There is no doubt that Kenya’s business environment has improved over the years and many investors have set up shop in all major towns across the country. This has further created fresh demand for speedy delivery of goods and packages – a need that has not been properly met by the national postal service.
The few big courier companies that rule the industry on the other hand have not been able to match the efficiency that most clients are looking for.
According to research, clients are looking for courier companies that are small enough to offer personalized services and big enough to provide same day deliveries even at odd hours. Very few of the big companies meet these criteria – and here lies a modest opportunity for you to invest in.
Starting a Courier Delivery Business in Kenya
The most important asset you will need is a reliable customer-base and a good reputation. Gathering a good customer-base should not be a big issue provided you give good value proposition and honest services. It is a simple business to start and operate, and you do not need any training to get off the blocks.
Step 1: Getting started
You can start with three motorbikes and a small stall (office) in town. A brand new motorbike will cost you less than Ksh100,000 and a leasing a decent stall will cost you about between Ksh4,000 and Ksh15,000 per month depending on the town. Alternatively you can buy a small used car (Toyota vitz, Suzuki alto or Toyota Passo) and one motorbike.
Since this business does not largely depend on walk-in customers, you can look for an office in upper storeys or in places outside the CBD. That might help you avoid paying good-will charges and high rent prices.
Also, take this opportunity to register your business at the Attorney General’s office or nearest Huduma Centre.
Step 2: Invest in equipment
A bit of preparation will go a long way in ensuring you’re ready for the market. First you will need to soup up your motorbike (or van) by attaching a small parcel’s compartment to it. You may also do a bit of branding e.g. labeling the bike, printing out a few fliers, business cards, delivery notes etc.
Step 3: Get licensed
Courier services in Kenya are regulated by the Communications Authority of Kenya. For starters, you can apply for the intra-city license that goes for Ksh30,000. This will enable you to deliver parcels across (and within) all major towns in Kenya.
Those using motorbikes may want to consider going for a “town operators” license which also costs Ksh30,000. Bigger companies can apply for regional license which costs Ksh50,000. Add the cost of a single business permit (around Ksh20,000 per year). Apart from licenses you’ll also need to think about acquiring liability insurance cover.
Step 4: You are ready to start
One of the cheapest yet effective methods of getting new clients is prospecting. This involves cold calling and knocking on potential clients’ doors seeking to build a network.
Assure your potential clients that you will provide more personalized services than the big boy companies. Give them your business cards.
Also, liaise with busy retail joints in your area so you can leave a stack of your company’s fliers for regular customers to pick. A bit of social media marketing can also help you to build links with online sellers.
Step 5: Grow big
When it comes to courier business, your company will need to grow as big as possible while still maintaining the handiness of a small entity. Think of investing in a simple website.
Think of getting a few branded t-shirts. Hire a few more riders and buy a few more vans. You can as well incorporate the business of running errands to the initial model in order to attract more customers.
Step 6: Focus on wholesale contracts
Having your loyal clients sign contracts with your company is the easiest way to stabilize your market and guarantee your existence even when business is slow.
Contract clients are much better than one-off clients – and it’s therefore wise to give them a price discount to get them to agree to a wholesale contract deal where they’ll be paying either monthly, bi-annually or annually.
How Much To Invest
In order to succeed, you will need to start really small so that you can build a solid bond with your clients as you go up the rungs. Generally, a budget of Ksh500,000 can be enough to simply get you off the ground.
But it may not be sufficient to guarantee your of sustenance and for that reason you will need to keep re-injecting your profit so that you can grow the business up to the take-off point. The break-even period for courier businesses is 24 to 30 months.
How Much To Expect
Your returns will depend on the type of clientele you attract and your pricing formula. Small letters can be priced at Ksh250 and bigger parcels for Ksh500. Sensitive documents and delicate cargo can be priced at over Ksh1,000. Bigger and heavier luggage can attract even more charges.
A small courier service business serving up to 50 clients per day can deliver average sales revenues of Ksh300,000 per month or Ksh3,600,000 per year.
The future of this kind of business is really bright. Kenya (and Africa) is on the rise. As more and more foreign and local investors set up shop, you have the best opportunity to expand your footprint. And just like wine, the attractiveness of this opportunity gets better and better with time.
Image Courtesy/ GloblSources