How to Start an Online Business in Kenya - 10 Steps

December 9th, 2021 by Felix Cheruiyot

If you're thinking of launching an online business in Kenya, there is no better time to start than today.

You'll find that it's actually much easier to start an online business than a storefront business, where you need a stall or office space.

There is no need to have a lot of capital saved to fully stock up your store with all the items you need to sell. You can implement a Just in Time (JIT) stock inventory management system and order items from suppliers on a need basis.

By starting an online business, you’ll be capitalizing on a growing trend. More people have become inclined to shop online due to the COVID-19 pandemic.

Internet and mobile penetration rates in Kenya have been growing year after year. There are as many as 59.24 million mobile connections in Kenya because some users have multiple SIM cards. About 21.75 million Kenyans are using the internet as of 2021.

This guide elaborates more on how to start an online business. It's applicable if you're thinking of a service-based business or an e-commerce shop.

Let’s get started:

Step 1: Find goods or services to sell online

Most 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.

You’re likely not planning to sell items in bulk but single items to a few customers. So, products need to have good profit margins. The NYU Stern School of Business identified a margin of around 45.25% as ideal for online products.

Rather than reselling goods with stiff competition, you may earn better profit margins with self-made goods such as crafts, décor, beauty products, custom furniture, etc.

The advantage of online businesses in Kenya is that you can also sell services. With this business model, you sell your time, but earnings may be limited to the number of hours you can work.

Are you looking for a potential online business idea? Check out our guides on 19 Online Businesses in Kenya and 9 Online Businesses that Pay Big!

Step 2: Conduct market research & find your Ideal Customer

Don't merely assume that there's an existing market for your products or services.

You need to conduct market research, and you can do it with these simple steps:

During the market research process, you should ideally survey potential customers. It's the most likely group to purchase your products or services.

Knowing their preferences, pain points, or interests gives you greater control when customizing your products and message to appeal to them.

As you evaluate the viability of your business, you can ask more questions such as:

Step 3: Write a business plan

A business plan is important for many reasons. It's a strategic tool that you can use to plan for the growth and expansion of your business. You can share it with potential investors to raise money.

Since the process entails conducting a SWOT analysis, you can identify potential weaknesses 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

Starting an online business in Kenya also comes with expenses. If you’re launching the business with your savings or raising the capital, it’s important to figure out the startup costs. Cash flow issues can cause your business to fail.

Some startup costs include office supplies, equipment, licensing and permits, branding, website setup, rent, etc. As you think of startup costs, you can also source for potential suppliers and budget for the inventory.

Even a service business like freelance writing has its own startup expenses, such as paying for internet or purchasing a laptop.

Step 5: Choose your name and Register your business

Choosing a name is a key step in launching your online business startup. The name needs to be unique and not infringe on existing trademarks. It's the same name that you'll use to identify yourself on social media and create a website.

Now, you can consider business registration to secure your business name and make it legal. You can undertake this process on the E-Citizen portal. 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 or lawyers. You can similarly consult business formation and legal compliance specialists.

Asking around your local cyber shop may be a good place to start, and some advertise their services on social media.

#Tip: On Facebook, you can search for "Company formation."

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 recognize your company across various marketing platforms easily.

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 by the people it seeks to associate with.

You must have 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. It’s also possible to hire branding experts through freelancing platforms.

Step 7: Create a website and social media channels

Customers need to find you online easily. If you have a website, you can appear on Google search for relevant keywords related to your business. Once someone finds your website, they can either buy products directly or call your phone number.

For instance, if we search for “Cleaning companies in Kenya,” we get the following results on the first page:

start online business in kenya - SEO showcase

GM Cleaning ranks as the top result. Since many people click on the first ranking, the company may be generating a lot of business by 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.

For the website, you can use a no-code option - where you create a website yourself without the need of hiring a developer. We have created a list of 11 best no-code platforms for your e-commerce and SAAS startup

If you’re tech-savvy, you can decide to build your own website with the following steps:

Now 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.

Think of any topic around your business, and write about it. For instance, if you offer company formation services, you can write about “How to form a company in Kenya.”

In the article, you can recommend your services or include a link to your sales page.

People also find businesses on social media. That's why you need a strong social media presence. You can think of strategies to grow your following, such as sharing awesome content or partnering with influencers.

Remember that more interactions may translate to more business.

Step 8: Select an online payment processor

Let’s assume you are running a local business selling laptops and computer accessories.

It may be quite unprofessional if customers have to send you money directly to your mobile number.

You can consider registering for an M-PESA PayBill or Till Number. However, processing orders manually can be quite tedious as your store grows.

It’s ideal to have a shopping cart integrated with a payment processor for a smooth checkout experience.

Some customers may be shopping with credit cards such as VISA and MasterCard. You still need a way to process their payments.

IntaSend allows your Kenyan online business to accept online payments from your website. Customers can pay with mobile or cards in a secure environment. You can easily track the 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 you with their cards, or you can even accept ACH bank transfers from US clients and get paid with Bitcoin.

Unlike foreign payment processors, IntaSend caters to Kenyan businesses with easier KYC requirements and payments solutions specifically targeted at local businesses.

start online business - payment link

Learn more about what IntaSend solutions can do for you.

Step 9: Launch the business and serve your first 10 customers

Launching your business online may entail many things. You can consider your first customer as the official launch of the business.

To kickstart the business, you can begin with a sales promotion. You can even consider doing a press release or making an announcement on social media.

Once your business is live, you need to build traction. 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 easier. You need to devote yourself to making the business a success.

Step 10: Build your brand’s visibility and reputation

Your online business will not become popular and highly trusted overnight. It's crucial to implement strategies to grow your business. With your site, it may mean trying to increase traffic. It can also mean increasing your visibility across your most important marketing channels.

One strategy commonly used by online businesses in Kenya is to promote themselves on social media through paid advertisements or sponsored posts. That’s because of the relatively low cost of running an ad.

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 more specific audience and set budget caps.

About 99% of customers read reviews as they shop online. So, ask past customers to share reviews of your products or services to enhance trust.

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.

Past customers will be your greatest strength. Make sure that you're delivering the best experience!

Bottom Line

Starting an online business deserves the same seriousness as opening a normal store or office. In summary, we have talked about:

You can consider IntaSend as your preferred way to process card and M-PESA payments with STK-push available.

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