BUSINESS PLAN

TITTLE: SMART LIFE WATER INSTALATION AND

CONTRUCTION COMPANY

PRESENTED BY : DENNIS GATHINJI NYAWIRA

INDEX NO: 5401010178

COURSE CODE : 1305 /316A

INSTITUTE : KAIBOI NATIONALPOLYTECHNIC

PRESENTED TO: KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILMENT FOR THE AWARD OF
CERTIFICATE IN PLUMBING

SUPERVISOR: MR KIMETTO

SERIES: JULY 2024

DECLARATION
I declare that this business plan is my original work and I have done thorough research on my
own and has not been presented for examination process.

Signature ………………………

Date………………………………

This business plan has never been submitted for examination purposes within the approval of my
supervisor.

Name: Mr.Kimetto

Date: …………………………..

i
ACKNOWLEDGEMENT
I acknowledge the work of my supervisor MR.KIMETTO for his time while I was writing this
business plan up to the end. May the lord bless you.

ii
DEDICATION
To God who has enabled me all through his grace has been sufficient all the glory back to him.
Parents and friends for their continuous encouragement. Thanks to all of you.

iii
Table of Contents
DECLARATION......................................................................................................................................... i
ACKNOWLEDGEMENT .......................................................................................................................... ii
DEDICATION ...........................................................................................................................................iii
EXECUTIVE SUMMARY ....................................................................................................................... vii
CHAPTER ONE......................................................................................................................................... 1
1.0 BUSINESS DESCRIPTION ............................................................................................................. 1
1.1 Background of owner ........................................................................................................................... 1
1.2 Business name ...................................................................................................................................... 1
1.3 Business location and address............................................................................................................... 1
1.4 Form of ownership................................................................................................................................ 1
1.5 Type of business ................................................................................................................................... 1
1.6 Products and services............................................................................................................................ 2
1.7 Justification 0f opportunity ................................................................................................................... 2
1.8 Industry ................................................................................................................................................ 2
1.9 Business goals and objectives ............................................................................................................... 2
1.9.1 Goals .............................................................................................................................................. 2
1.9.1 Objectives ...................................................................................................................................... 2
1.10 Entry and growth ................................................................................................................................ 3
1.10.1 Entry ............................................................................................................................................ 3
1.10.2 Growth strategy............................................................................................................................ 3
1.10.3 Targeted markets .......................................................................................................................... 3
1.10.4 Potential challenges ..................................................................................................................... 3
1.10.5 Remedies...................................................................................................................................... 3
1.10.6 S.W.O. T ...................................................................................................................................... 4
CHAPTER TWO ........................................................................................................................................ 5
2.0 MARKETING PLAN ........................................................................................................................... 5
2.1 POTENTIAL CUSTOMERS ............................................................................................................... 5
2.2 MARKET TREND ............................................................................................................................... 5
2.3 COMPETATION ................................................................................................................................. 6
2.4 COMPETATION S.W.O.T ANALYSIS .............................................................................................. 6

iv
2.5 COMPETITIVE ANALYSIS ............................................................................................................... 7
2.6 COMPETITION ANALYSIS............................................................................................................... 7
2.7 COPING WITH COMPETITION ........................................................................................................ 7
2.8 MARKETING STRATEGIES ............................................................................................................. 8
2.8.1 Quality of products and services .................................................................................................... 8
2.8.2 Marketing channel ......................................................................................................................... 8
2.8.3 Pricing ............................................................................................................................................ 9
2.9 POSSIBLE MARKETING CHALLENGES ........................................................................................ 9
2.10 REMEDIES ........................................................................................................................................ 9
CHAPER THREE .................................................................................................................................... 10
3.0 ORGANASATION AND MANAGEMENT PLAN .......................................................................... 10
3.1 MANAGEMENT TEAM ................................................................................................................... 10
3.2 FIRM MANAGER ............................................................................................................................. 11
3.3 OTHER PERSONNEL ....................................................................................................................... 11
3.4 RECRUITMENT, TRAINING AND PROMOTION ......................................................................... 13
3.4.1 Recruitment.................................................................................................................................. 13
3.4.2 Training ....................................................................................................................................... 14
3.4.3 Promotion .................................................................................................................................... 14
3.5 REMUNERATION AND INCENTIVES........................................................................................... 14
3.5.1 Remuneration ............................................................................................................................... 14
3.5.2 incentives ..................................................................................................................................... 15
3.6 LICENSES PERMITS AND BY-LAWS ........................................................................................... 15
3.6.1 Licenses ....................................................................................................................................... 15
3.6.2 By-laws ........................................................................................................................................ 16
3.7 SUPPORTIVE SERVICES ................................................................................................................ 16
3.7.1 Banking services .......................................................................................................................... 16
3.7.2 Legal Services ............................................................................................................................ 16
CHAPTER FOUR .................................................................................................................................... 17
4.0 OPERATION\PRODUCTION PLAN ................................................................................................ 17
4.1 production machinery and their capacities ................................................................................ 17

v
 4.1.1 Acquiring of machinery ............................................................................................................... 19
4.1.2 Repair and maintenance of machines ........................................................................................... 19
4.1.3 Social Amenities .......................................................................................................................... 19
4.2 operational strategy............................................................................................................................. 20
CHAPTER FIVE ...................................................................................................................................... 21
5.0 FINANCIAL PLAN ........................................................................................................................... 21
5.1 Objectives ........................................................................................................................................... 21
5.2 CAPITAL REQUIREMENT .............................................................................................................. 21
5.3PREOPERATIONAL COSTS ............................................................................................................. 21
5.4 WORKING CAPITAL ....................................................................................................................... 23
5.5PROFOMA INCOME STATEMENT ................................................................................................. 23
5.6 BALANCE SHEET ............................................................................................................................ 25
5.7.1 PERFORMANCE RATIO ........................................................................................................... 26
5.7.2 PERFOMANCE RATIO.............................................................................................................. 27
5.8.1 BREAK EVEN ANALYSIS ........................................................................................................ 28
5.8.2. BREAK THROUGH ANALYSIS FOR YEAR 2021 ................................................................. 29
5.10 financial challenges .......................................................................................................................... 30
5.11 Remedies .......................................................................................................................................... 31

vi
EXECUTIVE SUMMARY
This chapter describes the business in terms of the owner name logo, location, vision, mission
and the service offered by the business.

The chapter describes the business more about market, potential and target customers, market
tread, SWOT analysis i.e. strength, weakness and the tactics the business uses to cope with the
competition.

It gives details on various qualification that the personnel will be required to qualify for certain
post in business, the duties and obligation to meet.

The chapter describes the types of machinery, tool and equipment needed by the business for the
effective running of its operations in giving the services. It states management process expenses,
premises layout, possible challenge and the salaries

This chapter contains operational cost required for its running and management of the business
for a period of time. It also involves the calculations of the business annually.

vii
 CHAPTER ONE

1.0 BUSINESS DESCRIPTION

1.1 Background of owner

My name is Dennis Gathinji nyawira. Am at my early 20s of age. Am a student in Kaiboi
National polytechnic taking a course in plumbing certificate

Email address: gathinjidennis20@gmail.com Poster

address: 80 Karatina.

1.2 Business name

The business name will be called Smart Life Water Installation And Construction Company. The
name bears the word technology as it going to employ current technological invention to give
smart structures for smart people to experience smart enjoyable life.

1.3 Business location and address

The business will be located in Nairobi town hotel six eighty along Kenyatta avenue and
Syokimau Machakos county at new life plaza ground floor room number 14.

Email;smartlifewaterinstallationandconstructionltd@gmail

Telephone;0705008008

1.4 Form of ownership

The business will be in form of sole proprietorship where is expected to run the business as an
individual. I choose this form of business as I remain the only decision maker thus flexibility to
changes and enjoying the profit alone.

1.5 Type of business

The business will engage in activities that surround building works and water installation that
includes renovations, building news structures and maintenance services.

Tendering of contracts of contracts will be the most common methods of acquiring firm work.

1
 1.6 Products and services
The firm will be building and water installation services such as construction itself as stated
earlier maintenance of already existing building and others like supplying materials on sites on
own sites or other sites.

1.7 Justification 0f opportunity

Due to the arising need of more construction and water installation work brought about by the
fast development of the state it has increased the quest of building industry to satisfy the need.
Machakos Nairobi kiambu and others surrounding parts being the most promising in construction
works increase rampant need to building and water installation works.

Having acquired required skills and knowledge in certificate in plumbing gives an anchor in
venturing in this field in helping getting to vision 2030.

1.8 Industry
The business is under construction industry and engineering companies.

1.9 Business goals and objectives

1.9.1 Goals
To open a rampant stable most performing building and water installation company in the
country.

1.9.1 Objectives
To open many offices and firm branches in all counties.

To open a building firm which will take dominion in most construction works in the country.

To have maximized profits after a short period of time.

2
1.10 Entry and growth

1.10.1 Entry
The business will offer most required services to the customers at an affordable prices.

The business will ensure trustworthy services to customers and accountability of the work done
by the firm.

1.10.2 Growth strategy

To maintain a healthy relation with customers during and after the work to ease tension to clients
and increase trust with the firm.

Setting aside some profit to the company to help improve on standards and technology to ensure
provision of desirable works.

1.10.3 Targeted markets

The business will be dealing with all type of customers starting from large institutions works
such schools, renovations to such institutions hospital .etc.

The business will also deal with customers of small works such as building residential houses
and homes .etc.

1.10.4 Potential challenges

a. Competition- Foreign contractors such as china with advanced skills and machinery can be a
threat to the firm in wining tenders.

a. Finance Inadequacy-Large projects requires a lot of money to run them smoothly without
delays.

b. Government policies-In case of high taxation by the government it might cause some
disadvantages thus can be a threat.

1.10.5 Remedies
Competition –To curb competition the firm will adopt fair prices and advance in newly ventured
forms of construction.

3
Government policy- The firm will ensure everything is with the line with requirement by the
government to avoid being over charged due to avoidable errors.

Capital challenge – Will plough back profits to the company and also acquire loans from banks.

1.10.6 S.W.O. T
Strength

Having qualified able personnel in the firm.

Having local attachment to the local people as compared to foreign companies.

Weakness

Opportunity

Need for more residential houses and other building in developing towns.

Renovations and expansions of institutions.

Rapid need of learning institutions hospitals offices hotels and such.

Threats

 Government policies

 Financial challenge

 Competition.

4
 CHAPTER TWO

2.0 MARKETING PLAN

Objectives

 To run at least 3 large scale commercial contracts by the 3rd year.

 To increase sales and services every year

 To increase marketing expenditure by about 20% per year.

 To advertise the firm in the media.

2.1 POTENTIAL CUSTOMERS

Government

Focusing and applying tenders in both national and county government to win tenders on new
projects scheduled to start.

Individual customers

Due to the increased rate of building of residential houses and homes the company intends
to focus on serving such individuals.

Commercial customers

The firm will also focus on customers and in this case the clients who intend to build up estates
to sell and lease. this promises a large market and a larger marginal profit.

2.2 MARKET TREND

Focusing on Machakos county to the extremes of close to Nairobi there exist a market at
syokimau Athiriver and thus focuses on winning about 30% of the total construction activities in
the area and 15% in Nairobi and kiambu. The other competitors to share the other percentage.

5
2.3 COMPETATION
There is likelihood to face competition from foreign companies but can curb the competition due
to high cost charges by those existing foreign companies.

The firm also expects least or moderate competition from local existing companies.

2.4 COMPETATION S.W.O.T ANALYSIS

competitors Strengths weakness Opportunity Threats
Quentech Popularity High charges of Lower charges Unpopulality
contractors mechanically services Mechine in
6equipped eduquency
Financially
stable

k.c contractors Suitable located High charges Lower chsrging Location of

Heavy Deals with large Tender fr small office
mechenised works
Experienced works only Machinery
employment

Africa dominion Large numbers Poor quqlity of Offering quality Lack of enogh
contractors of works work works finances
Lower charges
Poor relations
with customers

6
2.5 COMPETITIVE ANALYSIS
Area Quintech k.c Africa dominion
contractors contractors Contractors
Quality High High
Low
Pricing Very high very high
Moderate
Customer market Moderate Moderate
Veryhigh
Technology High Very high
Outdated
Size of production Moderate Low High

2.6 COMPETITION ANALYSIS

Area Quintech k.c contractors Africa dominion
Advertisiment Moderate Moderate poor

Experience 10 yrs 17 yrs

New
Location Strategic remote
Strategic
Size Large Large
Medium

2.7 COPING WITH COMPETITION

o Ensuring that the company has fail which will be appealing to customers.

7
 o Ensuring the quality of work and services offered to the customers is at high quality.

o Ensuring good relation with the client realizing that they are the employer and we
working for them.

o Ensuring that the firm tries to involve new technology in the works so as to ensure we
don’t become outdated by technology.

o Trying to involve mechanization to maximize production and increase efficiency of work

done.

2.8 MARKETING STRATEGIES

2.8.1 Quality of products and services

To ensure self-marketing of services and construction done the company intends to produce the
most valuable and that meet standards of expectation to produce high quality services which will
be put across by employing personnel to bring out the best of the work done.

To ensure a healthy relationship between the clients and the company to improve on popularity
and have a good reputation.

2.8.2 Marketing channel

Producer……………………………customers

This will offer great customer constant and thus effective sales realized.

8
2.8.3 Pricing
This will greatly affect the profit margin having made all deductions e.g taxes

Following factors will help on how to do its pricing

1. Cost of production

If the cost the prices will also go high for services

2. Demand

To maximize profit when there is high demand proportional increase in cost will also rise

3. Government policies

Services will be proportional to government taxing and as policies are.

4. Competitors price

Charging slightly lower charges compared to other firms’ will attract other customers thus this
should not lead to lower profits margins. A reasonable profit should be realized.

2.9 POSSIBLE MARKETING CHALLENGES

High competitions from other firms

Poor pricing

Advertisement challenge

2.10 REMEDIES
Offer good services so that it becomes self-selling

Proper and good pricing methods to help realize maximize profit

Advertising in the easiest and convenient way.

9
 CHAPER THREE

3.0 ORGANASATION AND MANAGEMENT PLAN

Organization is the process of breaking down overall task into individual roles with the delegated
authority with the view of achieving organization goals.

Management is planning, organizing staffing, controlling evaluating the duties and efforts of
members to achieve a common goal.

3.1 MANAGEMENT TEAM

The following chart is to show different personnel in the origination and their duties to fulfilment
of particular responsibilities.

It shows in the hierarchy the origination team

MANAGING DIRECTOR

ARCHTECT HRM ENGNEER

CONRACTOR CASHIER

10
3.2 FIRM MANAGER
The firm being a sole proprietorship form of business, I will be the head being the owner
manager and I will manage the whole firm.

Qualifications

A holder of certificate in plumbing Financial skills from relevant units

management skills such as entrepreneurship construction

management.

Duties and responsibilities

Directing coordinating all the activities of the main and supervising all employees.

Making decisions

Making payment to workers

Evaluating firm performance

Setting goals and objectives of the frim

Making rules and regulations

Verifying field work

3.3 OTHER PERSONNEL

The cashier

Qualifications

A holder of appropriate certificate of bachelor in account

Experience of not less than one year

Good public relations

Not beyond 45 years of age

11
Computer literate

Reliability – can work with little supervision

Hardworking

Disciplined in all aspects grooming, time keeping etc.

Secretary

Qualifications

A holder in diploma in secretarial

Experience of not less than one year

Female

Not less than 35 years of age

Duties

Receiving and directing visitors in offices

Keeping records

Assist the cashier where necessary

Keeping firm documents Main

contractor qualifications

Have a grade 3 in masonry

Adequate experience

Good communication skills

12
Working with less supervision

Reliable

Duties and responsibilities

Carry site revisits and assessments

In charge of site investigations

Will execute field work

Architect

Qualifications

A holder of diploma in architect certificate from approved school

Six months of work experience

Good communication skills

Duties and responsibilities

Coordinate building team

To intraplate client idea into drawing

Take drawing for approvals to the building authorities

3.4 RECRUITMENT, TRAINING AND PROMOTION

3.4.1 Recruitment
Recruitment will be done after advertisements where interested personnel will all be set down
you’re a start up to what is being expected of them to increase the credibility of the particular
assignments which will be given to them.

13
As the managing director I will examine for the most qualified and reliable members.

3.4.2 Training
For newly appointed employees they shall be receiving basic training before they start executing
responsibilities.

Update on the field of workers will also be giving keeping then in touch with the changing
technology and other changes. This will help much in running the firm more effectively even in
rising changes.

3.4.3 Promotion
As the firm grows, the organization structure will be changed hence creation of new post and
vacancies which will call for promotion to employee’s best suit to promotion according to
contribution, hard work, ability, seniority, experience and commitment.

3.5 REMUNERATION AND INCENTIVES

3.5.1 Remuneration
Remuneration will be given to employees in post the hold. As the managing director I will have
negotiated on salaries with the employees conducting interviews and agree on salaries each
respective member will draw from the firm.

On prosperity and allowing of the firm this will mean also increased salaries in each employee.

14
Remuneration Table
JOB TITLE NO OF BASIC HOUSE TOTAL
EMPLOYE SALARY ALLOWANCE MONTHLY
SALARY
Managing 1 40,000 5,000 45,000
director
Cashier 1 25,000 5,000 30,000
Engineer 1 30,000 5,000 35,000
Architect 1 30,000 5,000 35,000
Contractor 1 35,000 5,000 40,000
Secretary 1 20,000 5,000 25,000
H.R.M 1 20,000 5,000 25,000
TOTAL 7 200,000 35,000 235,000

3.5.2 incentives
The firm is going to provide breakfast, lunch and also free transport for the workers who are
living in the area.

3.6 LICENSES PERMITS AND BY-LAWS

3.6.1 Licenses
The firm is going to have trading license from Nairobi city council with the permit of relative
bodies to carry out the activities country wide.

The lances will show legal permit and also credibility of firm works.

15
3.6.2 By-laws
The firm is going to strictly follow to date the laws lied down by the parliament and authorities
in all field such as location activities, health of workers, safety of the public etc. as provided in
labor laws. The employees permanent and temporary will be required to pay NSSF monthly in
the National Society Security Fund Act 259. The firm will also observe payment of tax to the
government.

3.7 SUPPORTIVE SERVICES

3.7.1 Banking services

This will provide banking services that the firm that requires for smooth operation. A saving
account will be opened. The bank will assist in making payment through cheques. The bank will
also assist in giving loans which will be used for industrial works.

3.7.2 Legal Services

The firm will have an advocate who at times will be used when dealing with matters which need
to be made under some obligations and which requires signatory and commissioned
advocate any discrepancy.

16
 CHAPTER FOUR

4.0 OPERATION\PRODUCTION PLAN

Introduction

Operation and production plan involves direction and co-ordination of firm and physical
facilities towards attainment at specified goods and services.

It shows type of facilities required, their cost and maintenance levy.

4.1 production machinery and their capacities.

The firm will employ machinery, safety gears and protective gear. this is to enable the
firm after quality workmanship of the services to be offered and enhance accuracy,
speed of work and reduction in labor required.

The machinery needed is as shown below and their prices indicated.

ITEM QUANTITY DESCRIPTION SUPPLIER COST

17
Excavator 1 Back actor with Caterpillar 100,000
both aim and Japan
Dumpers 2 shovel FUSO 80,000
Off-road dumpers
Drum mixture 4 Heavy duty 80,000
3m3 capacity drum Ltd
Vibrators 4 mixture Poker 20,000
vibrates Dario
Electric drill 2 Hardware 20,000
Drills
TOTAL Forward 282,000
electronics

Safety wear and protective devices

ITEM QUANTITY SIZE/ SUPPLIERS COST
CAPACITY

18
Reflector jackets 20 Medium C.W suppliers 1,000

Helmets 20
medium C.W suppliers 2,000
Safety boots 4
Googles pairs
--------------- Sadak 2,000
4 C.W suppliers
Hand gloves pairs

------------- C.W suppliers 1,000

TOTAL
7,000

4.1.1 Acquiring of machinery

Being a new firm to be started, machines will be acquired from locally available suppliers and
garages. Machines will be properties of the business owner.

A yard will be established in safest area and machines will be transported to the site then
returned to the yard after completion of their work.

Any other machine will be hired from available lending bodies until when the firm will be
selfsustaining with all building machineries.

4.1.2 Repair and maintenance of machines

Every machine will be subjected to short term and long term services before work and after three
months of work respectively,

4.1.3 Social Amenities

The firm will provide social amenities which will assist in smooth running of the business. This
include electricity, housing for the workers, washrooms, fuel and access road to site.

19
Electricity

Every worker room will be connected to power supply to easily run the task to execute machine
work such as computers, telephone, lighting etc.

Housing

For worker in the office shall be given rental rooms to be paid by the firm.

Fuel

Firm vehicles will be fueled at the available station in the area which is readily available.

Road

Available roads will be used since they are assessable to workers easily to the offices
headquarters.

Firm bulldozers will be used to make access roads to the sites, this will ensure smooth running of
firm activities.

4.2 operational strategy

This is the method the firm will use to make sure services are excused as expected.

The firm will purchase materials to be used in the offices and also make necessary arrangements
to take materials to the sites in advance to facilitate good work running in the site.

20
 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 Objectives
To increase capital by reasonable percentage annually.

To clear loans by the agreed period with the bank.

5.2 CAPITAL REQUIREMENT

Source Amount (ksh)
Personal savings 500000

Sacco
100000
Banks loans
300000
Friends donations
100000
Guarantor
200000
Youth fund loan
300000
Total
1500000

5.3PREOPERATIONAL COSTS
ITEMS AMOUNT(KSHS)

21
Advertisement 20000

Security 80000

Water bill 15000

Transport 15000

Rent 35000

Renovation 30000

License 35000

Electricity 10000

Total 555000

22
5.4 WORKING CAPITAL

Working capital=Current assets –Current liabilities

WC = CA - CL
Assets Year 2022 Year 2023
Current assets
Cash at hand 200 000 320 000
Cash at bank 300 000 500 000
Stock 200 000 250 000
Debtors 100 000 150 000
Total current assets 800 000 1 220 000
Current liabilities 300 000 350 000
Creditors
300 00 350 000
TOTAL
500 000 870 000
Working capital

5.5PROFOMA INCOME STATEMENT

SMARTLIFE WATER INSTALLATION AND CONSTRUCTION LTD

Profit and loss statement for the year ended 31st December
Particulars Year 2022 Year 2023
2 350 000 3 600 000
Sales
1 050 000 2 100 000
Less cost of goods sold
1 300 000 1 500 000
Gross profit

23
Less expenses
20 000 15 000
Advertisement
80 000 80 000
Security
15 000 15 000
Water bill
15 000 15 000
Transport
350 000 350 000
Rent
30 000 30 000
Renovation
30 000 30 000
License
10 000 10 000
Electricity
5 500 000 545 000
Total expense
750 000 955 000
Profit before tax
150 000 175 000
Less tax provision
600 000 780 000
Net profit after tax

24
5.6 BALANCE SHEET

SMARTLIFEWATER INSTALLATION AND CONSTRUCTION LTD

Balance sheet as at December 31st

Current assets Year 2022 Year 2023
Cash at hand 650 000 750 000
Cash at bank 800 000 90 000
Debtors 150 000 200 000
Stock 100 000 150 000

Total current assets 1 700 000 2 000 000

Fixed assets

Land 1 500 000 1 700 000

Building 200 000 200 000
Vehicles 500 000 450 000
Tools 600 000 600 000
Furniture 150 000 150 000
Total fixed assets 295 000 3 100 000
Total 3 400 000
3 700 000
Liabilities
Short term liabilities
Creditors 350 000 300 000
Long term
Bank loan 650 000 550 000
Capital 1 750 000 2 250 000

25
Total liabilities 1 750 000
2 250 000

5.7.1 PERFORMANCE RATIO

YEAR 2022

WORKING CAPITAL =CURRENTS ASSETS

CURRENT LIABILITIES

=1700000

650000

2.6.1

GROSS PROFIT ON SALE =GROSS PR0FIT × 100

SALES

=1300000 ×100

2350000

55.32%

QUICK RATIO =CURENT ASSETS –STOCK

CURENT LIABIITIES

1700000-1000000

350000

26
 2.1

NET PROFIT BEFORE TAX =NET PROFITS × 100

SALES

=750 000 × 100

2350000

= 31.9%

5.7.2 PERFOMANCE RATIO

YEAR 2023

Working capital =current assets

Current liabilities

= 2 000 000

300 000

=6.7.1

Gross profit on sales = gross profit × 100

Sales

1 500 000 × 100

3 600 000

27
 =41.67%

Quick ratio = current assets – stock

Current liabilities

= 2 000 000 – 1 500 000

3 000 000

=6.1

Net profit before tax = net profit × 100

Sales

955 000 × 100

3 600 000

=26.52%

5.8.1 BREAK EVEN ANALYSIS

Variable cost = cost of good +expense + tax

= 2 350 000 + 550 000 +150 000

28
 =3 050 000

Contribution margin = sales –variables

=2 350 000-1 250 000

= 1 100 000

B.E.P=contribution margin × 100

Sales

= 1 100 000 × 100

2 350 000

=46%

5.8.2. BREAK THROUGH ANALYSIS FOR YEAR 2021

Contribution margin =sales –variables

=3 600 000- 2 400 000

29
 =1 200 000

Variable costs = costs of goods = expenses + tax

=1 600 000 + 545 000+ 175 000

=2 320 000

Break even point (B.E.P ) = contribution margin × 100

Sales

=1 200 000 × 100

2 320 000

=51%

5.10 financial challenges

High rate of taxation

30
Competition from other firms

Financial challenges

5.11 Remedies
Paying the required amount of tax as required by the law

Making appropriate supply of goods to increase the amount of capital

Ensuring good relation and making sure irregularities such as corruption,

Dishonesty doesn’t occur to help maximize on profits

31