Now is a great time to start an online business, but you have got to do your homework before taking the plunge. Learn how to start an online business in Kenya with our 10-step process.
Thanks to the Covid pandemic and increasing connectivity, people are now more inclined to shop online. It also takes much less capital to start an online business than to set up a traditional physical storefront.
With many online businesses, there is less need to carry a large inventory. You can make or order products as needed. With software and informational products, you are essentially selling the same product over and over.
Need more reasons to set up an online business?
We will share a lot more reasons to take the plunge now in this article, as well as a step-by-step process on how to start an online business in Kenya.
Let’s get started:
What is An Online Business?
An online business is where you sell physical goods, services, informational products, or software entirely online. It is a type of business where you don’t need to be in physical contact with the customer to complete sales transactions.
An online business can be an e-commerce store where you sell different products or a service business where you sell packages. It can also be a SaaS business where you sell plans that allow buyers different levels of access.
In all these instances, customers pay for their purchases or subscriptions right there on the website.
Why Should You Start an Online Business in Kenya?
At some point, brick-and-mortar businesses will eventually start to feel the strain of overheads. As a result, scaling becomes costly and with shrinking margins, it becomes a struggle to remain profitable.
Online businesses, on the other hand, don’t have to lease expensive retail space. You also have a lot more control over how much you need to stock. Using a dropshipping model, you don’t even have to hold any stock yourself.
Online businesses also have a less defined audience or a radius their customers are drawn from. The market is a lot bigger. And because they don’t have open outlets in new locations to expand, scaling is a lot easier and cheaper.
You also have the freedom to operate your online business from any part of Kenya where there is reliable internet, especially if you are selling informational products.
Do You Have to Register an Online Business in Kenya?
All businesses in Kenya are required to formally register. While many online business owners choose not to register as a way of avoiding paying taxes, it is against the law. Besides compliance reasons, registering your business will also help you raise capital from banks when you need to.
Are online businesses taxed in Kenya?
Unless you are selling a product that is exempted from tax, your online business must pay tax like all other businesses. Tax evasion is a crime in Kenya as it is in many countries, so you will protect your investment by giving to the taxman what is due to him.
How to Start An Online Business in Kenya
You have a better chance of succeeding with your online business if you follow a tried and tested process to start it. You have to validate your idea, analyze the competition, and establish what it will cost to start the business before you start up.
With that said, here are the steps on how to start an online business in Kenya:
Step 1: Decide what you are going to sell.
Good business ideas are those that offer solutions to problems many people are facing. Problems equal demand for specific solutions.
Your task is to identify problems that you can solve, either with the expertise or skills you already have.
Most online stores resell physical goods bought from suppliers. If you’re taking this route, it's vital to identify products that people are inclined to buy online.
To make this a worthwhile business, the products you plan to sell online need to have good profit potential. The NYU Stern School of Business identified a margin of around 45.25% as ideal for online products.
Rather than reselling goods that already have many sellers, you will get better profit margins with handmade and crafted goods.
You can also sell services, such as virtual assistance or content writing. However, with these online businesses, your earnings may be limited to the number of hours you can work.
You can find other online business ideas here.
Step 2: Conduct market research
Don't assume that there's an existing market for your products or services.
Even if there is, you have to be sure that it has space for another player. The size of the market determines how much you can potentially make in sales.
With an innovative new product conducting market research will tell if the market is ready for such a product. With many new products, you have to educate the market first. Some products that look like they are winners will eventually prove to lack product-market fit.
Here’s an example of the market research process that you may conduct before setting up a business selling leather coats online.
- Define a research objective, e.g., “Determine the demand for leather coats among youths in Nairobi.”
- Come up with research and survey questions.
- Choose research methods to use, e.g., personal interviews, observations, trials, or focus groups.
- Conduct market research and gather data.
- Use the data to make conclusions and decisions about your business.
To get data that is relevant to the business you intend to start, you should survey people who are most likely to buy your products. This means you have to identify your potential customers first.
Knowing your potential customers’ preferences, pain points, and interests will help you customize both your products and marketing messages.
Questions you must seek answers to before starting your online business include:
- Are there any existing businesses offering similar services or products?
- Will demand for this product increase or decrease over time?
- Is it going to be difficult to turn a profit?
- What is the main problem that your service or product solves?
- Are people willing to spend money to solve this problem?
Step 3: Write a business plan
A business plan is a strategic tool that guides you through every stage of starting and managing your business. It is also useful for planning the expansion of your business. You can also share it with potential investors to raise money.
Since writing a business plan entails conducting a SWOT analysis, it helps you identify potential threats that could impact the survivability of your business.
You don't need to know a lot to create a business plan. Some services sell business plans for standard businesses. You can also download a free template online and customize it to fit your needs.
Step 4: Calculate startup costs
Though it does not cost as much as it does to start many offline businesses, starting an online business in Kenya comes with expenses. So whether you’re launching the business with your savings or raising the capital from investors, you have to figure out your start-up costs. You must also have an idea of your running costs.
Startup costs for online businesses include licensing and permits, branding, and website design and hosting. Even a service business like freelance writing has its own startup expenses, such as internet and computer equipment.
Step 5: Choose your name and Register your business
Choosing a name is a key step in launching your online business. Your business name is what identifies you with customers. It helps to differentiate your business from competitors.
Your business name needs to be unique and memorable, but it should not infringe on existing trademarks. It's the same name that you'll use to identify yourself on social media and your website, which will be your business’s primary home.
You will secure your business name and formalize your business when you register the business. Visit the eCitizen portal to register your business online. Remember that you have to register your online business the same way you register an offline business.
Registering a business means that you’ll be liable to pay any taxes to KRA.
You can either register your business in Kenya as a sole proprietor or a company with shareholders and directors.
There's a lot of information about the company formation process online, but you can also get help from accountants and lawyers. You can similarly consult business formation and legal compliance specialists.
Step 6: Brand your business
You can instantly identify a business like Coca-Cola or Nike from its logo or brand colors. Customers need to easily recognize your business across various marketing platforms.
Forging a brand identity may entail coming up with visual assets such as a logo, color scheme, and even typography. Companies also use other brand assets such as slogans, unique packaging, and sounds to enhance their identity.
As you build a brand that people love, you can think of other unique attributes that set your business apart. Are you environmentally conscious? Do you give back to the community?
A brand may also be unique in the people it seeks to associate with.
You must also maintain a consistent branding strategy across your website and social media pages. For instance, your cover photo on social media should be similar to other graphics on your website.
You can walk into any printing shop and ask for custom logo design services. You can also hire branding experts through freelancing platforms.
Step 7: Create a website and social media channels
As an online business, customers need to easily find you online. If they can’t, you can’t make sales.
Most online businesses depend on traffic from Google for their lead generation. So you will need to optimize your website content around keywords that are relevant to your business. When you do this, Google can literally send customers to your business website.
For example, if we search for “cleaning companies in Kenya,” we get the following results on the first page:
GM Cleaning ranks as the top result. Since many people click on the first ranking, the company may be generating a lot of business thanks to their prominent search presence.
So, how do you create a website for your business? You can hire a web designer or agency to create the site for you. It’s the best route to have a professional-looking site.
You can create a website without the need to hire a developer. But you do need to be tech savvy. Here are the steps to follow:
- Find a hosting partner;
- Reserve a domain name;
- Choose a hosting package that fits your budget and needs;
- Decide on a website builder to use. Most sites run on WordPress. For e-commerce sites where you need to showcase products, you can use the WooCommerce extension. Besides WordPress, two of the best e-commerce CMSs you can use are Shopify or BigCommerce.
- Build your main website pages such as the home page, about us, and pricing page.
Once you have a website, don't stop there. You can embark on an SEO strategy that entails publishing helpful blogs that rank on Google for popular search terms.
Imagine topics that your target customers could be interested in and write about them. For instance, if you offer company formation services, a good topic for a blog post will be “how to form a company in Kenya.”
In the article you write, you can recommend your services or include a link to your sales page.
People can also find your online business through your social media media. That's why you need a strong social media presence. As with your website, you will need to create and share good, helpful content to attract customers to your online business from social media.
Step 8: Select an online payment processor
Selling online requires you to create a smooth experience for customers right from when they first land on your website to when they check out. Unless they successfully check out, you don’t get the sale.
So it’s critical that you make it easy for customers to pay. Customers need to multiple ways to pay so that if one fails they can try the next. When there is more than one way to pay, your chances of converting every prospective buyer improve.
To add to your payment options you can register for an M-PESA PayBill or Till Number. However, processing orders manually can be quite tedious as your online store grows.
It’s ideal to have a shopping cart integrated with a payment processor for a smooth checkout experience. Some of your customers will be paying using credit cards such as VISA and MasterCard. You will need a way to process their payments.
IntaSend is the payment processor for online businesses in Kenya. The payment gateway allows you to accept payments on your website. Customers can pay with their mobile wallets or cards in a secure environment.
With IntaSend you can easily track all transactions and monitor your account in real-time. If your company serves global clients, you can still get paid securely with IntaSend. Customers can pay with their credit cards or Bitcoin.
Unlike foreign payment processors like, IntaSend is designed with the needs of Kenyan businesses in mind, with easier KYC requirements and payment solutions specifically targeted at local businesses.
Learn more about what IntaSend solutions can do for you here.
Step 9: Launch the business and serve your first 10 customers
You can consider your first customer as the official launch of the business. Until you have enough sales to at least cover your costs, you are not going to be doing any festivities to launch your business.
To kickstart the business, consider a sales promotion. A press release and some posts on social media announcing the launch also give the business some early traction.
Once your business is live, you need to build momentum. There is no better way to do this than setting an initial target to serve at least ten customers, or 100, depending on your scale.
Running an online business will not necessarily be easy. You need to devote yourself to making the business a success. You are going to be working your socks off for a while because see signs of success.
Step 10: Build your brand’s visibility and reputation
Your online business will not succeed overnight. You will have to implement strategies to grow it. That may include using SEO to increase traffic to your website. It can also mean increasing your visibility online using display and social media ads.
One strategy commonly used by online businesses in Kenya to promote themselves on social media is paid advertisements or sponsored posts. It’s relatively low-cost compared to other forms of online advertising.
With a small budget of 1,000 KES, you can even run an ad on both Facebook and Instagram for seven to ten days. Just target a specific audience and set budget caps.
About 99% of customers read reviews as they shop online. So, asking customers to leave reviews of after completing their purchases will help convince other people to buy.
You can also build trust by showing customers the backend of things. Stores that import apparel from Turkey may show new stock arriving at their store, or share photos from their business trip abroad
Get Your Online Business Off To A Flying Start With InstaSend
Starting an online business deserves the same effort and dedication as opening as starting an offline, brick-and-mortar store. To summarize, these are the steps you follow to start an online business in Kenya:
- Selecting products or services to sell;
- Carrying out market research and defining your target customer;
- Creating a business plan;
- Working out the startup costs;
- Choosing a name or registering the business;
- Branding your business with visual assets;
- Creating a website and social media pages;
- Selecting an online payment processor;
- Launching the business and serving your first customers;
- Building your brand’s visibility.
If you follow these steps and with IntaSend as your partner for accepting payments on your website and for managing your payments to suppliers and vendors, your online business will be off to a flying start.
Sign up with IntaSend today and give your customers more, easier ways to pay, and your new online business the best chance of success.
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