Kenya is a great country to start a business in, whether you are born right in Kenya – and live here – or you are an entrepreneur from another country with plans to enter the Kenyan market.
To start a business in Kenya, do the following
Table of Contents
- 1 To start a business in Kenya, do the following
- 1.1 1. Ask yourself why you want to start a business in the first place (you got to know if you have what it takes, right?)
- 1.2 2. Decide if you want to start your business offline (physical location) or base your operations online – or both
- 1.3 3. Get the necessary amount of capital to start your business – no more, no less
- 1.4 4. Focus more on getting customers and selling more to grow your business and be profitable
- 1.5 5. Think of the best way to incorporate your business entity – making sure you adhere to legal requirements affecting businesses operating in Kenya
- 1.6 How much do advocates and the companies that help with business registration in Kenya charge?
- 1.7 6. Move quickly to take advantage of all the opportunities that come with starting and owning a business in Kenya
1. Ask yourself why you want to start a business in the first place (you got to know if you have what it takes, right?)
Why do this? Because it is from this question that you will be led to think deeply about why your business idea should be turned into a real business.
This question will force you to think about the challenges and problems your business is going to solve for customers and clients.
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There are many examples of Kenyan men and women who see someone start a business and attracts many customers throughout the day who then go ahead to setup a similar business, not too far from the one that inspired them to give business a go…because many customers must mean that the business owner they are copying must be making lots of money and enjoying the profits coming in.
Money is the big motivation here.
Sometimes the person doing the copying is carried away they don’t spend enough time figuring out what solutions (products or services) the customers really want. And that’s usually the beginning of the fall for the new business – before it has even started.
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Answering this question gives your business a strong foundation and a good chance to become a successful and profitable company.
With a weak foundation (not putting enough time to answer this question, assuming you are committed to executing your plans and grow your business), your business is likely to be among the many businesses in Kenya that fail and close shop every single year.
The failure rates of businesses in Kenya, even in 2015 / 2016 / 2017, is quite astonishing – and so are the rates of business success in this country – a country with the biggest economy in both East and Central Africa.
So, it is up to you to choose which side you want your business to be counted in. it is not just a matter of saying I want to start a business and turn it into a big profitable company. It’s about coming up with ideas and executing them. First, you start by answering this question. That way, you will understand better the needs and wants of the customers and clients you want to serve.
And when you understand your customers well, chances are high that you’ll come up with the right marketing plan to make sure they receive the products and services you have tailored to the challenges and problems they experience.
When you understand your customers well, you will come up with better ways to reach them and make it easy for them to pay you for your products and services. For a lot of businesses fail not because they don’t have the right products and services but because they didn’t take time to ask why they exist (and what they solve and for who) in the first place, making it hard to sell their products and services because:
- they don’t understand their customers, or,
- they think they understand their customers but the customers don’t think so (i.e. they are not taking money out of their pockets, wallets, purses, debit cards, credit cards and phones to make purchases)
So, do answer this question. Let the answers you come up with give your business plan a strong foundation. When you know the why of your existence (why you want to start a business in Kenya), figuring the how gets easier.
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2. Decide if you want to start your business offline (physical location) or base your operations online – or both
In Kenya, consumers, still spend a lot of their money on businesses that have physical locations. Think shops, matatus, motorbikes, supermarkets, schools, hospitals, banks, insurance companies, garages, hotels, rental property, furniture shops, used motor vehicle yards, chemists, butchery, petrol stations, clothes, hardware stores selling construction material for example.
Yes, there are many businesses with physical locations that have websites (and downloadable apps) allowing online transactions – making it easy for customers to pay for their products and services.
If you are on a tight budget, getting a physical location can be daunting (rental costs for commercial space, equipments, employee hiring can cost a lot more) unless you are starting your business working from home.
In a case like this, if you want to get started immediately turning your idea into a business, without taking a loan, to get all the things that you need covering all the expenses with the capital you have, you can opt to register a domain name, get a web hosting plan and start your business online using your website as the main point of contact with customers, clients and prospects. You can also bolster your presence online and reach more buyers by using the many free classifieds ad websites and online marketplaces that have sprung up in Kenya in recent years).
Decide well. To some it may be a good idea to start online and use the rest of the money to do marketing. Others will take into consideration how skeptical Kenyans can be of businesses with no easily and quickly accessible physical location and decide to have both an online and offline presence.
Having both may increase the number of people finding your business and buying from you. But given the different types of businesses people start in Kenya, the good thing you can do at this moment is to consider the source and amount of your startup capital then decide on which path best suits the idea you want to turn into a business.
3. Get the necessary amount of capital to start your business – no more, no less
The best advice I can give you here is something I mentioned in this free PDF ebook you can download now: 10 Things to Look at if You Are Thinking of Starting a Business in Kenya.
What is in it? It concerns how you can go about answering the question, ‘How much money is enough to turn your idea into a real business.’
The advice I give is to remove yourself from the worries and concerns about how much you tally think you need to ‘comfortably’ launch your business. So, a common phrase like, ‘I need 50,000 Kenyan shillings to start the business’ becomes ‘The business (idea) needs Kenya Shillings 15,000 to launch.’
Notice the difference?
Sometimes, we think we need big loans to start successful businesses here in Kenya, but truth be told, we don’t in most cases.
After all starting and running a business with as little debt (financing from lenders) as possible – or none at all – gives you greater room to sell more of your products and services to the customers that come your way – without worries about debt repayment.
It should also be noted that some of the big businesses in Kenya we wish could be ours – seem profitable but are in truth ridden with debt, mismanagement and some of them usually are on the brink of declaring bankruptcy.
Only thing is you don’t know – because you are an outsider looking in.
You don’t know if they cook their books.
You don’t know how many banks, investors or micro-finance companies they owe money.
They might also be popular, well-liked and a brand many are familiar with and so it is easy to assume they are making good money. Usually that is the case. But then there are exceptions.
4. Focus more on getting customers and selling more to grow your business and be profitable
Sales – that is how you grow a business and make it profitable from the day you start.
Many people go into business obsessed mostly about two things:
- the fact that they want to make tons of money with their business and be rich
- how great their product or service is
Which is not a bad thing. It just keeps the brain from staying on the bumpy path that is sales – asking for the sale, closing deals, dealing with tough clients, dealing with rejection, constantly evolving and thriving even in the most crowded of niches or industries.
Your product, service or idea is great when people pay for it and use it – and then come back to you for more – of the same product, spares, upgrades and repairs.
So, think more about this – your business model, what happens when a prospect finds you, what happens when they buy, what happens when they don’t, what happens when they ask you a question, what happens when they make a feature request, what happens when they use your product or service, what happens when you make a promise (guarantee) to them, what happens when they hesitate, what happens when they refer someone else to you…
Think more of these things (helping your customers the best way possible) than you spend your time thinking about how much wealth and riches your business is going to net you – and your chances of actually starting and building a successful business empire more than doubles.
5. Think of the best way to incorporate your business entity – making sure you adhere to legal requirements affecting businesses operating in Kenya
When some people search for information on how to start a business in Kenya, what they are mostly interested in are the legal requirements they need to adhere to when registering their businesses.
Registering a business in Kenya can be tough. There are those who go through the process of incorporation easily while others , sadly, go through a lot of challenges.
You can go through the process alone and learn how to register partnerships, sole proprietorship or limited liability companies by yourself or seek the help of an advocate dealing in commercial law or get help from the many companies that help Kenyans and foreigners with the registration process both at the national and county level.
Visit an advocate in your town or city and let them help you search, reserve and register your business name filling all the necessary forms. They will help you come up with your company’s memorandum and articles of association, stipulate the duties of the directors and how the business operates.
How much do advocates and the companies that help with business registration in Kenya charge?
For a limited liability company, some will charge between Kenya shillings 20,000 and 70,000.
Here is a list of companies that can help you with everything you need to adhere to all the business regulations in Kenya:
- Inc.co.ke by Genius Executives – charge about Kenya Shillings 24,000 to 27,000 to register a limited company in Kenya
- Dealpoa – charge about Kenya Shillings 25,000 to register a limited company in Kenya. You can be the sole director or you can choose to incorporate a company with more than one person as the director.
All these three companies (once you send them the required information to start the process of incorporating your business) can help you register your business in Kenya online (with the registrar of companies) and then mail the incorporation documents back to you via post or courier.
They do this for Kenyan citizens and foreign nationals who want to do business in Kenya – by starting a new legal entity or by opening a subsidiary of their parent or holding company registered and operating back in their country of origin.
6. Move quickly to take advantage of all the opportunities that come with starting and owning a business in Kenya
When you have a solid plan – your business plan – however you may draft it, it’s not time to sit back and relax.
Start. That’s what you want right?
Execute your plan meticulously without being slow.
Move fast enough to seize all the opportunities that present themselves to you – the kind that grow your business and make it even more profitable.
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- by reaching new customers in and outside Kenya
- by having affiliates – start a referral program for your business
- by investing in similar businesses as the one you start (owning stakes in them and getting a profit from them)
- by going for national and county government tenders
- by using different marketing avenues, learning what works and doesn’t and doing a better job from all the lessons you learn
- by hiring talented employees or freelancers
- by maintaining the trust between you and your suppliers and everyone you deal with – making your relationship even stronger than it is now.
It is hard work (and a lot of patience and perseverance is required).
But you never know the great results (lessons) that may come with starting your business in Kenya despite the scary statistics on the number of businesses that fail in their first year of operation or the ones that fail before their fifth year is over.