Hello followers. Welcome to another day of our CEREALS BUSINESS TRAINING.
Cereals business in Kenya is a profitable venture with a ready market. Food-related businesses rarely lack customers, even during tough economic times.
Starting cereals business is not expensive since you can start small and expand your business. You can source cereals produce directly from farmers to save on costs.
Cereals business can either be operated online or onsite, where your customers will walk into your premises, order and pay for their cereals.
One of the greatest “start your own business” ideas you can have today is starting a cereals business.
People eat every day and cereals sellers and producers keep cashing in.
If you want to make money from starting a Cereals business, in today`s training I will give you a breakdown of Capital needed for a cereals Business in Kenya.
If you are wondering how much it will cost you to start a cereals business, wonder no more as we have spelt out in detail the cost of establishing one.
1. COST BREAKDOWN FOR LICENSES
This is the most critical component when starting a cereals business in Kenya.
After all your hard work, the last thing you want shutting down your business is a license issue. This is often a thorny issue for cereals shops in Kenya though, and it’s important you take the licensing process seriously, especially early on or if and when the rules change.
You cannot operate a cereals business in Kenya without a valid license.
The cost breakdown for cereals Licenses in kenya is as follows:
*Business permit – Between Ksh.7,000 to Ksh.15,000 (Cost can vary depending on your county and size of the business)
*Food and Hygiene – Ksh.7,000
*Fire Safety certificate – Ksh.5,000
TOTAL – Ksh.27,000
In Nairobi, you apply for all these licenses at city hall. In other counties, visit the local county council offices for licensing details.
2. COST BREAKDOWN FOR PREMISES
After securing the requisite licenses, it’s time to move into a higher gear as you prepare for a grand opening of your cereals business.
You will need to mount some shelves and display cabinets, so talk to your carpenter.
This will help customers see your products faster and also know where to find specific cereal brands they want.
Display the cereals by type so that customers can easily identify what they are looking for.
Shelves should be big enough for each product box to fit on them.
Depending on the size of the shop, this can gobble up anything between Ksh.7,000 and Ksh.10,000.
The requirements for setting up depend on your long-term goals and capital constraints.
For instance, if you don’t have much capital you can look for a small size shop and set up a simple cereals takeaway shop.
With more capital you can set up a bigger shop with enough storage and even venture into wholesaling. On average rent prices range from Ksh.5,000 to Ksh.50,000 depending on location and size of shop.
*Rent (2 months deposit + 1 month rent at Ksh.10,000 per month) – Ksh.30,000
*Renovation – Ksh.10,000
*Branding – Ksh.5,000
TOTAL – Ksh.35,000
3. GET THE NECESSARY EQUIPMENT
There is a set of tools and equipment you will need when selling cereals. These tools will help you with packing and also making sure that customers get their cereal in the best condition.
Here is a list of equipment you will need:
Tables: You will need working tables for putting cereals on display as well as for holding your tools.
Shelves: You will need shelves to organize your cereal boxes neatly so that customers know exactly what they are looking for when they come in.
Fixtures and fittings: These are necessary to make sure you have the right ambience at your store. Some good examples are take-away stands, dustbins, etc.
Tape: Get packing tape which you will need to seal cereal boxes after packaging them.
Scales: You will need digital scales to weigh out the cereal packages for customers. They are an essential part of the business.
Freezer: This is necessary for storing milk and any other products that go with the cereals. It will keep them fresh.
4. COST BREAKDOWN FOR WORKING CAPITAL
i) Stock
When purchasing stock, take into account your target market. For example if you are targeting the low end market, there is no need to stock expensive cereals and also if you are targeting the high end market, there is no need to stock low quality cereals.
Purchase a little of every type of cereals that you think your target market might consume, to avoid having a lot of dead stock in the event one type doesn’t sell.
A lot of new owners ask about the most reasonable amount to invest in stock, but there’s no correct answer as its contingent on so many factors.
However, my trusted sources say anything from Ksh.20,000 to Ksh.50,000 worth of stock going up is fantastic. Then top up slowly by slowly as you learn the ropes of the industry.
To get the best deal, compare the cereals wholesale prices from the various cereals distributors and buy from the fairest.
Later in our training we shall provide a list of the cereals distributors in Kenya.
ii) Salaries
When starting a business you may not see any need to have an employee but it is advisable to have one as your business grows and also someone to operate the business when you are not available.
iii) Electricity
Set some money aside to cater for the electricity costs in your establishment. Alternatively you can install solar with the objective of reducing your electricity bill.
iv) Miscellaneous
It is advisable you put some money aside to cater for unforeseen costs. Better have a backup pan rather than being caught off guard.
5. OPERATIONAL COSTS
The grains business model operates on a “buy low, sell high” model. You will buy cheap grains during harvest season; store awaiting prices to raise and sell later. As such the following are operational costs of operating a grain store in Kenya.
i) Buying costs; It is the price you pay to buy products. You can access real-time prices of a 90 kg bag of maize, beans and other cereals and pulses each day. These are published by the NAFIS, NCPB or the Ministry of Agriculture in Kenya.
ii) Transport costs: the cost you will pay to transport commodities from your supplier to your grain store. It includes the costs of loaders and off loaders. It is charged per bag or a lorry. It will depend on the distance and cost of fuel.
iii) Cess & Levies; the cost you pay at county boundaries to be allowed to trade your goods in the county.
iv) Storage costs: the cost you will pay to operate a store. Similar to the rent costs. To get the cost per bag, divide the total rent per year by the number of bags you bought and sold in the year.
v) Labour costs: The total amount of salaries and wages for store attendees, drivers and other store workers.
vi) Package costs: The cost you will pay to buy hermetic bags and sacks to store and sell your cereals.
These costs are highly flexible and depend on your shop size and the amount you can handle in a year.
vii) Display: Put up a signboard that will stand out and be visible from a distance. You can put it in an area where a lot of people pass through.
Include any flashy designs you have on your cereal boxes here.
Make sure the colour scheme is according to how your brand looks so that customers know exactly where they need to go when they are looking for their cereal.
Don’t forget to also paint your shop! If it is light, clean and spacious, people will be tempted to come in.
1. Shelves
Set up the shelves properly so that they are easy to reach.
This will help customers see your products faster and also know where to find specific cereal brands they want.
Display the cereals by type so that customers can easily identify what they are looking for.
Shelves should be big enough for each product box to fit on them.
2. Packaging
Make sure the cereal boxes are easy to open so that customers can access their cereal easily without breaking anything.
Include your logo and the name of the cereal you sell on each box for brand recognition.
3. Secure your shop
Put up a lock on your door and keep the key safe. This will discourage opportunists and criminals from breaking into your shop and stealing equipment or stock.
Don’t leave any open windows for this same reason.
4. Brand yourself
Make sure that you include all your branding information on your business permit, no matter how small you think it is.
This is to ensure that you are easily identifiable and people can find you wherever you set up your business.
The above capital is not cast on stone. Use it as a guideline to start your cereals business.
Adjust it accordingly, depending on your preferences and requirements and be on your way to establishing your first cereals business.
Inventory is the most challenging and expensive operating cost for cereals Shops in Kenya. Having too much of a certain type of product can lead to lost profits but having too little inventory can lose customers.
If you don’t have what a customer wants, you are unlikely to get a second chance as they will shop elsewhere to find their favorite products. To find a perfect balance, be thoughtful about the quantity of certain products. You can use a reliable POS System or stock cards to help manage stock levels.
It’s helpful to understand which products have a high-profit margin, and which don’t.
Inventory is the most challenging and expensive operating cost for cereals business in Kenya. Having too much product can lead to lost profits but having too little inventory can lose customers.
Stay informed on your industry’s market trends to predict popular products. By understanding current market demand, you can begin buying more of what people want and starting promotions on less-popular options.
By understanding what is and isn’t working in your market, you can avoid under – and overstocking your business.
Understanding your current market and their ideal product supply requires a deep knowledge of who your customers are. After all, low end and high class estates will have vastly different product preferences and priorities when shopping.
If you’re unfamiliar with your area, it’s advisable to do a simple market research. Amend your selections, promotions, and displays to accommodate their preferences. As you get more traffic in the door, you’ll have a better understanding of whose needs you’re catering to.
As important as it is to understand your customer, it’s equally—if not more—important to know your product. Some customers will know exactly what they want before they walk in the door but others will expect your expertise and guidance while shopping.
A well-stocked cereals store will have a large stock of inventory. There will be a temptation to try and compete with that, but you should resist.
Tilt your initial inventory towards items which will sell quickly—the more you sell, the cheaper the cost to you—and then broaden your inventory later.
Retail Stocking will cost Ksh.20,000 to Ksh.200,000
There are those who prefer wholesale business, In this case you need a capital in excess of Ksh.500,000.
END OF DAY 6 CEREALS BUSINESS TEACHING SESSION
We now come to the end of today`s teaching session, The PDF of this teaching is available here. Please comment your thoughts and questions below.
