Owning a successful business is a dream majority of Kenyans have. This is because of the benefits you derive from it. However, most new businesses don’t succeed within 1 year of operations. To increase the chances of success here is how to start a business in Kenya.
Many factors come into play when starting a business. These are all critical in ensuring the long-term success of the business. Hence, if you are planning to start one, you need to follow these steps to increase your chances of success.
Benefits of starting a business
- You become your own boss
Starting your business allows you to become a boss. This means you can make independent decisions and operate within your rules. some of these include operating hours and expansion plans.
- Higher financial returns
Starting a business can increase your returns multiple times if it is successful. This is different from employment where you work with a fixed salary.
There is no limit to what you earn in business and this could change on a day to day.
- Job creation
With a business, you have a chance to offer job opportunities. This brings about satisfaction and participation in overall economic growth.
How much can you make as a business owner?
As mentioned, there is no limit to what you can make if you start a business. However, various factors affect the amount of income.
Some of these include business size, business type, location, and customer service level. You can make as little as 10K from a 50K capital business per month to millions for bigger businesses.
The business also tends to become more profitable with time. This is because customers keep growing over time as your business becomes famous.
How to start a business in Kenya
Here are the steps on how to start a business in Kenya.
1. Identify your passion and skill
The best business to start is one where you have passion and skills in. As an example, if you have a passion for computers, you can start selling computers and related accessories.
As another example, if you have skills in media, you can strive to start a media company. Hence, you should evaluate businesses in your area of interest to settle on the best one.
Once you have identified what you like, it is time to move to the next step.
2. Conduct market research
The market research should be targeted to identifying key market opportunities in the business you have passion in.
Through market research, you should identify key market information such as start-up capital, legal requirements, customer preferences, competition, and needs.
Conducting market research helps to identify whether the opportunity is viable or not. You should also establish whether the capital requirements are within your abilities.
3. Meet the legal requirements
You have to ensure the business is operating within the law. To achieve this, you should comply with all the set legal requirements both at the local and national levels. Below is a list of legal requirements you need to start a business in Kenya.
These include getting a business permit, complying with the set health and fire prevention standards, and finally paying the relevant taxes.
Without having these in place, your business will be operating illegally. This exposes you to various legal consequences such as prosecution or business closure.
4. Raising capital
Upon compliance, you should ensure the necessary capital is in place to start operations. The amount of capital should be based on the information got during market research.
Capital is necessary to help in setting up the business until such a time becomes sustainable. Some of the key uses include paying rent, buying stock, and hiring employees where necessary.
Some key sources of capital include savings and loans. Savings is the internal funds that you put aside. You can either get a loan from a financial institution or from family and friends.
5. Starting operations
With all these steps in check, you are now ready to start your business operations. It takes time to break even. On average, businesses break even after 3 years in Kenya. Hence, you should be ready to put in the work until the business is successful.
Some of the key skills necessary to ensure the business is profitable in the long term include taking risks, innovation, and hiring the right skills.
Below is a recap of how to start a business in Kenya.
- Identify your passion and skill
- Conduct market research
- Meet the legal requirements
- Raising capital
- Starting operations