How To Start A Small Business In Kenya in 9 Easy Steps (2024)

Last updated on November 2nd, 2022 at 12:50 pm

Today, I will walk you through how to start a small business in Kenya. You will learn how to move from idea generation to that point you make your first sale.

In fact, this is the same process used by billionaires like Cris Kirubi and others to start multimillion businesses in Kenya.

Before we get started, I have something special for you.

Here is a guide you can download now completely FREE. Just use your primary email and first name. I say primary email because that is where I will send the free guide.

In brief, I reveal the top #20 online business ideas you can start now and make money within no time.

Here is what’s inside:

20 business ideas proven to work
Guide on how to get started immediately
You don’t need any capital or special skills to start these ideas.

This way, you start making money online in Kenya immediately.

Back to how to start a small business in Kenya.

Starting your own business isn’t complicated as you might think. I know some people may make it sound like rocket science, but trust me, it isn’t.

Also, you don’t need any degree or certificate to start a successful business in Kenya. All you need is a good business idea and a plan to execute.

With that said, let’s dive right in, shall we?

Table of Contents

How to start a small business in Kenya (a proven process that works like magic)

1. Market research

Chances are, you already have an idea of what business you want to start. Just in case you don’t have one yet, here is a list of 20 profitable online business ideas you can start now in Kenya.

Since you are here, I assume you already have the business or at least know the market area you’d love to enter.

Armed with your business idea, here is what you should do now:

Research the competition

Here is the truth:

No business operates in a vacuum. All of the businesses have competition, it doesn’t matter whether weak or strong competition.

In fact, if you after this step you realized that no one else is already doing your idea, there is a high chance it won’t succeed.

Let me explain.

The presence of competition in business is a good thing. It is a sign that your idea will work. Think of it as a litmus test to prove your business idea.

What happens if there is no competition?

It could be two things:

Your idea sucks and there is no market
You have stumbled upon an untapped market (very rare like a million to one chance)

In most cases, it is the first reason.

Now, look at what the competition is doing, not copy them, but to learn from them. Understand how they operate and why they do certain things.

The last thing you want is to come in and make mistakes that have already been made by your competition.

It is true, we learn from mistakes. But who said it has to be your mistakes?

Here is what to do:

Look at the market leaders in your niche, what are they doing?
From whatever they are doing, what can you do better?

Do this one thing and you have a profitable business idea

People tend to overthink this stage. If you think you can deliver what the competition don’t or better yet, do it cheaper and faster. If you can do that, you’ve got a viable business idea.

Besides the competition, market research also looks at your target customer.

How to know more about your customer

You need to have the following information about your target market:

Age (young, middle age, or old?) talk in terms of age brackets, 20-35, 44-65, stuff like that.
Occupation and income (the last thing you want is selling to people who cannot afford your products)
Location – where do they live? This helps you understand where to locate your business

There are two ways to get this data:

Administer surveys. Use sites like SurveyMonkey to create a comprehensive survey that will get you everything you need.
Look at your business product or service, and ask yourself, who’d be the perfect customer for this? What age, occupation, income, etc.

Here is an article on how to use Facebook to understand your target market.

I know you feel like this is too much, after all, I am just starting a small business in Kenya.

Well, bad news for you, because starting a business without solid research is doomed to fail.

Tell me this:

Why do you think 80% of small businesses fail in the first year of being in operation?

Now, with a solid business idea on your hands, move to the next step of starting your own business in Kenya.

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2. Write a business plan

As they say, without a plan, you are planning to fail. A business plan is like a roadmap, showing where you are going and checkpoints along the way.

Without it, you are preparing for failure.

Here are some questions to help you figure out your business plan.

What is the purpose of your business?
Who is your target customer? Who are you selling to?
What are your objectives?
How are you going to finance the business?

Get answers to these questions, and you got yourself a perfect business plan.

3. Look for funds

Depending on the type of business you want to start, you may require capital. The money will be used to get business off the ground by purchasing the raw materials, stock, registration fees, and salaries, among other business operating expenses.

But get this:

You can start a business with zero (0) money.

How?

Here is a list of 20 business ideas you can start now without any money and still make money.

You see, there two types of business:

Online business – operated online through your phone or laptop and an internet connection. You can start this type of business with zero or small capital.
Traditional (offline) businesses – these are the ones you are used to. Like opening a grocery store, you will need a physical location, products or stock, and registration fees.

Just like online business, it is possible to start a traditional business (brick-and-mortar) with small capital.

For example:

Instead of renting a whole stall or room, why not co-share with a friend and share the costs. Also, instead of buying the stock in bulk, you can agree with the supplier to extend credit to be paid later.

Either way, you need some money to start a business. Get that anytime you think of starting your own business.

Now, the source of the capital is for you to decide what you are comfortable with.

Borrow from friends
Ask for credit from suppliers
Use your savings
Talk to your bank

With the idea and money to start, look at the next step.

4. Pick your business location

Location is among the vital determinants of whether your business makes more money or not.

Not all locations are the same, which explains why you need to pay attention here.

Whether you are starting the brick-and-mortar (traditional) business or opening an online shop, location is critical. In some instances, location affects your taxes, legal factors, and even revenue.

Not all places have the same regulations.

Pick locations close to your customers to reduce transport costs
Consider regulations. Are they hindering your growth? If yes, you are better off somewhere else
Should you be close to competitors or not? It goes both ways, negative and positive. For example, if the location is attracting a lot of customers because of the competitors, you are better off there and lonely somewhere no one goes.

Just like in real estate, it is always about the location of the business.

5. Decide on business structure

Do you want a PLC or a private company?

You can always start as a sole proprietor, and later on own transition to PLC to scale your business.

The direction you choose impacts the registration requirements, the amount of taxes, and personal liability.

6. Pick a business name

I admit, picking a business name is the hardest thing. You will have to sit down and brainstorm perfect business names and keep a list.

To help you out:

Pick something that reflects your business brand and oozes your spirit
Make it unique and memorable. The last thing you want is going to register, only to realize the name is already taken

Here, I’d also advise you to register a domain name immediately. Thousands of website names are registered daily, don’t be surprised later on to find your business name already taken.

7. Register your business

As much as some people are saying registration isn’t a must for small businesses, I disagree.

Do you want peace of mind?

Then register your business with the right authorities. Besides making sure you are operating legally, business registration goes a long way in protecting your brand.

For example:

If you pick a business and fail to register with the authorities, your efforts were for nothing.

Someone else will come along, pick your name, and register. And you are left with no option but to go back to the drawing board.

For this reason, once you have the perfect business name, go ahead and make the necessary arrangements to register it.

Here is a guide on how to register a business in Kenya.

8. Apply for licenses and permits

Still, on how to start a small business in Kenya, registration isn’t enough to get you started.

You will need permits and licenses to operate. Considering your location, type of business, and industry, requirements to obtain them might vary.

But make sure to check with the local authorities.

Do this and you won’t have to hide whenever the ‘Kanjo’ passes by your business.

9. Open business bank account

Wise entrepreneurs do not mix business finances with personal finances. As such, you will need separate bank accounts strictly for business.

To open a business bank account, you will need registration paperwork. And that is why this should be the last step in how to start a small business in Kenya.

Other steps include:

Branding and advertising – once your business is open for customers, it is time to build a brand and start attracting more customers through advertising. Here, you can start by building a logo, a website, and creating social media pages
Pick suppliers – whether you are alone or have a team, you won’t be able to do everything alone. You will need suppliers and contractors. Make sure you can trust them considering they will be accessing your business data.
Build a team – again, you don’t need a team, but you cannot do everything alone. Whether fulltime or contractors, you need the best person for the job.

With everything, time to cut that big ribbon.

Congratulations! You have started your own business in Kenya.