Features
How to Start a Small Hardware Business in Kenya
A well-managed hardware business can be a very profitable venture.
A hardware business can be a very profitable venture.
However, like any other business, starting a hardware requires extensive market research, and a solid business plan to increase the odds for success.
You need to carefully consider your capital requirements, location of your business, the target customers, product suppliers, business licenses, etc.
With that being said, here is how to start a hardware business in Kenya – including the cost to start a small hardware in the country.
1. Market research
Before starting a hardware, or any other business for that matter, you should do a market survey to find out if there is a need for your product or service.
It is advisable to start a hardware business in a fast-growing area as people in these areas are more likely to buy construction products.
You also need to study the existing hardware businesses in the area to see what they stock. This way, you will be able to tell the fast-moving products in that area.
2. Write a business plan
A business plan helps to establish the direction of your hardware business. Outline the mission of the business and how you plan to market to the community.
Prepare a budget that reviews the size of the potential site along with a detailed layout of the hardware, including the inventory that you plan to maintain.
You also need to create a marketing plan and establish a tentative budget based on the expected startup costs, business expenses and revenues.
3. Formalize the business
The best way to start a hardware business in Kenya is to register as a sole proprietorship or as a limited liability company.
This will make it easier for you to open business accounts and establish healthy lines of credit with hardware distributers where possible.
Be sure to pick a unique name that easily sets you apart from other stores.
RELATED: 7 Side Hustles That Will Make You Rich in Kenya
You also need to register with the Kenya Revenue Authority for tax payment purposes. You may need to register for VAT, which will require you to acquire an electronic tax register (ETR) to formalize your transactions.
4. Obtain business permits
Obtain all the necessary permits to avoid trouble. You need a single business license that can be obtained from the local authorities in your area.
The costs of these permits vary from one county to the other.
You also need to obtain a fire certificate license from your respective county.
5. Finance the business
Whether you are starting as a sole proprietorship or as a limited liability company, you need to consider the overall budget and where the money is coming from.
If you are short on cash, you may consider taking up a small business loan from your bank, family, friends, or a local angel investor.
6. Stock your hardware
Based on the amount of startup capital that you can raise, the next step is to stock your hardware with fast moving products.
In most cases, the best products to stock when starting a hardware business in Kenya include cement, nails, steel bars, pipes, roofing sheets, and tiles.
It is important to mention that the startup capital depends on the location and size of your business. Hardware goods are often cheaper in Nairobi compared to far areas such as Kisumu due to transportation costs.
Rent is, however, quite high in Nairobi compared to upcountry.
Here is a sample breakdown of costs:
Rent and deposit – Sh60,000
Business permit – Sh10,000
Cement – Sh300,000
Steel bars – Sh200, 000
Pipes – Sh120,000
Roofing sheets – 250,000
Tiles – Sh150,000
Others – Sh150,000
Total Budget – Sh1,240,000
7. Market your business
Start by branding your hardware store with your name and logo to create a unique and easily identifiable brand that sets you apart from the competition.
You may also open a website and social media accounts to help you push your messages to prospects. You can also buy ads to boost your messages.
Monitor your marketing channels to see what works best for you.
Is hardware business profitable in Kenya?
Yes. If located in a fast-growing area, a hardware can be very profitable.
The profit margins are usually in the range of 10% of total sale. However, this can vary depending on the type of products you are selling.
The 10 Most Read Construction Stories of 2023
The ten biggest construction stories of 2023 that you shouldn't miss.
Road Curve Design and Construction
Everything you need to know about road curves.
The ABCs of Drainage Construction
Everything you need to know about construction of drains.