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ROSES AND PETALS FLOWER SHOP
BUSINESS PLAN
i
DECLARATION
I do here by declare that this business plan is my own, original and authentic work that has not been copied from any other source or person and that it has not been presented to any other institution for the award of any certification.
i
ACKNOWLEDGEMENT
Special thanks are owed to, my lecturer for helping me with the business plan idea and making it a success.
The Professional guidance of RAEM consultants is highly appreciated and acknowledged for their commitment and dedicated efforts in providing professional guidance in coming up with a viable business idea, offering good entrepreneurial, training and preparation of this business plan.
I thank all those provided me with information in one way or the other that was crucial in my work.
TABLE OF CONTENTS
ii
DECLARATION iACKNOWLEDGEMENT ii
LIST OF TABLES viCHAPTER ONE 1
1.0 THE EXECUTIVE SUMMARY 1CHAPTER TWO 2
2.0 BUSINESS DESCRIPTION 22.1 INTRODUCTION 22.2 MISSION STATEMENT 2
2.3 Keys to Success 22.4 BUSINESS OBJECTIVE 3
2.5 BUSINESS LOCATION AND ADDRESS 32.6 FORM OF OWNERSHIP42.7 TYPE OF VENTURE 42.8 TYPE OF INDUSTRY 4
2.9 PRODUCTS 42.10 JUSTIFICATION OF THE BUSINESS OPPORTUNITY 4
2.11 FUTURE VIABILITY OF THE BUSINESS 42.12 ENTRY AND GROWTH STRATEGIES 4
CHAPTER THREE 63.0 MARKETING PLAN 63.1OVERALL STRATEGY 6
It’s a widely-held thought that there are not too many florists in this county - there are too many florists who are the same. A florist with a well-defined niche business can thrive. Petals and
Roses marketing strategy is to develop a specialized, independent niche business that centers on Frequent Flower Gift Programs and features quality products, custom designs and outstanding
personalized customer service. 63.2 MARKETING OBJECTIVES 6
3.3 CUSTOMERS: 73.4 MARKET SIZE: 7
3.5 COMPETITION ANALYSIS: 73.6 METHODS OF ADVETISING AND PROMOTION: 8
3.7 SALES TACTICS93.8Sales Forecast 10
2017 SALES FORECAST ASSUMPTIONS 11
iii
3.9 PRICING STRATEGIES: 113.10 DISTRIBUTION CHANNELS 113.11 MARKET SEGMENTATION 12
3.12 MARKETING SWOT ANALYSIS 133.14 MARKETING ACTION PLAN14
CHAPTER FOUR 154.0 ORGANIZATIONAL AND MANAGEMENT PLAN 15
4.1 INTRODUCTION 154.2 PERSONNEL PLAN 15
4.3 OWNER 154.4 DELIVERY PERSON 164.5 TEMPORARY HELP 16
4.6 Second Year: Contract Floral Designer As Needed for Holidays & Special Events16
4.7REMUNERATION: 174.8 RECRUITMENT & SELECTION: 17
4.9 ORIENTATION, INDUCTION AND TRAINING: 174.10 COMMUNICATION CHANNELS: 18
4.11 DISCIPLINE: 18CHAPTER FIVE 19
5.0 OPERATION PLAN 195.1 INTRODUCTION 19
5.2 OPERATION FACILITIES AND CAPACITIES 195.3 PREMISES 19
5.4 FURNITURE, EQUIPMENTS AND MACHINES: 195.5 CONSUMABLES20
5.6 OPERATIONAL STRATEGIES 205.7 SUPPLIERS: 20CHAPTER SIX 21
6.0 FINANCIAL PLAN 216.1INTRODUCTION 21
6.2 DESIRED FINANCE & SOURCE 216.3 PRE-OPERATIONAL COSTS: 21
6.4 OPERATING EXPENSES (MONTHLY ESTIMATES) 226.6 PROJECTED INCOME STATEMENT 23
iv
6.7 PROJECTED STATEMENT OF FINANCIAL POSITION 246.8 PROFITABILITY RATIOS: 25
CHAPTER SEVEN 267.0 RISK MANAGEMENT PLAN 26
v
LIST OF TABLES
NO. - TITLEI - Present Market Demand for the products and Expected Future Trends.II - Demand & Supply Gap analysis.III - Competition analysis.IV - Price listV - Marketing SWOT analysisVI - Marketing action planVII - Staff remunerationVIII - Machines, Furniture &Equipments
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CHAPTER ONE
1.0 THE EXECUTIVE SUMMARY
This business plan contains six main chapters: This executive summary, the business description,
marketing plan, management plan, operational plan and the financial plan.
The business description mainly focuses on the mission statement, objectives, type of business,
location, address, type of industry, type of products, ownership, viability of the venture,
justification of the opportunity and entry strategies.
The marketing plan briefly outlines the marketing objectives, nature of products, customers,
competition analysis, demand and supply analysis, promotion, advertising, market segmentation,
pricing, distribution channels, sales tactics, marketing SWOT analysis and the marketing action
plan.
The Management plan outlines the composition of the management team, qualifications and
remuneration, recruitment and selection, communication channels and discipline.
The operational plan describes the type of products and their source, operational strategies, type
of furniture and machines to be used and their cost and source.
The financial plan outlines the desired financing, pre-operational expenses, operational expenses,
projected income statement, balance sheet and the cash flow statement. It also outlines
profitability ratios the performance ratios.
The risk management chapter outlines the expected business risks and how to deal with them.
Petals and roses believes there is an opportunity to use technology to make it simple for male
executives to easily purchase custom flower arrangements, with delivery on days they determine
in advance, for their loved ones. The company plans to approach its goal short term by targeting
affluent executive businessmen in kericho town and its environs for a very upscale, Frequent
Flower Gift Program and, long term, to debut the town's first floral art gallery.Petals and roses
will differ from traditional florists by cultivating personal relationships through the use of
technology and marketing, offering a gift program that makes purchasing flowers easy (and
forgetting special dates a thing of the past), and delivering exceptional customer service. Ideally
the company plans to open its gallery in November this year.
1
CHAPTER TWO
2.0 BUSINESS DESCRIPTION
2.1 INTRODUCTION
This chapter describes the business enterprise in terms of; the mission statement, objective, name
of the business, location and address, form of ownership, type product and its viability. It also
has the industry size trend characteristics and its future depending on the goals entry and growth
strategies.
2.2 MISSION STATEMENT
Petals and Roses will use technology to identify and serve an ideal target audience within the
county of kericho. The company will use sophisticated marketing techniques to secure a core
clientele of executive businessmen and corporate accounts, and will differentiate from
other traditional retail and on-line florists by offering Frequent Flower Gift Programs
with personalized service (e.g., customers can select the specific delivery dates) and custom
floral designs (e.g., customers can specify flowers, colors, scents, etc.).
Petals and Roses is dedicated to operating with a constant enthusiasm for learning,
being open to implementing new ideas, and maintaining a willingness to adapt to evolving
market conditions.
2.3 Keys to Success Using technology to develop loyal, frequently-buying male clients instead of traditional,
walk-in retail shoppers.
Designing and selling innovative, high quality fresh flower arrangements using a variety
of design styles, flowers, and containers.
Creating a storefront that resembles an art gallery, with fresh, avant-garde floral
arrangements displayed like art (and always for sale).
Offering additional products, including gourmet chocolates and original artwork from
local artists.
2
Communicating with potential customers through direct mail, print advertising and an
easy-to-use website.
Offering complimentary in-store events, such as book signings, cheese tastings, and
art showings, that coincide with other neighborhood gallery opening
2.4 BUSINESS OBJECTIVE Generate healthy total revenue of 50,000 in Year One.
Maintain an average direct cost of sales 40% or lower, and a high gross margin.
Build pricing programs based on the assumption of 10% profit.
Increase sales approximately 72% in Year Two and 21% in Year Three
To think of quality first in offering first quality products to the customers.
Petals and Roses will open after Valentine's Day and Easter/Passover in Year One. The large
percentage increase in Year Two reflects a full 12-months of revenue (versus 2 months in Year
One), the benefit of one year of marketing, and the inclusion of Valentine's Day and
Easter/Passover. Valentine's Day alone typically accounts for one third of a florist's yearly
revenue.
2.5 BUSINESS LOCATION AND ADDRESSThe business will be located at Kericho town in Kericho County.
The address of the business shall be:
PETALS AND ROSES FLOWER SHOP
P.O. BOX 2045
KERICHO
3
2.6 FORM OF OWNERSHIPThe proposed business will be sole proprietorship.
2.7 TYPE OF VENTUREThe proposed business will be a start-up. It will be expected to start its normal operations on 1st
November 2016.
2.8 TYPE OF INDUSTRYThe business will be in the packaging and sales industry.
2.9 PRODUCTSThe business will concentrate on packaging and selling of flowers mainly:
i. Roses
ii. Spray roses.
iii. Sweet peas.
2.10 JUSTIFICATION OF THE BUSINESS OPPORTUNITYThere is ready market due to the fact that the target market needs flowers as there are many
weddings taking place in Kericho, apart from that there are different parties that happen that
mostly harness flowers as part of their decoration for their events.
2.11 FUTURE VIABILITY OF THE BUSINESSThere are future prospects associated with need for more flowers due to the expansion of
Kericho Town
2.12 ENTRY AND GROWTH STRATEGIESEntry Strategies:
i. Relatively low pricing for some items.
ii. Good quality.
iii. Product specialization.
4
Growth Strategies:
i. Customer satisfaction, loyalty and conviction.
ii. Opening extra branches.
5
CHAPTER THREE
3.0 MARKETING PLAN
3.1OVERALL STRATEGY
It’s a widely-held thought that there are not too many florists in this county - there are too many
florists who are the same. A florist with a well-defined niche business can thrive. Petals and
Roses marketing strategy is to develop a specialized, independent niche business that centers on
Frequent Flower Gift Programs and features quality products, custom designs and outstanding
personalized customer service.
3.2 MARKETING OBJECTIVES
Petals and Roses needs to establish a reputation as an automatic, easy way to buy flowers and
foster romance with loved ones, specifically with affluent men who work in Midtown and
Downtown Atlanta. A measurable and specific objective includes initiating marketing efforts in
the fall of 2016, and having a minimum of 25 male clients in a Frequent Flower Gift Program at
the time of the store's opening in November 2016.
Petals and Roses needs to establish itself as a creative source for retail and office tenants in
kericho town that need weekly flower arrangements. Measurable and specific objectives are to
have five offices signed up for weekly deliveries by the time of the store's opening.
Petals and Rosesneeds to establish brand recognition to attract local shoppers who will
eventually visit Petals and Rosesas a destination shopping area. Given the district's art galleries, a
measurable and specific objective includes having a least one local gallery as a client within one
month of the store's opening. That said and done these are what will guide the shop to achieve its
objective:
i. To increase sales by 35% in the second year.
ii. Provide fresh and quality flowers to the customers.
iii. Meet customer needs, wants and demand.
iv. To be consistent in terms of packaging to ensure a constant stock.
v. Marketing the products so as to make it a one stop shop in the town.
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3.3 CUSTOMERS:The customers who are in this case individuals residing in Kericho County and the upcoming
towns in kericho county, Decoration companies who are hired to decorate events in the county
and hotels in the county.
The shop’s marketing efforts will focus on targeting men, and as a by-product of deliveries and
promotional giveaway programs, the company plans to secure commercial accounts. Residential
clients will stem from word of mouth and visibility of Petals and Roses to neighborhood
pedestrian and automobile traffic. The overall market approach involves creating brand
awareness through targeted advertising, public relations and a website; and generating leads
through co-marketing efforts with select venues, traditional direct mail/e-mail and events.
3.4 MARKET SIZE:The market size will cover an estimated area of 70 square kilometers in Kericho County.
3.5 COMPETITION ANALYSIS:There is relative average competition in Kericho town where the business intends to deal with.
The established competitors in Kericho are analyzed the table below.
Table III: Competition analysis:
N. Name % Market share
1 Mwaita flowershop 25%
2 Finlay flowers 12%
3 Green town flower shop 8%
Total market share by competitors 45%
Available market share 55%
Expected market share 35%
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3.6 METHODS OF ADVETISING AND PROMOTION:Public Relations
While the shop will primarily target men with its advertising efforts, it will target women in an
effort to educate women about the Frequent Buyer Program, and the women may encourage their
spouses/fiancées/significant others to participate. To strategically position its self in the market
the shop shall apply the following product strategies:
i. Product uniqueness.
ii. Great variety.
iii. Modifications.
iv. Announce the store's Grand Opening and the availability of services.
v. Issue at least one press release per quarter to local newspapers.
vi. Target Kericho publications for possible feature stores (one per story per quarter).
Advertising
the advertising program will explicitly target men.
Develop a 1/8 page, one-color ad for routine insertions in the Kenyan Business
Chronicle, the sports page and/or the business page of popular newspapers in town.
Start ads in the mid of 2016 to build awareness and to generate business (in the form of
gift certificates) for Christmas and other public holidays set to follow.
Co-marketing Efforts
Investigate contacting Kericho Golf Club, located in Kericho town, as a possible business
partner. Offer free bi-monthly floral arrangements in exchange for the opportunity to
market to club members (which includes businessmen).
Direct Mail/Postcards
Develop a list of potential clients for routine communications about holiday specials and
frequent buyer/gift programs.
Push users to a website that will enable them to see sample designs, read about the
Forget-Me-Not Club, and complete a form to request a free phone consultation.
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Buy/develop an e-mail list for routine communications about holiday specials and
frequent buyer programs.
Push users to a website that will enable them to sign-up for a free phone consultation.
Marketing Materials
Develop a consistent look and feel for all corporate collateral, including:
Comment cards - collect name, addresses, e-mail, plus feedback on services.
One-page brochure describing Frequent Flower Buyer Programs.
Stationery - business cards, letterhead, envelopes.
Gift cards.
Packaging - develop no-spill packaging to make it easy to transport flowers and use all
packaging for branding opportunities for Red White & Bloom logo and website.
Website
Highlight frequent flower program (for individuals and businesses), enable visitors to
schedule a free phone consultation, spotlight the floral design gallery and any local gallery
events. Photos will change monthly
3.7 SALES TACTICS
Direct Sales
Today, over 90% of Kenyans cite word-of-mouth as one of the best sources of ideas and
information. Word-of-mouth is rated as important as advertising or editorial content, and
Kenyans place one-and-a-half times more value on it today than they did 25 years ago. Petals
and Roses plans to foster direct sales by offering an exceptional level of personalized service to
male executives in order to build loyalty, and ultimately, word-of-mouth referrals to their peers:
9
The shop will keep a database of customer names, addresses, e-mail addresses and
preferences. This information will be used for e-mail and direct mail efforts to
build customer loyalty.
The shop will offer a 24-hour return/exchange policy to build trust with our customers
and maintain retention and loyalty.
Indirect Sales/Partner Opportunities
With its strategy of not offering special event or funeral arrangements, Petals and Roses has an
opportunity establish a referral service and partner with several key florists who can provide such
floral services. The shop will collect a flat percentage of each referral sale, with the sum payable
at the end of each month.
3.8Sales Forecast
2016 SALES FORECAST ASSUMPTIONS (November 1st OPENING)
Type Frequency Per Year
Retail 150 (x 8 weeks) 1,200
Commercial Accounts 750 (x 8 weeks) 6,000
Frequent Flower Gift Program 600 x 50 customers 30,000
Holidays/Events Christmas 10,000
47,200
The estimates above equate to approximately six deliveries per week for the Frequent Flower
Gift Program, and five deliveries per week for Commercial Accounts.
10
2017 SALES FORECAST ASSUMPTIONS
Type Frequency Per
Year
Retail 200 per week 96,000
Commercial Accounts 1200 per week 57,600
Frequent Flower
Gift Program600 x 75 customers 45,000
Holidays/EventsChristmas/Valentine's Day/Mother's
Day/Easter25,000
223,600
The estimates above equate to approximately nine deliveries per week for the Frequent Flower
Gift Program, and eight deliveries per week for Commercial Accounts. This sales activity level
represents the maximum amount of clients that Petals and Roses can handle without
adding another full-time floral designer and a full-time driver.
3.9 PRICING STRATEGIES:i. Penetration pricing strategy – relatively low price for market penetration.
ii. Skimming pricing will be applied as an entry strategy to distinguish customers based on
their income levels.
iii. Psychological pricing like sh. 499 may adopted at times during the growth stage.
3.10 DISTRIBUTION CHANNELSPetals and Roses shall sell directly to the customers and deal with retailers and commercial
accounts as the only intermediaries for a start.
The two channels will be as shown below:
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Petals and Roses Retailers Customers
Petals and Roses Customers
3.11 MARKET SEGMENTATIONTwo methods will be used to segment the market:
i. Demographic segmentation:
Different consumers have different income levels. .
ii. Behavioural Variable:
Other customers distinguish themselves based on personal style and prestige.
This will be considered in segmenting them.
3.12 MARKETING SWOT ANALYSIS
Table V: Marketing SWOT analysis
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Petals and Roses Commercial accounts
Customers
No. Element Strength Weakness Opportunities Threats
PRODUCT Uniqueness
High &
standard
quality
Non
awareness at
start
Creating
publicity
Possible
copying by
competitors
PRICE Skimming
strategy to be
used
Pricing may
not be
popular to
the market
Creation of
customer
awareness,
loyalty &
conviction
Low
income
earners and
price
sensitive
customers
may not
afford the
price.
PLACE Strategic
location &
nearness to
customers.
Use of only
one
intermediary
at start
Growth by
expansion and
creating more
channels &
intermediaries
Not
expected
PROMOTION Low
advertising
cost
Not
expected at
start
Use of e-
marketing after
expansion
Not
expected
3.14 MARKETING ACTION PLAN
Table VI: Marketing Action Plan
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Element Activity/Action When Whose
responsibility
PRODUCT Bring more designs
& quality
After one year Executive committee
and manager
PRICE Adopt psychological
pricing
After one year Executive committee
and manager
PLACE Use more retailers as
intermediaries
After two years Manager
PROMOTION Incorporate e-
marketing
After two years Executive committee
and manager
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CHAPTER FOUR
4.0 ORGANIZATIONAL AND MANAGEMENT PLAN
4.1 INTRODUCTION
This chapter describes how the business shall be managed and the type of personnel to be
employed.
4.2 PERSONNEL PLANPetals and Roses will not employ any staff members directly. As an owner of the shop, Gilbert
Ngeno will take quarterly payments in the form of an after-tax draw. Although actual draw may
vary with realized sales and profits, we are projecting owner's draw will steadily increase from
the first year to the third year. Other employees, when necessary, will be employed via a local
adverts circulated through social media, local dailies and posters. These labor expenses can all be
found in the Profit and Loss table, below.
4.3 OWNER
Gilbert Ngeno will oversee financial management, merchandising and operations for Petals and
Roses. Responsibilities will include: selling to commercial accounts; ensuring a profitable sales
picture; establishing pricing policies; keeping up-to-date on trends by monitoring trade journals,
vendors, sales reps, buying trips, industry meetings and educational programs; preparing and
executing marketing programs, including advertising, publicity and lead generation programs
(via direct mail and e-mail); establishing partner relationships as needed and designing
arrangements.
He will also oversee sales, design and delivery. Responsibilities will include selling to walk-in
retail customers; designing arrangements; ordering flowers, plants and greens; purchasing
supplies, vases and containers; pricing and selling merchandise and orders for profit; spot
checking orders to ensure quality products; knowing social and religious customs of various
holidays; and handling complaints.
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4.4 DELIVERY PERSON
The delivery person's primary tasks will include planning deliveries (right time, right
day); loading and unloading products carefully, securing plants and flowers during
transportation; repairing, returning and replacing any transit-damaged products; keeping track of
deliveries; and performing on-site credit card transactions. This position will be secured through
a local employment agency, and will work part-time. Based on projected sales for the first year,
a delivery person will be required approximately two hours per day, four days per week in the
first year; hours needed, will increase proportionally with sales in years two and three.
Characteristics: courteous, knowledgeable, neat and clean. The person should know Kericho
town and its surrounding.
4.5 TEMPORARY HELP
Petals and Roses will employ temporary employees via a local staffing agency to assist with
sales and customer service prior to Valentine's Day, Mother's Day, Easter/Passover,
Thanksgiving and Christmas.
4.6 Second Year: Contract Floral Designer As Needed for Holidays & Special Events
The contract floral designer will create arrangements using flowers, floral products and/or plants,
working directly with customers regarding price and type of arrangement or following
information from an order form. Other tasks include giving estimates on design work; working
promptly and profitably, including tracking all materials used in every arrangement for accurate
pricing; keeping the design area clean; keeping the cooler clean and rotating flower stock. The
designer may assist walk-in customers, operate the cash register, and handle customer concerns
and complaints. This position will be a part-time contractor.
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4.7REMUNERATION:Table vii: Staff remuneration
JOB TITLE NUMBER BASIC
PAYMENT(Ksh)
TOTAL PAY
PER MONTH(Ksh)
TOTAL PAY
PER YEAR(Ksh)
Owner 1 10,000 10,000 120,000
Delivery
person
2 5,000 10,000 120,000
Temporary
help
Depending
on work
load
3,000
Contractual
floral designer
1 7,000 7,000 Contract basis
4.8 RECRUITMENT & SELECTION:Advertisement:
The jobs shall be advertised by use of posters, post from social media, email notification and post
in the local dailies in Kericho County.
Selection:
Four candidates shall be shortlisted for each vacancy for interviewing to select the best.
4.9 ORIENTATION, INDUCTION AND TRAINING:the owner shall do the orientation and induction and training for the new staff. This will be a
simple exercise which will not require an external consultant.
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4.10 COMMUNICATION CHANNELS:Horizontal communication and vertical communication channels shall be used without any
restrictions. There shall not be direct communication on business matters between the employees
and the members except through the owner.
4.11 DISCIPLINE:The disciplinary process shall as follows:
i. First verbal warning.
ii. Second verbal warning.
iii. Third written and final warning.
iv. Dismissal.
Serious offenses like theft shall call for summary dismissal without any warning.
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CHAPTER FIVE
5.0 OPERATION PLAN
5.1 INTRODUCTION
This chapter describes the facilities to be used in the business; equipments, type of furniture,
machines, their cost and suppliers.
5.2 OPERATION FACILITIES AND CAPACITIESThe proposed business will employ the following facilities to aid in the daily operation of the
business.
5.3 PREMISESThe business will operate from a rented shop in Kericho town.
5.4 FURNITURE, EQUIPMENTS AND MACHINES:The following table shows the furniture and fittings Roses and Petals flower shop will use.
Table viii: Machines, Furniture &Equipments
Item Quantity Unit cost
(Ksh)
Total cost
(Ksh)
Source
Flower vases 40 200 8,000 Supermarkets
Customer desk 1 5000 5,000 Supermarkets
Display parlor 3 3000 9,000 Local carpentry
Flower wraps 50 200 10,000 Supermarket
Desks 2 5000 10,000 Supermarkets
Scissors and
clips
5 100 500
Total 42,500
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5.5 CONSUMABLESThe following consumables will be used by the proposed business.
Pens
Receipt book
Carbon papers
Rulers
Ledger books
5.6 OPERATIONAL STRATEGIESThe following operational strategies shall be implemented:
i. Cost control to minimize operational costs.
ii. Inventory management.
iii. Stock control to avoid stock outs and overstocking.
iv. Purchasing control.
v. Budgetary control.
5.7 SUPPLIERS:The business shall rely mainly on flowers from the flower farms in Unilever and Finlays
companies and from local flower farms in the region.
20
CHAPTER SIX
6.0 FINANCIAL PLAN
6.1INTRODUCTION
This chapter describes the amount and source of financing, pre operational costs, monthly
expenses, the projected cash flows on quarterly basis, the projected income statement, the
projected balance sheet, profitability and liquidity measurement and the notes guiding the
financial statements.
6.2 DESIRED FINANCE & SOURCE
SOURCE Ksh.
Bank loan 300,000
Savings 6,500
TOTAL CAPITAL 306,500
6.3 PRE-OPERATIONAL COSTS:These are the initial costs that the business will incur before it starts its normal operations. The
table below shows the anticipated pre-operational costs.
ITEM AMOUNT “kshs.”
Business name search and registration fees
Machine Furniture &equipments.
Opening stock
travel
1,500
42,500
40,000
2,000
TOTAL 86,000
21
6.4 OPERATING EXPENSES (MONTHLY ESTIMATES)No. ITEM AMOUNT “kshs.”
1.
2.
3.
4.
5.
6.
7.
8.
Electricity
Salaries
Stationery
Telephone
Transport & travel
Advertisement
Miscellaneous expenses
Rent
1,000
40,000
500
1,000
2,000
15,000
1,000
25,000
TOTAL 85,500
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6.6 PROJECTED INCOME STATEMENTThe projected income statement for the 1st year of operation is as shown below:
Roses and Petals Flower Shop
Projected Income statement
For the year ended 31st December 2016
DETAILS
Sales (note 1)
cost of sales:
Opening Stock (pre. oper.)
Purchases (note 2)
Carriage inwards (note3)
Closing Stock
Gross Profit
Less Operating Expenses:
Electricity
Salaries
Stationery
Telephone
Transport & travel
Advertisement
Miscellaneous expenses
Rent
Total operating expenses
NET PROFIT
40000
2000
60000
1,000
40,000
500
1000
2,000
15,000
1,000
25,000
(85,500)
442,500
51000
0
(-18000)
528000
23
6.7 PROJECTED STATEMENT OF FINANCIAL POSITIONThe financial position of the firm is expected to appear as follows as at the end of the first year of
operation:
Roses and Petals Flower Shop
Projected Statement of Financial position
As at 31stOctober 2015
Kshs
FIXED ASSETS (NBV)
(NOTE 4) :
Pre operational costs(note 5)
CURRENT ASSETS
Cash ( cash flow stsmt)
Stock (note2)
b/c
TOTAL ASSETS
CAPITAL:
Owners Equity
Net profit
LONG TERM LIABILITIES
Bank loan
CURRENT LIABILITY:
TOTAL CAPITAL &
LIABILITY
14700
649,900
60,000
306,500
136,000
300,000
724600
669800
1394400
1394400
1394400
24
6.8 PROFITABILITY RATIOS:The firm shall use the GP Ratio and the NP Ratios in determining its profitability.
The ratios as at the end of the 1st year are expected to appear as follows:
i. Gross profit ratio:
GP Ratio = Gross Profit * 100
Sales
= sh. 528000 *100 = 85.28%
Sh. 510000
ii. Net Profit Ratio
NP ratio = Net Profit * 100
Sales
=sh. 442500 *100 = 86.76 %
Sh. 510000
LIQUIDITY RATIOS:
The business shall use the current ration and the acid test ration in determining its liquidity
position.
These are expected to appear as follows as at the end of the 1st year:
i. Current Ratio
CR = Current assets
Current Liabilities
ii. Acid test Ratio:
ATR = Current assets - Stock
Current liabilities
25
CHAPTER SEVEN
7.0 RISK MANAGEMENT PLAN
The expected business risks are analyzed below:
Table x: Business risks
Nature of risk Dealing with the risk
Theft Insurance policy, strong metal doors and windows
Fire Insurance policy
Losses Proper market survey
Competition Promotional activities, customer care & meeting demand
26
