Cereal business in Kenya has received exceptional applause as a profitable venture. But is it a worthwhile business?
Cereal business is a low-capital idea you can start with Kshs 20,000 and above. Depending on the location and marketing strategy, this business earns a monthly return of up to Kshs 100,000.
Legumes and flour are a staple food in Kenya, hence they have high demand. A slight decrease in production causes a food shortage crisis-think of seasons we’ve had lesser dried maize tonnes in the country.
As a result, establishing a cereal business in Kenya guarantees you a ready market.
This piece equips you with the following:
- Introduction to cereal business in Kenya
- Factors to consider before starting a cereal business
- Step-by-step process to start a cereal business
- Tips to establish a profitable cereal business in Kenya
Let’s take an inside look!
What’s a Cereal Business?
A cereal business deals in grains. The most common types of grains you will find in Kenya include:
- Green grams or Ndengu
Most of the cereal businesses in Kenya combine grains with flour. For instance, you will find porridge flour in these shops.
Before you open a cereal business in Kenya, it’s essential you identify the fastest-moving types of grains in your location to avoid losses.
5 Factors To Consider Before Starting a Cereal Business
Evaluating certain issues helps you identify the best way to position your business for maximum profits. This process also guides you to choose an appropriate location, first stock, and access enough funds to run your venture.
So, what should you assess before starting a cereal business?
To start a cereal business in Kenya, you must acquire all the requirements, including legal documents, a rental space, stock, and hiring staff. As a result, you must determine the right amount of initial capital and how to get it.
Generally, it’s advisable to save up or fundraise from family and friends if possible instead of applying for loans. Why? As a first-time entrepreneur you’re more likely to make operational and financial mistakes that might lead to losses. You don’t want to lose debt!
2. Market Demand
Kenya’s population creates a high demand for food products such as cereals. However, this differs with seasons due to factors like inflation or increased grain prices.
For instance, the increased price of lentils can divert its demand to grains such as green grams and beans. It’s important to learn what’s on demand presently and identify the gaps in your area so you can use it to gain a competitive advantage.
Your business location affects your shop’s visibility, access, and ultimately client base. Finding a strategic location that your customers can easily see and access means you’ll attract a massive audience that you can convert to your customers.
So, ensure you get a rental space at a suitable place for easy access and transportation of clients goods.
Another primary factor you must evaluate before opening a cereal business in Kenya is your competition. Visit your business rivals and check their packaging, customer service, products’ quality, and pricing.
Then use this information to provide more quality products and packaging at a friendlier price. You can also improve your business outcome by administering excellent aftersale and customer service.
5. Production and Supply
Understanding the production and supply chain will help you protect your business from shortage or surplus disadvantages. But how?
You must learn the patterns of each grain production and the periods it is in surplus or shortage. This will help you define a suitable production plan to supply the right product depending on the seasons for maximum profits.
Step-By-Step Guide To Open a Cereal Business In Kenya
Now, that you know what to assess before opening a cereal business, let’s build a profitable venture through the following steps
Step 1. Research
The first step to establishing any successful venture is thorough researching. This process allows you to identify the buying prices and sellings prices, helping you choose the best supplier in your location.
You also learn the competition to expect and the market gaps your business rivals haven’t filled. Thus, you can strategize on providing a service and product that gives you a competitive advantage.
Another key thing research helps you accomplish is defining your target market and learning what they need. This will allow you to customize your products and services to attract them.
Step 2. Initial Capital
The initial capital of a cereal business in Kenya varies depending on the type of cereals, your location rent, and the variety of cereals. Focusing on one type of grain requires lesser amount than selling a variety.
Some types of cereals for instance, black beans and lentils are pricy compared to green grams. Hence, you must consider the prices of your stock to determine the amount you need.
Step 3. Location
Your business location should be easy to access for customers and employees. This will allow seamless operation increasing your business performance. Moreover, you can add a sign board to direct your target audience to your shop.
When choosing a rental space for your business it’s crucial that you establish your shop close to residential places. And if you plan to sell grains in bulk open a cereal business next to institutions such as schools or hotels.
Step 4. Acquire Necessary Legal Documents
Operating your business without the required legal documents might run you in trouble with the authorities, halting your operations. As a result, it’s necessary that you apply for all the official papers.
To run a cereal business smoothly, you will need the following:
- A county council business permit
- A health certificate (since you’re selling food items)
- KRA certificate
- Fire safety certificate
Ensure you consult with your county government office to confirm any further requirements that may have emerged recently.
Step 5. Get Cereal Shop Supplies
Operating a cereal business has unique requirements such as weighing scale, packaging tape, and storage spaces. Hence, you must acquire all these items to create an appealing ambiance and functional space for your employees and customers.
Some of the basic things you should purchase include:
- A weighing scale
- Table and shelves for display
- Packaging supplies such as tape and packaging bags
- POS system
Step 6: Prepare Your Shop
When setting up your shop, you should maximize your business functionality and efficiency. You can accomplish this by constructing display elements that will improve your business’ appearance and make it easy to offer services to your customers.
You should also brand your shop to match your cereal business. For example, you can paint your rental space with bright colors and hire a professional to write your business name on your shop and sign board.
Remember: When choosing a name for your shop, ensure it resonate with your target market.
Step 7. Get Your First Stock
Now that you have a suitable location for your business and you’ve set up your shop, you can acquire the first stock and organize it appropriately. You can use branded boxes to store your cereals for easy identification by customers and your employees.
When preparing your first stock list, remember to purchase fast-moving products and those in high demand within your area.
While some cereal business owners prefer to run the shop others hire staff to focus on other things. Depending on your preferences, you can employ experienced professionals equipped with excellent customer service skills.
Tips To Establish a Profitable Cereal Business
Starting a cereal business in Kenya is easy. However, maintaining it’s profitability and success in the long run demands you implement effective strategies.
Here are pro tips to help you accomplish this
Tip 1. Find a Good Supplier
The cereal supplier you collaborate with in your business should be reliable and time conscious. This is to ensure you get quality products on time to run your venture smoothly. Otherwise you may lose customers due to delivery delays.
Again, a good supplier provides goods at a reasonable price to allow you descent profit margins while selling your products at an affordable price. And in case you experience funding difficulties they can extend you credit when business is tight.
Tip 2. Implement Pricing Strategy
As a new cereal seller in your location it’s essential you implement strategies that will attract customers to your place. However, you should ensure whatever plan you choose does not affect your business profitability or success in the long run.
Pricing is one of the most effective strategies to introduce in your shop. Start by calculating the profit margin considering the buying price and the market price. Then assign a figure that’s slightly below the market price only if it leaves you a workable return.
This will attract Kenyans to your business as the current economic times call for tough measures. A buyer would rather buy 5kgs of lentils at Kshs 320 rather than Kshs 340 or 330 as it will save them Kshs 100 or 50 which can buy other groceries. So price your products strategically!
Tip 3. Market Your Business
You’ve perhaps encountered the Amana cereal adverts on TV, radio, or social media, including influencer marketing. While you might not be able to afford this types of marketing services, you can start small to grow your business.
For instance, provide promotions and discounts at your cereal business. Alternatively, you can begin to collaborate with affordable marketers to help you increase your reach online by creating a social media account where your target audience chill.
Also leverage your local market groups to advertise your goods. Someone might be looking for your products!
Frequently Asked Questions
1. How Do I Apply For a Business Permit?
To get a business permit for your cereal business in Kenya, follow these steps:
Step 1. Visit your local authority offices
Step 2. You will be given a business permit form to fill out. Ensure you write accurate information on this document.
Step 3. Submit the completed form and wait. Typically, it can take upto two weeks before your permit is processed.
Step 4. You will be notified when the permit is out. You can go to the offices to pick it.
2. Is Cereal Business In Kenya Profitable?
Yes, cereal business in Kenya is profitable. Nevertheless, there are some factors that contribute to your business’ profitability including the location, variety of grains, and pricing.
Generally, when you start a cereal business you earn an average monthly return of 35% and above.
Investing in cereal business in Kenya helps you enjoy a ready market. However, you must strategize to maintain the profitability of your business. You can accomplish this through marketing, connecting with the right supplier, and pricing your goods effectively.
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