................................................................................................12
5.0 THE FINANCIAL PLAN........................................................................................................12

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5.1 PRE-OPERATIONAL COST.......................................................................................................12
5.2 Working Capital............................................................................................................................13
5.2.1 Loan repayment schedule.......................................................................................................13
5.3.1 Projected Cash Flows for Mushroom enterprise 2026.........................................................15
5.3.2 Projected Cash Flows for Mushroom enterprise 2027..............................................................17
5.3.3 Projected Cash Flows for Mushroom enterprise 2028.........................................................18
5.6 BREAK EVEN LEVEL.................................................................................................................22
5.7 PROFITABILITY RATIOS..........................................................................................................25
5.8. DESIRED FINANCING...............................................................................................................25
5.9 PROPOSED CAPITALIZATION................................................................................................25
5.9.1 PROPOSED CAPITALIZATION.............................................................................................25

vii
CHAPTER ONE
1. 0 BUSINESS DESCRIPTION
1.1 Introduction
This chapter contains the business description, background information of the business,
background of the owner, the business name, location and address, justification of the choice of
business venture. Form of the business ownership, entry strategy, growth strategy, business
industry, anticipated problems that may hinder the business operation and solutions to the
suggested problems.

1.2 Business Description

The business will be known as Mushroom Enterprise. It will be dealing with the selling of
mushroom. The business will be a new one in Nambale Town the headquarters of Busia County.

1.3 Background Information

The selling of mushroom in my business area is not a common business. The first competitor to
my business will be Mali Safi Company that only resales mushrooms, thus not being a match to
Mushroom enterprise. The next competitor will be Hamisi mushroom Store that sells only one
variety of mushrooms.

1.4 The Business Name

The name of the business will be Mushroom enterprise. The owner of the business will be Aneti
Wamalwa. The aim of starting the business is due to high demand of mushroom in the area.

1.5 Background of the Owner

Aneti Wamalwa was born in the year 2002 June 4th at her home town of Busia Namable. She was
raised by both parents till she attained the age of 3 where she was taken to nursery school that
was near her home place. While still in nursery her parents noticed high potential in their child
despite of her young age, she worked hard in school and then she joined primary school St
Mary’s Butula Girls. In the year 2016 she sat for her KCPE where she attained 306 marks. In the
year 2017, she joined her school of choice St Peter’s Aterait Secondary while she was there she
also showed hard work in her exams and emerged the top scorer in the whole school. Besides
working hard, Aneti was a disciplined student thus portraying excellent leadership qualities and
skills. She was elected as the president of the school and there she knew how to balance her work
in terms of time and her duties too.

She sat for her KCSE exams and she passed with a mean grade of D Plain. Before joining her
dream College Bungoma National Polytechnic, she worked in a small shop selling mushroom in
the area and this is the genesis of the business idea.

1
 1.6 Location and Address
The business will be located at Nambale Highway near the police station, a bank and the
Catholic Church and several institutions including a girls, and boy’s boarding schools. As
indicated in the map below.

Address

MUSHROOM ENTERPRISE,

P.O BOX 692 – 50400,

BUSIA (K)

Mobile Phone Number: 0113713040

E-mail address: [email protected]

1.7 Justification of the Business Location

The reason why I choose the location is because of the high security from the police station and
also the place is surrounded by many schools and a bank (refer to the map above) hence the tight
security. This means therefore that the business will run for 24 hours.

1.8Justification of the Business Venture

The following are the reasons for the business venture;

I. Less capital required.

II. Mushroom farming does not require a large space to establish.
III. High returns in a short period of time.
IV. Easy banking.

1.9 Form of the Business Ownership

2
The form of the business ownership will be a sole proprietorship. The following are the reasons
for choosing this type of ownership.

I. A sole proprietor enjoys the profits incurred alone whether huge or small.
II. A sole proprietor can go on leave at any time.
III. It will be easy to start up the business since it costs less to register a sole
proprietorship vs a limited company.
IV. One becomes the boss of the business.
V. A sole proprietor comes into direct contact with her employees and customers.
VI. She is the central decision maker.

1.9.1 Entry Strategy

The products will be advertised on TV, Radio, on Social Media, via trade shows in order to
source for potential buyers.

1.9.2 Growth Strategy

The business will be able to open new branches throughout the country. The business will also
link with outside countries in order to expand the organization. It will also have a strong and well
defined core leadership.

1.9.3 The Business Industry

The business will develop a good relationship with the other manufacturers in the same type of
industry. MUSHROOM ENTERPRISE will be under the consumables product industry which
will also be based on the agricultural industry. Mushroom enterprise will be a market leader by
embracing the latest mushroom technology. The competition in the consumer product industry is
for the shelf-space, therefore Mushroom enterprise will strive to have sophisticated package
design involving marketing and satisfying customers.

1.9.4 The Goals of the Business

The following are the objectives;

I. To satisfy the needs of the customers – Mushroom enterprise will ensure that the
customers are served at the right time, through bringing enough layer stock to the
company.
II. To create job opportunities to the local people I the society e.g. the jobless youth
in the area will have room for work in the companies e.g. cleaners, feeders,
transporters etc.
III. To improve the economy that will be through taxes in the County Government of
Busia.
IV. To improve the nutritional profile of the community through the provision of
cheap vitamin in the form of mushroom, this will prevent the chances of gross
malnutrition.

3
1.9.5 The Anticipated Problems That May Hinder the Business Operations
I. Theft – this might occur in the form of employee pilferage and breakings.
II. Poor communication networks.
III. Shortage of water.
IV. Electrical power shortage.

I.9.6 Solutions to Anticipated Problems

I. Theft – In this case the company will be able to install CCTV cameras all over the
company and it will also employ trained security personnel.
II. In case of poor communication networks the company will install WIFI.
III. Shortage of water – This will be reduced by drilling water points.
IV. Electrical power shortage – In case of blackouts in the company, the company will install
automatic back-up generators.

CHAPTER TWO
2.0 MARKETING PLAN
1.8 Introduction
This chapter contains the marketing plan, customer identification, market shares, competitors,
methods of promotion and advertisement, pricing strategy, sales tactics, and product or
distribution strategy.

1.9 Customers
The business will be targeting three customers;

I. Individual Customers – These types of customers will be those individuals with small
shops out there wishing to buy from my enterprise.
II. Institutional Customers –Since MUSHROOM ENTERPRISE will be located and
surrounded by various institutions, therefore my target will be the nearby schools.
III. Commercial Customers – Here the business will be targeting those hawkers in town
selling the same since they are many there.

4
 1.10 Competitors
I. Major Competitors – The major competitors to the business will be the nearby companies
i.e. Mali Safi Company and Hamisi Mushroom Store
II. Minor Competitors – This will be the small scale farming community back at home in the
village.

II.3.1 SWOT analysis table for Competitors

SWOT NAME OF STRENGTH WEAKNESS OPPORTUNITY THREAT
COMPETITOR
1. Mali Safi Availability of Long working Tight security. Language
Company good hours. barrier.
communicatio
n skills
2. Hamisi Good Poor Loyal customers. ……………
Mushroom managing infrastructure.
Store time.

II.4 Market Shares

Due to competition from the market the business goal will be to get 50% of the total available
market share (TAM). Therefore the business should earn the highest marks as a target. I have
two competitors that will be surrounding the business. The first is Mali Safi Company at 35%
and Hamisi Mushroom Store at 15% of the market share, Mushroom enterprise 50% of the whole
remaining market share.

II.5 Pricing Strategy

Penetration pricing will be one way of pricing. There will be offering of goods and services at
lower prices as compared to the competitors. The business will also use dynamic pricing. Here
the business will use this method of pricing in order to make the current price demand of the
mushroom. Dynamic pricing is the constant change in pricing to match the current demand of the
item.

II.6 Promotion and Advertising

Use of public notices, Social Media and special events like festivals, business exhibition or trade
shows will be the major methods that will be used to promote and advertise the products. There
will also be various ways of advertisement such as creating awareness of the incoming business
in town, use of business and also magazines.

II.7 Sales Tactics

The business will offer the following tactics;

I. Giving quantity discounts. This will be a way of attracting more customers to the
company.

5
 II. The business will also ensure affordable prices to the customers.
III. Creating rapport.
IV. Another sales tactic will be sell-on-delivery, there will be door to door delivery as per the
customer’s needs.

II.8 The Product

Usually mushrooms have different types. Oyster mushrooms known for their sweet flavor and
meaty textures

The business will offer transport services at affordable prices and reward the potential customers
after every year. The reward will be free transport in order to make work easier for them.
Distribution will be done by use of vehicles such as pickups and Lorries for large quantities and
small quantity distribution will be by motorcycles.

CHAPTER THREE
3.0 ORGANIZATION AND MANAGEMENT PLAN
The business will be organized in various departments namely; the general manager, marketing
officer, farm manager, sales officer, office messenger and the accounts person.

III.1 The Organization Chart

6
 General
Manager

Farm Marketing
Manager Officer

Office Accounts Sales

Messenger Person Person
III.2 Management Team

3.2.1 General Manager

The general manager is a person who supervises all the activities of the business.

Duties and Responsibilities

I. Monitoring the day-to-day activities of the company.

II. Implementing policies.
III. Coaching the workers.
IV. Creating good communication in the management team.

Qualifications

I. Must be 25 years and above.

II. Must be a Kenyan citizen.
III. Must have a certificate and diploma in supply chain management.

III.2.2 Marketing Officer

Is the person who markets the product in an organization through various ways such as
advertising and creating awareness in public gatherings?

Duties and Responsibilities

I. Directing and guiding the junior staff on what to do.

II. In charge of marketing products.

7
Qualifications

I. Must have a diploma in Supply Chain Management.

II. Should have good communication skills.
III. Work experience of at least 1 year.

III.2.3 Farm Manager

Duties and Responsibilities

I. Responsible in managing the mushroom.

II. Supervising the grounds men.
III. Ensuring that the mushroom are ever safe.

Qualifications

I. Diploma in Business Management.

II. Work experience of at least one and a half years.

III.2.4 Sales Person

Duties and Responsibilities

I. Helping the marketing officer in searching for market for the product.
II. She will be responsible for selling the business products.
III. Informing the general manager on the status of the products.

Qualifications

I. Must be good in record keeping.

II. Must have good communication skills.
III. Must be a form four certificate holder.

III.2.5 Accounts Person

He will be handling the financial issues and decisions in the company.

Duties and Responsibilities

I. Assist in the preparation of the budget.

II. Manage records and receipts.
III. Reconcile the daily, monthly and annual transactions verifications.

Qualifications

I. Must have a degree certificate in accountancy.

II. At least 3 years professional experience in the field.

8
 III.2.6 Office Messenger
Duties and Responsibilities

I. Checking messages.

Qualifications

II. Must be god in communication skills.

III. Honest.
IV. Must be quick.

III.3 Selection and Recruitment of the Staff

The staff will be employed according to their level of education and experience through
advertisements. Some departments will require those with experience and it’s only a few
departments who will need those without.

III.4 Staff Training and Development

The training of the staff members will be done at the organizations compound. The training
sessions will be from Monday to Thursday according to the departments. Marketing and farm
departments will start on Monday to Tuesday and sales, finance and office messenger will be
training on Wednesday and Thursday. The training session will start at 8 O’clock and end at 12
Noon. The general manager will take the staff through training and the payment will be five
hundred shillings from each member. And the training will be for a period of two weeks.

III.5 Staff Remuneration

S/NO Staff Title Monthly Salary Other Benefits Total
1. General Manager 20,000.00 KES House Allowance 25,000 KES
5,000 KES
2. Marketing Officer 15,000.00 KES House Allowance 17,000 KES
2,000.00 KES
3. Accounts Man 10,000 KES House Allowance 12,000 KES
2,000 KES
4. Sales Personnel 5,000 KES House Allowance 7,000 KES
2,000 KES
5. Office Messenger 3,000 KES House Allowance 5,000 KES
2,000 KES
GRAND TOTALS 53,000 KES 13,000 KES 66,000 KES

III.6 Staff Motivation and Promotions Policy

I. Promoting their seats.
II. Giving them leave.
III. Helping them with welfare support.
IV. Raising their salaries whenever they perform their duties well.
9
 III.7 Legal Requirements for the Business
Trading License
The business will acquire its trading license from the county assembly office which will cost
3,500 KES.

Business Permit

This will be obtained from the chief’s office that will be found in Nambale Town. This costs 900
KES and it is subject to annual renewal.

III.8 The Business Support Services

The following services will be available at Mushroom enterprise.

Banking Services

The business will be able to deposit, and withdraw its money for production and services in the
business industry.

Insurance Service

The insurance services will provide cover in the event of unforeseeable events such as fire
outbreaks, thefts and other risks that might occur in the business organization.

Transport Services

The business will be having its own means of transport i.e. pickups for long distance transport
and some motorbikes for short distances.

CHAPTER FOUR
4.0 Production Plan / Operational Plan
This chapter contains the production process and strategy, production facilities and equipment
and the government policies affecting the business operations.

4.1 Production Process

Mushroom enterprise will consist of two departments that will facilitate its production and
services. The departments will work together to achieve the objectives of the business. The

10
production and marketing management will determine the production of higher demand to bring
them into the marketing industry. The marketing officer will deliver goods to customers on time.

4.2 Production Facilities and Equipment

Equipment Quantity Unit Cost (KES) Total
Mushroom 200 100 20000
Mushroom House 3 1000 3000
autoclave 150 KG 10000 15000
driers 100 KG 50 5000
bagging machine 100 50 5000
substrate mixer 100 50 5000
compost tuner 3 1000 3000
machine
Computers 1 20,000 20000
Calculator 3 1500 4500
Tables 5 1000 5000
Chairs 20 250 5000
Pens 15 10 150
Books 7 100 700
Totals 25,210 91,350

IV.3 Government Policies Affecting the Business Operation

I. Licensing Act

The computer will be licensed by the County Revenue Office before the commencement of the
business. This will allow the business to carry out its operations without any inconveniences
from the authorities. The license act will act as a security for the business.

II. Employment Act

Mushroom enterprise will comply with the Act by paying the employees on time. Through that
the employees will get motivated and hence this will lead to high productivity in the business.

IV.4 Production Strategy

IV.4.1 Methods to be used to Control the Stock
1. Buffer stock control
A buffer acts a cushion to absorb the impact of potential harm. Therefore Mushroom enterprise
will be ordering the product from its suppliers in surplus. This will help prevent shortages and
delays whenever the customers come to buy them.
2. Just in Time Method
The business will only ensure that it also orders the mushroom from its suppliers only when the
needed arises this will help the company prevent the inventory holding costs such as the costs
11
associated with feeding the mushroom, buying the feeds, and also the medication and other
associated costs.

IV.5 Operational Timetable

Mushroom enterprise will be operating from Monday to Friday with the weekends being resting
days for the employees. The business will start working from 8 AM to 6 PM in the evening.
Breaks will also be there for example lunch breaks at 12 PM to 2 PM.

DAYS MORNING EVENING

Monday 8:00 AM -12:00 Noon 2 P.M – 6:00 PM
Tuesday 8:00 AM -12:00 Noon 2 P.M – 6:00 PM
Wednesday 8:00 AM -12:00 Noon 2 P.M – 6:00 PM
Thursday 8:00 AM -12:00 Noon 2 P.M – 6:00 PM
Friday 8:00 AM -12:00 Noon 2 P.M – 6:00 PM

CHAPTER FIVE
5.0 THE FINANCIAL PLAN
5.1 PRE-OPERATIONAL COST
These are the costs incurred by the business before it starts its operation. The business venture
will incur the following expenses before starting its normal operations.
ITEM COST(KSH)
Business registration 5000
Post office box rental 3000
Advertisement and promotion 6000
Telephone/Mobile 8000
Recruitment 10,000

12
 Licenses and permits 20,000
Insurance 3000
Security 105,000
Machinery and Equipment 6500
Rent 3000
Electricity 1500
Water 2000
Stationary 2000
Installation 4000
Stock 150,000
Goodwill 5000
Miscellaneous 5000
TOTAL 347,000
5.2 Working Capital
Working capital is equal to the current asset’s fewer current liabilities. This will be calculated
using the table below.
ITEM 2026 2027 2028
Current Assets 421,810 441,120 1,233,900
Stock in Progress 150,000 180,000 220,000
Cash at Bank 71,810 181,000 873,920
Cash in Hand 10,000 20,000 30,000
Debtors 185,000 55,000 100,000
TOTAL 83,8620 877,430 2,457,480
Current Liabilities 4000
Creditors 104,000 50,000 80,000
Short Loan 8000
TOTAL 108,000 80,000
WORKING CAPITAL 730,620 2,401,370
5.2.1 Loan repayment schedule
The proposed business venture will acquire loan from National Bank of Kenya loan will be Ksh.
200,000 payable over a period of 25 months at an interest rate of 15% p.a
MONTH PRINCIPAL INSTALLMENTS INTEREST BALANCE
AMOUNT PAID
1 200,000 8000 2500 192000
2 192,000 8000 2400 184000
3 184,000 8000 2300 176000
4 176,000 8000 2200 168000
5 168,000 8000 2100 160000
6 160,000 8000 2000 132000

13
7 152,000 8000 1900 144000
8 144,000 8000 1800 136000
9 136,000 8000 1700 128000
10 128,000 8000 1600 120000
11 120,000 8000 1500 112000
12 112,000 8000 1400 104000
13 104,000 8000 1300 96000
14 96,000 8000 1200 88000
15 88,000 8000 1100 80000
16 50,000 8000 1000 72000
17 72,000 8000 900 64000
18 64,000 8000 800 56000
19 56,000 8000 700 48000
20 48,000 8000 600 40000
21 40,000 8000 500 32000
22 32,000 8000 400 24000
23 24,000 8000 300 26000
24 16,000 8000 200 8000
25 8000 8000 100 0

14
5.3.1 Projected Cash Flows for Mushroom enterprise 2026

PARTIC JAN FEB MARC APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
ULARS H
Cash in KES KES KES KES KES KES KES KES KES KES KES KES KES
flaws
Balance 300000 12830 106100 82880 74580 71560 50680 30530 43550 26890 19780 47730 982580
B/F 0
Sales 50000 52600 53400 54000 56500 59000 61000 64000 66500 69000 72000 82000 740000
Bank loan 200000 200000
Debtors 15000 20000 30000 1000 40000 70000 176000
TOTAL 550000 18090 159500 15188 15108 130560 11168 12453 11005 96890 13178 19973 2098580
CASH 0 0 0 0 0 0 0 0
FLOW
Cash 0
outflow
Pre- 347000 347000
operationa
l
Purchases 15000 20000 23000 25500 26000 28000 28000 28500 30000 32500 34000 36000 326500
Salaries 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 300000
Electricity 1000 1050 1000 900 800 1000 750 700 850 650 700 500 9900
Water 1000 800 850 900 750 800 800 600 500 550 500 350 8400
Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000
Creditors 1000 3000 4000
Transport 3000 2750 2500 2800 2500 2250 1500 3000 2800 2000 2250 2000 29350
License 20000 20000
15
Insurance 1000 1000
Advertise 4000 2000 6000
ment
Security 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Loan 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 96000
repayment
Loan 2500 2400 2300 2200 2100 2000 1900 1800 1700 1600 1500 1400 23400
interest
Repair 2000 3000 5000
Miscellan 5000 5000 4000 2000 2500 2800 2000 2000 2500 3000 2200 3000 36000
eous
Total cash 416000 69500 72150 74800 76650 76550 78450 77100 78350 82800 81450 10675 1290550
outflow 0
Bal b/f 128300 10610 82880 74580 71560 50680 30530 43550 26890 19780 27730 81810 744390
0

16
5.3.2 Projected Cash Flows for Mushroom enterprise 2027

P J F MA MJ J A S O N D T
A AE AP AUUUE C OE O
R NB R R YNL GP T VC T
T C A
I L
C
U
L
A
R
S
C KKKKKKKKKKKKK
as EEEEEEEEEEEEE
h SSSSSSSSSSSSS
in
fl
o
w
s
B 8 5 8 1 1 1 1 1 1 1 1 2 1
al 1 4 5 2 3 4 4 4 6 6 9 0 6
a 8 6 7 0 6 3 9 3 7 9 0 2 4
n 1 6 7 4 8 7 8 9 9 9 6 6 8
ce 0 0 0 4 9 7 1 9 8 4 4 9 3
B 0 0 0 0 0 0 0 0 0 9
/F 0

17
S 7 1 1 1 1 1 1 1 2 2 2 2 3
al 0 4 6 6 6 6 7 9 0 5 5 7 8
es 0 6 0 0 0 5 0 0 0 0 0 0 3
0 0 0 0 0 0 0 0 0 0 3 0 9
0 0 0 0 0 0 0 0 0 0 6 0 7
0 0 0 0 0 0 0 0 0 0 0 5
0
D 1 3 1 5 2
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bt 0 0 0 0 2
or 0 0 0 0 8
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6
0
T 1 2 2 2 2 3 3 3 3 4 4 4 3
O 5 0 4 8 9 0 4 3 6 1 4 7 9
T 1 0 5 1 6 8 9 4 7 9 6 2 1
A 8 6 7 4 8 7 8 9 9 9 0 6 3
L 1 6 7 4 9 7 1 9 8 4 0 9 7
C 0 0 0 0 0 0 0 0 0 0 0 0 5
A 0
S
H
F
L
O
W
C 3

18
as 8
h 7
o 6
ut 7
fl 5
o 0
w
P 4 6 7 9 1 1 1 1 1 1 1 1 1
ur 0 0 0 0 0 0 2 2 4 7 9 9 2
c 0 5 0 0 0 5 0 0 0 0 0 0 8
h 0 0 0 0 0 0 0 0 0 0 0 0 7
as 0 0 0 0 0 0 0 0 0 0 0 0 5
es 0 0 0 0 0 0 0 0
0
S 2 2 2 2 2 2 2 2 2 2 2 2 1
al 7 7 7 7 7 7 7 7 7 7 7 7 6
ar 5 5 5 5 5 5 5 5 5 5 5 5 1
ie 0 0 0 0 0 0 0 0 0 0 0 0 7
s 0 0 0 0 0 0 0 0 0 0 0 0 5
0
0
El 1 9 1 8 9 9 1 9 1 1 1 8 3
ec 2 5 0 0 5 0 0 5 0 2 0 0 4
tri 0 0 0 0 0 0 0 0 0 0 0 0 1
ci 0 0 0 0 0 0 7
ty 5
0
W 8 8 7 9 7 7 8 8 9 1 7 7 2

19
at 0 0 0 0 0 5 7 3 0 0 0 0 1
er 0 0 0 0 0 0 0 0 0 0 0 0 4
0 0
0
R 6 6 6 6 6 6 6 6 6 6 6 6 8
e 5 5 5 5 5 5 5 5 5 5 5 5 7
nt 0 0 0 0 0 0 0 0 0 0 0 0 6
0 0 0 0 0 0 0 0 0 0 0 0 5
0
C 1 3 5 5 1
re 0 0 0 0 1
di 0 0 0 0 4
to 0 0 0 5
rs 0 0
0
T 3 3 2 2 2 2 3 2 3 3 3 2 7
ra 5 2 7 5 5 7 0 8 0 3 0 5 1
ns 0 0 0 0 0 0 0 0 0 0 0 0 2
p 0 0 0 0 0 0 0 0 0 0 0 0 0
or 0
t
Li 2 5
ce 0 4
ns 0 7
e 0 0
0 0
In 1 3
su 0 0

20
ra 0 0
n 0 0
ce 0 0
A 3 3 1
d 0 0 6
v 0 0 0
er 0 0 0
ti 0
se
m
e
nt
S 3 3 3 3 3 3 3 3 3 3 3 3 4
ec 0 0 0 0 0 0 0 0 0 0 0 0 2
ur 0 0 0 0 0 0 0 0 0 0 0 0 0
it 0 0 0 0 0 0 0 0 0 0 0 0 0
y 0
L 8 8 8 8 8 8 8 8 8 8 8 8 1
o 0 0 0 0 0 0 0 0 0 0 0 0 3
a 0 0 0 0 0 0 0 0 0 0 0 0 2
n 0 0 0 0 0 0 0 0 0 0 0 0 0
re 0
p 0
a
y
m
e
nt

21
L 1 1 1 1 9 8 7 6 5 4 3 2 1
o 3 2 1 0 0 0 0 0 0 0 0 0 0
a 0 0 0 0 0 0 0 0 0 0 0 0 5
n 0 0 0 0 0
in 0
te 0
re
st
R 2 1 3
e 0 4 0
p 0 0 0
ai 0 0 0
r 0
St 1 1 1 2 2 1 1 1 1 2 1 1 7
at 5 2 5 0 0 7 3 5 8 0 8 7 0
io 0 0 0 0 0 0 0 0 0 0 0 0 0
n 0
ar
y
M 2 3 2 3 2 3 2 2 2 3 3 2 3
is 0 0 5 0 7 0 0 5 3 0 0 0 3
ce 0 0 0 0 0 0 0 0 0 0 0 0 0
ll 0 0 0 0 0 0 0 0 0 0 0 0 0
a 0
n
e
o
us

22
 T 9 1 1 1 1 1 2 6 1 2 2 2 2
ot 6 1 2 4 5 5 0 7 9 2 4 7 0
al 9 4 5 4 2 8 5 8 7 4 3 1 3
ca 5 7 1 4 9 3 7 3 8 6 1 3 4
sh 0 7 5 0 5 2 0 0 8 0 8 7 1
o 0 0 0 0 0 0 0 0 0 0 0
ut 0
fl
o
w
B 5 8 1 1 1 1 1 1 1 1 2 2 3
al 4 5 2 3 4 4 4 6 6 9 0 0 7
b/ 6 7 0 6 3 9 3 7 9 0 2 1 7
f 6 7 4 8 7 8 9 9 9 6 6 1 0
0 0 4 9 7 1 9 8 4 4 9 7 8
0 0 0 0 0 0 0 0 0 0 5
0

5.3.3 Projected Cash Flows for Mushroom enterprise 2028

MAR
PARTICULARS JAN FEB C APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Cash inflows KES KES KES KES KES KES KES KES KES KES KES KES KES
2011 2349 2864 4060 44215 4126 4816 5499 57103 62387 68603 80869 570459
Balance B/F 70 50 70 50 0 30 50 00 0 0 0 0 0
3000 3500 3500 3250 32000 4000 4200 4500 45000 42000 50000 50000 478500
Sales 00 00 00 00 0 00 00 00 0 0 0 0 0
Debtors 5000 30000 2000 82000
23
 0
TOTAL CASH 5011 5849 6864 7310 76215 8126 9016 9999 10510 10438 11880 13086 105715
FLOW 70 50 70 50 0 30 50 00 30 70 30 90 90
Cash outflow
2000 2500 2300 2000 30000 2800 3000 3500 30000 35000 32000 310800
Purchases 00 00 00 00 0 00 00 00 28000 0 0 0 0
3000 3000 3000 3000 3000 3000 3000
Salaries 0 0 0 0 30000 0 0 0 30000 30000 30000 30000 360000
Electricity 1200 1000 1500 1000 1000 800 900 1000 1000 1200 800 900 12300
Water 700 750 900 1000 700 700 1000 1000 800 800 700 750 9800
Rent 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000
4000 3000
Creditors 0 0 10000 80000
Transport 4000 4000 3700 4000 5000 4500 5000 4000 3500 4000 3000 4000 48700
License 20000 20000
Insurance 10000 10000
Advertisement 4000 3000 7000
Security 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
Loan repayment 8000 8000
Loan interest 100 100
Postage 100 80 120 150 120 130 170 180 150 160 140 120 1620
Repair 3500 1200 1300 6000
Stationary 120 150 200 250 200 150 180 200 200 180 200 200 2230
Miscellaneous 5000 3000 4500 3000 300 4000 2000 3000 2000 2000 3000 3000 34800
2662 2984 2804 2889 34682 3339 3487 4288 35784 39734 39977 382255
Total cash outflow 20 80 20 00 0 80 50 80 75150 0 0 0 0
2349 2864 4060 4421 41263 4816 4499 5710 62387 68603 80869 90892 631233
Bal b/f 50 70 50 50 0 50 00 20 0 0 0 0 0
24
Income statement for Mushroom enterprise for the years Ending 2026, 2027, 2028
PARTICULARS 2020 2021 2022
Net sales + Debtors 925000 2191360 360000
Less cost of sales 329000 1396000 20000
Gross Profit 595500 795360 10000
EXPENSES
Salaries and Wages 300000 330000 360000
Insurance 20000 20000 20000
License and Permits 10000 10000 10000
Electricity 9900 11750 12300
Water 8200 9650 9800
Stationary 3320 2000 2230
Advertising 6000 6000 7000
Postage 1520 1900 1620
Security 36000 36000 36000
Interest on Loan 234000 9000 100
Repairs & 5000 5000 6000
Maintenance
Transport 29350 43000 48700
Rent 78000 78000 78000
Miscellaneous 36000 31000 37500
Total Expenses 566690 585000 629250
Net Profit Before tax 28810 210360 795750
Less Tax 10% 2881 21036 79575
Net Profit 25929 189324 716175

Pro-Forma Balance Sheet for Mushroom enterprise as at the Years Ending 2026, 2027,
25
2028
PARTICULARS 31/12/2026 31/12/2027 31/12/2028
Assets
Fixed Assets
Machinery 20000 19600 19208
&Equipment
Less depreciation 2% (400) (392) (384)
Hardware 5000 4900 4802
Less Depreciation (100) (98) (96)
20%
TOTAL FIXED 24500 24010 23530
ASSETS
Current Assets - - -
Cash at Bank 71810 181170 873920
Cash in hand 100000 20000 35000
Stock 185000 100000 220000
Debtors 185000 55000 100000
Goodwill 5000 5000 5000
Total current Assets 421810 441170 12333920
TOTAL ASSETS 446310 465180 1257450
LIABILITIES - - -
Current Liabilities - - -
Creditors 4000 50000 80000
Total current 4000 50000 80000
liabilities
Long term liabilities - - -
Capital Equity 312381 217856 461275
owners
Add net profit 25929 189324 716175
Long term loan 104000 80000 8000
Total long term 442310 415180 1177450
liabilities
Total liabilities 446310 465180 1257450

26
5.6 BREAK EVEN LEVEL.
The breakeven point is the no. of units or sales sold in a given period without making profit or
loss in a given period without making a profit or loss. At this point it is only possible to meet the
variable and fixed costs.
This can be calculated as follows:
Breakeven point = Fixed costs
Contribution margin%
Contribution Margin=Total sales-variable costs
Contribution Margin%= Contribution Margin
Total Sales
BREAK EVEN ANALYSIS FOR THE YEAR 2026
FIXED COSTS AMOUNT KSH VARIABLE COSTS AMOUNT
Rent 78000 Purchases 329500
Security 3600 Electricity 9800
Salaries 300000 Water 8200
License &Permits 10000 Postage 1520
Interest on loan 32500 Telephone 8000
Insurance 20000 Stationery 3320
Transport 29350
Advertisement 6700
Repairs & 5000
Maintenance
Miscellaneous 36000
TOTAL 476500 TOTAL 436990

YEAR I
Contribution Margin=925,000-46790 Total Fixed Costs=Ksh 476,500
=488,210
Breakeven point = Fixed Costs
Contribution Marin%
Contribution Margin%= Contribution Marginx100
Total sales
=488,210x100=53%
925,000=52.7% =476500/53 =8990.6

27
BREAK EVEN POINT ANALYSIS FOR THE YEAR 2027
FIXED COSTS AMOUNT KSH VARIEBLE COSTS AMOUNT
Rent 78000 Purchases 1396000
Security 36000 Electricity 11750
Salaries 330000 Water 9650
License &Permits 10000 Postage 1900
Interest on Loans 9000 Stationery 2000
Insurance 20000 Transport 34700
Advertisement 6000
Repairs & maintenance 5000
Miscellaneous 31000
TOTAL 483000 TOTAL 436790
YEAR II
Contribution Margin=2191360-1498000
=693360
Contribution Margin%= Contribution Marginx100
Total Sales
=693360x100
2191360
=31.6% =32%
Total fixed costs=Ksh 483,000
Breakeven point= Fixed costs
Contribution Margin%
= 483, 00
32
=15,093.75
=15094

28
 BREAK EVEN POINT ANALYSIS FOR YEAR 2028
FIXED COSTS AMOUNT VARIABLE COSTS AMOUNT
Rent 78000 Purchases 4460000
Security 36000 Electricity 12300
Salaries 36000 Water 9800
License &Permits 10000 Postage 1620
Interest on loan 100 Telephone 8000
Insurance 20000 Stationary 2230
Transport 48700
Advertisement 8000
Repair 9000
&Maintenance
Miscellaneous 37500
TOTAL TOTAL 4589150
YEAR 3
Contribution Margin=478500-3585150
=1199850
Contribution Margin%= Contribution Margin x100
Total Sales
=1199850100=25.007%=25%
4785000
Total Fixed Costs=Ksh504, 100
Break Even Point= Fixed Costs
Contribution Margin%
=504,100
=20164
BREAK EVEN POINT ANALYSIS FOR THE YEARS 2026, 2027, 2028
PARTICULARS 2026 2027 2028
Fixed Cost 476500 283000 504,100
Contribution Margin 53 32 20
% =8990.6 =15094 =20164

29
5.7 PROFITABILITY RATIOS
RATIO WORKING 2026 2027 2028
TYPE FORMULA
Gross Profit Gross 595500x100 795360x100 1425000x1000
Ratio profitx100 925000 2191360 4885000
Total Sales =64% =36% =29%
Return on Net profit after 25929 189324 716175
Equity taxx100 312381 217856 461275
Ownership =0.083%=0.1% =0.869%=1% =1.55%=2%
Equity
Return on Net profit after 25929+23400x100 189324+9000x100 716175+1000+100
investment tax 442310 415180 1177450
axI.O.LX100 =11% =47.8% =60.8%
Total
investment

5.8. DESIRED FINANCING

ITEM AMOUNT
Pre-Operational Costs 347000
Working Capital 78500
Fixed Assets 24500
TOTAL 450000

5.9 PROPOSED CAPITALIZATION

ITEM AMOUNT
Owners Contribution 1000000
Total Borrowed(Friend/Relatives) 150000
Bank loan 200000
TOTAL 450,000

5.9.1 PROPOSED CAPITALIZATION

NATURE OF RISK CONNTINGENCY MEASURES.
security Employ enough security personnel

30
APENDIX

31