Matatu business is a big industry in Kenya making billions of shillings to the owners every month. It is this lucrativeness that has made many Kenyans venture into the sector. However, there are factors to consider when buying a matatu in Kenya.
Although this industry is awash with cash, not everyone succeeds. This is because some investors go in blindly without any market knowledge or skills. However, factoring in some of these elements greatly increases your chance of success in the business.
These are not technical factors but some that you can understand by just doing basic market research. A key beginning point if you want to get into business.
Some of these factors include;
1. Price of the Matatu
Cost is a key element when getting into the business. To remain profitable, your income must exceed costs. Several elements determine the amount of money to buy a matatu with. This includes your financial ability and the size of the car.
Financial ability is based on your capital. On the size, the Industry takes in different car sizes from small 7-seater vans to big buses. The bigger the matatu size, the higher the price.
Hence, you need to do adequate research before signing that cheque. It is also common that second-hand matatus are cheaper than new ones. However, they also fair share of challenges such as mechanical problems.
In this business, the bigger the matatu, the higher the amount of income it is likely to generate. This is because bigger matatus carry more passengers.
Some of the other factors that affect the price of the matatu include the model of the car and any extra modifications. In the Kenyan market, most owners modify their cars to add some elements such as entertainment systems and fancy seats.
2. Sacco to join
All matatus in the country are supposed to operate from a Sacco. Hence, before buying a matatu in Kenya, you need to shop for a Sacco that suits your needs.
Some SACCOs are more popular than others. Hence, you should seek a good Sacco that is well known, operates more routes, and has a huge pool of customers. More customers mean more business translating to more returns.
Joining a Sacco requires you to make an application for consideration. For most SACCOs especially the major ones, there is no guarantee of acceptance. You need to keep trying until a chance is available. Most of the SACCOs also have a joining fee. However, the amount of the fee varies. Top SACCOs charge a premium while new or small SACCOs have lower fees.
The Sacco is an important factor in this business as they help in matters such as fleet management, setting service standards, and negotiating on behalf of the members.
Some of the best saccos in the country include Metro Sacco, North rift Sacco, Mololine Sacco, 2NK Sacco and Neno Sacco.
3. Matatu route
Every matatu operating in the country has a specific route that it should follow. This helps to bring accountability and reduce conflict.
Hence, you need to determine your most preferred route before buying a matatu in Kenya. On the routes, the choice is between long distances such as intercounty or short distances such as town service.
This will also be a key factor in deciding the kind of car to buy and the Sacco to join. For the long-distance routes, you should consider having a well-maintained and comfortable matatu. This will not only make the journey comfortable for the passengers but also ensure the car can make the journey successfully. Saccos also operate on specific routes.
Doing business on a route you are not authorized makes you liable to legal prosecution. Hence, it is important to stick to the set regulations.
To get more information on the routes, you should do some market research either by visiting Sacco offices or engaging the government agencies in charge of public transport such as the National Government and Transport Authority (NTSA)
You require workers to help in running the matatu especially if you are not the driver. You should start the search process earlier before buying a matatu.
The need for this is that it could take time before getting the right staff. Hiring the right staff greatly increases your chances of success in this business.
Some of the factors to consider when hiring your staff include experience in the business, customer service skills, and compliance with the legal requirements such as having a valid public service vehicle driving license. Learn more on how to get a smart driving license in Kenya.
Remember, these are the people who will also be in charge of your multi-million investment. Hence, you should as much due diligence as possible. Alternatively, you can task the Sacco to get your staff. This is a good approach but it denies you the chance to get your staff.
Some of the ways to retain your employees include competitive remuneration and flexible working hours.
Although having these factors to consider when buying a matatu in Kenya well-taken care off doesn’t guarantee success, they increase the chances. Hence, if you want to have a successful journey in this industry, purpose to tick all these boxes.