Africa is a hungry continent and you can never go wrong if you invest in food business. Everyone needs to eat and the escalating rate of rural to urban migration means more new mouths to feed every day. That is why the idea of starting a cereal shop is a good one. This is one of those businesses that you can start with as little as Ksh20,000 ($200) and scale up to Ksh1,000,000 in a year if you play your cards right. Would you like to know more? Read the next few paragraphs.
Note: When we talk about cereals we mean dry grains e.g. maize, beans, green grams, groundnuts etc. Not breakfast cereals like corn flakes.
Step 1: Getting Started
You want to first identify an ideal (preferably residential) location. This should be a place that is densely populated. Places like Githurai, Mwiki, Ruai, Kamulu, Thika Makongeni, Mtwapa – generally you want to open a shop in an area that is densely populated preferably with people of the lower and upper middle class income levels. A good room with enough foot-traffic in these areas can cost you anything from Ksh5,000 per month.
Step 2: Plan On What To Stock
You don’t have to be a farmer to get your stock of cereals. There are many wholesalers who can supply you with your initial stock at a reasonable price (in Nairobi wholesalers are mainly found in Nyamakima area). Alternatively you can plan for a trip to the rural areas so that you can negotiate for even cheaper prices. For instance, you can get cheaper rice from places like Mwea and Kagio or cheaper maize from Chwele in Western Kenya.
Tips For Buying Stock
*Make sure the grains are properly dried to prevent rotting as this could “burn” you.
*Timing is important. For instance, it is cheaper to acquire your maize stock when farmers are looking to empty their granaries awaiting the next harvest.
Some of the fast moving products out of a cereal shop include:
Beans: Nyayo, Rosecoco, Yellow beans, Mwitemania, Butter Beans, Gituru and Gachuma varieties.
Porridge Flour: Baridi, Wimbi, Mawele, Mtama, Ndimu.
Green Grams: Ordinary, Nylon, Makueni, Lentils.
Nuts: Njugu Mawe, Groundnuts.
Rice: Pure Mwea, Thailand, Pakistan, Sindano, Fivestar, Basmati, Brown Mwea.
So now up to this point, you have identified a good location and identified the best places to buy your initial stock. What next?
Step 3: Get Licensed
You only need to go to your sub-county offices to get this. The officers there will give you some forms to fill and then they’ll come to visit your premises. Then depending on the size of your premises they will issue you with a single business permit charge. In some counties like Nairobi, you can book a 3 month, 6 month or 12 month license depending on how flexible you are financially.
Step 4: Do Business
It is likely that the first days of opening the shop will be dry days in terms of few customers. But instead of sitting in the cereal store and whining the whole day, the best thing would be to start by visiting institutions around you. Make friends with the caterers, give them a good deal and they will gradually become your customers. Apply for tenders from local organizations also. As for the day-to-day customers, you want to sell to them on a cash-only basis – avoid selling on credit. From our research, credit sales are the main cause of failure for small cereal and wholegrain outlets.
How Much To Invest
Ksh20,000 – Ksh80,000
How Much To Expect
Returns vary depending on where you buy your stock and how aggressively you resell it. On average you get 25% net profit.
Final Word
The good thing with starting a cereal shop is that unlike other ideas that we’ve discussed in the recent past you can start this immediately. Typically, apart from securing a good location, quality stock and the county license there are no other major requirements for starting. And unlike a video gaming or a movie shop business, you don’t have to spend the whole day in the shop to ensure your workers conduct themselves appropriately.
So in other words, you can either start this as a full-time business or as a side-hustle. You only need to invest in stock cards so that you can track how and when every kilo of cereal is bought from your shop.
The returns are however not as mouth-watering as you would expect especially if you are one of those who dream of getting rich overnight. This is the kind of business where you start small and grow big especially as you build connections with institutions and hotels around your place.
Featured Image Courtesy: Paulas Healthy Living
