Retail business in Kenya is the second most popular among women after agriculture. Kenyan economic survey in 2013 revealed that there were 53,200 women in retail. But the majority of them were informal sector traders.
Every time you go outside, you can see that retailing remains popular in Kenya. There remains much more opportunity to be exploited beyond the struggles being faced by the sector’s big players. First, Kenya’s formal retail penetration is only 30%, compared to 60% in South Africa. There also remains a lot of niches that will be exploited in time.
To be successful in retail business in Kenya you must work beyond location and handling money safely. There are many more aspects like inventory management, efficient logistics, employee productivity, customer service and pilferage among both customers and employees.
You want to include all of this in your business plan before you set out. A business plan helps your new business survive and impresses banks and investors. Show them how much money you want, how you will use it and the repayment terms or exit strategy.
Part 1 of a retail business plan
This is known as the executive summary and contains your mission, vision and objectives. You do it last. These are not just corporate bullshit I swear. You need it to set strategy to woo the financier reading your business plan. Otherwise you will be stuck in a day-to-day rut. It has been found that foreign businesses in Kenya tend to define strategy unlike the homegrown businesses.
Part 2 of a retail business plan
You must also include the business structure you opt for. There are different business structures in Kenya and each come with their respective advantages and disadvantages. It will determine ownership, relationship with investors, taxation, among other things.
Part 3 of a retail business plan
Things get juicier from this point because you get more specific about the kind of retail business you will be running. First, answer, what kind of services will you be offering? And how will you offer them? Retail business in Kenya is about connecting individual suppliers to individual consumers (although some have started doing things in-house, is that an efficient way of doing things?). List the items you will be selling. If you will offer extra services; like how supermarkets in Kenya have bakeries, for instance, then include them too. Remember you cannot get too detailed. This is your business.
Part 4 of a retail business plan
Part 4 is about your market summary. The first thing you do is analyze the prospects of your industry. You don’t want to get into something that will be dying in 5 years. After is when you define your target market. You can use any metric you see relevant; demographic, income, gender, geographical location, etc. Through this definition you will be able to tell (by tell I mean write on the plan) the prospects of your target market and what it is that they want. You will know how to offer it to them.
Obviously, you need to include an analysis of your competition. In Kenya we have informal sector dominating retail, so answer, why is it so? Who has what market share? What are the strengths and weaknesses of competitors and how do they compare to yours? You don’t want to be undercut 1 year into business, right? Then do your market summary well.
Part 5 of a retail business plan
Since, up to this point, you have conducted a SWOT analysis of retail business in Kenya, you will be in a position to tell what it is that you will focus on and what it is that you will forgo. Look at Carrefour and Ukwala, as examples. No Kenyan has yet complained of racial profiling at Ukwala.
From the choices you make, you will set the operation plan of your retail business. What are the regulatory requirements? What is the size of your store? Write about your affair with suppliers (retail business affair). I cannot exhaust what you have to write on how your business will operate.
Lastly, on part 5, you make forecasts for your business since you already know the prospects of your industry and target market. You also know how to prepare a cash flow statement and how to prepare an income statement. How much money do you expect to make? Because you did the competitor’s analysis, in part 4, I trust that you will be reasonable.
Don’t forget to set targets. These are different from objectives because they are much more specific.
Part 6 of a retail business plan
You’re almost ready to be a new retail business in Kenya. This is the final part. Here you summarize the management of your business. How will the hierarchy look like? It is important because you will use it to determine salary, role of your team and avoid divisive gossip when it comes to promotions, bonuses and the likes. You will also include the professional support your business will need (lawyers, consultants, etc.)
