Starting a Business in Kenya and how to grow it

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Starting a Business in Kenya

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Starting a Business in Kenya successfully, avoiding cash flow catastrophes and how entrepreneurs can grow their ventures.

Having a unique business idea is not the must have recipe for the success of a business in Kenya, you can always take something that every Kenyan love and put your own stamp on it.

It’s far harder to starting a business in Kenya and build it to a successful business with an entirely original idea, because you have to convince Kenyan’s they need you.

It’s much easier to offer something every Kenyan already loves, but in a fresh new and better way.

Raising funds for starting a business in Kenya can be hard particularly for the young starting entrepreneurs, especially if they lack confidence. Potential investors can clearly see people’s insecurities very clearly, however hard they try to cover them up.

This reduces your chances of raising funds. If something is undermining your confidence, work out what it is and address the issue.

Great new business ideas in Kenya need not be unique, but they must provide something every Kenyan loves in a new and better way.

An example of this is Jumia owned by German-based technology firm Rocket Internet, Jumia had several success factors. It’s timely entry in the Kenyan market reflects the trend for online shopping in Kenya, as there is ready demand now.

Jumia offers the best pricing and delivery of consumer products online in Kenya.

Jumia offers the best pricing and delivery of consumer products online in Kenya.

It involves offering the best pricing and delivery of consumer products online in Kenya. You can now  purchase mobile phones, tablets, computers & laptops, women’s fashion, men’s fashion and more online and have them delivered or collected.

Jumia also has payment options that include Mpesa and Pay on delivery options which are suitable and convenient for Kenyans.

Jumia starting a business in Kenya, wasn’t on a fresh or unique idea but they provided competitive pricing, convenient payment options and a much faster delivery turnaround time.

Remember the South African media giant Naspers through its Internet arm MIH started Kalahari.co.ke which borrowed its concept from the world’s largest e-commerce platform—Amazon.

Kalahari.co.ke shut down with its owners quoting “unprofitability” as a reason.

Kalahari.co.ke shut down with its owners quoting “unprofitability” as the reason.

Kalahari.co.ke was shut down with its owners stating that it was a “sad day for e-commerce” in Africa and cited “unprofitability” as the reason. MIH also runs two other online businesses in Kenya–Dealfish and Mocality, classified ads sites which were also closed.

Standard delivery cost or rates for Kalahari.co.ke was Ksh 600 per order when the sum of the items weight in the order was less than 4 kgs. Thereafter their system automatically calculated the delivery charge as follows:-

5kg – Ksh 620, 6kg – Ksh 890, 7kg – Ksh 1200, 8kg – Ksh 1400.

If the parcel was 8kgs and over, one was charged Ksh 300 for each kg over 8kg.

Unlike Kalahari.co.ke, Jumia’s delivery mostly within Nairobi are free and on average they charge far less than half the price of an average delivery that Kalahari.co.ke used to charge.

Delivery times at kalahari.co.ke was probably what failed them. They deliveries took between 5 to 23 days which was way to long for online shopping. The conventional expectation for online shopping is usually same day or next day delivery.

Jumia’s delivery if placed before 2pm may be delivered same day otherwise most of their deliveries are between 2 to 3 days. Jumia clearly was able to offer Kenyan’s love for online shopping or rather better deals in a new and better way and most importantly make it work.

The most important key to success in starting a business in Kenya is the entrepreneur. If the person launching the business is brilliant, but the business idea is not quite right, the model can be tweaked.

Most small and medium sized enterprises in Kenya fail because of poor cash flow management. It’s a huge problem, yet it’s relatively simple to explain.

Put simply, cash flow management is about managing your income, spending and savings. It’s just a question of thinking ahead, so entrepreneurs don’t have to be afraid of their cash flow management.

One way of managing your cash flow after starting a business in Kenya would be to start by looking at your outgoings. How much do you need to pay your monthly bills over 12 months? If your monthly outgoings are KshXXX, save any income over that amount and use it when your income falls short.

For very early start-ups, even this can be very tough to achieve, so work out what is the barest minimum you need to survive and devote all your time to earning that. Only when you have got that covered, can you think about using some of your time to develop and grow the business.

How do you grow your business? First, ask yourself if you want to grow your business. If it’s delivering a good lifestyle, think carefully. If you decide to go ahead, think about times when you could have grown it before – when, for instance, you were approached by a potential stockist, but you didn’t have the resources or time to supply them – and try to recreate the situation that led to that approach.

Also, find out how larger businesses in your sector grew then imitate their actions, adding your own personal touch. Every business has its own touch – identify yours and use it.

STARTING A BUSINESS IN KENYA NEEDS

Lots of hard work – To turn a great business concept into a thriving enterprise in Kenya you need lots of hard work – and a bit of luck. If you don’t think there’s some degree of chance and luck involved, you’re delusional.

For Jumia’s online business to work in Kenya, they had a bit of luck too. They started when the adoption of Mpesa was huge hence it supported their payment option, additionally the pack of “boda boda” riders everywhere in Kenya also excited the online market assisting with the deliveries which is a win win factor in their success.

Offer something your target Kenyan consumers want or need – When starting a business in Kenya you have to offer something your target Kenyan consumers want or need and do it better than the competition or educate customers to want it in the first place.

Ensure you have a true passion for your Business – Ensure you have a true passion for your business. You must enjoy what you’re doing, because you are the key ingredient in making your business a success.

Surround yourself with brilliant people – Mingle yourself with brilliant people. We all have our weaknesses, so choose people whose strengths are in your areas of weakness and who are willing to challenge your decisions.

For all those entrepreneurs who are starting a business in Kenya we hope this has been helpful and we wish you all the very best.

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