Setting up a business and becoming an entrepreneur, is now one of the most popular alternative for today’s generation of young people. The increased success rate of this development, has led to the option of securing traditional 9 to 5 jobs, becoming less and less attractive. Especially for individuals looking to accumulate long term wealth and stability.
An estimate of 7 million individuals are unemployed in Kenya and more than 1.4 million individuals are on the hunt for jobs. This is according to a survey conducted by KNBS which is the Kenya National Bureau of Statistics. In 2019, statista.com put Kenya’s unemployment rate at 9.31 percent. The tough situation on ground, is partly why the self employment route, continues to grow in success and popularity.
At mpesapay.com, our How To series, will effectively open your eyes and mind and put you on game to the quite numerous business ventures available in today’s world that could potentially keep you busy, while also putting more money in your pocket and increasing your purchasing and spending power.
If you are only looking for a business to set up on the side however i.e a side hustle to add to compliment what you already have going, you might still find this series useful.
With great customer service, a very clear vision, Capital, fantastic management skills, among other things which will be noted in each post, you are almost guaranteed success in whatever business venture you settle on.
Today’s article will show you how to set up your very own Shea Butter business in Kenya. While this is not really a 5,000 Kenyan Shillings capital business, I am sure you would agree that this is also a very viable business option.
Shea butter which has been used for centuries, is essentially fat that is extracted from the nuts retrieved from the shea tree. When in warm temperatures, it is ivory or off-white in color. Shea Butter is used for hair, skin, massages in some cases, and also as a base for medicinal ointments.
How To Start A Shea Butter Business In Kenya
Just how much do you need to set up a Shea Butter business? What paperwork, and or equipment are you required to have in Kenya? If you are considering this option, here is everything you will need to kickstart your Shea Butter business in Kenya.
- Acquire The Needed Training. Yes, the Shea Butter business also requires a certain level of training. Especially if you have never done this professionally before. The training will enable you better understand the technicalities behind your chosen business. You can get this by ‘interning’ or working under an already established Shea Butter business. YouTube will also provide a ton of knowledge and information, in the form of Do It Yourself (DIY) videos and tutorials available on the platform. Doing this, will ensure that the Shea Butter you produce, will be of the best quality attainable. It will also increase the confidence of your customers, and at the same time enhance the reputation of your business, ultimately improving your skill level.
- Have A Business Plan. For every business, having an effective and concise business plan is very important.
- Know If There Is A Demand. Yes, this is very important. You need to find out if there is a demand for you intended business i.e Shea Butter.
- The Name Search. You need to do this to confirm that the name you settle on for your business, is not already in use by another establishment. The name search costs around 300 Kenyan Shillings in Kenya and you will receive results in a couple of hours.
- Figure Out Your Market. It is very important that you figure out your market. Especially before starting your Shea Butter business. Your potential customers will basically be everyone from grocery and convenience stores, health stores, the middle class, upper class, the expatriates and anyone in general who is heavily into purchasing natural homemade products like Shea Butter.
- Register The Name Of Your Shea Butter Business. You will need to register the name of your Shea Butter business if you plan to run it as a legitimate business. The business name registration would cost you around 1,000 Kenyan Shillings.
- A Location. As with most businesses, a good location is one of the major factors that determine whether or not your Shea Butter business will record any success. For example, a Business located at a major street, will benefit from a large amount of foot traffic and more people will get to know about it and step in even if it is just out of curiousity. Find a location that is both ideal and easily accessible. Especially for customers who prefer to meet up in official settings or a physical premises as opposed to just receiving deliveries. Also make sure that the location you settle on, is affordable and within your budget. In addition, do confirm that the location, does not have extreme cases of shoplifting, theft and break-ins. In scenarios where you are renting, ensure that you get the necessary approval from your landlord or owner of the building, for the adjustments and alterations you might be carrying out when occupying said space. Doing this will enable you avoid any fall out between the both of you.
- Figure Out How To Raise Capital. The Shea Butter business like any other business, also needs capital investment. After completing your business plan, knowing your market and finding a location, this should be your next line of action. Although Personal funds are sometimes the primary source of funding for many new businesses, doing that alone might not be enough. Taking on a financial partner could just be your best bet. If obtaining a business loan from financial institutions proves difficult, the next option should be getting it from family and friends. Loan arrangements in this setting are usually much more flexible as they come with much lower interest rates. All you would need to do is convince said family and friends, of the profitability of your business. Please make sure however, that you pay back the money and in good time too, so as to maintain confidence which you would need if you would require money from them in the future.
- Choose The Most Suitable Business Structure For Your Shea Butter Business. Choosing a business structure can determine your personal liability, how much you pay in taxes, as well as your ability to raise financing. Those reasons are why it is very important that you choose the right business structure. One that is the most suitable for your business from the get go because changing structures later on, could inevitably lead to tax consequences. Be sure to also consult a business accountant and a lawyer too before deciding if your Shea Butter business would be a Partnership, a Sole Prorietorship, a Corporation or a Limited Liability Company (LLC).
- Secure a Kenya Bureau of Standards (KEBS) License. The license will cost you an estimate of around 20,000 Kenyan Shillings only.
- Secure A Business Permit Or License. This is one of the most fundamental licences that businesses in Kenya are required to have by law, before commencing operations, so you will definitely need one for your Shea Butter business. Although the cost of a business licence or permit differs from county to county, it usually sits at around 3,000 Kenyan shillings.
- Decide Your Pricing. Yes you should decide on your pricing before going into the market. One important factor that should influence the pricing of your Shea Butter products, is whether or not the intended buyers will be wholesalers or retailers (retail buyers). When figuring out your pricing, you should also put into consideration, your logistics expenses, your labor, as well as the cost of every single ingredient used. While competitive pricing is always best, keep in mind that customers and potential customers will be more inclined to purchase your Shea Butter products as a result of their quality and in some cases, with or without competitive pricing.
- Make Sure Your Shea Butter Products Are Well Packaged. Source for and buy packaging materials like boxes, labels as well as containers. You will definitely be needing them when delivering your Shea Butter products.
- Get An Employer Identification Number. If you will be looking to set up checking accounts for your business and or hire employees, you will need an Employer Identification Number. To get one, simply get in touch with Kenya Revenue Authority which is Kenya’s internal revenue service.
- Employ More hands. No one is an island, you really cannot carry out all the daily activities of a Shea Butter business efficiently, on your own. Especially when your customer base, starts to grow.
- Create A Unique Logo. Yes even your Shea Butter business needs a logo too and the importance of a very well done Logo cannot be over emphasized. Especially with regards to having a positive first impression on your potential customers. Make sure you create a logo that will set you apart from the competition and stand out.
- Secure A Fire Clearance Certificate. This is received after undergoing an inspection which you pay for. It also involves getting advice regarding the guidelines of protection against fire, and the installation of the required equipment like fire extinguishers.
- Get Insurance For Your Shea Butter Business. Although nobody likes to incur extra costs, Insurance is one very important part of starting any business. So make sure yours is insured
- Be Trained In Sales. Ensure that you as well as your staff are very well trained in sales. This training will come in handy when your business begins to grow.
- Brand Yourself As Authority In The Shea Butter Industry. Customers and potential customers have a tendency of believing a little bit more in businesses who are perceived as Authorities or seen as authoritative in their fields. When you are making a pitch to a potential customer, make sure you are confident.
- Plan Out Your Marketing. Next after figuring out your target market, should be planning out your marketing. Yes, your Shea Butter business just like any other business venture, definitely needs marketing too. Learn how to get the attention of your target market. Would referrals work? Or discounts or both? How about sponsored adverts on social media, posters and fliers. Email marketing for example, is one cost-effective way that is also very efficient in building the customer base for your Shea Butter business. If you have a website for your business, you can gather email addresses of people who visit your site. Fliers, are also another cost-effective way to market. Flyers are one ‘page’ advertisement pieces that can be created at little or no cost. You can distribute these to people, in and around the area where your Shea Butter business will be located. Find out what is most effective for you and use that or a combination of all of them.
- Take Photos Of Your Shea Butter Products. A very effective way to win over potential customers, is to impress them with visual showings of your Shea Butter products. You can either go for hiring a professional photographer or videographer, or taking the videos and photos yourself with the aid of a smartphone. You can then upload and display said content on your social media pages and website.
- Make Sure Your Shea Butter Business Has An Online Presence. Yes, you need to have an online presence. This includes creating a Facebook page, as well as Twitter and Instagram accounts for your business. You can also get a website created for your Shea Butter business as well, to further attract larger customers who may require your products in bulk. Make sure the website is easy to navigate, and that your content is also very engaging. Ensure that all the relevant information about your business (which includes the contact details for your business and testimonials) is included, as well as the privacy policy and terms & conditions. To ensure that the website is very well done and looks presentable, make sure you hire a professional. The hired professional, will also make sure that your website is well maintained and updated regularly. Creating a LinkedIn profile for your business will also be a good look and will help you further network with other businesses. Just make sure that you update your LinkedIn frequently.
- Figure Out Payment Arrangements That Work Best For Your Customers. You will need to know the payment methods and arrangements that would work best for your customers and potential customers i.e if they would prefer to pay via M-Pesa, T-Kash, Airtel Money, via POS or in cash. Knowing this will help you offer more payment options and also be more equipped to serve them better.
- Make Sure The Accounting For Your Shea Butter Business Is In Order. Make it a given that you always have a record of your expenses as well as the income your business generates. Doing this, will ensure that you have a full understanding of how your business is performing financially. It will also help you when it’s time to file your annual taxes.
- Talk To Others Who Have Done This Before You. No man is an island. While a number of established business owners are more than happy to give advice to new entrepreneurs, it can sometimes take a while to find one who will be willing to do so. The wait however, will be worth it. Talk to entrepreneurs who have gone into or are still in the Shea Butter business. Examine, study and understand their various business models and strategies. You never know, you just might pick up one or two nuggets of wisdom from them.
- Acquire An Already Established Shea Butter Business. Alternatively and if you have the resources, you can opt for buying an already established Shea Butter business, instead of going through the motions of setting up one from the ground up. Buying an already established Shea Butter business means that the customers, production line, equipment and premises are already in place. It also means that there is already staff set up and sales figures that will give you an idea of just how much money the business makes and if it is indeed a profitable venture. Keep in mind however, that buying an already established Shea Butter business might be a complicated and also expensive process. To successfully pull this off, ensure that you and your team have the right skills and experience for carrying out an acquisition. This will almost guarantee that you will not over pay for said business. Also make sure the financial and legal necessities are in order.
And that is it! All you need to know about starting your very own Shea Butter business in Kenya.
Is the Shea Butter business, a suitable business venture for you to go into? That question, is left for you to think on and answer. The goal of this How To series is primarily to open you up to the various entrepreneurial opportunities that abound in the country.
One important thing you should take away from this article is to continue thinking of new ideas and ways to grow and expand your business. The tips here only a small fraction of what you need and are solely for pointing you in the right direction.
Also while the prospects are very promising and running a Shea Butter business might seem easy, please have a realistic approach as well. It still requires a sizable amount of patience and dedication regardless and as with any business, there is a chance that you might incur losses. Especially at the beginning, so please keep your overheads low.
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