Do I need to register my online business? Does my business need a website? Will I have to pay taxes and KRA? How do I find customers online? How much will it cost to start my online business?
These are only a few of the questions you need answered if you want to start an online business in Kenya.
Covid-19 led many businesses online and many more are still coming online even now because it has become obvious that there is a lot more Internet in our future.
And that’s why we’ve created this guide for you, whether you want to start or grow your online business, you’ll get many of the answers you need here.
What’s an online business?
An online business is any business that provides its products and services via the Internet. They are usually contrasted with offline businesses where products and services are provided via face-to-face transactions.
Currently though, an online business seems to encompass almost every business that doesn’t have a physical shop or presence from where customers can patronise the goods and services offered.
For example, if a customer wants to buy a pair of shoes from an online business, they’ll usually go to that business’ website, select the shoes they want, make the payment and their shoes will be delivered within a day or so.
On the flip side, if that customer decided rather to buy a pair of shoes from an offline business, they’d get out of their house, drive to that business’ shop or store, find the shoes they want, have a feel of them and even try them on before paying for the shoes and driving home with their new purchase.
Because you’re considering starting an online business in Kenya, this article will lay out some of the pros and cons of having an online business.
Why should I start an online business?
There are a number of great reasons to start an online business. Perhaps you want the freedom to work from anywhere in the world.
Or you want to make sure that you’re able to build an asset you can hand over to your kids. Maybe you just don’t want your earning ability to be capped.
You’ll find below a few good reasons to start an online business in Kenya if you’ve got an idea you want to try out.
Online business ideas and models in Kenya
Probably the very first thing you need to do when you want to start an online business in kenyaa (or any business at all for that matter) is to have an idea of what your business will do.
Actually, most successful people in business didn’t have just one idea, they probably had several. They had several ideas, even tested some of those ideas and at least one succeeded.
It’s a bit impossible for us to provide you with guidance on what will make for a successful or profitable business idea in Ghana though. That’s because everyone considers success differently.
You might not be satisfied with a business that makes you ksh500,000 a year whereas someone else will be over the moon with that same business making them only ksh 50,000 a year.
Similarly, you may not have the skills, talent, know-how, marketing chops or contacts to make a particular business idea work whereas for someone else, it’ll be a walk in the park.
But most importantly, almost every innovative company you see today was likely written off somewhere in their history by others thinking that it would never work.
Depending on the type of online business you’re starting, it could cost you absolutely nothing to get started. Alternatively, if your business model is complex or has major barriers to entry, it could easily cost you upwards of Ksh 100,000 or even much more.
Do you need any special licences or permits?
You may be starting a business in an industry that requires a special permit or licence. A few examples include food manufacturing, health, oil and gas, accounting, law, architecture, construction, etc.
Acquiring these permits or licences and staying in compliance with their requirements is another cost to factor in when starting your online business.
Do you need any special technology, software or equipment?
If you’re planning on starting a software-as-a-service company, or a Kenyan search engine for example, you might need some special or proprietary technology, software, equipment or inventions to help make that happen.
Are you starting alone or do you require employees?
Different businesses have different requirements when it comes to labor. If you’re a solopreneur, you can get things done yourself. But if your startup needs a team of 50, you’ll have to factor in the cost of employees, salaries, taxes and KRA contributions.
Do you need to stock inventory?
If you’re starting up an ecommerce business, you may need to stock up on the various products you sell in order to deliver the moment you open your doors. If you’re into dropshipping though, you might not need inventory.
Are you boostrapping the company or do you need investors to start?
Some people like to build their companies slowly. Others need to move really, really fast and so they need to raise capital or have investors.
Other expenses
This list could probably go on a bit longer but these are a few of the things to consider, aside initial marketing costs, payment processing fees, legal fees, professional fees, office space, etc.
Not all of these will apply to your business, but you should certainly look into the ones that do.
Do I need a website for my online business?
As mentioned previously, there are many different types of online businesses you can start and whilst a website will enhance every single one of them, some lend themselves to having a website more than others.
For example, in the not too distant past, it would have been almost unthinkable to be a blogger without having a website (a blog is a type of website that shows the latest posts and articles in reverse-chronological order, or the newest information first.)
Nowadays though, you can win national blogging awards with only an Instagram account!
One might say, “But you won’t be able to monetize your content with banner ads if you don’t have a website.”
Whilst true, there are Instagram influencers who gather an enormous following, dishing out the latest gossip, news and entertainment and by posting sponsored content from brands and businesses, they make tons of money.
You may want to debate the difference between bloggers and Instagrammers some more, but the world is rapidly changing, making new things possible.
That being said, there are very, very valid reasons to have a website for your online business. We list 8 of them below:
- Make your customers happy
- Free advertising and exposure
- Business emails
- Gain International customers
- Professional branding
- Automation and systems
- Effective advertising and analytics
- Maintain permanent access to your customers
Should my business accept payments online?
So, bit by bit, your online business is moving along nicely. People are interested in what you have to offer.
When it comes to accepting payment for your product or services, this is likely going to depend on how you make your money or your specific business model.
If you run a blog or you’re a YouTuber and you make money from Google placing ads on your content, then you’re going to be paid via any of their options that work for you. Be that cheque, Mpesa, Wire Transfer, etc
A note on fraud and scammers
One of the things you have to remember is that wherever there are opportunities, there will also be criminals wanting to take advantage of those opportunities.
Sometimes due to a lack of systems and structures in Kenya, it is relatively easy to participate in fraud and online scams and walk away scot-free.
Because of that, there’s a significant number of people who are totally against patronizing any online business in Ghana. They’ve probably been defrauded in the past and never want to experience that again.
It’s your job therefore to ensure that your online business looks the most credible it possibly can. Don’t give a potential customer any reason to imagine that you’re not a genuine business.
Can you convince everyone to do business with you? Nope! Can you convince people who are on the fence? Yes you can!
- Ensure your existing customers are able to leave reviews for you online.
- Make sure your business is registered and you’re paying all necessary taxes.
- Make sure all payment accounts (mobile money wallets, bank accounts, etc) are in your business’ official name
- Invest in a professional website that provides all the information about your business and services that any potential client might want
- Don’t send business emails from Gmail and Yahoo. Go professional with business emails.
Conclusion
If you’ve made it through this guide to the very end, congratulations.
Whilst we hope to have answered some of the questions you have in mind in starting an online business in Kenya, there are probably other questions which you might have in mind.
Feel free to contact us or leave a comment below and we’d be happy to address that as best we can.
Wishing you the best with your online business.