Most Kenyans are business minded. Everyone you meet has founded one venture or another. From the most common and profitable samosa and boiled eggs businesses to selling clothes and shoes online or by the road side. Most of these ventures end up being short term,its common to see a shop with signs of a saloon then it turns into a butchery and then a kinyozi. Its an endless cycle where ventures do not last.
Most businesses that young entrepreneurs venture into have some things in common. One, they usually do not require high initial investments,they are usually proven,they do not require specialized equipment or skills (people in trades are an exception),they are close to roads(the common wisdom is that the closer you are to a main road,the better) and initial profits returns are high.
Why do these ventures fail? Or if they succeed why don’t they grow into big local chains? And i do not mean country wide,even at the county level.
I recently saw a business model that made me smile from its simplicity. The rite of passage of circumcision is something most men go through in Kenya. I saw poster(cheap posters with just basic information about where circumcision clinic was and housing for the kids and the price was 6900. ) So how much did it cost the owner,goodwill from a local church and medical equipment and a trained staff. The thing that made me admire that model is how vast the guy had thrown his nets. I went to different counties(before lockdown) and saw the same posters with similar prices but different venues.
In essence this model favoured spreading risk by reaching a wider market by being in different counties. Logistics costs and effort aside(which are low because the most profitable counties are close together),this model ensures sustained profitability. For a while though haha so we are back to the 1st question?
How can we make this business last? Can we change into a long term business? Is it seasonal in its nature? How much effort do the entrepreneur need? How much money will have to be ploughed back? How can we lower expansion costs? Where and when do we make the most profits? How fast do we break even after opening up a new shop? Are there strategic partnerships that i can make that would be valuable? Is this the right business for me? Is it fun?
These are questions all young entrepreneurs have to ask themselves. I also believe that young entrepreneurs in Kenya should focus on turning small venture into sizeable but long-term businesses because profit for 5 years is better than profit for 6 months.
Stoned Economist 