What you need to know:
- From my experience, you don’t need too much money to start a business.
- This is a common misconception that keeps many people from trying their hand in business. It’s also an excuse.
- The most important capital you need is strong will, and a sense of purpose. Where there’s a will there’s a way.
- Start with whatever small amount you have and aim to grow it.
If you asked most young people what challenges keep them from starting businesses, one answer is likely to keep recurring – lack of capital.
So, how much money is enough to start a business? How can one raise this capital? Are your business ideas viable without this money?
Take the story of Kenyan filmmaker Betty Kathangu-Furet, for instance. She got creative and raised funds to film her first project by selling tickets to movie enthusiasts.
With the advent of technological concepts such as crowd funding where ambitious individuals can raise small amounts of money from a large number of people via the internet, raising the capital to start a business has been made easier. Therefore, before you cite lack of capital as a barrier in your journey to entrepreneurial success, think twice.
This week we bring you the stories of four feisty youngsters who grew their capital by first taking a leap of faith, and then making numerous sacrifices along the way. Their enterprises are now highly profitable ventures with the potential to grow into regional conglomerates.
BYRON HEENIE, 28, PHOTOGRAPHER
Photography has always been my passion, and I have run my photo studio alone for seven years now.
I started off by buying a camera worth Sh65,000 from my savings. The good thing about photography is that one needs only a camera, and photography skills to get started.
Even before I set up the studio, I was so scared of how I would interact with my clients and satisfy their expectations.
Now that I have been in it for seven years, I know that social skills such as good communication and networking, are key. I have now built a strong financial base through saving and reinvesting, and that is how I have managed to keep up with the increasing market demands and acquire more clients.
I have also learnt that saving calls for a lot of discipline. I value the role that family plays in all this, and I wish I had asked them to support me when I began my journey in photography. However, I have no regrets because through hard work and resilience, I’ve been able to take my business to great heights.
Crowd funding is an exciting concept that is quickly catching on. It is an easier and more effective way of sourcing for funds. Young people are able to finance their projects by receiving financial help from other young people across the world, which is really cool.
WAMUYU KARIUKI, 27, FOUNDER, NANCY ELEANOR STORE
I established a clothing line in 2016, and I sell both official and casual attires for modern, stylish women.
So many people get surprised when I tell them I started the business with some Sh2,000 which I had obtained as loan from a relative. From this small amount, and after many years of financial hardships, my venture is now up and running.
When I was starting out, I vowed never to take a loan to grow my business. I always believed that I could do it without one. Running a business without any outstanding loans gave me the confidence I needed to take more risks. Besides, I wasn’t sure I would be offered one because I didn’t have any guarantors. Also, I was discouraged by the tedious application process so I never tried.
However, I have learnt that this can be detrimental because if you don’t have money, you will be helpless when a good opportunity comes.
I’ve grown my business mostly from retained profits. When running a small business, it is difficult to save the little profits you make from sales. I had to be frugal, to practice strict financial discipline, and make tough decisions.
Working with a tight budget makes you discover innovative ways of reducing your expenses, and also to find new ways of growing your business.
In the clothing industry, location is key. Finding space in an attractive location is not easy.
From my experience, you don’t need too much money to start a business. This is a common misconception that keeps many people from trying their hand in business. It’s also an excuse. The most important capital you need is strong will, and a sense of purpose. Where there’s a will there’s a way.
Start with whatever small amount you have and aim to grow it. Just start doing what you love. Get moving!
But while at it, be honest and know your financial capabilities. If you can only afford a few employees, or to rent space in a low cost area, do that. Don’t overstretch yourself.
It took me two years to open my shop but during that time, I was conducting business online to raise money to hire staff and rent out space.
Last but not least, all aspiring entrepreneurs should know that expanding their businesses without having the necessary revenue will only lead to failure.
TONNY NYAOKE, 21, ENTREPRENUER
I run a game house near the University of Nairobi where students can sit and play virtual games.
I started the business in 2018 when I was in First Year with Sh600,000 which I had borrowed from my parents and relatives.
However, this money came with strict conditions. For instance, my parents expected me to attain financial independence immediately I received the amount, and this really frightened me. How was I supposed to pay my bills while at the same time trying to steady the business?
Some relatives expected me to share proceeds from the business with them as compensation for the amount they had contributed. I found myself paying them back with interest!
The next step was to convince the university management to let me operate the game house within the school. Getting clearance from them took months.
I haven’t done any public fundraisers for my business so far, but my friends and family have been very helpful. My elder brother is my biggest financier so far. He supports me unconditionally and buys into all my investment ideas, as long as they are viable.
I started realising profits just five months after I started out, and the revenue has continued to grow steadily since then. Last year, I was forced to shut the game house down due to operational challenges, but I opened a new branch in Juja.
But I haven’t given up on expanding my business. I plan to build a good relationship with various lenders so that I can someday access huge loans. Anyone can run this business as long as you have enough capital and a good location.
On a good month, I can make up to Sh120,000, and about Sh70,000 after paying my bills and expenses such as rent and repairing the gaming gadgets.
Although I have fully repaid the initial loan, I am still not debt free because I continuously source for funds within my friends and family circles.
I am, however, proud of the progress I have made so far. I am now financially independent, which is something I have always wanted.
I plan to enroll for a course by the Association of Chartered Certified Accountants (ACCA) to further develop my skills and knowledge in business.
I have encountered many people who have difficulty entrusting their money with young people. They always assume that young entrepreneurs will misuse the funds, which isn’t always the case.
This makes it difficult for young people to sell an idea or pitch it to investors, and discourages them from getting into business. Young people also face great difficulties when securing loans from government institutions due to lack of collateral.
LILIAN KAMAU, 30, FOUNDER, ANKARA ACCESSORIES KENYA
After graduating with a Bachelor’s degree in tourism management from Moi University in 2016, I unsuccessfully looked for formal employment for three years. I eventually gave up and decided to go into business.
I started off with capital worth Sh30,000 which I had saved through table banking. Small as my seed capital was, it was enough to get my business running because I only needed to buy Ankara fabric and pay the tailor who made the first few attires. I sold the clothes online and after one year, my business was worth about Sh400,000.
I sell bags and jewellery to mostly women on Instagram, who give me referrals regularly.
At first, my biggest challenge was how to market my products online. In fact, I’m still trying to reach a larger audience.
Additionally, I constantly search for highly qualified and reliable tailors to meet my client’s deadlines and increase productivity.
I am now employed elsewhere, but I channel a significant chunk of my salary to expanding my business, which is now a side hustle.
Human capital remains my biggest asset. I’m not a qualified tailor. I am just a designer, so I rely entirely on tailors to bring my sketches to life. This arrangement is quite expensive, but it works for me. I’m also happy that I am creating employment opportunities for other people.
If I could go back in time, I would avoid making too many pieces of the same design, because this always left me with a lot of dead stock. Nowadays, my customers make their orders in advance, and this has greatly helped me minimise on losses.
I’m one of the few lucky entrepreneurs who have never borrowed loans, and I remain optimistic that my business will continue to grow.